KRUK Spólka Akcyjna Aktie

Good afternoon. My name is Michal Zasepa, I'm CFO at KRUK. Welcome to the results presentation for the first quarter of 2026. [Operator Instructions]

Let me now go through the presentation. The presentation is also available on our website. So let's start. In the first quarter of 2026, KRUK had PLN 262 million of net profit. This is roughly what we expected for this quarter. However, the structure of the results was somewhat different than we budgeted.

If you look at the top line, it was somewhat lower than we planned. On the other hand, we also saw lower cost. But overall, we believe this was a decent result. And with this result, we, of course, need to concentrate more on recoveries in the following quarters to improve the revenues, possibly also continue to extract some cost efficiencies, but our target for this year profit is not changed. We don't give forecast, but we -- you know that we have a target of at least 12% growth on the profit before tax in order to receive the allocation for the warrant program, and we would like to see it happen.

This was a good quarter for deployment of money into new portfolios, PLN 530 million, especially good in Italy and it's double what we invested more than double what we invested in the previous -- in the quarter -- first quarter of the previous year. The company continues to be well capitalized and with good access to the funding and moderate leverage level.

If you look deeper, you can see that we exceeded on the total level by 4% the accounting forecast, which is roughly what we expected, those differences will continue likely to be single-digit numbers. Most of the expenditures, as you see here in the first quarter came from Italy, which is very good news. And usually, the first quarter is -- the decline in this quarter is relatively modest. So we expect to see more investments in the following quarters. And our expectations for this year investments does not change, and it's somewhere in the range between PLN 2.5 billion, PLN 2.8 billion.

I will now go through the segment analysis to give you more flavor of the results. So let's start with Poland. Poland had a good quarter. Overall on recoveries, we were almost exactly on plan. However, we exceeded expectations on recoveries from corporate portfolios, and we were 2-point-something percent below our operating target on retail portfolios. But this 2-point something, it's already significant in terms of value and it was a reason why we recognized somewhat lower positive revaluation on the portfolio than budgeted.

Please remember, this is a quarterly exercise that we are doing. This revaluation will be higher in some quarters, lower in some quarters as we'll be reacting to what's going on in the current quarter in recoveries. So this is where we are. After first quarter, the game is on. The next quarters, hopefully, will be good and we'll be able to catch up, although this is, of course, not certain.

The good information is March in Poland was a very good month. If we continue to see that, then the situation will be fine for the Polish market. Still, it was another year where we were very close to our target, and you see that the profitability of the business is stable.

On the investment front, this quarter, we saw -- as we saw in 2025, a relatively high level of competition and not so high supply yet, and we expect to increase our investments in the following quarters.

If you look at the Romanian business, the performance was very good. We met fully our operating target for recoveries. And also, we recognized the revaluation with the level that we expected. Just as a reminder, this year, we are expecting lower revaluation than in previous year. And we also added another PLN 80 million investment in the market.

The market continues to be competitive, both in Poland and Romania, relatively fresh portfolios are offered for sale, which means that they have potential to see high success rate 70%, 80% for which we are -- in order to win them, we can afford to pay relatively high percentage of the nominal value, sometimes 30%, sometimes even 40%. Hence, you can see that this average price for these markets will be relatively high.

So overall, a very good quarter for Romania, and we expect this trend to continue in the following quarters. In Italy, this quarter was good, but not as quite good as we planned. So we missed a small 3% on recoveries on retail. On the other hand, on corporate, we exceeded significantly our target. Also, that's the reasons why we didn't see a higher positive revaluation in the quarter, but hopefully, we'll be able to catch up in the following quarters.

It was a very successful quarter in terms of deployment. We bought one very significant portfolio, which represents obviously a big chunk of our targeted investment planning for 2026, but maybe we will be able to exceed it since the beginning was very promising.

And Spain, a market where you remember, we suffered from the changes in how Spanish courts function. The good news is that we see an improvement. We see an improvement in how our cases are going through the process. That's why we are more optimistic that we will be able to go back to buying portfolios in the following quarters of this year. And if that trend continues, we should already see more recoveries from legal process already in second quarter of this year and in the following, of course.

And looking -- seeing that situation, we also accelerated sending some of the cases in Spain. So this quarter result, this PLN 30 million of EBITDA is also lowered by higher expenditures, higher spend on legal costs than we budgeted, which is good news because it means we see the potential and these investments should be repaid in the following quarter. So it's not yet a guarantee of success on the Spanish market, but it's definitely a positive news that we saw over the past couple of months.

And the rest of the markets where we continue on closing down and winding down our operations in Czech market, and we continue to learn and work with our portfolios and small -- and buy small portfolios in France, but there's no major development in France. We continue to gather knowledge and experience and also test certain operational improvements in France in this mode where we are an investor and we work with a few servicers and that should continue for the following quarters.

We continue to look at the U.K. and U.S. market, but it's unlikely that we will make any significant move in those markets this year. We are continuing on the path of digital transformation, and there is additional CapEx and OpEx coming from that also this year, likely higher than previous year. And as you may remember, we are also during the process of reorganization to become a special investment company, regulated fund that process may last up to second half of 2027, and it's going on plan as for now.

So we are quite busy with 2 reorganization and of course, making sure that this year's target is realized. My summary for the situation is that the situation is good, but we see some minor weakness on the recoveries. We think it's possible that we'll see the improvement, but it's not guaranteed in the following months. We will be looking also to extract some cost efficiencies to increase the chance that we'll be hitting the target for the full year for the net profit this year.

We believe the business is in good condition. We continue to have very good access to funding. The fact that we made a very successful issue of a large bonds issued this year in Poland also means that likely the effective tax rate for this year will be relatively low because we already have PLN 600 million sitting at the mother company need less money to be taken from our investment companies during which process of transfer they are taxed.

And as I said, it's likely that we see somewhat lower costs than we anticipated both operating and overhead this year. So overall, we are optimistic about the coming quarters, but there's quite significant initiatives that we are carrying on currently apart from the current business as usual.

Lending business is more common. This is a year where we expect the business to produce lower EBITDA than last year. There's a few reasons for that. First, there was an extra gain in revenues in Q1 2025 coming from revaluation of the recovery curve. We don't think it will repeat this year. And second, the sales are somewhat lower than planned and the products that we sell are the products that have longer tenure, so the revenue will be recognized over a longer-term period of time, and that's already visible in Q1 of 2026. We continue here to develop the start-up operations in Romania. And of course, the main -- the bulk of the business remains in Poland.

Looking at the funding, we are in a very good situation. The demand for our bonds exceeded our expectations in this first half of the year. And also, we see positive feedback from the banks who continue to be open to extend their -- to increase their involvement into KRUK.

