Good morning, ladies and gentlemen. Welcome again to NLB Investor Day, and welcome again to this region of opportunities. My name is Milos Maksimovic, and I will be your moderator for today. Since everyone is here, we should get started because we have a lot to cover. I'm proud to announce our first speaker and one of our hosts, Mr. Blaž Brodnjak, NLB's CEO. Esteemed clients, business partners from the whole region, investors, investment bankers, analysts, consultants, journalists, colleagues, and friends from nearby and as far as California. As far away as California. We have people here from California, Sweden, you know, other parts of the world, and we have people online as well, since this is a hybrid event. Warm welcome also to people online. Allow me to humbly and warmly welcome you to this fantastic venue of the National Theatre. Welcome to Belgrade, Serbia. Welcome to the part of the world we in NLB call and treat as our home. I'm enormously proud to have been privileged by addressing you in person and online at the first Investor Day of NLB Group in its history. Consciously organized here in Belgrade following the transformational investment, accompanied by just completed role model integration of two banks into today already one, NLB Komercijalna Bank, with a fully enthusiastic and motivated team to support our regional clients in the Serbian market, as well as in the region, being the largest, obviously, Serbian market in our region. Located at confluence of Sava and Danube, Belgrade has been a regional center since Roman times, and the rivers have been connecting it with the Central European and regional capitals. With now already two million inhabitants, significant, really significant investment into the municipal infrastructure and nationwide educational reform, combined with a project called Digital Serbia, it has got a critical mass to again act as a development hub for the whole region, and we are happy that we have been accepted here as a credible investor and a genuine friend. Similar progress we can witness with some incredible recent unicorn stories in Croatia and many SME companies playing important roles in small global niches, actually playing them from villages throughout Slovenia and other countries in the region. I'm not sure whether everyone here and online has been aware of the fact that Serbia has for many years in a row belonged to the largest recipients of foreign direct investment per capita in the world. By that confirming high attractiveness of its business environment on one side, and we are convinced also that other regional markets can offer comparable opportunities once all political leaders focus on a dialogue, jointly tackling priorities and reforms that really matter. Allow me to just look back for a minute to the times when Belgrade still had only moderate 25,000 inhabitants. This was, for example, still the case in 1869. This is the year when on the 2nd of October, Mahatma Gandhi was born, and God, today's world is again in a desperate need of some of his wisdom. On the 20th of October 1869, a fantastic building was put in production and the first play was performed here in this special place. In 1869, now getting a bit personal, a gymnasium was actually opening doors in the oldest Slovenian town where I was born and attending the school in 1869 as well, right? This is a town called Ptuj. To be really personal, in 1869, one of the largest wooden presses for grapes was actually installed at what is today my family's estate, one of the largest wooden presses actually in northeastern Slovenia. Just to reflect a bit on the past, there were many ups and downs for this region in the last 150+ years, many ups and downs. I firmly believe that the time has come to settle with the past and focus on what really matters, which is the quality and sustainability of our presence on the planet in the interest of our children. Today, we have all, unfortunately, rightfully again, been extremely concerned and keep fingers crossed for the absurd developments in Europe to finally return to the one common noble idea which has been connecting and bringing us together for decades rather than dividing us. Amidst of the current turmoil, we in NLB, firmly believe that Europe has finally understood the importance of integrating the entire Southeastern Europe region into the cohesive union at a significantly accelerated pace. The time for respective invitations, speed up reforms, and full accession is now and the clock is ticking. We genuinely believe in this integration being not only right, but also just. We have been very actively promoting all initiatives supporting the establishment of the free trade zone of the entire region, leveraging on smart specialization and enormous talent pool. We've been among world's leading regions in terms of Olympic medals per capita. Nikola Jokić was, for the second year in a row, just awarded the most valuable player of the NBA, with Luka Dončić contributing some unique magic to the game. Tadej Pogačar won two Tour de France races in a row. The last finals in European Championships in volleyball and basketball were played by Serbian and Slovenian heroes. Croatian football team played at finals in World Championship in football. Water polo has been privatized by Montenegro and Serbia, and Croatians, just to give us a couple of examples, with Macedonian and Montenegrin volleyball, handball teams taking Champions League titles. Some of the greatest minds in history, such as Nikola Tesla and many others, were born here as well. These are just some examples speaking about creativity and innovative spirit of our people, who represent enormous potential once granted a chance to shine. NLB has onboarded the journey of raising awareness and recognition of the region in the eyes and hearts of global investors by listing our shares at the London Stock Exchange and Ljubljana Stock Exchange in November 2018. We have traveled around the world on multiple road shows and finally invited you all to visit us here, where we live and create. Being fully conscious of the ambiguities, threats, and risks deriving from the conflict in Ukraine, with a heart full of pain and solidarity with Ukrainian people, following still not fully retreated pandemic, please do not resent that we today chose to talk about opportunities our region, its businesses, people, and finally, the team of NLB can offer to you. We are truly honored by your great response to our invitation, and we thank you all from the bottom of our hearts for devoting your time and attention to us today. We are especially thanking all the investors who have already trusted their money to our business prospects and in advance to the ones who will. At the same time, we today want to demonstrate that we put our money where our mouth is. Besides introducing ourselves and our strategic priorities, we invited and are really privileged by their attendance, reputable speakers and panelists to share with us their views, experience, and enthusiasm to demonstrate that our region really is full of opportunities and will rather sooner than later win the deserved attention and even more productive investment, keeping our most talented people here. I trust we are all interested in hearing the outside perspective about the shape and above all, the attractiveness of the region for international investment, while at the same time, we want to highlight the noble trade boosting initiatives coming from this region. Our utmost gratitude goes to our clients, managers, and business owners from all of our markets in the audience, and