Ladies and gentlemen thank you for standing by and welcome to the Millennium BCP one quarter 2021 earnings conference call. At this time, all participants here in listen only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one on your telephone. I must advise you that this conference is being recorded today, and I will now like to hand the conference over to our speaker today, Miguel Maya. Please go ahead. Good afternoon. This is Miguel Maya speaking. Welcome to BCP's conference call. This quarter earnings presentation includes our revised strategic plan, which contains the main priorities and targets for the bank in the upcoming cycle until 2024. I will first go through the highlights of the activity on the first semester being complemented by Miguel de Bragança, and then I will get back to conclude with the presentation of the strategic plan guidelines. Starting with the first semester highlights, we achieved a net profit above, EUR 12 million, which was contained by the significant provisions of EUR 240 million in Poland related with the FX loans. The net income was also influenced by the mandatory contributions specific to the Portuguese banks that unlevel our playing field, which for BCP surpassed EUR 56 million in the second quarter. These issues are very relevant but didn't affect our franchise. We are consistently generating higher core incomes levels, which grew 2.4%, supported by increase of 0.7% in the NIM and 6.4% in commissions. The net core income reached almost EUR 530 million, having decreased 3% due to one-off costs, mainly EUR 87 million in Portugal associated with the restructuring program. With this program, we expect to reduce about 800 employees in Portugal, excluding non-usual costs, the net core income would have grown 9% year-on-year. Against a backdrop that remains adversely marked by the pandemic evolution and by the FX litigation risks in Poland, our business model proves to be resilient, having achieved a pre-provision profit above EUR 530 million, equivalent to a year-on-year increase of 5.1%. We have a capital position above regulatory requirements with total capital of 14.9% and Common Equity Tier 1 of 11.6%. Our liquidity levels remain high, well above regulatory requirements, having EUR 26 billion in assets eligible for ECB funding. We maintained a strong commercial activity this semester, reflected on the increase of EUR 2.9 billion in performing loans, of which EUR 1.9 billion in Portugal, representing a growth of 5.4% and reflecting our strong support to the economy. Over last year, the increase of customer funds was persistent, rising by more than EUR 7 billion, a growth of nearly 9%, with off-balance sheets assets increasing 14%, which confirms our capabilities to assist customers through their investment decisions. In an adverse context of economic turmoil, we managed to keep the NPEs trajectory of reduction. In Portugal, we reduced more than EUR 800 million NPEs over the last year, of which almost EUR 207 million was done this semester. The improvement in asset quality was combined with our continuing normalization part of the cost of risk, which decreased to 64 basis points in Portugal, influenced this quarter by one well-succeeded single name transaction, which if excluded, the cost of risk in Portugal would have been 81 basis points. At the group level, the cost of risk decreased to 55 basis points. Alongside the reduction in the cost of risk, there was an increase of 9 percentage points in the coverage levels of NPEs by impairments, which have achieved 67% with the total coverage increasing to 180. Our app stands out from the competition and BCP leads on digital satisfaction, which translates in the growth of the 25% in the number of mobile clients. The mobile app completeness, the close relationship that we nurture with the customers through a wide network of physical branches that assure proximity and high-quality services supported on human interactions. Group-wise, the share of mobile customer reached 53%. Customers are increasingly choosing the mobile to interact with the bank, which they use in 90% of their digital interactions with us. The high adoption levels of the app by customers is reflected on the strong year-on-year growth on mobile transactions, 43% increase on payments, 64% increase on sales, and 68% increase on transfers. Our investment in the digital transformation in Portugal led to a mobile platform that enables improved user experiences with fully redesigned end-to-end journeys. The overall quality of our app clearly put BCP in the leading position chosen by the customers, as shown by top rank in the most recognized market resources. Once again, we confirm that the bank has a resilient business model and it's capable to adapt to a challenging environment. The strong focus we put on efficiency revealed in the way we have been managing operational costs over the last years, push us not to delay the staff reduction program and start it even before the presentation of the strategic plan. I also want to highlight the sale of Millennium Banque Privée in Switzerland, which we see as a timely transaction, considering the offer received by UBP and also the current competitive context of the banking union and the group's priorities concerning efficiency and capital allocation. Miguel de Bragança the floor is yours. Thank you very much Maya. I'm sorry. We are having a small problem. Small problem. I am sorry. It is not correct. Okay, thank you very much ladies and gentlemen. As you may see in page 12, our income statement shows an interesting trend in what are the core evolutions. I would like here to highlight the last line in the income statement, where our net income, excluding the provisions for legal risk on mortgage in Poland, which is clearly a legacy issue here. A legacy issue has increased around 25% vis-à-vis last year. This was done to a large extent with the recurrent evolution of the income and with the cutting of recurring costs. As you may see on the top line, the net interest income grows somewhat. It shows an important evolution in Portugal compared with last year. In Poland, you see already that in the last quarter, you are already seeing some positive evolution vis-à-vis the quarter before. Commission, the very healthy growth of 6.4% both in Portugal and international operations, which makes that the core income grows 2.4%. In terms of costs, the operating costs were impacted by the EUR 87 million provision for restructuring. As you may see, the operating costs, if you adjust for this evolution, have decreased around EUR 20 million. The core operating profits had a positive evolution if you adjust for the restructuring charge. The other income had a positive evolution also. There were reasonable trading gains in the quarter related to debt securities in general, showing a positive evolution vis-à-vis last year of EUR 43 million, so that the pre-provision profit even in spite of the restructuring charge and in spite of the very heavy regulatory costs, increases 5% vis-à-vis the year before. Impairment and other provisions, strongly impacted by the CHF provision in Poland, as we will speak in a couple of minutes. It was appropriately disclosed to the market, this is the main impact in terms of the evolution of our P&L. Page 13. We see, as I was commenting, a very positive evolution of the NII in Portugal. This positive evolution of the NII in Portugal has benefited from the prolonged reduction in the decrease in the funding costs, both the costs of deposits and the costs of wholesale funding. On the asset side, the decrease in the NPEs has had a negative effect, in spite of this, we grew around EUR 40 million. In the international operations, as you know, there was a very sharp drop in the reference rate in Poland in the beginning of the year. In the meantime, it has stabilized. This stabilization has not been enough to allow for a growth when you compare with last year. When you compare with the quarter before, both in Poland and in Mozambique, you already see a positive evolution. Fees and commissions growing in a very healthy way. I would like