Good afternoon, ladies and gentlemen, and welcome to the preliminary results 2022 conference call of Raiffeisen Bank International. Today's conference is being recorded. At this time, I'd like to turn the conference over to Mr. Johann Strobl, Chief Executive Officer. Please go ahead, sir. Thank you very much for the kind introduction. Ladies and gentlemen, welcome to our call. It's about the preliminary 2022 results. Thank you for taking the time out at your busy schedule today. The results, as you have seen, are very good. These include, of course, an unusually high contribution from Russia, with many distortions caused by the war. I believe, however, that the underlying trends and the performance of the rest of the bank is also very good. The overall consolidated profit is around EUR 3.6 billion for an ROI of nearly 27%. The underlying profit, if you adjust for Russia, Belarus, and the one-time gain on the sale of Bulgaria, is around EUR 982 million and an ROE of 8.7%. Please keep in mind that this includes EUR 448 million of provisions for litigation in Poland and EUR 253 million of risk costs. This gives you an idea of the very good earning capacity of our core businesses. As we will discuss in a minute, our CET1 ratio improves to 16% consolidated and 14% if we assume a full write off of our Russian business. If we move to the next slide, you see that our loan book have grown nicely in Central and Southeastern Europe, while we had reduced significantly in local currency terms in Russia and Belarus. Core revenues have improved nicely as well, in particular for the business excluding Russia and Belarus. Our adjusted cost-to-income ratio of 50% is also very satisfactory. Let me move to the next slide. Let's first discuss the dividend. On the one hand, the very good results across the group in 2022 and the strength of our balance sheet mean that we are able to pay a dividend. The proposed EUR 0.80 per share are roughly 26% of our normalized earnings. On the other hand, considering the uncertainty ahead, we need to be prudent and will wait for more visibility. We have made a lot of progress on the CET1 ratio, and as we stabilize around the current levels, we will be in a better position to distribute. Until the decision to distribute is made, we will deduct the EUR 0.80 per share from our capital ratio as this amount is earmarked for our shareholders. As mentioned, our ability to propose a dividend is also a reflection of our very strong balance sheet. Net of the proposed EUR 0.80 per share, we have strengthened our CET1 ratio to 16% and, more importantly, improved our CET1 ratio excluding Russia to 14%. At the same time, we have grown the loan book in our key markets, digested the RWA inflation from rating downgrades and other inorganic effects, and provisioned conservatively. We have also improved our MREL buffer over the course of the year. I would like to take a minute to highlight the remarkable job our colleagues in Ukraine have done and the excellent performance of our bank there. First, by ensuring business continuity in the early days of the war and again when the country's energy infrastructure came under attack. There was extensive preparation done before the invasion, including for blackout infrastructure such as generators, diesel power banks. Within weeks, all data and critical systems were successfully moved to the cloud. Most importantly, we experienced no downtime of any consequence. Raiffeisen Bank Ukraine is a major contributor to the banking infrastructure in Ukraine and one of the best performers under these extreme circumstances. The feedback from both customers and authorities alike has been unanimous. Second, Raiffeisen Bank Ukraine has strengthened its capital position while also taking a very conservative approach to risk costs. The revenue potential of the bank is also intact with a stable customer base and market shares. In fact, among the privately owned banks in Ukraine, we have seen the smallest loan book reduction, and we have the highest share of customer assets relative to the balance sheet. In critical industries, we have maintained our lending exposures or even written some new business. Operating income benefited from the high interest rate environment as well as excellent fee business and trading results. This has allowed us to absorb the significant risk costs without showing a loss for the year. More importantly, Raiffeisen Bank Ukraine demonstrated very strict cost discipline, which largely offset the unexpected OpEx pressure caused by the war, such as cloud migration and relocation costs, financial assistance, and donations. All in all, I am very proud of the job done by our management and colleagues at Raiffeisen Bank Ukraine. Let's move to the next slide. As mentioned already on the second slide, we have seen very good growth in core revenues this year, and you can see this on slide seven. We have had seen both NII and fee income growth for eight consecutive quarters. In the most recent quarter, we have again seen excellent growth in the core group, excluding Russia and Belarus. We continue to see benefit of higher rates through resilient liability margins, both in euros and domestic currencies. In the Czech Republic, you will have noticed a CZK 38 million drop quarter-on-quarter. Now, to a large extent, this is coming from a line shift in revenue recognition on a fixed derivatives. If we focus on the underlying business trends, we see a small drop in the quarter around CZK 8 million, which is coming from the deposit mix. We have seen some of the current account volumes move to saving accounts and term deposits, which of course, have a better yield. Fees and commission income is largely driven by Russia this quarter, and elsewhere growth was slower. Looking at the core part of the group FX business saw lower volumes, and of course, the loan and guarantee line usually tracks the lending volumes, which were also muted in the quarter. Let's move to the next slide. What you see here is what I have mentioned earlier in the business areas, excluding Russia and Belarus. You saw a nicer loan growth by 6% year-on-year, I think also the deposit growth is very good within the group. I'll leave you with this slide and move to the next one, which is the waterfall of the CET1 ratio development for Q4. What you see is a significant improvement by more than 130 basis points to 16% coming from various areas, reduction in the loan book, some other credit risk reduced and market and operational risk. Overall, also important to have the retained earnings to be considered negative. We have seen, of course, the FX rate, which happened rather at the year-end. Of course, I should mention here, as it's stated, the earmark dividend is excluded from the 16%, and you should be also aware that these are numbers from the traditional application of IFRS 9, where the benefit is about 44 basis points. If we now look at the outlook on capital for 2023, you see our assumptions on organic impacts