especially the ones participating today at the upcoming panel. Throughout the years, we have developed genuine partnerships, and I can confidently state that we understand we are stronger together and that we are the ones responsible for ever improving quality of lives and welfare of our people. With our seamlessly delivered products and services to our clients, we continuously improve their experience, while with the entire universe of sustainability-related initiatives, we address much broader environmental, social, and governance list of topics. For today's panel, we really gathered a prestigious team following the idea of key industries and smart specialization within our region: energy, food, wholesale and retail of both, pharmaceuticals, tourism, finance, and last, but not least, the ICT industry, and to our belief, some of the most important focus points for the upcoming period. You will hear a lot about NLB's plans from us, of course, but we assess it as extremely important to listen to our clients. To listen to clients with regional operations, also offering them a chance to introduce their vision and priorities today. I'm convinced that this will help all of us getting better insights into our region and will trigger even more interest for investment. Besides that, we are demonstrating that business does neither know nor accepts borders. As we have brought together the leaders of some of the most meaningful businesses from four regional countries, partly even competing, we sincerely believe that the only appropriate response to the ever bigger divide is rather connecting and cooperating. In the afternoon, I believe that NLB will reassure you that our sustainability agenda is getting further boost. We will wrap up with three wonderful people, proving that our society and spirit are much more than strictly business. We are extremely passionate people, and when embracing friends, we don't let them go. Please allow me to wrap up by stating that I'm personally truly happy that we will now be addressed and welcomed to the region by the person with unbelievable drive, especially since he has not been feeling well in the last days, he has still come, and this we really appreciate. His energy is iconic. He has been carrying the flag of the united markets of so-called Western Balkans 6. Marko Čadež, you are my idol. Esteemed ladies and gentlemen, welcome once more to Belgrade and our part of the world, a place we deeply cherish and truly love as it is our home. Thank you, Blaž, once again, for these opening remarks. Now, ladies and gentlemen, you will have an opportunity to hear the keynote speech given by Mr. Marko Čadež, President of the Chamber of Commerce and Industry of Serbia. Mr. Čadež, the floor is yours. Hope we hear each other. Dear, dear friends, Blaž, distinguished businessmen and participants of NLB Investors Day. Good morning and welcome to Belgrade again. I would like to use this opportunity, first of all, to congratulate the organizer of this event, NLB Bank, for having Komercijalna Banka as integral part of the NLB Group family just closed two weeks ago. Thank you, very much again. In the Serbian National Theatre today are companies from all economies of the region NLB cooperates with, but also from all around the world. We have, as we heard, also online presence of big investors. Representatives of the regional business system that represent present and future potential investors, bankers, analysts. Thanks to NLB Bank for bringing us all together and to businessmen who responded to the invitation, who will today participate in the discussion and attend the meeting. I'm so glad that I can learn from you today, my friends. Why in front of us, all risk and challenge in Serbia is still worth investing and why attractive, why Serbia is attracting 60% of FDIs arriving in this region. We already hear my dear friend and colleague about some facts, but not only despite of that, but because Serbia and Belgrade is also home of more than 6,000 companies from all around the region, from Slovenia to Macedonia. They are working here, they're operating here, they're seeing Serbia as a markets worth to invest and worth of the to place their capital. Of course, despite the fact that sharing the fate of the European and the world economy, it faces great challenges and risks. During the past two years of the pandemic, Serbia managed to save its economy, companies and people to exceed the results from the pre-crisis 2019. In terms of key macroeconomic parameters that for now, after and during the Ukrainian crisis, it is well maintained that in the first quarter and the March of this year, the growth of both production and exports of goods and services is continuing. Hope it will continue as well. To preserve macroeconomics and exchange rate stability and that despite the growth, it keeps important inflation under control, still. I will not go into the detail about Serbian facts and figures that I think all of you already know. It is not so easy to stay here in front of you doing everyday operations, everyday business, knowing very well what are the risks and challenges of Serbia and our economy, but also the regional economy. I will maybe indicate the few facts. Yes, in the shortest time, the economies of this region, whether they are members of the EU, such as Slovenia and Croatia, or are preparing to become one, just that they have begun to recover from the consequences of COVID. They now share the fate of European economies on which they rely most firmly, which they account for three-quarters of their trade and exports, and which is already facing the severe consequences of the Ukrainian crisis, which is more or less going to the global crisis. Apart from the alarming assessment this week that the world is on the verge of a new financial crisis as a result of inflationary pressures, the war, the COVID battle in China, and many other aspects that the world economy was facing also before the war. There are some facts that we will state. The energy will never be cheaper again than it was before the pandemic and the Ukrainian crisis, that there will no longer be cheap money as it was until before, and that the consequences of the crisis for the region and for the whole world could be greater than the consequences of the pandemic, that we may feel this new impact, not maybe now, or this month, or next month, but by the end of the year, I think that we will face the new reality. What is the answer? What we can do? What are the chances? What are the opportunities? I really believe, and I really insist that the regional cooperation is the great answer. We can use the opportunity to attract a new foreign investment, a new investment in the best way only if we work together, present ourselves as a single region and a single economy, as a joint regional market, as a single investment destinations. I deeply believe that the biggest reserves and the biggest chances for further growth of the economies in this region, regardless if they are EU members like Croatia and Slovenia or are rooted or on the way to be one. Why I believe this, I think we all share these values. This integrated approach is already present in your businesses. Much, much before politics in the region or Brussels even recognized the regional economic integration as opportunity, your businesses lived this every day. The NLB Group is not just Slovenian. Atlantic Grupa or Fortenova are not just Croatian companies. MK Group or Delta Holding or Kappastar are not just Serbian companies. Alkaloid is not just North Macedonian company, or