If you look at the projected recoveries on this slide, we show the change. This estimated remaining recoveries increased to PLN 27 billion. That's a target we mean to exceed as you may know. And just to remind you that these were the expected returns on the investments we made, you may see again that we continue to show the investment discipline as we are showing -- as we're keeping also this year.

I think this is the most important news and part of this commentary, and I'll be now very happy to take your questions.

There was a question about the bond issues this year. We don't plan new bond issues in the immediate future of the next couple of months as we also expect to have good access to bank funding, but we don't exclude it, of course, in the wider -- in the longer horizon of the next few quarters. And also, you may have seen that we've done the first call for ones U.S. bonds in Poland. It may be that it will be profitable for the company to call some other bonds, but we don't, at this point, have immediate plans to do it yet.

You're also asking what are our plans for entering new markets?

So as I mentioned, we continue to look at U.K. and U.S., but it's unlikely that we'll make any significant entry this year. But the plans don't change those 2 markets are of our interest.

You also asked about the progress of the digital transformation. The project is going on plan, a very important milestone for second half of this year is the minimum viable product in Poland, which means there will be a framework of the system that should be already operational, and there will be first cases that will be going through it on a test mode, which will allow us to check the development that was done so far.

But just to remind you, the whole of the business, our back book shall be transferred to the new system only sometime in 2029. Before that, there will be some portfolios, new portfolios going through the newer system, and there will be some other system that will be still the legacy systems. So at this point, in this year or the next year, we don't -- we will not see any efficiency gains yet, but we'll be making hopefully good progress to see the results and build this improvement potential for 2029 and for the following years.

There is a question also about the reorganization that is undertaken this year. Just to remind you, this is something we announced in January in 2026, and this concerns our plan to become the special investment company, so a regulated fund under the specific legislation as a mother company for the group, that entails certain regulatory steps, regulatory clearance, tax clearance.

The reasons for this reorganization were explained by me and Piotr Krupa earlier this year. And this process should not affect shareholders nor bondholders. It should strengthen the company, give us better access to funding, safeguard potential conflict of interest and be finalized in the second half of 2027, but it's a major reorganization of the group in Poland.

So in a nutshell, it means that the current company KRUK SA will be divided in 3, the investment fund, the servicing company that will have the service functions like HR, IT and KRUK Collection company. Those will be all 3 separate companies. The mother company, the KRUK AS -- ASI, the special investment fund will be the owner of all of the companies in the group as KRUK SA is today.

There is a question on April and also on the Q1 that it seems it was mostly retail portfolio slightly lagging in terms of collections in Q1. Any color on April?

So yes, there was a few small percent of a lag in retail portfolios in Q1. However, the performance is improving. So March was better than February overall for retail portfolios. I don't have final numbers for April. We will have it only in the first days of May. Expectation is that April will be a good month for retail portfolios overall.

Also maybe for some of you, it will be a useful information. If you look at the quarterly recoveries, Q1 usually is lower in terms of recoveries than the Q2 or Q4 because of seasonality, because of the amount of working days. And an additional comment, the revenues, you saw that there was some decline in revenues Q1 versus Q4 versus Q1 2025. Please remember that in Q1 2025, there was a one-off of PLN 21 million coming from release of provisions in Wonga. If you account for that, the revenues did not decline.

You also asked if we see an increased competition for portfolios, especially Poland? The answer is no. We see roughly equally competitive market as we saw in 2025, but it means a competitive market where, of course, we're losing most of the transactions, and we are overall targeting somewhere between 25%, 35% for Romania or about 50% market share. So it's a similar market environment as we observed last year.

You're asking about the structure of ERC. I believe we have that information in the financial report for QR. So I ask you to browse for that roughly -- okay, it may be not for the full ERC, but you may have it for the realized recoveries. I think in the Q1 and overall for the year, it should be around 10%, maybe 9%, 8% of recoveries will be coming from other assets than the consumer unsecured. And it should be roughly similar for the ERC.

Looking if there is any other questions. If you have any, please ask them. Okay. I see no further questions. Thank you very much for your time today. If you have any follow-up questions, please contact the IR, and have a good day. Thank you. Goodbye.

Good afternoon or good morning. Welcome to a call conference for KRUK Group. My name is Michal Zasepa. It's my pleasure to host you to this meeting. I'll be using the presentation, which is available on our website since yesterday. Please let me guide you through the Q4 or full year 2025 results. And in the meantime, and after my presentation, please use the Q&A functionality here in Teams to ask your questions. I will answer them after the presentation.

So let's start. 2025 is a record year for the business. If you look at operating profit measures such as EBITDA, cash EBITDA, there's healthy growth of 12%. It's also 12% that our assets grew by. The net profit growth is much smaller. And the result for that is taxation. There was a release in tax assets last year. There was more tax that we paid or created additional reserve provision for deferred tax assets this year. But fundamentally, this has been a healthy growth for 2025 despite the fact that during the 2025, Romanian RON depreciated versus euro and polish zloty, which cost us about PLN 41 million. And despite the fact that we have increasingly invested and spend money on digital transformation. The OpEx for the digital transformation, which started at the beginning of 2025 was for the year about PLN 30 million. So you have the PLN 70 million of additional costs that occurred in 2025 and depressed our results. Still the business grew by about 12% on operating level and on to profit before tax level.

We ended that year with PLN 11.6 billion of portfolio worth on our balance sheet, again, 11% growth with healthy indebtedness level at 2.6x net debt to cash EBITDA with record high recoveries, investments moderate, somewhat lower than our initial plan. They were PLN 2.2 million. But on the other hand, with decent return, you will see later in this presentation, we assume PLN 2.3 million return on the investments we made back in 2025. So overall, a decent year, although it's fair to say we budgeted for higher growth, we have not realized fully our plans.

So let's look at the long-term horizon. You may see here that this was a year where we added PLN 2.2 billion, which is less than in the 2 previous years. But please remember, in that business, there is a strong inertia that allows us to continue to recognize the profit and revenue growth a few years after the purchases. That's why this level of investment, especially if it's a good return should not undermine our ability to grow the business in the future. The business is very strong in terms of cash flow. You can see a healthy growth of cash EBITDA throughout the years and also in 2025. Also, our recoveries level for the total consolidated group level showed very healthy growth. This has been excellent results in Poland, Romania, good results in Italy, relatively weak results in Spain and in France, but the total was quite satisfactory. And we finished that year with 20% return on equity as expected despite the fact that our net profit was somewhat lower than budgeted.