here to highlight, both in Portugal and in the international operations, the fees of market-related fees that are basically asset management fees that show the capability of our business model and of our commercial model to sell off balance sheet products like investments and unit trusts. Other income. You see in page 15, the net trading income evolving well vis-a-vis last year, growing from EUR 32 million to around EUR 80 million, mainly with the benefit of the Portuguese operations. It was a quite positive quarter and half year, by the way. You see also that the mandatory contributions have grown from EUR 122 million- EUR 129 million. A part of this was some anticipation of an additional fee or an additional contribution charge on the banking sector that last year was charged in Q3 and this year was charged in Q2. This explains around EUR 6 million of this EUR 7 million-EUR 8 million difference. Operating costs. A positive evolution, mainly in Poland. As you see, Poland has reduced around 1,000 people. The recurrent costs in Poland have reduced around 9%, but in Portugal also you are starting to see a sharper drop in the recurring operating costs with a drop of 1%. Of course, with the communication of the restructuring plan, of which we will give a little bit more insight further down the road, we will have a stronger impact in this area. The restructuring costs, as I was commenting, are due to the need to pursue efficiency linked to the changing customer habits, the leverage on the simplification and automation that we have obtained in the last years, and of course, the competitive pressure. Our objective here is to invest around EUR 90 million, the one that we have already provided for, to allow for like-for-like savings of around EUR 35 million per annum. Of this, around half will be cut in the branch network, physical branch network, and around other half will be cut in central areas, mainly operational areas. The areas of the future and the areas of cost of risk and lines of defense are not being particularly affected by these cuts because we clearly think that these are areas very important for the future of the bank. In terms of cost of risk, it was a good quarter. It was affected by a recovery and a one-off, as you see here. The stated cost of risk decreased from 85 basis points to 55 basis points. Adjusted by one-offs, we are already at 70 basis points, which is, I would say, more normal cost of risk for our business model. In terms of the CHF legal risk, as you know, we have again provided for an important amount linked to our methodology that is basically a product of the inflow of cases in courts and the probability of loss associated to these inflows that both have degraded somewhat in the first months of the year. In Portugal, as you see, the stated cost of risk is decreased from 82 basis points- 64 basis points, but adjusted for this one-off, it is quite stable at 81 basis points, so it is around 80 basis points. Right now, our cost of risk, if you adjust for some volatility is around 80 basis points in Portugal. International operations, there was a very positive evolution, mainly in Poland, because last year the macro scenarios that we had designed for Poland for the methodology of the provisions proved to be somewhat conservative, so that this year, effectively, we are being less affected than what is the normal across the cycle cost of risk because of additional provisions that we did the year before. The reduction of the NPEs continues at a good trend, mainly considering that we are in the midst of the crisis. What we see right now is that the NPL ratio is already at 2.5%. The total NPE ratio, including off-balance sheet exposures, is at 3.5%. If you include only loans, it is already very close to 5%, which is, as you know, a benchmark in the industry. Since the beginning of the year, so already deep in the crisis, we have been able to decrease NPEs by EUR 270 million. In terms of business activity in page 21. One sees a very healthy evolution of our franchise with the customer funds in Portugal growing around 10% and a strong contribution from the off-balance sheet products, and in the international markets growing around 6.5%, also with a strong contribution of the off-balance sheet products that grew almost one-third. Loans to customers. The NPEs, as you know, as I've just commented, reduced around EUR 900 million year-on-year, but the performing credit grew around EUR 2.9 billion. It's a very healthy evolution in this area. As you may see, strong contribution both from the mortgage market and from the loans to companies. In the international operations, you also may see more or less the same healthy growth that you see in the Portuguese market in terms of performing exposures. Capital and liquidity. Our total capital ratio decreased from 15.6% to around 14.9%. If we adjust for the sale of the operation in Switzerland, it's 15.1%. It is basically an operation that has already been agreed, only subject to approvals. In terms of the CET1 ratio, the ratio decreased to 11.6%, adjusted for the sale of Banco Privée, it's 11.8%. This was influenced, of course, by the result in the quarter, which was affected by particular one-offs like the regulatory fees that are charged in Q2 and the restructuring provisions and the Swiss franc provisions. It's especially negative quarter, I would say because of all these issues. It's also somewhat affected by the growth of the RWA, both of the healthy growth in credit and the evolution of the FX in Poland and in Mozambique that somewhat inflated the exposures with the consequent impact in RWA. A third impact that was a smaller impact was also due to some increase in the interest rate. The available for sale reserves and cash flow hedge reserves have had some impact on capital. Of course, the other side of this is that this somewhat increase in the long-term interest rate has increased substantially the buffer on our pension fund so that our pension fund today has an excess of capital, if you want, that basically makes it able to cope with shocks of up to around 60 basis points before having any type of impact in capital. Right now, we have a very resilient pension fund with a buffer in terms of capital, exactly because the responsibilities decreased substantially because of this increase of interest rate. Leverage ratio and RWA density as we have had in the quarters before. I would say healthy evolution. The pension fund, as I was just commenting, and as you may see here in June 2021, you see more than or around EUR 300 million of excess, which is around equivalent to around 60 basis points before an adverse impact having an impact on capital. The normal asset allocation that you would expect in our pension fund with around 40% equities, 40% bonds, and the remaining in terms of real estate and other types of assets. Liquidity ratios, very comfortable. Actually, too comfortable because this has an impact on our P&L. We are trying to develop more off-balance sheet activity and to give more healthy credit. Effectively, from a liquidity standpoint, we are in a very balanced position. Now I will not go into detail in terms of the Portuguese and international operations. Of course, we are at your disposal for any doubts in the Q&A session and even afterwards. Given that we are presenting also our plan, I will pass the floor now to our CEO, Miguel Maya that will describe in deeper detail our strategic plan to 2024. Thanks Miguel. Now I will make a brief presentation of the main guidelines of our revised strategic plan. With the previous strategic cycle, Millennium began a deep transformation process that laid the foundations to prepare the bank for the future. The progress achieved since 2019 clearly shows the strong commitment and the transformation undertaken by the bank. The initiatives implemented led us to overachieve core strategic targets, both on business growth and balance sheet improvement. The NPA reduction target was achieved six months before the deadline while keeping a controlled cost of risk and having reinforced our competitive edge and innovation