Devolli is not just Kosovar one. They build regional approach in the very essence of their existence. All of you present today are incorporating these real values in everyday operations in your core. Let us face this. This is something the politics, not only in our countries, but the politics in Brussels, the politics of the biggest EU member states have to learn from. This is the one simple truth. It is not about our national economies fighting who is gaining more, who is having more deficit, who is having less deficit or more surplus, who is building more growth or less growth. It is the question of all of us today to connect us in the regional value chains and to promote the creation of big regional players, the players like your companies, but also to make the possibilities for you to grow even further. I very share the opinion of my friend Blaž, that, and I will really quote, "Jointly, we could create miracles by breaking the economic barriers and expand the space for doing business." The fact is that the pandemic and now the crisis in Ukraine made the issue of regional cooperation in this part of the world even more important as the best and obvious answer and defense against everything that we are facing now and what is ahead of us in the future. What are the demands of the business community? What is our demands basically in the Western Balkans, Southeast Europe, name it however you want. To continue the dialogue between the business community and institutions in Brussels and support the European partners in order to remove obstacles in doing business with the EU, which is of interest of the both companies from the region, companies from the EU, especially from the member states who are close to us and are part of the region. I will just show you two examples in last week. One is two days ago, we started the joint initiative in the commercial sector between Croatia and Serbia, between two chambers and their companies in order to facilitate trade via road and railway border crossing, reduce the waiting time at entering the EU. I think all of you coming from Croatia or anywhere through Croatian-Serbian border, you saw the tracks, you saw the lines, and you saw how this really is impacting our economies. Just a week ago, we had a great meeting between the business community of the Western Balkans region and Brussels and all the DGs relevant in Brussels to try to communicate one simple demand. Let us find new ways, let us find a new approach how we work together and how our path into the European Union will look like. How do we accelerate the establishment of the common regional markets? There are different initiatives. You will find in Chamber Investment Forum, WB6, Common Regional Markets,, or Open Balkan Initiative. Why I will just emphasize the importance of the Open Balkan Initiative? Because Open Balkan is really our manner of accelerating all the initiatives we have. It's nothing else. It is nothing new. It is nothing what we are establishing in parallel. It is three states that decided to put the fate in their own hands and to try to make more, to try to be faster, and it is open and it is possible. It is possible. Serbia, Albania, North Macedonia at the beginning of the realization, it's one year ago, we accomplished relatively a lot of things, you know. The most important steps in the facilitation of mutual trade to our common market. Among the three customs, we aligned working hours of the border crossing. We reduced the waiting on the border crossing to only 15 minutes for trucks. We recognized, mutually recognized our facilitating trade documentations like phytosanitary or veterinary certificates. We will also issue the first joint working permits and open ID member cards at the summit in Ohrid on 9th and 10th of June. This is concrete steps. This is why I'm also inviting, and we are trying to invite all other partners on their way to EU to join the initiative, because this is nothing else than the economic forum for fostering our way as fast as possible, and to show to Brussels that we can. That we can do a lot. On the other hand, there's other side of the coin to make them listen. To make Brussels also listen that they need to change their approach. How it is possible? We have a jointly proposed solution, and it is not solution which we actually, you know, made in heaven or invented the wheel. We propose two steps to the EU membership of all our countries on the way to the EU. For EU offering the Western Balkans first to initially become the part of European Economic Area, we are calling it European Economic Area 2.0, as a Southeast Europe economic community, and later a full member. By applying the same EU accession model as Finland, Austria, Iceland, and the model is functioning now as in Norway, as we speak. It is not impossible. EU is the most important economic partner upon which economies from the region as well for the Serbian economy directly rely. Despite dilemma in Serbia, it might have looked differently in the past, but Serbia places 2/3 of its exports to the EU markets. 25,000 companies do business with EU partners, Serbian companies. Almost one million people are employed in these companies, and they engage, directly employed, and they engage suppliers, farmers, cooperatives with additional the same number of people, because if you look at the numbers, there is no dilemma. There is no dilemma if you look at the numbers in all the regions. Dear friends, allow me to return and to add something to the words of my dear friend, Blaž, our host today. Only together, we can do miracles. Let us use this platform today and send a clear message to those who decide in our capitals, in capitals of the biggest EU member states, in Brussels. Let us be creative and not hampered in the process developed decades ago in a world so different than this one we are living in now. Let us find mechanisms, and we have proposals, which will all allow us to do business without barriers in establishing European Economic Community first for our countries on the way to the EU, making European single market as the core of all our societies. Let us do it today rather than tomorrow, because my friends, in this moment we are living in, timing is more important than bureaucracy. My friend, let us send this clear message to fellow politicians sitting over our fate, that timing and readiness to act now will determine it, not only if we as a region will be ready to do miracles, but if we as a continent, as a European project, will survive. Not contemplating, but acting will decide if together we will fail or together we will thrive. Thank you for your attention, my friends. Marko Čadež, thank you very much for this inspiring keynote speech. Now it is time to focus our attention to macroeconomic overview of the region. Our guide on this assignment will be Mr. Richard Grieveson, Deputy Director at Vienna Institute for International Economic Studies. Mr. Grieveson, the stage is yours. Good morning, everybody. Thank you very much to the organizers for the invitation. It's a great pleasure to be here and to have the chance to talk on behalf of my institute about this very important, very interesting region. I represent the Vienna Institute for International Economic Studies. That's a research institute in Vienna. We've been looking at this region for 50 years. It's a region very close to our heart, and I want to talk about the challenges. Of course, there are some challenges, but also to emphasize the opportunities in the future in this region. 