If you look at Slide #5, it shows a split of the recoveries. You may see Poland contributed about 40%. The recoveries on total were good. They were also in each of the quarters of 2025 and in Q4 above the accounting, this conservative forecast that we had, this percentage is single digits, and it should remain single digits. In 2025, we invested across all 5 of our markets, Poland, Romania, Spain, Italy and France. The biggest single market for us was Italy. And this year, we faced somewhat higher competition than in previous years, but this is also worth to consider in context of decreasing interest rates. Our expectations for returns did not decrease. The market went down somewhat with IRR expectations because interest rates went down, but also because in some of the markets after 2 years of dominance of KRUK, some of our competitors were more brave and possibly wanted to invest more and we let them do it given that we've realized our goals.

The results, we believe they are quite healthy, although not as good as we wished for at the beginning of this year. You once again see here that on all the levels, but the net profit, the growth was double digit. The costs increased -- operating costs increased year-on-year, and this is -- and this increase was driven by salary increases, which grew in line with the market. But also, as I mentioned, there is an additional increase coming from digital transformation, roughly PLN 30 million and some increase in legal costs. Finance costs grew as well because we had more debt.

On the other hand, the interest rates decrease set off some of that increase. And also, we had a positive impact of hedging instruments totaling about PLN 60 million. And once again, our revenues in that year were negatively affected by depreciation of RON despite that Romanian results were excellent for the year, which you will see in a minute.

The company is very well capitalized. We enjoy good access to debt, both from banks and the bond investors. We are ready to continue to deliver on our strategy, which calls for increasing investments, but also increase in recoveries above what you see in estimated recoveries, this conservative accounting forecast, which calls for the digital transformation realization in the next couple of years, and I will touch on that in a few moments.

So this is a look at the segment business lines performance across our markets. In 2025, as I said, you saw very good deployment of -- into portfolio purchases in Italy, where we enjoyed, again, a leading position. It was a good year in Poland, although we did invest less than last year. So there, you could see that our investment discipline limited somewhat our appetite for portfolios. We -- our market share for this year was lower. We had, on the other hand, excellent year in Romania, and we withdrew from some of the tenders, especially for banking portfolios in Spain, waiting for more stability in our collection process and especially more stability in the performance of Spanish cards. So if it wasn't for Spain, we would achieve our planned target of PLN 2.5 billion investment. Still, this PLN 2.2 billion comes at decent IRRs. So we are satisfied with this result.

You can also see that we optimize between markets to get the maximum NPV to get the maximum IRR from the deployed capital. That's why we decided to decrease somewhat investments in Poland or not to be more aggressive in lowering our expected return in Poland. But on the other hand, we could achieve the desired return level in other markets, Romania and Italy. And that's why you've seen bigger investments there. You can see that all of our 4 markets are profitable with good EBITDA. We were happy with great results from Poland, great results from Romania despite the fact that there is a decrease versus year-on-year, but that comes from just decreased amortization of our very profitable portfolio. We're also very happy to see record results, almost PLN 300 million of EBITDA from Italy. We are not happy with the results in Spain. We hoped we expected higher results still, the business continues to be profitable in 2025, achieving this PLN 130 million EBITDA for the full year. We made a write-down of our assets in France and some write-down of our assets in Slovakia in process of exit, and I will comment that on the subsequent slides. Overall, this picture shows a strong -- solid, I think, growth, double-digit growth on EBITDA and cash EBITDA year-to-year, as you see here.

And now a commentary to the market. In Poland, our assessment of the market size was that it was almost exactly the same as in 2 previous years, about PLN 2.1 billion was deployed in Poland for consumer unsecured portfolios, of which about 25% was bought for us. This likely gives us #1 position, although it's a notably lower market share than a year ago and 2 years ago. You may look at this that 2024 was an exceptionally exceptional year for our market share. Poland continues to be very competitive market. It's still a position in 2025 that gives us #1, which shows we are #1. But it's also an outcome of the fact that after a few years of strong market position, some of our competitors have more appetite to increase their deployment in Poland. And also decrease of interest rates naturally decreases or increases pressure on the IRR.

Overall, we made good investments in Poland achieving this level of market share. And the results in Poland in terms of recoveries, performance of the back book were excellent. You can see that in the numbers here. You can see it in the value of positive revaluation that we recognized in Q4 over [ PLN 120 million ], and we expect that this trend continues in the following quarters and likely years for the Polish market.

In Romania, the market grew significantly year-on-year. You can see that it's -- our estimate is about PLN 800 million compared to PLN 500 million last year, of which we took great majority of 70% market share. So it's a very satisfying result. And the results in terms of financial performance are also very good. You may see that the revaluation was somewhat lower than in some quarters of last year. And I want to tell you, this is the outcome of the fact that we have raised the recoveries so much that this potential for future positive revaluation is lower now than it was a year or 2 years ago. We still expect to continue to see positive revaluation, but on a level closer to the level you have been observing in Q3 or Q4 2025 in subsequent quarters and few years. Overall, the business is growing very well. And in 2026, we hope to be close to the investment level we've seen in 2025 in Poland. And I should add in Poland, our plan assumes that we will grow investments versus last year.

In Italy, the market also grew compared to previous year, PLN 2.3 billion, and we are very satisfied with this market share, although it's lower than in '23, '24, but indeed, it was extremely high in those years. In terms of performance, this performance was good, but not as good to allow us to recognize positive revaluation in the past 2 quarters, you can see that it was more or less 0 for Q3 and Q4. If the recoveries go in line with our operating targets, which means they would exceed the accounting forecast, we should come back to positive revaluation in following quarters. This is uncertain, but this is something we would like to achieve. Overall, the situation in Italy is good, stable. And you may have read that we have already secured a significant portfolio on that market in 2026.

And Spain, last but not least, the market significantly decreased year-on-year. We believe this is partly due to the uncertainty in legal system among -- across Spain, the courts were working slower and there was uncertainty how long such a situation will persist. In that market also KRUK stopped buying the big banking portfolios. we resorted to buying smaller consumer finance portfolios, which are not as much affected by the legal process. And that's why we only invested there a fraction of what we invested in the previous 2 years, and we had about 12% market share.

The performance on that business in 2024 and Q4 was below our expectations. Still, our recoveries were more or less close to the accounting forecast. And you can see that in that situation, the revaluation was more or less 0 for this last year and also Q4. The business was profitable in each of the quarters and also in Q4 2025, but we have ambitions for the business to generate significantly more money in the future. The situation in the legal system across courts in Spain is that the reorganization is complete in sense of creating these new departments and making the final structure for the courts, but it's the beginning of the process of digging into those delayed thousands or hundreds maybe of thousands of cases that lie in Spanish courts and wait to be processed. This acceleration needs to happen this year, we hope. And we think it's realistic that we will see it happening. Only we don't know exactly what the pace will be and where we'll see that exactly in 2026. So it's a stabilization, but on a relatively low level of court effectiveness and with an expectation from our side that this situation will change positively in 2026.