capability, driving to the expansion of the mobile customer base beyond 2021 targets. This part was hindered, though, by relevant exogenous factors, namely the impact of the pandemic and the increase of the legal risk associated with the FX mortgage portfolio. As you all know, in recent years, there has been a significant evolution in some of the challenges faced by the banking sector. Let me recall the main ones. The competitive landscape is unleveled and the pressure in a low profitability context constrained by a lower for longer interest rate scenario while new tech and digital attackers are gaining ground competing in a less demanding regulatory framework. Behaviors and expectations of customers have also evolved as they become increasingly digital-driven. The economic turmoil caused by the pandemic led to higher risk levels demanding for additional impairments. On top of these challenges, Portuguese banks must operate within a legal framework which includes significant mandatory contributions and legal restrictions. Moreover, there are still specific risks in Poland that increase the provision requirements related with FX mortgage. Having emerged in the weak position in the aftermath of the financial crisis, we undergone a deep transformational journey from which we stand out and become a bank more profitable and more efficient with a stronger competitive edge in our commercial banking business model. Some indicators clearly show the outcome of a journey in the Portuguese market since 2013. The NIM more than doubled, having increased 90 basis points. From a bottom position in efficiency, we started with a cost-to-core income of 95% to become a market leader with 46%. We saw a relevant part of our assets convert in NPE, almost EUR 13 billion. We confirmed our ability to manage this legacy in a swift and efficient manner, gaining top capabilities along the journey that were crucial for our success in reducing almost EUR 11 billion of NPE. We achieved this while pursuing a controlled trajectory of normalization of the cost of risk, which has decreased from 157 basis points to around 80 basis points. I must underline that our strong capabilities in credit recovery, which I know very well because I was in charge of those areas between 2012 and 2018, give us confidence to swiftly manage the increase of NPEs resulting from the pandemic with a quick recovery pace and no significant losses. The bold operational turnaround we have performed prepared us and converted BCP in a bank fit to embrace the challenges ahead. In 2018, we defined a strategy for the transformation and growth of the bank. Our business model proved to be resilient, consistently regenerating pre-provision profit levels around EUR 1.2 billion, while we managed to deliver a bold reduction of around 46% in NPEs stock. The customer base expanded by 1.1 million clients. The assets under management increased by EUR 3.3 billion and the loans increased almost EUR 7 billion. We have also accelerated the digital transformation of the bank in Portugal with Millennium emerging as the best digital bank, having exceeded the mobile customers target while implementing a deep transformation in our operating model that enabled for steep increases in efficiency. We have a clear aspiration for 2024 towards positioning Millennium as a future-proof relationship bank, achieving robust profitability and a strong balance sheet position, managing the impact of the pandemic, accelerating our competitive differentiation in efficiency and customer engagement, supported by targeted human touch and mobile solutions and business models enabled by our skilled and effective talent base while addressing sustainability challenges, focusing on climate change and risks and opportunities. The Portuguese economy was recently hit by a shock that has impacted severely on both the demand and supply sides. Notwithstanding, the economy shows resilience, for which much contributed the ready response of the authorities, the impressive adaptive capacity of the corporate sector, and the decisive action of the banking system. Banks, by granting widespread moratoria, were instrumental in protecting the cash flow of companies and households. As a result, the unemployment rate has remained under control at relatively low levels, which was crucial to preserve the cohesion of the social fabric of the Portuguese society. This economic and social resilience created the basis for a swift and a sustained recovery based on three main pillars. The Recovery and Resilience Plan will generate a substantial boost to public and private investment, which will not only support economic growth and employment, but also impact a structural improvement driven by the green and digital transitions. The return to normalcy of private consumption as social distancing measures are phased out with the completeness of the vaccination rollout in the context of elevated excess savings by households. The gradual return of the tourism sector as the pandemic fades away. Our revised strategic plan preserves relevant priorities from the previous one and adds new bold elements consistent with the current environment. Considering that a more thorough revision of the strategic for the Polish market is currently hindered by the evolution of the FX file and that no significant changes are currently required to our strategic guidelines for Mozambique, the priorities of the strategic plan will be mainly focused in sizing market opportunities in Portugal, building on the achievements from the previous cycle, namely, the leadership in companies and retail segments, which enable us to act as a catalyst for European Union-funded investment opportunities of companies aligned with the recovery program and to support families in their investment and protection needs. The customer experience, we enable clients through our value propositions that combines a leading mobile platform with a targeted human touch to deliver distinctive service and high level of engagement with the communities we serve. Our capability is to provide high-value propositions to the customers in the management of their investments and the sustainability culture embedded at the core of the bank's operating model, which position us to become the partner of choice of the customers in the ESG transition. For the upcoming cycle, seven priorities will drive our development in Portugal. Serving the financial and protection needs of customers with personalized solutions which combine targeted human touch with a leading mobile platform, aiming to expand relevance and develop high engagement relationships. Being a trusted partner for corporate recovery and transformation, supporting customers' pursuit of opportunities driven by European Union funding to the economy while enabling solutions fit for a more digitized, competitive, and exported-oriented corporate landscape. Capital and risk resilience, reinforcing our balance sheet and ensuring readiness for the post-pandemic world, strengthening both our risk and capital management practices. Best in class in efficiency, realizing cost savings enabled by productivity gains already achieved, including the full exploitation of mobile and automated capabilities, increased efficiency in the branch network, and tech and data-driven process re-engineering and automation. Data and technology edge, focusing efforts on the implementation of our next generation data platform while scaling advanced analytics models to gain differentiating mass personalization capabilities, intelligent automation, and informed and agile business and regulatory management. Capability building and talent renewal by reinforcing Millennium's ability to attract, develop, and retain the best talent to embrace modern challenges in critical domains and adapt working practices to reflect the new paradigm. Sustainability driven, adapting our business model to increase differentiation towards the communities and our customers, rising expectations of sustainability while capturing associated business opportunities. Discussion of these priorities for Portugal will be combined with ongoing efforts