20 minutes I have. I'll talk about three things, basically. I will start with kind of orientation, economic fundamentals of the region and how we put it in a regional, sort of broad Eastern European, and the global context. The second, how these two major shocks, which we've lived through in the last couple of years, the pandemic and the invasion of Ukraine, affect the region, what they mean for the region. Then finally, the most important part, what are the challenges, what are the policies that should be implemented to address them, and where are the opportunities for this region in a very different global economy. I start with the big picture. How do we think about this region? The orange bars are the per capita GDP for this region, and then the gray are some comparators. You can see that compared to Central and Eastern Europe as a whole, this region is still relatively underdeveloped, so there's still economic potential there. If you compare it globally, so in the global emerging markets space, it's actually already a pretty developed region. It's much wealthier than places like India, South Africa, and Brazil. The market size, so within Central and Eastern European context, these are mostly small or medium-sized economies. Croatia, Serbia, Slovenia are the medium-sized, the rest are pretty small. The Western Balkans 6, if you put them together, and I would endorse fully the messages of the previous speaker in terms of thinking of this market as a whole, it's actually a pretty big market. It's bigger than Slovakia, a little bit bigger than Hungary. A market of a fairly significant size, if it functions as a single market. Pre-COVID, looking at the five years before the pandemic, the real growth of this region, as the chart on the left, was average, slightly below average, in Central Eastern European terms. Decent in the global context, a decent rate of growth in the global emerging market context, but a little bit below countries like Turkey, Poland, Romania, regional peers. What was very significant in these years though, these years up to 2019, chart on the right, was much lower inflation. This is a problem of the region before the crisis, before 2008. That really changed in the years after the crisis. Inflation really came down a lot, everywhere in this region. This was a really positive story that we've looked at a lot over these years. A really decent, robust growth performance consistently coupled with very, very low inflation. That's a new reality for this region, and something that we see as being very positive. The external competitiveness of the region, it has been a problem. Historically, it has been a problem, but it's improving a lot. A big reason why it's improving is the FDI attraction. That was already mentioned, I think by both the previous speakers. This region is the leader in Eastern Europe over the last 10 years in terms of attracting FDI relative to its GDP. It's really a great success story. Although there is still a problem of competitiveness, you see the gray bars here, a lot of countries still run current account deficits, some of them quite big relative to their GDP. They also attract a lot of FDI, that's the orange, to finance these deficits. They're building increasingly competitive manufacturing sectors. That's the core of the growth model, especially in Serbia, for example, and that's helping to improve the competitiveness of the region. What I think is a challenge, and I'll come back to this towards the end as well, but just to mention it now. What is a challenge of this region, but it is a challenge for Eastern Europe as a whole, Western Balkans is by no means unique, is the demographic story. The declining working age population, and at least in some countries, deficiencies in the education system. This is what has to improve, and I will come back to that towards the end of the presentation. That was the big picture. That's the context. That's how we see the region. Some strong points, some room for improvement. In terms of the pandemic, this region actually came through the pandemic pretty well. This chart shows the cumulative growth for 2020 and 2021, so the downturn and then the recovery, all of Eastern Europe and then some Western European comparators on the right. The orange bars, the region we care about, you can see most of the countries are rather towards the top of the distribution here. Serbia was, after Turkey, the best performer in the region over this period. Also Albania, Kosovo, Bosnia, Slovenia did pretty well, relatively. Both compared to the rest of Eastern Europe, but also especially compared to Western Europe. You can see that the Euro area, countries like France, Germany, Austria, and Italy did much, much worse, in these years. How do we explain this resilience and strong recovery of the region in the pandemic? Well, I think there are a number of factors. One is, certainly from the second wave, the winter of 2020, restrictions weren't as tight. There was a clear prioritization of the economy over public health from that point on. Second thing is the relatively low share of services. This success in attracting FDI into the manufacturing sector really helped. Of course, Montenegro, Croatia, tourism dependence is a bit different, but the rest of the region, less exposed to services. That was the sector most affected by the pandemic. What we also saw was really a rapid and very impressive adaptation to the pandemic. We showed in the study every single wave in this region, the economic hit was smaller than the previous wave. Firms, banks, consumers, workers, all adapted in a very impressive way to the pandemic and kept the economy going. We saw also good policy responses in the region, and I would highlight Serbia actually as a best practice example in that sense. Governments acted well in a lot of this region to stimulate the economy through the pandemic. We also saw, and this is very important, good response from international organizations. That's especially important, so people like the EBRD, the IMF, for the less developed economies of the region, so Bosnia, for example. Just as this story was looking really good, just as the recovery was becoming strong and entrenched, the war started. We see very clear, visible on economic sentiment everywhere. In this region, it's not as bad as in some other places like in Turkey, but you can see the downturn in economic sentiment across the whole region. I think it's clear why that is the case. Our projections, we do projections for the next three years. We just released them last week. We still think every country in this region will have positive growth this year. We downgraded most of them, but relatively, it still looks okay, at least in the baseline scenario, which are the gray bars. If there is an EU embargo on Russian oil and gas now, which looks, I think, quite unlikely, but if it happens, of course, the picture changes a lot. To take that into account, we also have this adverse scenario. Those are the orange bars. There, you can see the situation looks worse. Some countries in this region would still post positive growth, but much, much lower. In the baseline scenario where we don't have this big embargo straight away, there will still be. The story's not as positive as it was, but we will still see this resilience across Southeastern Europe. Similar story for inflation, but the other way. In the baseline, we're gonna see higher inflation. Inflation is certainly back in the region, but it won't be extremely painfully high unless we have this embargo and this adverse scenario straight away. In that case, I think we'd see double digit