When this happens, will be able to resort to buying more, and we have plans to buy -- to invest in Spain this year significantly more than last year than this PLN 122 million, but less than in 2024. So somewhere in between will be our target investment market. When exactly how big it will be, it will depend on how the situation evolves. In the meantime, we don't wait and see. We don't sit and wait for the results. We're focused on what we can improve internally. We're also testing an alternative legal process, which used to be longer, more expensive, but now may prove to be more successful. And it could be that we'll be building also some upside to the current revenue forecast by exploiting those alternative legal processes plus introducing some improvements in our operating process, which is always possible and hopefully, that will build our -- improve our profitability for the coming years. We stand by Spain. We bet still our money on that market. We believe we will make it work and come back to higher profitability in the future.

And finally, other markets, please note that these numbers entail France, but also Czech, Slovakia and Germany, the 3 markets that we're exiting and France, the only market which we are developing among this group. In Germany, we have fully exited in 2025, so we don't have assets anymore. Czech and Slovakia, we are on plan to exit these markets in 2026. We made a few sales of our assets on that market. Some of those sales were at profit and some of the sales that we made for Slovakian assets in Q4 was actually at loss. So part of this EBITDA loss that you hear, a few million of that is coming from the sale of Slovak portfolios. But majority of the loss comes from negative revaluation of our -- some of the French portfolios, not a comment to that. You probably realize entering a new market in NPL is a high-risk operation. That's why -- and also having gone through these processes on some other markets, we limit the high risk by limiting our investment deployment in size. That's why we invest in that market as you see here in 2024, PLN 90 million or PLN 115 million in 2025.

But we indeed can expect that the performance of those portfolios can be significantly different than our initial assumptions, especially that we don't have operations there, especially that we rely on the valuation of these portfolios provided by third-party servicers. Now we are in a situation where after 1.5 years being there, we had a very positive and better-than-expected performance on any [indiscernible] process. That built our positive EBITDA for that business in the 2024 and 2025. And sometime in 2025, in the second half of 2025, we noticed that some of the cases from some of the portfolios after we entered the legal process do not deliver as much as expected. That means the courts behave differently than assumed. That also means that there may be a high level of imprecision in the valuation. It's underestimated [indiscernible] part, overestimated the legal part. This is normal. This is a normal phenomenon for newly bought portfolios.

We make now a reduction in our expectations for recoveries. We defer some of the expected payments for future. We also manage our servicers. We have retained second servicers sometimes in 2026 when we compare both how they do in the legal process and we go on. This situation is, in our view, not a significant obstacle -- it happens usually on new markets. It happens sometimes on old markets on some portfolios we carry on. We just try to learn from the situation as much as possible to include that learning in future investments and in improving our operations. Unfortunately, at this point, in France, we don't have full control of our operations. We don't have operations. So this -- our ability to improve is also lower than on the markets where we have a servicer. But this -- on the other hand, we don't need to cover all of the overhead cost of having operations there being still a small-scale company on the [indiscernible].

So we will continue to buy at small scale in France in 2026 and try to learn as much and improve as much as we can from this situation we found ourselves in 2025. And a word about our lending business. We presented from now on, we will present it as one group level loan business because Wonga Poland is now a mother company of Novum, the lending company that was focused on crew customers. And also Wonga Poland acquired from KRUK Group, its Romanian entity lending to customers and started to lend money on the open market to new customers. So now Wonga brand is the brand for the lending activity across KRUK Group being present on 2 business lines in Poland, open market and closed customers in Poland and open market and crew customers in Romania. And I'm happy to tell you this was a very good year for the business. We earned PLN 170 million EBITDA in 2025.

In terms of funding access, the situation looks good. In 2025, we successfully increased value of our credits and making from the banks. We also saw a very good market for bond issues. That situation persists in 2026. So please expect us to also strengthen our access to debt funding this year, although it's not a year where we would need a lot of money coming from the analysis of our cash flow, not so much of our bonds are coming due in 2025, actually none. However, it could be that we decide to resort to call option for some of the bonds calculating whether it's profitable or not for specific issues. So that moment may come because of the difference in interest rates now and from a few years ago. We are well funded, and we will use most likely banking credits and Polish bond issues to finance our growth this year.

On this slide, I draw your attention to these figures, which show the expected money multiple or gross IRR at all the investments we made in a given year. And you can see it's about 21% for 2025 or 3x money, a decent result. It's lower than in 2024 for 2 reasons. First is indeed somewhat higher competition and our returns are subject to pressure from fall in decrease in the interest rates. But second, a higher percentage of our investments is coming from countries where we have a longer curve, namely Italy versus Poland. And also that means that the money multiple and IRR is similar, but the gross IRR is somewhat lower. Overall, on IRR on operating level, we made our budgetary plans. Also, you may have seen that we decided to invest somewhat less, but at a better IRR, which is, I think, a safer scenario.

Moving on. I want to also draw attention to this slide. The graphic representations are the slides below, where we had another year of recoveries, which shows the strength of the back book. This 22nd year of our recoveries portfolios or subsequent year gave very satisfactory performance across those old vintages of portfolios, which tell us this curve has been flat and nothing indicates that it's going down soon. So that's a very positive news that those recoveries are remarkably resilient.

And on this slide, I want to comment how advanced we are for implementation, realization of our strategy, strategy for the period of 2025 to 2029. Please remember the most important element of this strategy is to deliver on the net profit growth. And here, we don't give you a guidance, but we guide you to what our shareholders approved for the incentive plan for the company and for the Board, which calls for 12% annual profit before tax growth every year in that period. And we would like to achieve that, and we did achieve it in 2025.

Now the elements of that plan call for PLN 15 billion of investments. We are on way to realize it. But please understand it is a benchmark. If we can realize our profit goals by investing not PLN 15 billion by PLN 13 billion with decent IRRs, that's even better scenario for us. So the PLN 15 billion is not a goal in itself. Of course, we need to grow investments to continue to grow long term, but it's really a range of possibilities. And at this point, this PLN 15 billion, we believe, is still possible to achieve.