from retained earnings, and the RWA increase on the other hand, mainly from loan growth, some FX elements, and some other regulatory elements, what you have also as part of this development, but it should be above 15%. Moving to slide 11, which is one element to inform you about our dual steering approach, what you see here is the impact of a deconsolidation scenario in Russia. Of course, rate rest expectively on the 31st of December 2022, we would have landed at 14%. If we look forward, we will steer the group in a way that for sure we should be above 13.5% if this would happen. The core numbers are the EUR 4.2 billion of CET1, which would be the consolidated without compensation in this calculation, and an RWA deconsolidation of EUR 15.8 billion. Be aware that the subordinated instruments which are held by the group are not deducted in these numbers. If we wouldn't get any compensation for this as well, this number 14% would be lower by 30 basis points. On slide, on the next slide 12, you see an overview for your convenience for the core numbers on group level, and the various MDA triggers, MDA buffer, and the available distributable items. I think the numbers speak for themselves. You see the increases in some of the buffers on the right-hand side of this slide. Moving to the next, you see a good improvement. This 13, what you see is a good improvement over the year on our MREL and funding. You might have also seen that in addition to what we report to year-end, we had another MREL eligible issuance at around EUR 1 billion just recently in January. If we then move to the next, you see few information on liquidity and MREL resolution groups. we have this Multiple Point of Entry concept. The LCR very well improved, NSFR very good. I think we have in all these aspects, very good numbers and for your information, you see also the upcoming funding needs to meet also in the other resolution groups, the respective requirements. Moving to the next slide. This is the second part of the Russia update. What you have seen is a huge decrease in RWAs of EUR 6.3 billion. Half of it was the FX development, and the other elements are reductions in the credit RWAs, but also in the liquidity, in the RWAs required for liquidity. Yeah. I think what one might also mention here to give the total, the total view, we have net cross-border risk to Russia of slightly more than EUR 200 million. This, we also reported our trade finance guarantees to Raiffeisen Bank Russia, which are about EUR 80 million. Of course, with these very good results, the Russian entity is more than well capitalized with a CET1 ratio on local standards by more than 27%, which is an enormous buffer. Also if you look at the liquidity ratios, the numbers are very strong. Coming to the next slide, which is 16, an updated macro outlook from our own sources, Raiffeisen Research. The basic assumption is that the beginning of the year sees, of course, a slowdown, maybe a shallow recession, also some recovery in the course of the year, so that overall in Central Europe, we expect that the year brings a small growth of about 1%, slightly more as the structure is different, the industry structure is different in Southeastern Europe with an on average around 2%, and Austria 0.5 after the strong 5% growth in 2022. We see a stabilization in Ukraine after the huge drop because of the war by a third in 2022. We see a further decline in Russia by around 4%. Next slide gives our view on interest rate developments also some flavor on where we expect inflation will be. It seems, if you look here, that in some markets we already have seen the peak of this rate cycle, and in the second half of the year, we already expect rate decreases like in the Czech Republic and in Hungary, stable development in Romania. Serbia and the Euro, of course, we see some further increases. Coming to my last slide before I hand over to Hannes. I think here I would abstain from in the reading exercise. This slide is full of numbers. The best what we can share with you what we expect within this year. This probably might also answer most of your questions already, what you usually had. With this to Hannes. Hannes, please. Johann, thank you very much. Good afternoon, ladies and gentlemen. I hope you have had a good start to the year. Thank you for joining us for our first update of 2023. Before we discuss the coming year, however, I would like to spend a minute on where we stand after a challenging year. Johann has mentioned the positive development of our balance sheet. There is but little for me to add. We finished the year with a non-performing exposure ratio of 1.6% stable on the year. Again, a very good Stage 3 coverage ratio of 59%. In most of our countries, we saw few insolvencies, which allowed us to build up our overlays and post-model adjustments. Please bear in mind, we have EUR 729 million of overlays available to us for any risk costs beyond what is already budgeted for the next year. There have been a number of RWAs headwinds this year, and I believe we have managed them well. We have been proactive all year in reviewing our exposure and our internal ratings. Initially with the war in Eastern Europe, followed by inflation spikes and energy crisis. This has been definitely a very busy year for risk manager. I shared with you some of these portfolio analysis performed during the year, and I'm otherwise satisfied that our portfolio is fully reviewed and up to date. Not to forget the bank's liquidity situation, which is excellent, both on the group level and each of our individual countries. While there was some initial volatility in March, this did not last, we have seen consistent liquidity inflow since then. Of course, you're aware of, since I'm not getting tired in repeating, our rating has been confirmed by Moody's and S&P already in March. Focusing on Eastern Europe, I would also like to highlight the very good performance of the Ukrainian colleagues. The cost of risk, unfortunately, reached our initial guidance this year. Yet despite this, the capital situation of our bank in Ukraine is sound. In local currency terms, we have maintained our loan book roughly flat, with any drop largely attributable to the increase in provisions. We wrote new business during the year, supporting the agriculture sector and related industries. In Russia, we have reduced the loan book by 30% in local currency terms. We will continue to selectively replace corporate exposure with retail exposure. Russia is an example of our active RWA management. You will recall, of course, the rating downgrades and the liquidity inflows which led to substantial RWA inflation in the first and Q2. On the provisioning side, we also came to the upper end of our initial guidance. Here, however, this is largely driven by Stage 1 and Stage 2 bookings. Again, the revenues have more than made up for the risk costs, and the capital situation of the Russian bank is well above the regulatory requirements. As we look ahead to 2023, we see some reliefs in otherwise challenging environment. For our corporate customers, many of the post-pandemic tailwinds are now over. The very positive momentum that we saw in 2021 and the first half of year 2022 is behind us. We were talking about the deteriorating consumer confidence. This usually, of course, comes after certain lagging with economic consequences. Which is now, anyway, the accepted new reality. We have a complete new rate environment. What is always important for me to say is that on the other hand, the doomsday energy scenario have not materialized. Let me move on to the next page, please. What we understood from all your feedbacks that you would appreciate a little bit more color in splitting up our risk cost guidance to the different segments. Well, on Group Corporates & Markets CE and SCE, I think the headline would go stagnation or possible slight recession in a combination with higher rates and persistent inflation. As I said, we have now already a stock of overlays of EUR 729 million. 