inflation everywhere. The region does have a huge, or parts of the region do have huge reliance on Russian gas, especially Bosnia, North Macedonia and Serbia. I think the story is very well-known. In terms of the financial contagion, and I think many of you will know this story very well, we have seen pressure on exchange rates especially against the dollar. Chart on the left shows the region and other countries from Central and Eastern Europe. We've seen this weakness of currencies. Not especially big, actually, in the Eastern European context. The countries of Southeast Europe are actually performing better than countries like Poland and Hungary, EU member states in that sense. A lot of this has been the way central banks have stepped in, and I wanted to emphasize this point. I think it's important. Chart on the right, central banks have big reserves. They have big firepower to use against this, and we've seen big interventions in currency markets across the region, going from Serbia, where FX reserves are about 20% of GDP, up to Bosnia, Croatia, where it's about 40%. Obviously, Croatia with the euro accession coming up, this is especially important. We've seen this intervention, and we've seen this relative stability in currency markets. What we haven't seen so much is real interest rate increases. We've seen nominal rates go up a lot. You all know about that. In real terms, adjusted for CPI, interest rates are actually still pretty negative across the region. That's good from a government financing perspective, but maybe in other ways, less positive. How lasting is the inflation shock? This is a very important question. I think it's maybe the number one question in my profession at the moment. Certainly, it won't disappear quickly. Inflation is back. It's gonna be strong the rest of this year. We think probably, the situation will be better by next year. Inflation will be lower, partly because of the central bank reaction, although in real terms, as I said, it hasn't been that strong, but also because we see this higher inflation, it's eating into real incomes. It's going to reduce inflation. There's gonna be pressure from the demand side. We see that even already. That will continue and intensify this year. This worry about the wage price spiral, not so sure about that, to be honest. The 1970s was a very different time. Labor was organized in a very different way. I think that is, those fears are probably overdone, but it's very uncertain, a major uncertainty in all directions, and anybody who really has a very strong view on inflation in this environment, I would be quite suspicious of that. Turning to the last section of the presentation, probably the most important, the challenges and opportunities in this new global economy, and it is a totally different economy. COVID has delivered structural shocks that will last, and the war is now doing the same. Want to highlight first four challenges of the region. The first is the EU question. We've seen the process stall. Slovenia joined, Croatia joined, but for the rest, the process has stalled. Maybe it's starting again. There's some positive signs. Some momentum may be starting to return, but this is important. The whole story of economic and development in the region, it only works if this happens and if the EU accession process gets back on track. The second challenge is some of the fundamental weaknesses that the region has, and I would highlight three, institutions, infrastructure, and demographics. All can be overcome. I will come to that in a minute, but these, I think, are the real challenges of the region and where compared to a lot of the rest of Eastern Europe, the situation is not too positive at the moment. Third challenge affects everybody, but it's maybe especially important in this region, is the new geopolitics. We know that Russia is an important player in this region. China also is and increasingly so, actually. In this new context, since the invasion for this region, the balancing act between Russia, China, whatever, and the West is going to be much more difficult. From our perspective, from an economic financial perspective, the integration is overwhelmingly stronger with the EU, and that goes for every single country in Southeast Europe. It's clear what the incentives are from the economic and financial side, but we know we cannot fully take the politics out of it. Our sense is if there is a hard divide, if the region is forced to choose, there will be some loss, either giving up the relationship with one side, or the other. The incentives from our perspective are very much towards the EU side. The fourth challenge, I really think this is a challenge, but also an opportunity, is the green transition. It's very complicated. I don't have much to say about it now. It is, of course, a challenge for the region. There are going to be a lot of difficulties for the region, but it is also an opportunity. You know, this is an area where nobody's very advanced, actually. It's an area where Western Europe is also, most of Western Europe is not especially advanced. We see lots of opportunities actually for leapfrogging in the new green economy. Those are the challenges. I want to finish by emphasizing two big opportunities. The first is the investment story of the region and so-called nearshoring. Since the pandemic, a lot of firms in Western Europe have become much more nervous about how extended their supply chains are. This is intensified then I think by the war as well. What we find, we've done some studies, some surveys, German firms especially are thinking very seriously about shortening supply chains. 40% of German firms are worried about their supply chains. Within that, two-thirds are considering changes or considering nearshoring, taking production out of Asia and moving it into closer markets. In that sense, Eastern Europe, Western Balkans is absolutely first in line. 40% of German firms is a lot, and this could really be a very significant change for the region if it takes the opportunity. Can it take this opportunity? Quite possibly. Three boxes here, start on the left. What German firms already in this region like? Proximity to Germany, knowledge of the region, relatively low cost. That's why they're here to start with. That puts Southeastern Europe close to the front of the queue for this nearshoring. What new investors care about, so potential new investors, is the availability of skilled labor and the political stability and governance question. They care much less now about labor costs. The level of wages. That's much less important than it was in the past. That's no longer the clear advantage of this region. What they're worried about, when we ask them in the surveys, is unfortunately both those things in Southeast Europe. The governance question and the availability of skilled workforce. They recognize the region has very good workers. That comes out in all the surveys. They're very happy with the quality of the labor. There just aren't enough. These are the two things. I think the policy priorities for the region, for policymakers in the region are very clear. It's the governance question and the availability of skilled labor question. That's how the region can take advantage. If they do that, the upside is potentially pretty huge. We've said already, I think all three of us so far have said this, the region's been very successful in attracting FDI relative to its GDP. That's true. The GDP is still quite low. In per capita terms, the stock of FDI in this region, and that includes even Croatia, Slovenia, the more