More important, I think, is what do we think and what do we see about the possibility of exceeding the accounting remaining -- the estimated remaining recovery. So this accounting forecast for recoveries. And for the first time, in 2025, we showed you a picture where we said, listen, our ERC stands at PLN 21 billion, but the management's plan, this ambitious operating plan stays at PLN 8 billion more, PLN 29 billion. And in this presentation, we give you a situation -- a snapshot of situation as of now a year later. And this situation is that currently, our ERC stands at PLN 26 billion, but our operating plan is again PLN 8 billion above. So despite the fact that we recognized PLN 500 million of positive revaluation raising our accounting curve, despite the fact that we achieved PLN 225 million of recoveries above 2025 accounting forecast. The difference, this PLN 8 billion difference between accounting and operating plan did not decrease as planned. It actually stayed at PLN 8 billion. Why? Because we saw we identified additional potential of recoveries on our back book on portfolios that we have purchased over the past 20 years, not on the ones we bought in 2025.

So it's a significant positive situation. And we also tell you most of that additional roughly PLN 1 billion comes from Poland sometimes later in the curve. And why it's coming? Because we see the stability across all the back book portfolios in recoveries even after 10, 12, 13, 15 years. So it's quite positive, and it tells you despite significant revaluations, we did not decrease this potential to go above forecast -- recoveries forecasted in our accounting plan for the next [indiscernible] year.

We made the 20% ROE target as expected. We are on the way to build our assets to PLN 20 billion. In that time, the assets grew by 12%. We continue to go through digital transformation from this [ PLN 500 million ] earmarked for this project, we spent already about [ PLN 70 million ], 40%, OpEx, 60% CapEx. Our leverage is contained within the plan. So I think we can say all of the boxes are ticked here in terms of strategy implementation.

On this slide, we once again tell you this difference between operating and accounting target, but there's no new information above what I told you a minute ago. So I'll go further. And finally, on this Slide 18, we tell you a bit more detail about what we have achieved technically in terms of building this new digital IT ecosystem. This is a very important year, 2026, where the system, this newly created operating system will already be tested on the first portfolios in Poland. It will be the minimum viable product. So it will not be fully operational, but it will already test sometime in the second half of 2026, whether the system works, what need to be improved. And once again, the full functionality here, we want to achieve by 2029 and the benefits, which we believe will be significant from implementation of this new system in Poland, Romania, Italy, Spain and potentially later in the new markets will come after 2029.

So we are well advanced in that process. It's a difficult process. It's an investment in the future. It's an investment with a payoff beyond the strategy level, but we believe it's very important for the success of that business in the long term, and we're really excited about what we are building at the company.

And just a reminder, you may have read that in January, we have -- we announced that we will be reorganizing the group to fit it better for a company with very significant element of investments in NPL. KRUK wants to become an alternative investment company, a publicly listed alternative investment company by end of 2027. It's a significant reorganization. We believe it will help us manage risk better. It will make us stronger. It will be a more regulated, more safe business, we believe, better fitted to realize our investment plans. And we started to work on that, and we will need probably 2 shareholders' approvals during that process.

First, to break up KRUK into operating company, headquarter and investment company and second, to merge this investment company into a licensed investment fund sometimes in 2027. We're in process of preparing for that. The good information is we have good feedback from the regulator, and we have good feedback from our biggest shareholders to continue to work on that path and I think a good understanding of all the regulator and supervising bodies.

I think this is the most important information at this point, and I'll be very happy now to take your questions. I'll now look at the Q&A section.

Okay. You are asking how the new structure will affect us in terms of taxation. So my answer to that would be, first of all, this reorganization is done for business reasons so that we are better prepared to be a company that deploys in the next 5 years, this PLN 15 million and does it mitigating the investment risk does it with better regulatory oversight and does it with good investment discipline. If we deliver on this plan changed, the side effect could be that our tax situation remains as it is currently, which means we continue to pay 19% tax from the profits that the company has made, where our securitization funds profits are taxed when they are transferred to the [indiscernible] in the company when we pay out the dividend we pay or we pay back or redeem our bonds. The side effect of the transformation will be that if we get positive opinion from the Polish tax authorities, our securitization companies will not be subject to Pillar Two GloBE taxation. So there will not be an additional tax on the top of this 19% that we're paying.

And one more comment regarding GloBE, not relating to the organization is that we have informed you a year ago that we could be subject to global taxation from 2027. Now we know we will not be. We will not be because in 2025, we have not exceeded the threshold of EUR 750 million of revenues, which is this threshold to qualify, which means that we know for sure that neither in 2026 nor in 2027 will be subject to the taxation.

You're also asking what was the reason behind changing incentive program underlying benchmark from EPS to profit before tax after 2024. The reasons for that was uncertainty related to global taxation. We didn't know what exactly how this will affect us. And therefore, we agreed with the shareholders that for this particular period of time of this uncertainty, it's more reasonable to have this threshold at the lower below tax, which, of course, matter for 2025. But later on, we should achieve similar levels of growth, both on net profit and profit before tax.

You're also asking, is it fair to assume that our reorganization is converging the group to an asset management company seeking a license for that. It is true, although it will be a specialized asset management company, a company specialized in NPL purchases. And we will change the mindset in which we will say this is the investment company. And of course, our most important goal is to maximize NPV on the deployed capital. But we also are an investment company that wholly owns the servicing companies. And their job is to maximize the value on the portfolios that we have given them to service. And now it allows us to be to make a decision about deployment and optimization of the process at different places, and it makes our lives a bit easier not to have the risk of affecting our operating -- operational agenda by our investment decision or vice versa.

It also opens the door to thinking that if we are on that market, relying only on our own servicer, is this the ideal situation forever? Or should we champion challenge our own servicer to see whether we could improve it somehow by looking at what other servicers is doing. That will be especially useful in the new markets or in the markets where we don't feel yet we are the best servicer on the market. But overall, you should understand that this reorganization is not a change of strategy. We are and will remain to be an NPL company, but we are indeed a company where most value is done by the decision to deploy billions of zloty and soon billions of euro in some periods of time. So we are actually in this reorganization, achieving a structure that we have in all the other countries, but Poland because when you look at KRUK Group today, in, for example, Spain, there is local Spanish servicer, but there is a securitization fund in Malta making the investments. If you look at Italy, it's similar differentiation. Only in Poland, we have one company, KRUK, who is servicer, headquarter and investment company. We want to separate that, and we believe it will be a good idea long term to -- for our risk management.

You're also asking how much money do we want to deploy in 2026. Please understand it's always a certain range of possibilities. I would say, more than in 2025. Why more than in 2025? Because we plan to come back to buying more in Spain. And the results could be somewhere between PLN 2.4 billion, PLN 2.7 billion in 2026.

You're also asking specifically about when do you want to return to investing in Spain. The answer is in 2026, I would say, possibly in second half of this year, but it will really be dependent on what we see in recoveries, what we see market opportunities.