to presently explore the full growth potential of our international operations. The initiatives under the priority of serving the financial and protection needs of customers will increase banking income by EUR 200 million at the end of the cycle. To achieve this, we will build on the full set of attractive needs of our customers in which we hold a competitive edge, namely in investment management, bancassurance, and personal lending solutions. Strengthening our investment and savings value will lead to increased EUR 3 billion in the assets under management and expanding our existing capabilities on personal loans and enhancing the value proposition of mortgage loans will result in an overall increase of EUR 3 billion in new loans. Alongside, we will reinforce our first bank relationship capabilities to capture 150,000 new high-value customers. The initiatives for being a trusted partner for companies recovery and transformation will increase banking income by EUR 100 million. Overall, we will provide around EUR 3 billion of new loans to companies scaling financing solutions related with the investment opportunities of companies under the European Union funding programs, as well as innovative short-term credit solutions of factoring and confirming under the state guarantees lines of credit. To support loans production, we will deploy a new generation of credit processes and promote tailored solutions complemented with insights to assist companies shaping their investment programs and facilitate access to the European Union funding opportunities. In parallel, we will strengthen our digital capabilities in the company segments with innovative initiatives aiming to achieve a digital penetration of 75% in these segments. Regarding capital and risk resilience, the focus will be on reinforcing the balance sheet position, ensuring readiness for post-COVID setting, building on our expertise and solid track record of NPE reduction to successfully execute our mitigation plan for pandemic-related distress exposures and reach a NPE ratio of around 4% by the end of the cycle. Efficient capital management and a resilient business model that generates capital will lead us to a capital position that's quite for our risk profile with a Common Equity Tier 1 above 12.5%. We have also designed several initiatives to stand as best in class in efficiency through the full exploitation of our mobile and automation capabilities. We will implement initiatives to simplify and automate business processes, increasing automated processes by 60%, allowing employees to focus on more productive and high-value tasks, aiming at a reduction of 30% in manual servicing. We will also further enhance our distribution model, optimizing the branch network configuration and adjusting its capacity and pace consistent with the preservation of a competitive footprint. Data and technology edge are critical to thrive, increasing our agility, our efficiency, and time to market, supported on intelligent automation capabilities that enable us to provide customers with tailored solutions and personalized services. Moving forward, we will invest on several key initiatives selected to continue the journey started in the previous strategic plan from which I highlight data architecture readiness, expanding advanced analytics and artificial intelligence use case with a focus on customer insights, risk management, and regulatory needs. Expand our future-proof digital experience platform for delivering customer-driven recommendations and hyper-personalization. Continue investment in cybersecurity resilience. On the capability building and talent renewal front, we will prioritize initiatives to nurture next-generation skills in domains that are critical for the readiness of the bank to face the challenge of the future. We are adjusting the workforce of the bank and will continue to adapt the operation model to the new normal, exploring hybrid and collaborative working models, building on our proven remote work infrastructure. The career management and the compensation models will also be improved to provide attractive growth opportunities to high potential workers and to better align the compensation with the bank's strategic goals. Concluding the strategic priorities in Portugal, we will adapt our business model to be more efficient and increase the bank's differentiation. We will innovate in green and social label proprietary products for individuals and companies while exploring partnerships to provide solutions and advisory services fit to support the customer's green transition. Summing up the outcome of the main initiative from the strategic priorities we have established for the activity in Portugal, we aim at growing EUR 3 billion in loans to companies, EUR 3 billion in assets under management, and EUR 3 billion on loans to individuals, achieving additional annual banking income of EUR 300 million and recurring cost savings of EUR 35 million, leading to a reduction of 6 percentage points in cost-to-income. Besides the scope of the strategic priorities for Portugal, the international business will continue the journey started in 2018, adjusted for recent developments, strengthening our competitive position in those markets. In Poland, aiming at a ROE of 10%, a cost-to-income around 40% by reducing the FX portfolio contingency to normalize the bank risk profile while keeping the strong position in new production of mortgage and personal loans, and selective increasing in the loans to companies. In Mozambique, aiming at a ROE of 18%, keeping cost-to-income around 40% by adapting the business model to better serve the customer's needs, enhancing the bank's digital offer, and optimizing the approach to high-value customers. Finally, we present the set of bold targets for the group that we are strongly committed to achieve in 2024 with the implementation of the strategic priorities defined for the upcoming cycle. A cost-to-income ratio around 40%, a cost of risk around 50 basis points, a return on equity around 10%, a Common Equity Tier 1 ratio above 12.5%, NPE ratio around 4%, a share of mobile customers above 65%, a growth of 12% in the number of high-engagement customers, an average ESG rating above 80%. Underlying our strategic plan revision and its guidelines, we took into consideration that success always depends on the accurate identification of priorities and on the ability to focus the teams in what really makes the difference, avoiding distractions and inefficient allocation of resources. We are truly convinced that with well-selected and clearly defined priorities as we have, together with the execution capability that we already showed, we will be able to go beyond the targets we have presented to you today. In conclusion, I highlight that the new plan is based on the reinforcement of the bank's efficiency, driven by the reduction of the operational costs and by the competitive edge that results from our proven capabilities to take advantage of the opportunities associated with the strong GDP growth that is projected for Portugal and for Poland in the coming years. Now we will be ready for your questions. Thank you. Ladies and gentlemen, we will begin the question and answer session. As a reminder, if you wish to ask a question, please press star one on your telephone and wait for your name to be announced. Please stand by while we compile any Q&A queue. This will only take a few moments. If you wish to cancel your request, please press the hash key. Once again, please press star one if you wish to ask a question. Your first question comes from the line of Ignacio Ulargui. Please go ahead. Hi thanks very much for the presentation and for taking my questions. I have three questions. The first one is on capital. If you could update us a bit on what kind of headwinds should we expect in terms of CET1 and quarter one in the coming quarters. Also, if you could just elaborate a bit more on how much of a 60 basis point decline in the ratio that we had in the quarter could be reverted in coming quarters, probably referring, Miguel, to the point of the RWA inflation related