developed markets, is very low compared to the real success stories of the last 30 years, which are countries like Czechia and Estonia. If the region can take this opportunity of nearshoring, which I think it can, if it gets the policy right, the upside potential here is potentially pretty huge, and this is a very interesting development strategy for the region in the future. The second opportunity I wanted to emphasize is digitalization. Digital economy was developing fast. Anyway, IT hubs, including in this region, were developing fast. Belgrade is an important IT hub already. But the pandemic delivered a huge digital shock. I mean, it delivered 10 years worth of digital improvements in a few weeks. What this does is it changes Europe's economic geography. The defining feature of European economic development the last 30 years in this region, in Eastern Europe in general, it's been proximity to Germany. That's the chart on the left. Sorry, it's so small. Basically, countries like Czechia, Slovakia, a huge advantage given the geography over this region. That will now change. That's changing. As more and more of the economy is digital, online, this pure geographic factor is less and less important. What we see is already some tentative signs of this, the chart on the right. In the last 10 years, in North Macedonia and in Serbia, so two of the countries of the region, we've seen what we call brain gain, so meaning, net immigration of younger educated people, and this is completely new in this region. This is a complete change of trend to everything we've seen in the past. Our hypothesis is basically, these are young people from the region. They go to Germany or somewhere to study, but then they come back and they work in digital jobs, in IT jobs, because in this new digital economy, they don't have to be in Germany anymore. This, of course, in the context of the demographic challenges I mentioned, this is probably especially important. What especially the non-EU members of the region need? Well, they need this deeper regional economic integration, which we heard about in the previous presentation. I endorse everything that was said. They need these domestic reforms, especially on the governance side, on the institution side. There's progress, but it needs to continue. But that alone is not enough. The region needs a much firmer EU accession perspective. The whole thing will not work without that. Even if we know that membership will not happen next year or the year after, there needs to be much deeper economic integration with the EU now. And there are lots of ways that that can happen. We've published a number of studies on that. There's a lot more that can be done with creative thinking. But a couple of examples would be. Well, probably the best example would be inclusion in the EU budget, which has been such a huge advantage for countries like Hungary. It's financed so much of the infrastructure, and this region hasn't had that, or at least the non-EU members of the region haven't had that. This is something that we constantly push in our studies as well. That was it. Just to conclude, because there's a lot of information there. In 2020, 2022, the global economy suffered two pretty huge shocks, and they will deliver very lasting structural changes in a positive and in a negative sense. Production chains will shorten, so this nearshoring will happen. Just a question of whether the Western Balkans can take advantage of it. Inflation is back, at least for now, and this move towards a multipolar geo-economic order has accelerated. It's not like it wasn't happening anyway, but of course, with the war, it's accelerated massively. This region, Southeast Europe, mostly came through the pandemic pretty well, at least the countries that are not extremely reliant on tourism, and the recovery was strong and on course before the invasion. This year will be difficult, especially because of inflation, but that should improve from next year. The region faces challenges. I don't want to downplay those. The stalled EU accession, but you know, hopefully that can start to move again. Governance, demographics, I mean, there are clear challenges that the region faces. But nearshoring, FDI attraction, and digitalization are major opportunities for this region. There's a clear case how this region can benefit from them, and if policymakers at the local level and also at the EU level do the right things, we are very optimistic that this will happen and that there is a very bright future for this region. Thank you for your attention. Ladies and gentlemen, we are all aware of attractiveness of our region, but on the following panel, we will analyze how it can also be a great investment opportunity. Let's see who will take us through this interesting topic. We will discuss on this topic with Victor Erch, analyst in the Redwheel Emerging and Frontier Markets team, with Mr. Aleš Ipavec, CEO of Ljubljana Stock Exchange. Samuel Goodacre, JP Morgan, Executive Director and Head of CEEMEA Banks Team. Mr. Richard Grieveson, which we just had on the stage, as you know, Deputy Director at Vienna Institute for International Economic Studies, and Mr. Matko Maravić, CEO of InterCapital. Welcome, gentlemen. We have planned 30 minutes plus 10 minutes for questions and answers. Hopefully, we'll have enough time for that. I'll start with a question for Richard. Vienna Institute for International Economic Studies has firsthand expertise of the region and publishes unrivaled comments and analysis on events in the region, as you have just shown in your presentation. Would you support the thesis that gathering reliable, up-to-date, and on-time information about events in the region presents an important bottleneck for better understanding and closer ties with the region within the region and internationally? It's a good question. I'd say it's very mixed, actually. I mean, there are countries. We look at the whole of Central and Eastern Europe, the former Soviet Union as well. I would say in that context, the reliability, quality, availability of the data from this region is not too bad, actually. There are a couple of countries where it's still challenging, where our statistics department would certainly say it's still challenging. Bosnia, I think Kosovo, where you really have to go still to the websites, the PDFs, type it by hand. There is still some of that. More and more, we see this region integrating with EU data standards, more and more with Eurostat norms. That's certainly the case for Serbia, for example. The situation is improving more and more in that respect. I would say that, relative to even 10 years ago, data, reliable data, up-to-date data, is much less of a bottleneck than it was. It's improving all the time. Okay, great. Mr. Maravić, your brokerage house has commanding market share on Ljubljana Stock Exchange, and it executes around every fourth trade on Ljubljana and Zagreb Stock Exchange. How does a regional brokerage house see the evolution of stock markets, and what do investors expect from you? Is it good research or cheap execution, capacity to find counterparties in block trades? What is it? Thank you for the question. I first want to use the opportunity to welcome everybody being here and being online. Secondly, to congratulate the entire NLB team for putting this event together in this beautiful venue in a great city. A real privilege to be here along with my colleagues. I'll answer the second part of the question first, I guess. We have been a fairly small brokerage house 15 years ago, a couple of percentage