You're also asking why do we have higher effective tax rates in Q4. Please understand that a big element of our tax is deferred taxation. So we have an accounting rule that says based on the planned cash flows, twice a year where the Management Board approves the budget or the business plan, the budget sometimes in December, the business plan sometimes in June, we look at the next 3 years, and we see how much money do we need to transfer to the Polish matter company and while transferring this money will pay tax. And then we say, okay, so that will be the transfers. That will be the tax. How much is our provision for that. If this is -- if the provision is lower than it should be, we increase, we increased the provision. If it happens that the provision is already bigger than what we planned, we decreased the provision. Hence, the volatility in 2024, in Q4, we released the provision because our business plan changed. In Q4 2025, we increased provision.

So please look at the deferred tax assets and take a look also at the cash tax that we are paying and both are available in our financial statements to see that those are really driven by different situations. And please understand that we have this volatility, which is not intentional. It's a product. It's a derivative of the change in our cash flow plan for the next 3 years. And again, in the long term, we will pay 19% or high-teen percent effective tax rates on all of the profits we make. But in the mid- to short term, it will depend on whether we are stable or we are returning the money to the mother company or reinvesting the money in our securitization funds where in which situation we can enjoy a period of time where our effective tax rate is significantly below 19%.

Guidance on portfolio purchases in 2026, I answered that already. Let me see if there are any more questions. You're asking, do we want to increase investments in France in 2026 despite lower recoveries. We're thinking about investing a similar amount of money this year roughly as last year. So it means contained investments, not significant growth, partly because of the issues that we have seen.

You're asking about incentive program. Does it mean that in the next future incentive programs, you will come back to EPS? Yes. Yes, because it is the best measure given situation in taxation environment is stable.

I don't see more questions. I'll wait a second to see. If it happens that I didn't answer your question exactly, please follow up with the IR team. We'll be happy to take it.

I don't see more questions now. In which case, thank you very much for your interest and time today. Have a good afternoon, and I hope to see you on the roadshow or company conferences. Thank you very much. Goodbye now.

Good afternoon. My name is Michal Zasepa. I'm CFO at KRUK. It's my pleasure to host this meeting where I will present the Q3 and 9 months results for 2025 for the KRUK Group.

I hope you see the presentation that I'm sharing, the presentation that is available on our website. And please give me now several minutes to present. And in the meantime and after, please ask question via question-and-answers interface here at Teams, and I will answer your questions after I deliver the presentation.

So let's start. This was another very good quarter for the company. After 9 months, we have earned close to PLN 900 million of net profit. This is as expected. So we are, in our view, on the way to deliver what will be most likely the best net profit in our history for 2025.

So in other words, we expect this 9 months to build our good position to have record high profits for the full year despite the fact that the 9 months of 2024 were higher than for this year. But last year, we had an extra high net profit in Q3 and a relatively weak Q4. This year, likely the situation will be different. We have more even results for the quarters, and we also expect a decent Q4.

You can see that we deployed about PLN 1.4 billion in new portfolios. This is less than last year. But as planned, we are on the way to deploy somewhere between PLN 2.4 billion to PLN 2.5 billion and Q4 should allow us to achieve it. Of course, there is some uncertainty. We have not yet won all of those portfolios, but we see good pipeline, and we see already that we have won significantly more portfolios by a few hundred million zloty than what you see here as booked results for Q3.

Recoveries were very good. This PLN 2.9 billion is a record result. It's also in line with our operating ambitious plan for the entire group.

We had a record high cash EBITDA over PLN 2 billion, while the ROE decreased, but it decreased because it's counted for the 12 last months, which means it also includes the relatively weak Q4 of 2024. So I hope after Q4 of 2025, you will see some increase in this measure.

The company is well funded with good access to funding and continues to be moderately leveraged at 2.6x net debt to cash EBITDA or 1.4x -- 1.3x net debt to equity. This leverage level likely will somewhat grow in Q4 as we are realizing the plan to reach this PLN 2.5 billion of investment.

So overall, it's been quite successful 3 quarters and quite successful Q3 for us on the consolidated group level.

You can see on this slide, share of recoveries, share of investments. The fact that, again, we exceeded our accounting forecast by a strong single-digit number this time, 7% that shows you the business is healthy.

Recoveries are increasing in the countries where we invested more. So you can see an increasing share of Italy. On the other hand, in expenditures, you can see Spain taking the largest share where we saw the biggest opportunities for the past 9 months. And you can see a small share of Spain, where we became very cautious given our relatively weaker performance over the past year.

And we are investing as much as the market allows us in Poland and in Romania and possibly more investments are coming. So overall, this picture shows good level of recoveries and optimization, our optimization across markets to win as much as possible of the good quality, good return investments as we can.

Overall, looking at the business, as I told you, the net profit is at the level that was expected and desired by the company, no surprise here.

On the revenue, we are maybe a little bit below what we expected, but we are compensating it with costs. In this specific quarter, you may see there was somewhat lower positive revaluation than historically, but that's nature of the business where there are differences in between quarters in how the curves are shaped and it's not something we consider a problem.

Operating costs were increasing. They were increasing because we continue to increase salaries, especially in Poland and Romania with the market by a high single-digit number, but also because we invested more in costs of the New Horizon, the digital transformation -- that's the name of the digital transformation program we've instigated at the beginning of this year. However, versus our budgetary assumptions, this cost growth was more contained than we expected.

Finance costs went up together with the growing value of the debt, but were offset somewhat by lower interest rates and by the fact that we hedged some of -- some part of our debt, which contributed to some positive hedging gains.

Overall, as I told you, the businesses continues to be well funded. We enjoy very good access to debt funding, both from banks. And here, we significantly increased our banking lines by PLN 90 million. We increased the RCF and we added some bilateral contracts. We enjoy very good access if needed to the Polish bond market and the terms are as attractive that there is no need to go outside of Poland for the bonds. So funding is not an obstacle for the group currently.

Looking now at the segment analysis, if you look at this PLN 1.4 billion of investments, Italy contributed most. Why? Because this is one of the largest markets, and it has been relatively less competitive than some other markets and also because the supply was relatively big in those markets.

Poland was the second largest investment place for us. You may see that we invested for the 9 months of this year less than a year ago. That is not worrying us. There is more portfolio coming in this quarter, and we hope to increase this investment level significantly. However, it's a fact that the Polish market is quite competitive. And usually, we are bidding there with -- together with higher number of competitors than, for example, in Italy, and that may also reflect the fact that the investments in Italy were higher than in Poland.

We're very happy with the investments in Romania, and it's relatively big investments for that market. And in Spain, we were shy here, and we will continue to be cautious until we see greater stability in the legal system and improvement in our recovery.