2023 might more be focused on Stage 3 bookings. We believe that we could see up to EUR 440 million in the segment mentioned. You may consider this on the upper end, and I would dare to agree. At the same time, please bear in mind the sudden defaults, what I'm also usually flagging, and this you would most properly find in this segment. The other two segments I picked out are more difficult when it comes to risk cost guidance. For Russia, Belarus, of course, it becomes now evident that the same sanctions are making their impact. Ongoing recession, especially if commodity prices drop and global growth deceleration. Here we would believe that risk costs could sum up to somewhere around between EUR 250-EUR 270. Ukraine, it goes without saying that this is more than challenging to come up here, with any well-founded and sound numbers. We again came up with this EUR 220 million. Please bear in mind, if you look at the risk costs from Ukraine, that also here we have an overlay for extraordinary situations of around about EUR 50 million. Having said this, let me move on to the next page when talking about IFRS 9 provisions. Said in my summary, total EUR 949 million, and big part of it was anyway, not in the Stage 3. Mainly in Stage 1 and Stage 2. You can see here all the details, the moves between Stage 1 and 2, adding a little bit on the micro side. On the other hand side, having the capacity to release the one out overlay. The quarter four has been mainly driven by Stage 3 bookings. Having said all this, I'm sure you also have recognized our strong drop on RWAs. If you look at this drop of EUR 10.8 billion, I think you have three main buckets. The one is the credit risk RWAs. Here you have two effects. The one that short-term exposure has been reduced. On the other hand side, also locally liquidity placements in Russia have been reduced. On the other hand side, we have conducted in the quarter four, some new securitizations and guarantees. The second big part, if you try to explain the EUR 10.8 billion drop in RWAs, comes, of course, from the FX, which is summing up to EUR 4.4 billion. op risk. I will talk about this in a page. We have switched back to the Standardized Approach. Market risk RWAs also have been reduced because we have reduced our USD hedging. Let me move on to one of our big blocks, what we also have allocated in our 2022 numbers. This is about Poland. As you can see on the right-hand side, we have now increased our stock of provisions for litigation to EUR 803 million. We have added another EUR 262 million for new provisions for litigation in quarter four. What is important for me is, as I said beforehand, we hand back our Advanced Measurement Approach on the op risk and therefore being capable to report reduced volatility when it comes to op risk RWAs. I anyway was talking about the NPL, the coverage ratio on my introduction, and so I would stop here my presentation, and we are eager to take your questions. Thank you. Thank you, gentlemen. 'Ladies and gentlemen, we may now start the Q&A session. If you wish to ask a question today, you will need to press star one on your telephone keypad. Please ensure that the mute function on your telephone is turned off, or we will not receive your signal. Once again, if you wish to ask a question, you will need to press star one. If for any reason you need to remove yourself from the queue, you can do so by pressing star two. We will pause for a moment in order to allow a queue to assemble. Our first question comes from Gabor Kemeny with Autonomous Research. Hi. Thank you for the presentation. I have a few questions, firstly on NII, particularly your guidance, your 2023 guidance excluding Russia and Belarus. I think it implies a pretty significant drop from the Q4 level, from the Q4 annualized level, around 15%-20%. Would you be able to comment on the outlook here, why you are so cautious or downbeat on NII going into 2023? A related question to that, if you could elaborate on the Czech NII dynamics, please. Because it looks like the trend you have been flagging here, increasing share of savings accounts, term deposits, probably sounds like more like a trend rather than a one-off. What are your thoughts about the Czech NII into 2023? My final question is going to be on Russia, and the impact of the sanctions, not so much against Russia, but I'm asking this on the back of the sanctions, the recent sanctions which directly impacted Raiffeisen. It would be useful to hear your thoughts about Raiffeisen's ability to keep the Russian business in light of the likelihood of potential further sanctions. Thank you. Thank you, Gabor, for your questions. I think in a nutshell, as I tried to explain, we in some countries, we already assume that the peak of the rate cycle is now, and in the second half of the year, we see a declining rate. This will have some impact on the NII. The second is that we tried to explain that in some countries, the adjustments, the reallocation of funds on current accounts to term deposits and savings accounts is still ongoing. This together explains why we are not so enthusiastic anymore of a further increase in NII. To your question on the Czech development and on this reallocation to the trading result, yeah, in the FX derivatives business, well, I understand there is no one practice in the market. It can be allocated to the NII, so the interest component can be allocated to NII or to the trading risk, trading line. We have chosen the second one, so there was a reallocation to that. As I said in the speech, so it's the net impact is around EUR 8 million, which comes from this shift to other deposit from current account to the deposits. So the basic assumption to support you is that at least for now, an NII income of around EUR 50 million per month in the Czech Republic. I hope this covers that. To your final, to your third question, the Russian sanctions on that. Let's look at it from two perspectives. The one is the