to the FX and whether there is something that you can do there to improve capital ratios. Second point on the strategy plan, wanted just to get a bit of a sense of how much of the EUR 300 million banking income growth that you have or the additional EUR 300 million of banking income that you have in Portugal comes from rates. What would be a better strategy to accelerate the shift from on-balance sheet to off-balance sheet funds? Because you are gathering plenty of excess liquidity, which is affecting and impacting your NII. Final question on other impairments in Portugal. You have taken, if I get the number right, around EUR 40 million of non-allocated provisions in other impairments. Why is that? Do you see any risk related to loans under moratoria, or have you taken that extra EUR 40 million in the quarter? Thank you. Ignacio, thank you very much for your questions. In terms of headwinds from capital, we are not expecting any particular headwinds in the next quarters. As you know, the bank has a strong pre-provisioning profits capability generation. We will continue to generate these pre-provisioning profit as we expect. Of course, we will have to look very carefully at the decision from the Supreme Court of Poland, scheduled for September, to see what will be the impact on the Swiss franc provision. We are clearly, right now, providing more than our competitors. I would say that on an underlying basis, we will continue every quarter to create capital. We have to, of course, monitor the Swiss franc issue also in relative terms. As you've seen mainly with the comparison with other international banks, we are providing more than our competitors. In terms of the RWA, I mean, inflation, it is particularly difficult to anticipate currency movements, as we all know. When the zloty goes up, when the metical goes up, this increases our RWA in these currencies. I would expect that at least these increases in zloty and metical do not continue. At least I would not expect this for the next quarters to increase the RWAs. As you know, your guess in terms of currency movements is at least as good as mine. In terms of the plan, what is there implicit in terms of the plan? The underlying EURIBOR in the plan is very close to the present EURIBOR. What we are expecting is an underlying EURIBOR in 2024, around 10 basis points better than the one that we have right now. The type of exposure that we typically have is we have very close balance sheet in terms of interest rate risk is around EUR 100 million for every 100 basis points increase. 10 basis points roughly is equivalent to EUR 10 million before taxes. I would say, if the EURIBOR goes up more than 10 basis points, we have an upside in our plan that has not been considered. In terms of other impairments, we have had a good quarter in terms of trading gains. We have had a good quarter, as you have seen, in terms of a one-off in recovery. It seemed to us prudent to have here also in terms of other impairments, some prudency, because we will not probably have this extraordinary recovery that we had in Q2 in the next quarters to come, and we never know exactly what will happen in terms of other assets. It's a small, I would say it's something to mitigate this additional recovery that we had in the cost of credit in Q2. It's to mitigate this impact. We've had some non-allocated provision of roughly the same amount as you have pointed out. In terms of the evolution of the capital ratio. Of the capital ratio, slightly around 38 basis points, 35 basis points - 38 basis points have to do with RWAs. This evolution of the RWAs are explained, of course, by the growth in credit. As you've seen, we have a strong growth in credit. As you know, the NPEs typically do not consume a lot of RWAs because the unexpected part in the NPE is already low because the NPEs are already provided for. The performing trade very often has a higher risk-weighted asset density than the non-performing part. The fact that we are growing in performing trade, of course, has an impact in RWAs. We've also had this impact in terms of currency movements that, as I was commenting, maybe is not something that will occur quarter after quarter because the currency movements are intrinsically volatile. Of the remaining part, I would say half of it was the P&L of the quarter. Another half of it is the impact of the evolution of the interest rates in the fair value reserves and in the cash flow hedge reserve. That had, of course, the symmetric impact. When interest rates go up, the fair value reserve goes down. Of course, we create then a buffer in the pension fund that is already around 60 basis points that allows us to cope with possible negative evolutions. Effectively, this was net positive in economic terms because as I was just commenting, right now our pension fund for the present level of RWAs has a resilience of around 60 basis points before having any type of impact in terms of the capital ratio. Net, it was economically positive, albeit having a short-term negative impact in terms of the capital ratio. Thank you very much. Thank you. Next question comes from the line from Maksym Mishyn. Please go ahead. Yeah. Hi good afternoon. Thank you for the presentation and the opportunity to ask questions. I have two. The first one is on the strategic plan. In your Common Equity Tier 1 target of above 12.5% for 2024 and the 10% return on equity, what kind of dividend payout do you assume? I also was wondering if you could confirm that 12.5% is a target for BCP, if you expect any regulatory headwinds until we get to 2024. The second question is on the results. What was the reason for the decrease in corporate restructuring funds? Was it an impairment, or you were able to make some disposals there? Thank you. Just to make it clear, the 12.5%, probably in graphical terms, could be better, is not really a target in the same way as ROE is a target. The 12.5% is the level of capital that we think is adequate in a steady state for our business model. What we are saying is that by 2024, we should be already in a stable phase. Being in a stable phase, we think that we should be around 12.5%, so that if we are structurally many quarters above 12.5%, we should distribute these funds back to the shareholders. If we are structurally below 12.5%, we think we should retain more dividends until we get to the 12.5%. It's not really a target that we think we will get to. This is also the other answer to your question. We do think that over the long term, as we are saying here, with a EUR 6 billion growth of credit in Portugal, we do think that our other ways, at least in Portugal, will not grow more than 4%. If we are saying that we are with an ROE of around 10%, this means that from a structural standpoint, once we get to a steady state, we should be able, on an ongoing basis, so once we get to stable, to get to the levels of 40%-50% of dividend payout. If we have a 10% ROE, and if we are growing 4%-5% [inaudible] if we are already at a steady state, the remaining is effectively excess capital. How to get there and exactly how to get there is something that we are not disclosing because this is a strategic plan. This is not the budget for next year. This is something that we will be discussing. This is a decision for the shareholders. There are many paths to get to this level. What we can here design is a vision and is a steady state. Okay? In terms of the restructuring funds, let me just check here. The reduction was mostly through distribution from the restructuring funds to the banks because they were able to sell assets, and of course, they distributed then these to the banks. Okay? Thank you very much. Thank you. Next question comes from the line of Noemi Peruch. Please go ahead. Good afternoon. Thank you for taking my questions. The first one is on capital. If you could please quantify the impact of the FX moves on the RWA out of those 38 basis points you mentioned just before. I hear you that you're not saying how you want to get to 12.5%, I was just wondering which are the options you are currently evaluating. Organic growth, further