So if you look at the business today at the split of the value of portfolios, Poland makes up close to 40%, Italy coming second with $3 billion and then 2 also large markets with $1.8 billion of assets in Spain and Romania. So -- if you look at Spain, don't worry that we have not bought so much. We have a lot of portfolios to work and full concentration is on improving the recoveries there.

I'm happy to see that in this 9 months, we had record high cash EBITDA and cash EBITDA have grown considerably for all of those markets, as you see here. On EBITDA level, the business was profitable everywhere, but please note the growth is coming mostly from new markets. So Poland and Romania, despite their excellent performance, decreased somewhat on profitability on EBITDA level because of the nature of the back book there. We are adding high-teen percent IRR portfolios to back books of over 20%.

The balance sheet -- the value of those portfolios is not growing so fast. And as a result, profitability is relatively stable there. And the growth comes mostly from the back book that we have accumulated in Spain and Italy after we went successful to legal process, the costs go down, the recoveries and revenues stabilize and profitability increases. So this is a trend that we have expected, and I'd like you to understand why it's happening.

So overall, in my view, solid performance for Q3 and the 9 months. And now let's take a look -- a closer look at each of the main markets. In Poland, as I told you, we're not discouraged with relatively lower investments until September and more is coming for October and Q4. In the meantime, recovery trends has been very strong and continues to be very strong. You can see significant positive revaluation. We expect this trend to continue, and we're happy with the profitability that we have on the business.

In Romania, a good investment quarter with this $130 million and also a very strong trend of recoveries, significant positive revaluation. So again, after 9 months, we are where we wanted to be in Romania.

In Italy, very good 9 months in terms of investments, solid trend of recoveries, record high recoveries, including a cutoff for corporate portfolio that we bought. So there is an extra boost for cash flow, but not for revenues in Q3 alone, and we expect to continue to see good results there.

And finally, Spain, which, as you may remember, well, it suffered a year ago in Q4 of 2024, we took a relatively significant write-off there. I'm glad to tell you the situation has stabilized. It has stabilized without improving much. So the results for Q3 recoveries alone are close to our accounting curve. So there is not much margin for a mistake.

We see that the legal environment is in process of reorganization. We see that there is some good progress that we are expecting to see and has been started, but the process of those changes in the legal system in Spain is ongoing, and it will take still yet several months. So what we do, we concentrate on finding our improvements in our internal process of also understanding where these legal changes go, how exactly courts will be organized and how to adapt to that situation best as we can to prepare to see that in some months, we'll see even greater stabilization and some improvement of recoveries versus this planned minimum accounting forecast that we have currently.

So our expectation is that for the next few months at least, we will probably see a situation how it is now, which means the business is profitable, as you see in Q3, we earned PLN 50 million in EBITDA. So we expect to show also good profitability for Q4. But we see the situation as still not adequately stable to come back to significant investments in that market. So we will probably be quite selective until we see a stronger recovery improvement and also signs from the market that would tell us we know how to operate now and not only this one in second quarter, but majority of them. And hopefully, that will come sometime in 2026.

This market is still at relatively higher risk than the other markets because of this history and because of the fact that we have little or none cushion in our operating plan versus the accounting forecast. So we took the write-down, we lowered the curve, and we're now going right on this curve. But if something happens, if November or December recoveries will be significantly below what we think today, of course, it will constitute a problem. We don't expect that today, but the risk is higher than in any other markets that we are in.

Overall, we're optimistic. We have no doubt Spain will be a very good market for the business. If you look at the portfolios that we have bought in Spain, 7, 8, 9 years ago, and we already started to see this level of -- this length of performance because we started to invest in Spain in 2016, we see an evidence that portfolios overperform in terms of cash, but they performed over a more flatter recovery curve.

So it's not a guarantee that will happen to all of our investments, but this is already visible that like in many of our other markets and portfolios, Spain is following this logic that once we do something, we may be at first in this initial phase of development of the business and market, sometimes overestimating. But overall, after a longer time, 5, 10, 15 years, we usually manage to beat our own expectations, and we see that eventually in profits and returns for the business.

So we expect we will find ourselves in that situation in a few years in Spain. Until now, we'll be concentrated on making sure we do every best step for managing this PLN 1.8 billion. The balance sheet that we have, we'll be selectively buying small, medium-sized portfolios, which are immune given how -- what they are from legal system in Spain. There are such portfolios from time to time. And hopefully, sometime in 2026, maybe second quarter, maybe third quarter, we'll resume to investing more heavily in that market.

The other markets grouped here on this Slide 13 are 2 different streams. Exit stream, which is Germany, Czech and Slovakia. For Germany, we have successfully sold our German company, and we still hold some assets, but there are tiny assets and they are in process of being sold. So most likely this year, we'll end our experience and journey with Germany. And we are also following similar routes with the Czech and Slovak business. We sold some assets already. We are in process in selling some other parts of the assets, and we will be starting a liquidation process for our company sometime in the next couple of months with the insight with the plan of liquidating our position in full exits sometime in 2026.

And the other stream, which is development stream is France, and France is here responsible for all of the investments that we make here. Here, the situation does not change. We rely on currently 2 servicers. We continue to look for quality portfolios, which will allow us to add to our experience, but also make some money. And we're waiting for a good moment to establish our operations there, but the decision has not been yet made how and when we will do it. So we'll continue to buy portfolios, but not on such a great scale. So don't expect us to invest suddenly in France many hundreds of millions of zloty until we'll have a solid plan to be operational in France.

So far, the experience in France has been quite good. However, we see that we had very successful first stage of amicable process, which exceeded our expectations in terms of recoveries, and that was our experience for the past 1.5 years. Now we have almost half a year, maybe a bit less experience in legal process on some portfolios. This legal process overall is going slower. The recoveries are a bit lower than the plan. And now we are investigating this. It's not a significant problem from the P&L perspective, but it's, of course, an important operational question, have we underestimated amicable and overestimated legal stream or can we improve the legal stream and have even better returns? And that's something the team will be concentrating on in the coming months.

Overall, we remain optimistic about France and we would like to continue to develop there.

For the other markets, which are not listed here, we continue to research U.K. and U.S. But that means we try to understand how big the market is, how competitive it is, how the business is done, what business models work best there and who could be possibly a good partner for us in a co-investment process like we do in France or a possible acquisition target. But this is still a preparatory phase, and we have not yet made a decision to enter any of those markets yet, but we're preparing for that.