financial impact. I think here it's very, very simple. We have a leasing business in Russia, which is outstanding at year-end, EUR 360 million around. A bigger part of that is vehicle leasing. Nevertheless, we assume that our customers are not using these vehicles in the territory of Ukraine. Therefore, I think the direct risk of repossessing or confiscation of these assets, I would assume is very small. I mean, the in the mid to long term additional consequences, these sanctions mean, 'cause, of course, for the first time, an RBI entity is sanctioned and one has to observe and analyze what it could mean. Currently, I can only say we watch out, we will monitor, we will analyze. As of now, I could not add anything or give you any indication what this would mean. I don't expect that this would cause sanctions by Western governments, entities whatsoever. Okay, understood. Thank you. Next question is by Mehmet Sevim with JPMorgan. Thanks very much for the presentation. Maybe if I may follow on Gabor's question on the sanctions risk, not necessarily on this one sanction that we saw, yesterday, the day before. It feels like it's becoming sort of a. There's a momentum that we're seeing several risks and headlines coming, related to your operations in Russia and some of the liabilities that you have there, and that you have to follow the rules in Russia, et cetera. Can I ask, is this becoming sort of a liability now? Given the options are quite limited, seemingly, is the urgency of finding a solution increasing in your eyes as we enter 2023? I know it may be a difficult question to answer, but I would appreciate any color that you can give us here. Maybe my second question is on the dividends. When I look at the capital ratios, now you're at 14% excluding Russia, 16% including it. You recently increased your management target. Seems like you're above all these requirements. What kind of developments would you expect to see from here to make that decision, or at least propose it to EGM at some point later? Is it simply just to wait and see how the Russia situation pans out later? Maybe finally, on the Polish provisions, you reached quite a good coverage level now with the top up that you've done in the Q4. How should we think about provisioning from here in Poland in 2023? Thank you. Thank you for the questions. Indeed, I can only give a color based on what we observe and expect. Indeed, what we see is some changes. I think the Ukrainians and also the authorities had at the beginning of the war been very vocal that Western banks should leave Russia. What we saw recently is that it seems that some of these, they pick up again for whatever reason. I think it's political warrants. As I said before, it's not the financial impact as of now. I think the concerns earlier had always been what, if you just talk about the Ukrainian part of this overall development, of course, the question is, will there be at some point in time also an impact on the Ukrainian entities or Raiffeisen Ukraine? We have to see. I think it's well understood, and we tried to share with you that the bank is. Also we know that there is a huge sector of state-owned bank in Ukraine. I still believe that foreign banks are important for the development of the country. Of course, we hope that this is considered, and I shared with you the positive contributions that the bank delivered to the country. I hope this is considered when talking about whatever sanctions they might have in mind. Of course, it's a change in the sense that now an entity was sanctioned and not only threatened to be sanctioned. I think in the other part, I think there are spillovers. So there is also here up and downs, but there we carefully monitor the, let's say, the social media exchanges of views on our activities in Russia. Of course, some events make it, bring it to a broader attention. We have had this when the moratorias for conscripted soldiers had been discussed in the public. I mean, that's a very small amount in the portfolio. So also in absolute terms, it's very little. Of course, we understand that within Ukraine, this is also a big emotional topic. From the Western parts, I think here the governments have a clear view that they want define in which scope and in which frequency they add sanctions. I think this is a clear political instrument. Here we have a, I think a very good compliance framework and we adhere to. As Hannes said also, we are proactively trying to understand what consequences could be. You see from the numbers that we to a large extent avoided that. We have this, of course, this emotional political part and what Western governments need and want. I can only assure you that we are working on the assessment of the options, what we have. Leaving Russia is one of the options. I'm sure you have carefully monitored the recent publications, what we call the protocol, which states the requirements for a sale of a bank and also the what for potential buyers might be of interest or is also potential dividends. I mean, the good thing is it's very clear now. The not so good thing is that of course the range is still wide, so the minimum discount what you have is 50%, but it can be substantially higher as well. Still you need, this is just a frame for a decision, but you also need an improvement. I can assure you we are working with quite a lot of manpower and also external advice on that, but we permanently have to adjust. When it comes to the dividend, and you also made the link to Russia. Yeah, I think it's important to see the developments and as Hannes and I shared with you, we want to keep this high level of CET1 ratio and the good other ratios. I think there might be an option of leaving Russia, which would require, for a short period of time, more capital. What I mean is, between the period of IFRS deconsolidation, when we would occur a loss, and the final regulatory deconsolidation of the RWA. There, there might be a period where the impact might be even bigger than deconsolidation with zero rates, so that at that point in the zero amounts. At that point, one might be below this 14%. This would slightly help as well. To the dividends, this simply means that there is a high probability or that you shouldn't expect that we have the annual shareholder meeting end of March. You should not expect that we would propose it for that, well, depending on some developments, but rather that we would have an extraordinary shareholder meeting in the course of the year. Nevertheless, we wanted to state with that we want at the right point in time to distribute the dividends to the shareholders. D'accord? Yes, I can take the question on the Swiss franc. You raised amendment the 2023 guidance. We would think about that most probably we would need maybe another up to EUR 200 million for the year to come. I may anyway assume that you're closely following all the different legal steps. Is it when there is an ECJ ruling to be expected in an end. This is what we have currently