points in market share. Since then, as you pointed out, we hold roughly 25% both in Slovenia and Croatia. Our growth was primarily through institutional flow. We were always institutional broker. We didn't have many retail clients. We were, I guess, fortunate enough to go abroad fairly early and attract these investors to the region. Roughly 70% of international flow in Slovenia goes through us, roughly 50% regionally-wise. That's the story of our success, I guess. Now, coming to the first part, it's actually not good that we hold 25% of the market share. That means that the market development has been subdued. It means that there were no new entrants. I mean, it's good for us, but as for the market and long-term perspective, it's not natural that a brokerage house holds such a large market share. The reasons for that and going forward, what we believe or what I personally believe needs to change is always the typical same old story. I'm not gonna go into that one, that we are lacking large and scale listings. NLB was probably the only large and scale listings we had in the region in the past 10+ years. Majority of them should be coming from the government sector, but it's, I guess, not in our control. We are preaching about it, but it's not that we can do much about it. What we need to focus on and where growth is lack of retail participation on the domestic market. It's not just on domestic market, it is in the finance sector in general. Roughly 3.5% of total wealth of a household in Croatia is in financial assets. It is roughly 7% in Slovenia and roughly 20% in the Euro area. Heavy, heavy underinvestment. We need to make a push that every single household in the region owns financial stocks, funds, and that part of it is from the region. Thank you very much. Now a question for Mr. Ipavec. The simplest trading on Ljubljana Stock Exchange in many ways resembles typical frontier market trading. Low liquidity, weak market efficiency, coupled with a certain amount of information asymmetry. Many large investors find valuations on Ljubljana Stock Exchange compelling and would like to invest more, but it seems that they're afraid they will not be able to sell quickly. A lot of transactions occur through block trades, and issuers have selected market makers to narrow bid-ask spread. Do you think your resources are best spent with encouraging institutional or retail trading? In what way and why? First of all, before I answer your question, let me thank the organizers, our dear colleagues from NLB for inviting me to this eminent event. I mean, Ljubljana Stock Exchange, of course, is focused on different segments of investors, be it retail clients, corporate clients, foreigners, domestic clients. What we are seeing in comparison to other stock exchanges in the region is that percentage of retail clients is relatively low. It's around 28%, and this is something we would like to address. That's why we also, after 10 years, implemented market makers. Majority of our stocks in the stock exchange has liquidity providers. We also, there are two companies listed, 7 ETFs on our stock exchange, which was also the case after 10 plus years. We are putting a lot of effort also into the financial literacy, which is quite low in Slovenia, even though we are quite developed country. Yeah. Our focus are all investors, but where we have to do our homework are especially retail investors. Okay. Mr. Erch, now, let's go to you. At Redwheel, you manage almost $24 billion. You believe you can deliver long-term value to your clients by being active and having as little unnecessary restrictions. What are the most important characteristics, such as quality of the management, valuation, strategy, macro environment for a market or company when you consider investing? Well, thanks for that. Thanks for, you know, inviting me into the conversation. Thank you to NLB for hosting this. Welcome. Amazing inaugural CMD at this fantastic venue. I feel like a musical star for the first time in my life. Welcome. You know, in terms of what we look at in and across the globe in markets and countries that we operate in, a lot of the factors, Richard, you touched on in your presentation, but by and large, over the last 10, 15, 20, even you could go to 100 years back, we believe there are three main paths of economic development of a country: through commodities, through tourism, and through new factories of the world or, you know, FDI inflows in that sector. If the cash inflows into the economy from those sources is reinvested correctly, you can really create this amazing virtuous cycle of higher domestic employment, driving consumption, driving urbanization, which then again drives higher investment, and so on and so forth. When we look at, you know, across our universe of, you know, 70, 80 countries globally, we really look for countries that we think have the basics in place to be able to take advantage of those. That would be an educated workforce, good infrastructure, and a willingness to spend on that infrastructure with a government that can implement those projects. Equally important, fiscal monetary policy that is conducive to growth and, you know, promotes stability, and I think that's something that, you know, the region definitely has too, in that aspect. When it comes to the companies that we look for, I mean, strong management teams, experienced management teams that we think have a very credible plan to execute and to tap into that secular tailwind. From a valuation perspective, we're growth at a reasonable price investors. You know, we can invest in companies trading on 30x earnings as well as 5 x earnings, as long as there is a good trade-off between the growth that they provide. That's really an attractiveness, you know, of this region, and that's why this region can be as attractive as Vietnam, where growth is higher, but so are valuations. Lastly, governance, of course, you touched on it too. It's a super important factor, but today, it's no longer enough to just have governance and, you know, protect us as minority shareholders. You know, we also need to have a very strong environmental and a social agenda and, you know, we continuously push companies like NLB to align with us and align with international goals on that. A lot of different factors, but hopefully, that gives a broader overview. Thank you. Thank you, Mr. Erch. Now, let's have introduction for Mr. Goodacre. You and your team follow financials in CEEMEA region, so from South Africa to Poland, basically. You specifically cover key Turkish, Polish, Czech, and some Russian banks, OTP from Hungary and NLB from Slovenia. You initiated coverage on NLB in December 2018 with a report titled Yield Play in Former Yugoslavia. Can you explain the key differences in how banks operate in this region and in other markets? How you see this region from the perspective of risk and opportunity? You don't need to. It's already on. Just fire at will. Righty-o. Well, thanks again, everybody. In fact, I'd echo Victor's comments. It feels very special to be here on stage. In fact, as a youngster, I aspired to being a musical theater dancer, but I can't dance. That's why I now analyze banks across the region. I think that I mean, three things strike me really on the back of your question. The first one is that I would argue the business model of banks in this part of the world, in CEEMEA and perhaps to a certain extent in emerging markets more broadly, are actually quite simple. You know, simple businesses. They historically have been deposit takers and lenders. We can see that in