sales, or perhaps a capital increase. Just want to make sure what's on the table. On cost, can you please share with us the timing of the staff exits? When is the earliest you think you would see the full impact of those EUR 35 million? If you think about those annual savings and the cost base in 2024, shall we assume that indeed the cost base in 2024 will be EUR 35 million below the one in 2020, or would that be offset by wage inflation? Lastly, did you reprice some of the fees, especially in cards and transfer, or was it growth or was it a one-off in the quarter? Thank you very much. Thank you for your questions Noemi. In terms of the other ways, I think we have given already enough information. We don't want to go more into detail than that. It's already much more information than our competitors give. At this point in time, it's what we have to say. In terms of the cost and when we will get the EUR 35 million of cost. We are planning to have the exits of the people during Q3 and Q4. Exactly how many will be in Q3 and how many in Q4, it depends on the specific systemic circumstances of the person and of the function. What we can tell you is that next year, the staff costs will be EUR 35 million below the staff costs of this year. Of course, when we go to the recurrent of this year, so to say, adjusting for this. We go for 2024, of course, there will be some normal wage inflation that one would expect in this situation, that we would expect to be in the banking sector for the aggregate of the functions in Portugal, very low single digit. We will have here a mix of people that will be more expensive, namely people from systems, IT and so on, but that will have a sharper recovery in their salaries. The bulk of the people that are working in the branches will have a very low salary growth, as you know. Fees and cards. Fees and cards. As you are seeing, we are getting many more customers. We are being able to capture more customers in Portugal. Of course, with more customers, one has more fees, more penetration, more cards and so on. We have not increased materially the pricing on cards. We have made some small adjustments in line with what we do every year in terms of current account fees and so on, and transfer fees and so on, but nothing material. How come you different this one? In terms of the 12.5%, I would say what makes the bank particularly different from other banks is our recurrent core operating profits. Our strategy to get to the 12.5% is based on this recurrent core operating profit generation. This is our strategy. We are not envisaging for this 12.5% any type of inorganic solutions. Neither purchases, nor divestments, nor any type of capital increases. Thank you. Thank you. Next question comes from the line of Carlos Peixoto. Please go ahead. Hi good morning. Good afternoon. Sorry. Hope everyone is fine. A couple of questions on my side as well. The first one would be a bit of a catch-up on the other provisions line. You already mentioned that there was this generic provision or an allocated provision, but I was wondering what should we expect in coming quarters in other provisions in Portugal to be expected to be abnormally low, given the buildup made this quarter or whether further provision should be expected? Within that as well, whether you could be considering reviewing or writing down any goodwill on any of your units, namely Poland, whose market value is for some time now below the book value in your accounts. Secondly, looking a bit into the stages evolution during the quarter, I was wondering if you could give us some color on what's the loan book distribution between stage 2 and stage 3, and basically, what type of evolution there was during the quarter on stage 2 loans. Thank you. In terms of starting with the goodwill in Poland, as you know, the goodwill does not affect the capital ratios. Were we to do any type of readjustment of the goodwill that we have in Poland, this would not have any type of impact on our capital ratios. This is an analysis that we do periodically based on the projections that we have for the bank. As of today, our projections justify totally the goodwill. The goodwill is not linked to the market value of the bank, but to the NPV of our projections. In September, there will be some news, mainly from the European Court of Justice, in terms of what will be the outcomes of the, or some of the questions that were posed to the Supreme Court of Poland will hopefully be clarified in September. Of course, this may have an impact in terms of the valuation of the bank. As of now, we don't have any information that will give us, I would say, the reason to impair the goodwill in Poland. In any case, this would not have any type of impact on the capital ratios. In terms of other provisions, the other provisions are notoriously difficult to anticipate, because these are provisions exactly for other risks. I would say that a good sign to have across the cycle is to have an average of the last quarters. In not having any additional information, I would say that this would be a good sign for the next quarters, with the hint is to have the other provisions basically modeled based on the average for the last quarters. Let's see exactly what will occur in the next. It's like trying to project trading gains. In terms of the Q2 migration for the total loan book. Yes, Miguel? The total loan book. We'll take this offline. There has not been any special evolution from amongst stages. Right now everything is performing according to normal. I don't have here right with me the migration from the different stages in the end of Q1 - Q2, but to tell this, the comment is off the call. Okay, thank you. Thank you. Next question comes from the line of Sofie Peterzens. Please go ahead. Yeah. Hi, here is Sofie from JP Morgan. Thanks for taking my question. In terms of the dividend, you mentioned that you potentially are considering up to 40% dividend, how do you think about dividend versus share buybacks? Clearly with BCP share price where it is currently, you can make the argument that share buybacks are more accretive. If you could just elaborate a little bit on your thoughts on share buybacks compared to dividends. My second question would be, on the sale of the Swiss business, what earnings impact, if any, should we expect from that? My third question would be on the discount rate. With the increase in the discount rate, what capital impact did it have this quarter? If the discount rate would have been kept at the current level, what would that have done to your Common Equity Tier 1? My last question would be, if you could just elaborate a little bit on Mozambique, the net interest income. It looks extremely strong. Was there any one-offs or how should we think about the run rate of net interest income in Mozambique going forward? Thank you. Thank you. Thank you very much Sofie for your questions. Starting with your last questions, Mozambique. The net interest income in Mozambique is there to continue. The interest rates in Mozambique are high. Our business model in Mozambique is a very simple business model, where we have a lot of customer deposits that then are invested in government or central bank paper. It benefits directly from the level of interest rates. The interest rates in the second quarter were better than the interest rates on the first quarter. This is something that is there to stay. I would say in the first quarter, it was abnormally low also. In terms of Switzerland, the contribution that Switzerland had was around EUR 7 million-EUR 8 million per year. It's nothing very material, something that can be addressed within the projections of the bank. In terms of share buybacks and capital attrition versus dividends and so on, what I want to say, we have here to be pragmatic. Okay. What we don't think is in our shareholders' interest is any type of rights issue or capital increases. This is absolutely something that we think would not be in our shareholders' interest, and it's not something that we are thinking about. The other side of the coin, in spite of the fact that when you look at our