considered in our numbers, that EUR 200 million are being added to the litigation provisions. Thanks for the question. All very clear. Thanks so much. Next question is by Máté Nemes with UBS. Yes, good afternoon, thank you for your presentation. I have a couple of questions, please. The first one is still on NII. I'm just wondering if you could confirm that you're indeed using a 4% ECB rate forecast for your group NII outlook for 2023. I think that's what you show on your macro forecast slide. That's the first one. Second question is Hungarian NII. I think in Q4, you recorded a very strong 22% growth. I saw that there has been healthy growth also on the loan side or the asset side, about 7%. I'm just wondering, well, what's been driving this step change in NII? Is there any one-off here? The last question is on your cost of risk forecast. I think, Hannes, you mentioned 50 basis point cost of risk outlook for GCNM, Central Europe and Southeastern Europe. Do I understand correctly that that guidance is driven mainly by stage three and does not assume any further overlays to be added on stage one and stage two? Thank you. Well, let me start with the, with the cost of risk question. Yes, you understood me right. I think we really have now heavily increased our overlay bookings just to reference it. This is more than a full year of expected loss, the EUR 700 million. I think this concept served us well in 2020 and also in 2022. Well, of course if some special situations are coming up, we still might be tempted to have another EUR 1 million here or there allocated to the overlay bookings. The 440, if they would materialize, and I'm really cautious here on this 440, we would believe it's either out of migration, but mainly out of the Stage 3. Do not forget the loan book, what I'm talking here about is a quite substantial one. We're talking about a loan portfolio of round about EUR 90 billion. Out of this EUR 90 billion, we're saying, well, we could see up to EUR 440 million. Those like you, Matt, know me well, that I'm usually also including one or two sudden defaults when I do the risk cost guidance anyway. This is. Yes, you're right, it's Stage 3. Please bear in mind on this EUR 440, which I have shared that one or two sudden defaults are also included. Johann? Yeah. Thank you, Hannes. As far as to your NII. If I start with the Hungarian one, which is very precise, as you were asking for Q4, I think the special phenomenon in Hungary is what you see is that the central bank rates are high, but the allocation from the current account to other deposits is low. It's not that huge what you might expect. As the margin is always much better on this current accounts, this was supportive very much. Of course, if you keep then this liquidity in the central bank at the deposit rate there, then this supports your margin very well. I think what maybe if you compare to other banks, what might also strike you is when talking about the NII that, yeah, there is a cap on some loan rates, which probably in other banks is because of the structure, what they offered compared to what we offered. So fixed versus variable rates, loans, indexed loans, this is also different. In a nutshell, this was also supportive as the Let's say, the negative part of these government measures was relatively less painful for us than for other banks because of the structure of the loan book. When talking about your question to the euro, to the ECB rate, where we. Yes, we at this point in time, we assume that it will move in the course of this year to 4%. This still comes in steps if you look where we are. It takes some time to feed through. You shouldn't expect too much positive impact on what we have in the head office. This is to a large extent here. The, within RBI, it's mainly large corporate customers where you always are around the market rate. The margin is razor sharp, and you gain very little from it. We have in some network banks a share of euro deposits, and here we could get something. Maybe, I guess could be that, it might have a positive impact of EUR 40 million-EUR 60 million in the course of 2023. Very helpful. Thank you very much. Next question comes from Alan Webborn with Société Générale. Hi. Thanks for the call and your answers so far. Just a couple of questions, if I may. Firstly, Hannes talked about potentially sort of EUR 200 million plus more provisions on Poland. Now they're taken in other income, aren't they? Are they in your forecast for provisions or are they outside of that? Because you did seem to say that they were taken into account. Could you clarify what you mean by no further legal provisions for Poland in relation to what you said about provisioning? That was the first one. Secondly, on Russia, I mean, there was a pretty 30% odd depreciation in Q4. Yet you, when we see that in what happened to the loan book, and what happened to obviously Risk-Weighted Assets as well, yet the reduction in NII was relatively limited, and your fee income again was record. Could you just give us a little bit more detail as to what was going on? What were the levers, if you like, in the Russian business in Q4? Presumably that is not something that's sustainable. I mean, I understand that we've had a number of quarters of very strong numbers. You're forecasting a recession in Russia, and apparently there's not that much hedging. Could you put a little bit of color on what's actually been going on there? That was another question. On Ukraine, in terms of provisioning, you're talking about sort of again a few hundred million EUR more provisions put into the pot for 2023, and yet you took almost no provisions in Q4 against quite a high operating income. I wonder what's going on there? why, if you need to take so many more provisions for Ukraine next year, didn't you use Q4 as an opportunity to bump them up a little bit? That would also be interesting. Does the dividend that you're proposing need to be agreed with the regulator? Has it been agreed in principle, or does that happen after properly propose it? That would be also interesting. Finally, do you think that the margin, the net interest margin of the group excluding Russia and Belarus, will actually be up in 2023? Thank you. I'm not the IFRS guy, but the provisions for Poland is in the other, not in the risk provision of Hannes, but in the other. When talking about the ruble depreciation, and you compare it to the NII of 2022. If I remember correctly, we had this steep drop in the FX rate only in December. In the income you have the reporting on the I'm looking to my colleagues on the average of the month, and the compensation for this you have then in the OCI. The impact on the OCI was huge and partly, of course, this is the income. Looking forward, of course, we start from a different level, and therefore NII and also fee income cannot compare to what we had so far. When talking about the, not so much the FX impact, but the development on its own, the fee income. You see some