Wonga and Novum had another solid quarter with good profitability. And I also want to inform you that in Q3, we started our operations of Wonga in Romania with a plan to build a position there, starting from a small scale start-up operation based on some assets and a team that KRUK Romania had because it also had small lending operations concentrated on our own clients. Now we will be entering or we have entered the open market. And hopefully, in 3 years from now, we will be able to tell you that we have a successful solid business. It will not be a very big business. If we will be 1/3 of the Polish operation, I think that will be quite good results given the market size. So it's a nice addition and hopefully a good opportunity for Wonga to grow.

Looking at the P&L, once again, in my view, solid performance on EBITDA and net profit and making it quite likely that we will see a decent results and growth for this year. If you're asking specific questions, what the growth expectations, we're not giving a forecast, but please remember the last option motivational program that the Board has is based on the assumption that we need to grow at least 12% on profit before tax year-to-year to get the allocation, and we definitely want to get the allocation.

I will finish here and I'll ask for your question. Thank you for listening to my presentation.

We have the first question. Is the company considering early redemption of bonds with the highest interest rates?

We will consider and we may decide to do it if this will be profitable for us and open for that window -- and a window for that will open in some time, and then we'll be deciding on what to do.

Another question that I have is, do we -- what are the plans to enter new markets, which and when?

We don't give a specific answer to that question. But as I mentioned, we are researching U.K. and the U.S. markets. U.K. is the biggest debt selling market in Europe. U.S. is the largest debt selling -- consumer debt selling market in the world. U.S. is, according to our assessment, significantly bigger than the whole European market in that respect. So if we enter those markets, that opens a significant market opportunity for us to continue to grow. However, of course, those markets are competitive, are mature. They are relatively highly regulated. So they are not easy, of course, to get into and win.

Do you have any other questions? No. We'll give you a minute more to see. I don't see any other questions at this time. Okay, I see a question. And the question is, can you talk about your right to collect accrued interest versus principal? For example, even P&L accounts that you book for 3 years, do you continue to accrue interest? How does this vary across markets?

So this vary across market. The legislation tells us what we can do and what we cannot do over -- and that's also changing time, and it also may vary whether this is any capital process or legal process. So to make it -- to give you a simple answer, the simple answer would be that, as a rule, we are most often able to see some accrued interest during the legal process, but it's not interest that we decide to put on the debtor, but the losses if a case when successful through legal process, the losses you need to add some additional interest, which is called delayed payment interest.

And this is quite significant in Poland. It's much less significant in the other countries, and it does not happen much from a member in Romania and Spain. But for example, for Poland, our biggest market, that's a significant percentage, currently maybe about 10%, 11% annually. And it happens when the judge makes a verdict saying, this debt needs to be repaid. And from that moment, the outstanding amount of the debt is increased by certain interest, which is determined by law. And the fact that it exists, prolongs our recovery curves in Poland and in the markets where it exists.

Do you have any other questions? I have another question here. You have had the experience of exiting some markets before. From this presentation, it appears that you remain committed to Spanish market as of now. How would you make the decision regarding staying committed to Spain business versus exiting?

We are doing long-term business planning twice a year. So we, every roughly 6 months, look at what we have in Spain, look at what we believe is market in terms of buying portfolios in the future and see the business plan for the next 5, 10, 15 years. And we see what realistically in our assumption are the profits that we can make. And at this point, as in historically, we believe the market is big enough and our competitive position is strong enough for us to continue to earn money in Spain an adequate return. So for us to exit Spain, we would need to change that view.

What would that mean? That would mean that we make losses and we do not have an idea how to turn them into profits from our back book in Spain. This is not the case. Despite the fact that we incurred some write-downs in Spain, our back book in Spain, according to best of our knowledge, yields a high-teen percent IRR. So it's a decent result. You may not see it in the results for the past year, but we see it in our long-term forecast.

Second, we would need to see that for regulatory reasons, for market reasons, we are not able to buy profitably. Again, that's not something that we see. Spain is one of the largest debt selling market in Europe, and there is a number of players who do that business profitably. So it doesn't look like any of this situation will occur and it doesn't look like we would be in a situation where we would need to exit Spain.

Where we exited, that's Germany, we saw a very small market, and we saw that we could do returns of 10%, 8%, 9% IRR, which was not satisfactory. So long-term and short-term perspective, it was that. When we exited from Czech and Slovakia, we saw a profitable business, but we saw a tiny market. So we could continue to earn them $5 million, $10 million, but that's a percent of the group profits. And that's why we want to be -- we want to refocus our attention to the larger market where we can make hundreds of millions of gains, not several. Spain will be a very good market for in the mid and long term.

Okay. We have another question. From a competition perspective, do you see any player becoming more or less active year-on-year in your markets? How is the competitive intensity evolving?

We see somewhat higher prices or somewhat higher price pressure across our markets in 2025 versus 2024, which is natural because interest rates went down in Europe and in Poland for euro and for Polish zloty. And as a result, all of the participants count the weighted average cost of funding at some lower level than a year ago, and they are translating it into their maximum price levels. So I would say that's natural that when interest rates go down, our expected returns also are affected. But it's a moderate effect, the difference may be 1% or 1.5 percentage points.

In terms of competitive activity, it's -- I think it's a good environment where a few strong players in every market bid and compete strongly. And sometimes this or sometimes other players is successful. We don't see somebody who would be successful enormously in many markets. We see competitive situation differing country to country. And we see that there is not many new players, and there is not many players with this hot capital that would be quite reckless with investing the money NPL, which happened from time to time in the past. So I would say it's quite stable situation, although it's a tough competitive environment where possibly not everybody will be making money from the current players, and there will be some consolidation.

But knowing the history from 2020 -- '10 to '15, '16 where this competitive landscape environment was very fierce where the interest rates were 0 or negative in Europe, we enjoy being in this competitive situation. So it's also lessons learned that it's good for us, a rational player to be in an environment where interest rates are not 0. And I hope as long as they are not 0, but 2-or-some-percent or something like that in Eurozone, that will not recreate this bubble of reckless money chasing portfolios for any price.

I don't see other questions. So in a summary, we expect a good year for this year. Of course, as always, there's countries which will outperform and underperform. But overall, we expect a good 2025 for in-process and budgeting. So hopefully, we will also be seeing good prospects for 2026. I didn't mention, we are continuing our program from digital transformation. It's going well currently, but it promises significant benefits only from 2028, 2029 and later. But we are fully focused on that. And hopefully, sometime in 2026, we'll have again 4 big markets to invest in without much of limitation. And at some point, France will be a new market. And in the longer term, we hope to add either U.S. or U.K., although without yet specific time commitment when we will do it.

Thank you very much for your time. And if you have any follow-up questions, please contact the IR team, and we will be very happy to continue our dialog. Have a good afternoon. Bye-bye.