capital ratio, we feel comfortable with it on an objective way. In relative terms, and I think you would agree with me, we do have right now a lower capital ratio than some of our peers. We are in capital accretion mode. This means that most probably in the next quarters, we will accrue capital through dividend retention or through a slow dividend payment. As a small dividend payment and not the immediate type of dividend payout that we think makes sense over the longer term. We are in capital accretion mode. This capital will accrue through a higher retention of profits than in a steady state. Because exactly, we are in this stage, dividends make more sense, even if they are small, than share buybacks. Share buybacks make more sense if we go for, I would say, a larger options for extraordinary options. At least at this point in time, in which we are in a capital accretion mode, until we get to these type of levels that are more aligned with our peers, we do think that dividends make more sense than share buybacks. Once we get to the steady state, if we are persistently above a certain level, maybe we will have share buybacks. In terms of the discount rate, just to make it clear. When we have a decrease in the value of the responsibilities, so that is not aligned, so to say, with any type of decrease in the value of the assets, we have an excess funding in this pension fund. This excess funding in moment zero does not contribute positively to the capital. Only contributes positively to the capital if we ask to the pension fund regulatory authority to distribute these excess funds to the bank, which may occur, but it's not usual in Portugal. We have not asked. Okay? If we had asked to the pension authority, and if the pension authority would have given us this waiver, this would have an impact of 60 basis points. As of today, 60 basis points, 60. We have not asked, so the money is still in the pension fund. The fact that we have more assets than liabilities allows us that if in the future the interest rate goes down or for whatever reason, there is a market movement and the value of the assets goes down, and so on, up to this level of this capital buffer, we do not suffer any negative impact in our capital. For the absence of doubt, as of 30th of June, there was no impact from the increase of the pension fund discount rate on our capital. There could have been an impact if we had asked from the pension fund authority to distribute this access to the banks, which is not usual in Portugal, by the way, but it is theoretically a possibility. This impact would have been 60 basis points. If we maintain the money there, or the excess funding there, this excess funding may be used to cope with any type of adverse capital movements and with any type of decrease in interest rates before affecting our capital ratio. Okay? I don't know if that- Okay. Thank you very much. That's clear. Okay. Thank you. Next question comes from the line of Gabor Kemeny. Please go ahead. Hello. I have a few short questions. Firstly, can you give us a sense of how do you see the ECB's stress test and how could BCP be performing in this test? On the back of this, would you expect any changes in your capital requirements going forward? Other question, coming back to capital, just under your baseline assumptions as you see the Polish FX situation and all the other moving parts, would you expect your CET1 ratio to stay below 12% in the second half of this year? Following on from that, do you think you have options to sell other assets than the Swiss business to support your capital ratios going forward? Thank you. Okay. I think first in terms of the stress test, as you may know, there are a certain number of guidelines in terms of disclosure of stress test results and so on, so I have to be extremely careful in this regard. As you know, there is not any type of disclosed formula in terms of what is the impact of the stress test or how does the stress test translate into the P2R. Nobody On the P2G, I'm sorry. Nobody knows exactly what is the formula by which the result of the stress test translates into the P2G. This was not disclosed in any way. For me, it's very difficult to anticipate anything for me, and I think for everybody. Having said that, in the last stress tests, our P2G, after seeing what happened in the market, and there was a public disclosure of the general P2Gs in the market, were very much aligned with the averages of the market. We are a bank that has a very strong forward-looking, I would say, business model. I would feel very surprised if the result of our stress test would not be aligned with the average of the European banking system, to say. That's what I can tell you in this regard, because knowing our business model, knowing the business model of other banks and so on, our base case is that the end result will be very much aligned with the average of the other EBA banks. If it is not the end result, we would be surprised. Of course, we don't know in detail neither the formula on how the stress test translates into a P2G, nor the results of our competitors. Just based on common sense and based on the resilience of our business model, that's what we think. In terms of our CET1 ratio, we feel comfortable with our CET1 ratio, not because of its static point at which we are right now, but because of the speed and the capacity of the bank to grow the CET1. It's totally different to have a CET1 of 11.5% or even 12% in a bank that has a poor business model, that is not able to charge home customers, that has a poor cost-to-income, or in a bank that quarter after quarter generates a sound pre-provision profit. I cannot tell you today, quarter after quarter, what will be the CET1s of Q3 and Q4. What I can tell you is that we feel very comfortable that our capital situation will continue to benefit from these positive dynamics that the bank has on its core income. If there are legacy issues affecting us, such as the Swiss franc and the size of them affecting us, is something that, of course, we will have to address and treat in a professional way as they come. We feel very comfortable that our business model is resilient and that we can cope even after some quarters with levels that may be somewhat below our targets because we know we will get to our targets. Thank you. Just another small question. I saw there was a government proposal to potentially guarantee the sensitive corporate debt, the corporate debt to sensitive sectors, once the moratorium will be lifted in September. Can you give us your thoughts about the bank's involvement and possible costs for the bank from this initiative? This initiative is being analyzed and developed by the government. It is independently in a political decision, in a positive term, negotiating it with the European Union and namely with DG Comp. Once the government has this decided and has this totally designed, we will be involved. We are not sitting around the same table as the government, developing this solution with the government. It's the government that has the authority to do it, that is designing it. We do not have yet, mainly because it's still in a development phase, we do not have yet more insights than the ones that are given in the newspaper. That's basically a guaranteed line that will be allocated to specific sectors for loans that are in moratoria, that banks that extend the moratoria in these sectors for some time may benefit from. We do not have any specific information. What we know is on the newspapers. I'm sure that once the government has this totally closed with the European Union and has this totally designed, the government will share it with us, and we will use it as much as possible to the benefit of our customers and shareholders. Understood. Thank you. Thank you. Next question comes from the line of Hugo Cruz. Please go ahead. Hi. Thank you. I have a few questions. First, on the revenue target for Portugal, the EUR 300 million. That implies a CAGR of 5%, which is quite a bit higher than what you've done in recent years. Should we assume the same CAGR for the different revenue