seasonality, some also driven by the various developments around the war and the impact on Russian population. Here, this is one driver of fee income as well. But of course, it will have an impact also by the from the FX. One should not be as, you should not consider the very good development of Russia, that this will continue from any perspective. Neither from the volume, from the amounts, what we have, nor from the very positive FX impact. This is a different year, what we have ahead of us. I mean, still the underlying business as of today is looks good still, but at a different rate level. Well, Alan, you gave us a lot of question and also about Ukraine. What is our way of thinking when looking at the Q4? Just in Q4, we had in total EUR 73 million of Stage 3. If you look the full year, how we have dealt with the war situation in the country, we took the impairment losses early on. As usual, this is our approach, but it is just to reconfirm that we took the impairment, the pain and losses early on. As I said, when talking about the risk cost guidance in Ukraine, and when talking about this EUR 200 million, which I flagged, I clearly say, well, this is the most challenging part on the assessment. Bear in mind that we have EUR 50 million of Stage 2 overlay provisions also allocated for a potential blackout scenario. You see the things what we are discussing here, blackout, non-blackout, I don't know, but the EUR 50 million for the blackout would already be here. Looking at the total portfolio of still EUR 1.6 billion, as I said we were supporting also the planting season in the agric business. We still have EUR 1.6 billion of performing loan portfolio available. Therefore, we thought it's prudent and conservative to have another guidance of EUR 200 million on risk costs. Believe me, every euro we have to spend less in risk costs is a good year for me as well. Johann. Thank you, Hannes. To your question of the dividend, of course, when we talk about the dividend, we go there. As you see, we left it open when it will happen and therefore it then when we come to a decision, it would need, again, a discussion also or an information of the regulator. Okay. That's great. Just one or two small follow-up. On the overlays in Russia presumably are staying in Russia, so they're not available to do anything else with. That was one. Also on, I noticed in Russia that you appear to be sort of growing the business. There seem to be about 5% more staff there in Q4 against Q3. I mean, I guess it's being run independently, but I just wondered why you'd be doing that in the current environment. Thank you. Well, I'll take the first question when it comes to the Russian overlays. Yes, these overlays are being created, booked, and built in Russia, and they will and shall stay in Russia if they are needed. At the same time, I think we have been extremely transparent also showing how much of overlays, Alan, have been booked on the remaining RBI group. Please bear in mind that besides the overlays, we also have heavily increased our stage two bookings when it comes to the macroeconomic adjustments. This was a main driver in the Q4. Of course this macroeconomic bookings are available for the entire RBI group. Yes, you're right, the overlays of the above EUR 300 has been booked and created in Russia and therefore will be available for Russia in the case of need. Johann. To your question of if the increase, this is not an increase, business growth, it's related to IT. What you see is that in addition to the sanctions, there are many IT companies finishing their services to Russian banks. Our bank has to redevelop or develop new systems quite quickly. This is why we add additional IT people to be fast enough and to be resilient and independent from Western suppliers. Super. Thank you. We'll take our next question from Anna-Uliana Golub with Goldman Sachs. Information in the comments. One question on the insurance, please. Just regarding your plans for benchmark Tier 2, is that purely based on the anticipated RWA inflation that you see in 2023? Just given that you did a benchmark deal in the Q4 of 2022 and you have limited amortization due to few bullet structures in your Tier 2 curves. I was just wondering. Thank you. Yeah. We had a pre-funding for in October, which for one which is running out now. I think this should serve us well. I hope I got your question right, but this would answer to the question I understood. Thank you. Sorry, in October, then you indicate another deal for this year, if I understood correctly from the presentation. It might be that in the later of the year we will consider one, but not quickly. Understood. Thank you very much. We'll go next to Andrea Vercellone with BNP Exane. Good afternoon. Two questions and one clarification. The first question is on the 7%, return on tangible equity target, for, or guidance, for 2023. I understood that that includes EUR 200 million of extra provisions, for Swiss franc mortgages in Poland. If it is or not, can you confirm? Yes. Andrea. Confirmed. Okay. At the denominator, what have you used in terms of equity? The current equity of the bank, or you have taken out Russia and Belarus, given the scenario is without Russia and Belarus? Can you give us some color on volume growth? The 3% to 5% in 2023, which countries would do better, or which geographies would do better? The clarification is just on the Czech Republic NII, the EUR 30 million. Does that refer to the whole of 2022 or just the quarter? Is that the new base or the new base is higher because you have taken down EUR 22 million, which was for prior quarters? Thank you. Yeah, sorry, I interrupted you. The 7% ROE target, the EUR 200 million, as Hannes explained, are included in that. The denominator is without Russia and Belarus. It's, of course, it's always the average of the capital, what you have. Then the volume- Sorry, being the average, you have taken it out, at both ends, right? Yes. On both ends. You're taking. Okay, at both ends. Okay. Yes. In Czechia, I understand that this creates a confusion, this reallocation. That's why we say our base assumption is we start from January with a monthly NII in the Czech Republic by EUR 50 million per month. I hope this clarifies. The loan development, probably some further shrinking in Eastern Europe, of course, not at the speed what we had so far. Of course, now we are coming more to the longer maturities. We have in the bigger segment, Central Europe, maybe 3% loan growth, something like this, 3%-4%. In the Southeast Europe, slightly more so, a higher single digit. Thank you. Next question is by Riccardo Rovere with Mediobanca. Good afternoon, everybody. Couple of two, three questions, if I may. The first one is on slide 10, where you mention 80 basis points of regulatory and inorganic effect on capital. I suppose this is in 2023. Would you mind elaborating a little bit of what is this refers to? The other question I have is with regard to the overlays. Your guidance is with that before the use of overlays in 2023. How should we think about the use overlay? Is it possible to use it in 2023, or is something given the outlook, is something that is eventually postponed for sure to 2024? Just to have an idea when you talk with your auditors, what kind of discussions you have on this topic. The other question I have is on fee income. Looking at what you reported in Q4, it is a bit difficult to reconcile fee income at around EUR 2.5 billion next year. Do you expect all the business related to a fact to basically evaporate? If that is the case, why should it be, given that this that stream of revenues has been there now for 3 quarters in a row and the situation is not exactly changing, unfortunately. The other question I have is on the general, on the leverage, and the risk credit asset reduction. Is that something that we can consider as somehow completed, or how should we think about you current, say, reducing the business here and there, especially Russia, let's say? To your question to page number 10 with the other impact. A couple of elements which we have to mention. One is this an impact from the transitional benefits, what we had so far. This is phasing out. Others are that there is a Phase out of the temporary very positive treatment of sovereign. They had a risk weight of 0. This is increased to 20%. This was public debt issues in currency of other member states. Here we took out the maximum what one can assume. There is this EBA repair program where if you have more need for detailed question, which then has an impact on Romania and Slovakia, Hannes might have additional questions. Yeah, some, in the financial institutions rating model, there are also some adjustments. Couple of topics which come from that. Well, Riccardo, talking about the overlays and the use of overlays, I know that you're anywhere, of how add-ons can be released, but just for the big audience, on the one hand side, we could of course immediately release them if the underlying risk, which is currently not being captured in the different models, would not longer exist, and therefore, we anyway would be obliged to release. The other one is if the risk factor which we have flagged is being captured within the model and/or if the client, has migrated into a Stage 3. Maybe one more thought to be added, what we also tried to, the way how we have created some of the, of the, post-model adjustments and overlays that they are self-consuming. I give you an example. I was always talking about our cross-border exposure, and in the due course, whenever we are able to further reduce, we would also release a certain amount of post-model adjustment because we have allocated a certain bulk booking to this cross-border exposure. Whenever we are capable to reduce, we are also able to reduce part of this post-model adjustment. Ricardo, thanks for the question. To the fee income question, Ricardo, I mean, if you look on total group level, we explained several times that this specific currency management by the central bank, of course, will not repeat. This was a strong contributor to the FX income. Even if you take aside this component, then you do remember that there was also in the western part of the world for a period of time, substantial FX business related to Ruble. I think we also had a share in these activities, this is will not come back again. You should also expect on total fee income some assumptions like in the eastern part, we will see further devaluation in the currency. If you compare it to 2022, then this also has, in EUR amounts, a negative impact. Of course, what I should also not forget is that Croatia now is in the Euro area. Here, of course, the FX business, which is still needed for tourism and other activities, is substantially smaller. This on its own might cost us EUR 20 million or so. Thank you. Did I miss something or Ricardo? maybe on the, yeah, maybe on the, sorry. On the leverage and how should we think about the size of the balance sheet of especially the Russian operations? I'm not sure if I got your question right. You see the balance sheet size in Russia, how this might change. I mean, here, this is mainly a question of the deposit inflow and the currency developments, I would say so. Here this is not driven by the loan book, but it comes from these other elements. Here is difficult to say. Some large corporates, they can place their deposits here and there. Then maybe also when it's about foreign currency deposits, then it might be also a pricing issue. These are price sensitive deposits as well, which are the driver for the balance sheet. Thank you. Okay, thanks. Thank you. Next question comes from Hugo Cruz with KBW. Hi. Thank you for the time, Hugo Cruz from KBW here. I have a few questions in no particular order. First of all, you are accruing a dividend, or you will accrue a dividend for 2023. What will be the accrual mechanism that you're assuming? Is there a payout? Is it just ex Russian, Belarus, or on the whole thing? second a question on the Polish. I thought before these results, you didn't have to increase coverage anymore because you had so much capital allocated against the Polish Swiss franc issue. What made you change your mind about it to decide to increase provisions again? you gave the guidance of EUR 200 million. Does that mean that's on the provisions, but should we expect any change to the RWAs or allocated against Poland? Would that change in 2023? Final comment, question. We have the EBA stress test coming up. I don't know if you have any comments about the assumptions, that the EBA is using or what kind of impact you expect that for IFRS 5. That's it. Thank you. Indeed, there is also a dividend accrued for 2023. It's around maybe a little bit more than what we, what we have this year, for this year, so for 2022. That's the maximum I can say as of today. I think from this figure, it easily can be assumed that one does not expect an input, if I may say so, a contribution from Russia or Belarus at this point in time. Well, thank you for your question, Hugo, on the Polish zloty. By the change of the approach from the IRB to the Standardized Approach. I think this is pretty straightforward, and we have shared with you how dynamic and how strong the dynamic of the op risk RWA has been because of each and every legal provision bookings we had to add more op risk related RWAs. The IRB was not capable to serve this and to cover this topic appropriately. The second one, the way I understood your question on the increase of provisions, but at the same time having a lower capital RWA coverage. Please bear in mind a couple of thoughts this on this one. Whenever we add more of the legal provisions, this of course is also increasing our coverage when it comes to the legal claim of our counterpart. The locally deployed risk weight of this 150% when it comes to Swiss franc financing, of course, keeps on existing. The op risk RWAs, what we have seen out of the IRB have