lines, i.e. net interest income, fees, et cetera? Why should we assume that you'll be able to achieve that? Obviously, it's not from rate rises, what new measures can give us confidence that you will achieve that? The second question is around cost of risk. Can you give guidance for the group cost of risk for this year and the next? Third question is to clarify your comments on the dividend. Are you going to wait to get to that steady state before you pay dividends, or would you start paying before? I know specifically the 10% ROE. Fourth question, again, a clarification. I think you said that the staff costs in Portugal will already fall by EUR 35 million next year versus this year, adjusted for one-off. I just want to confirm if that's correct. Finally, fifth question. The ROE targets that you gave for Poland and Mozambique, are they based on what CET1 ratios? That's it. Thank you. Thank you. In terms of the measures for Portugal to get to this EUR 300 million, I believe that in this presentation, we are already giving a lot of disclosure in terms of the measures that we will be implementing. Of course, this is an equilibrium between the information that we give to the financial market and the information that we give also to our competitors. We are already giving much more information than probably some of our competitors are giving. We feel comfortable that with this EUR 6 billion of growth in credit together with EUR 3 billion of growth in off-balance sheet products is enough to justify this EUR 300 million difference. The main measures are the ones that are there. Of course, internally, we know exactly what corresponds to each measure, you have to understand it will not be good for you as shareholders if I go into more detail because I would be giving free information to my competitors, which is something that I do not want to do. You have here already more color than in most of the strategic plans that you see. In terms of the cost of risk, we have commented in Portugal that we have right now a recurrent cost of risk adjusted for this one-off around 80 basis points last year and 80 basis points this year, give or take. Of course, it was lower because of one-off. I would say that in the second half of the year, we will be close to these 80 basis points. In the year after, our best estimation is to start some convergence towards the 50 basis points that we expect to have in 2024. In terms of dividends. Dividends is the decision of the shareholders, and I would encourage you even, for the ones of you that are listening to me and are buy-side agents, that to come to our shareholders meeting and also to vote in this type of decisions. As I was commenting, our dividend policy will only be normalized once the bank is totally normalized. Up until the bank is normalized, we will retain a larger percentage of our profits because we think it's in the interest of our shareholders to capitalize the bank through profit retention and not through other measures. If we are going to pay some dividends before getting to 2024, it's certainly our intention to do so. Not the normal payout. Our intention is to also have a progressive normalization also in this dividend policy. Exactly how much will, to a large extent, depend on the shareholders and on the evolution of the bank and on the volatility of the bank. In terms of the EUR 35 million, just to be clear, if we take the first half of this year, because the first half has not been affected by the staff cutting yet. We have a run rate of the first half of this year, and compare the run rate of the first half of this year with next year, we would expect in terms of staff costs to be EUR 35 million below next year, vis-à-vis this year, give or take. That's what we expect. Of course, the second half will already benefit from some of the cutting of the EUR 35 million, depending on the specific moment that people leave. In terms of Common Equity Tier 1 ratios in our different geographies, we clearly are aiming for having, after the stabilization in Poland, we believe by 2024, all these Swiss franc issue will also already be stabilized to have a Common Equity Tier 1 in Poland consistent with the business model around 13% or more. After the Swiss franc issue is out of the way. In Mozambique, for this type of geography, the type of CET1 that we are envisaging also is something around or above 30%, because of the risk simplicity in the geography. Okay thank you very much. Thank you. Next question comes from the line of Benjie Creelan- Sandford. Please go ahead. Yes good afternoon. It's Benjie here at Jefferies. Two questions for me, please. Just returning to the strategic plan. I was just wondering on the EUR 3 billion of new loans for the corporate sector. I was wondering if you could maybe just discuss a little bit more around the details of that. Whether there's any specific sectors that you're looking or see an opportunity in, and also, how much of a benefit are you expecting from the NextGenerationEU funds within that EUR 3 billion target? My second question is just a numbers question, if you happen to have it to hand. In terms of the TLTRO, could you update us on where your current benchmark lending stands, please, and what the level that's needed to be reached by December to benefit from the minus 100 basis point bonus rate? Thank you. Okay. Starting with the last question. We have not changed our TLTRO access. It's slightly above EUR 8 billion, and I don't have here the numbers with me, but the type of trend that we have makes us absolutely comfortable that we will get to the 1%. There is almost no possibility of not getting to the minus 1% because of the movement that we have. That's why I don't have it on top of my hand. Effectively, we are benefiting, so to say, from a 50 basis points, because I would say that this - 100, as we have excess cash, a part of it is invested at minus 50. We are effectively benefiting from the difference between - 100 and - 50 from the TLTRO. On the other hand, we are having very low interest rates that when they fade away, of course, we will benefit strongly from it. In this plan, as I was commenting to Ignacio in the beginning, there is almost no upside from a normalization of interest rates because we are assuming the interest rates to remain broadly at the same level at which we are. In terms of the companies, I would say that more than a direct benefit from the project finance in NextGenerationEU. We are clearly investing a lot in facilities for providers of these projects, for providers that will invest in capacity to fulfill the demands of these projects. That's what we want to do to some extent. The NextGenerationEU will have a lot of public investment. We are not that much investing or lending, so to public entities, but more to the private entities that will be the providers of these funds. From these, I would say, from these EUR 100 million, roughly half of them will be from more smaller startups and micro businesses that have higher spreads but lower amounts. The other half will come from more established and larger companies. We will really want to serve as a vehicle for this fund distribution. Also what we will do to a large extent is we have facilities of bridge financing for EU-backed projects with very user-friendly processes so that the customer can have access in anticipation to these funds at a much faster pace than they would otherwise have. That's what we would like to say at this point in time. Perfect. Thank you very much. Okay. Shall I finish? Thank you very much for engaging here with us. We realize it's a difficult moment. We would like here to highlight the very strong resilience of our business model, the way our NII is evolving, the way our commissions are evolving, the way our costs are evolving. We are certainly not complacent. We will continue our effort of cost-cutting and of revenue management so as to be able to generate capital to normalize the bank and to get to a level where we really will excel by 2024. Thank you very much. That does conclude our conference for today. Thank you for participating. You may all disconnect.