been many, most of the time or mainly being motivated by this very, very strong dynamic we have seen out of these legal provisions. Because now we have moved back to the Standardized Approach, the allocation of op risk RWA towards the specific segment goes across along the cross income allocation. This is the main reason why you now would see a lower RWA coverage when talking about Poland. The second or third question you raised is the EBA stress test and comments on the assumptions. What we do have on this one, yes, we had next to all the many discussions we had in the last couple of days. We deeply looked at the scenarios provided. I think within our guidance and way of thinking and talking to you, I dare to claim that on the FX scenarios and on the energy prices, we would say that they are milder compared to what we have considered when talking about our integrated stress test and when sharing our way of thinking with you. At the same time, when looking at the GDP and unemployment rate, this looks a little bit more pronounced than what we had in top of our mind. As you're well aware of that, last time, what is the motivation or the narrative, how it's being argued is, well, let's assume the virus would be back, and then we would see 2 years of slump in GDP, and only the third year would maybe then see a certain recovery. Having said this is important, Hugo. At the same time we have this EUR 729 million of risk overlays. First thing, not yet having conducted yet the calculation, but I would at least assume that the impact is comparable or higher than with our last stress, with our last EBA stress test exercise. This would be out of my first talk with my colleagues when looking at the macroeconomic assumptions. For me, it was interesting to see how certain countries have been considered when it comes to valuation drops in terms of real estate. This is interesting how the country spread is looking like. This would be my first assessment and not to spoil the conference call. I would stop here. Thank you, Hugo, for your questions. Thank you. We'll go next to Robert Brzoza with PKO BP Securities. Hello, can you hear me? Hello? Yes. Good. Great. Thank you for taking up my question. I know, I mean, we're quite, getting quite late, so quickly. Looking at the changes of the equity and regulatory capital quarter-to-quarter, has there been anything else except for the FX impact behind? Second, there has been already a couple of questions on the fee line development going forward, like lesser demand for hedging, et cetera. Looking at Russia, specifically, are you aware perhaps of any coming legislation that could affect profitability of the sector in general? I'm referring here to the, for example, budgetary situation, funding for war in Ukraine, which might require some special sort of war economy, with negative impacts spilling over, for example, onto the banking sector. To your knowledge, have any such potential plans or drafts been already taken or thought about on the ground there? Thank you. Let's start with the second one, where there's a short answer, which is, no, I'm not aware of any developments till now. I'm not a real insider in Russia, but given the history what they have, I would not expect that they go for such things. The first question was the FX impact on the In Q4, I think the answer should be on page 9, I guess. It's the 78 basis points, which was negative. The last of these elements in the waterfall. Page 9, 78 basis points. Thank you. Thank you very much. Next question is by Tobias Lukesch with Kepler Cheuvreux. Yes, thanks for taking my questions as well. I would like to touch back on the NII. With regards to the deposit beta, could you maybe share with us what you're currently seeing in the individual countries and also what your forecast is, your expectation for deposit beta? We know it's all often kind of 20%-30% with many European banks. Secondly, again, touching on the question, on the first question actually from Gabor, with regards to the 15%-20% decline of NII, if we kind of extrapolate the Q4 result. Could you maybe give an indication, I mean, 'cause you explained well with the Czech Republic and so on, but, how much of that potential EUR 600 million-EUR 800 million decline, which, could be transferred actually to the trading line? Is it EUR 100 million-EUR 200 million you see basically on the other line? Yeah, I think that's it. Thank you. Beta is a difficult one, no? I spent some time with my people at the end of the day, they told me, "Please tell me what is the beta." I was somehow struggling. We rather that the intention is to give you, and we tried here and there to give you some sensitivity on the driven by the key rate developments. Yeah, as I said before, there may be Czechia flats of flat development, maybe slightly negative with the, so the minus -EUR 8 million, what you have seen in Q4 is some indicator what might go on when you have this structural shift in the liabilities. In the NII if the check is irritating you, that's why we try to say simply take the EUR 50 million as a starting point. The EUR 38 million, this was only a check issue, and the EUR 3 million built up in the first 3 quarters, and we changed it in the 4th quarter, so it's not a quarterly jump or whatsoever. It's a reallocation of that. Yeah, I would need to figure out a little bit more on your annualized Q4. There are some factors in. Maybe the team could come back after the call and give you a break up on what we have, if this is okay for you to Piers. This would be great. Thank you very much. Next question is by Elena Dan with Morgan Stanley. Hi there. Thanks for taking my question. Sorry if I've missed this already, I haven't heard any plans for AT1 issuance in your presentation. I I realize your AT1 bucket is filled, do you have plans to call the AT1 in June? Would the regulator let you call without pre-financing? Yeah, indeed, Ellie. We might come. I'm sorry. I was a little bit distracted by your question, if it was already answered. The question before was the Tier 2, where I said we will come in late of the year. You were talking about the AT1. Sorry for creating this confusion. I think what we shall say here is that the rate has been adjusted in the coupon has been adjusted. What we can say is, we cannot comment on upcoming call decisions at this point in time, but you should be aware that we are committed to replacing the non-call bond with a new bond subject to these economics and spreads of the refinancing. Here, this was my where I said, yeah, we have seen some coupon adjustments which you anyhow aware. Thank you for your question. Thanks. Thank you all for your questions. If you have any more, please remember to press star one on your telephone keypad to place your question. The mute function on your telephone needs to be turned off so we can get your signal. As there are no further questions at this time, we will now conclude today's conference call. Thank you for your participation.