the fact that revenues in CEEMEA on average are 80% net interest income, and in perhaps some of the more developed European markets, that's as low as 50%%. I think that firstly talks to a lot of growth opportunity outside of what traditionally has been banking in this region. We're really excited about some of the ancillary financial services. I'm sure Blaž and Archibald will go on to talk about this later. Effectively, it's been a region full of growth, and we would expect that to be sustained with new business streams going forward. The second thing that strikes me about EM banks in this region, is that they have been highly profitable. If you look at our coverage, in developed Europe, for example, this year, we expect the average ROE of a European bank to be high single digit. In CEE, in our coverage, it's 14%. You know, partly that's high rates, high growth and whatnot. The third thing I would say is that sort of returns have to be considered in the context of risk, and it's something we've all sort of spoken about. That would bring me on to the point of cost of equity, because you have to think about the return of a bank relative to its cost of equity. I think investors sort of think about investments in terms of excess return, particularly when marrying it up versus valuations. That then leads us onto a vastly interesting discussion on politics in the region, some of the headwinds banks are facing, and I think we'll go on to find that it's not, you know, a journey without its bumps, but one that we think banks here can sustain and thrive in. Okay, Richard Grieveson, can you let us know a bit about your approach to understanding the region? Which indicators do you see as leading or at least coincident? How can an investor separate noise from relevant information? To ask differently, is political turbulence around elections relevant, or should the investors focus more on long-term underlying economic data? Oh, again, a very interesting question. I think again, it's a very mixed picture in the region. I mean, this is one of the problems, that people from outside the region will see the region as a whole. We encounter that even in Austria, which I think, you know, most people in Austria have some understanding of this region, but even there, and I think it's even worse if you go further west, to see it as one region which functions in the same way, and that's the whole story. Of course, it's completely differentiated. I mean, one of the things we found in these studies and these surveys we did is that there were countries in this region which are seen by German investors as strong in terms of political stability. Of course, there's some political noise. Of course, in some of the countries of the region, there's a lot of political noise. But even countries which I think often from the outside, people who don't know the region, are seen as risky. Once firms have a presence here, they don't feel that at all in many countries. They see basically between elections, stability in policy making, which is the main thing for them, you know. It's that there are no big shocks. Just as a small example, I was in Turkey last week, and this was. It's the whole story there, you know, these constant policy initiatives which come out of nowhere. And I think most of the countries in this region, that's actually not the case. That's actually, in a way, a positive for the region. You just have to get people here first, so that they see that. I mean, in terms of what are the most important indicators, again, it really depends on the country. I think again, it's such a differentiated region. You have countries in this region like Serbia, North Macedonia, which are integrating successfully into the manufacturing core. My phone's cutting out. Let's borrow one from Victor, yeah, we'll change. Apologize. I mean, countries like Serbia, North Macedonia, really integrating very successfully into the Central European manufacturing core. You know, they're following a kind of Czech, Slovak growth model, which has been very successful in that region, and I think they're doing it quite successfully. We have other countries like Croatia, Montenegro, which are really tourism economies. What indicator you look at, it really depends on the country. I mean, of course, we look always at the fiscal indicators, the external debt indicators, the volatility of the exchange rate, all of these things to look for problematic cases. There are risks in this region in that sense, certainly, but I would say again, by broader Central Eastern European standards, not especially. I think to conclude, I think this region still has a bit of a problem with how it's seen outside. Firstly, that people overstate the risks of this region from the outside if they don't know it. Secondly, that they see it as a whole, and they don't see the differences. Once people get here, that goes away pretty quickly. As you said, between the elections, everything, business as usual. Now, question for you, Mr. Ipavec. Again, Ljubljana Stock Exchange has 27 listed companies that at the end of 2021, had combined market capitalization of EUR 9.5 billion. Combined value traded in 2021 without block trades amounted to approximately EUR 320 million, indicating substantially lower turnover as compared to developed stock exchanges. What can you do or are already doing to improve ease of trading, cost, access for investors? In short, what would you say to all the investors looking at this Investor Day to entice them to trade on Ljubljana Stock Exchange? If you compare Ljubljana Stock Exchange to the developed stock exchanges in the western part of Europe, I fully agree with you. We are just not on that level from all respects. If you compare Ljubljana Stock Exchange to the stock exchanges in the region, which is our more natural peer group, then we are speaking of one of the best performing stock exchanges. Yeah, indeed, our market cap right now just equity is EUR 9.5 billion, but it used to be 5 billion less than five years ago. This is 90% increase. Our daily turnover five years ago was less than EUR 1 million. Today, it is EUR 2.2 million, which is 120%. Let's say last year our average daily number of daily trades was 130. Today is 240, which is again, substantial, 85% increase. As it's often the case, you can look at things as half empty or half full. Let me answer your question. What would I say to the investors? Slovenia, generally speaking, as an economy, is ranked top 45 best performing countries in the world by GDP per capita. Obviously, I cannot comment on specific shares listed on the stock exchange. This is true also for NLB. General understanding of analysts and investors is that companies on the Ljubljana Stock Exchange, or better, the valuations of companies are relatively low with high dividend yields. We are also part of European Union, which means that we are committed to the European regulation. We are also member of European Monetary Union, which means that for European investors, they don't have exit risk. Lastly, our trading platform is Xetra, which is also widespread platform among biggest stock exchanges in Europe. In a nutshell, I would say that investing on Ljubljana Stock Exchange is investing in a European country which is stable, which is developed, which is modern and transparent. Due to the history of 50 years of socialism, we have not been able to fully develop our capital market. As I said before, the capital market is developing slowly but continuously, and we are growing. I would say that Slovenia is some kind of sleeping beauty. Actually, I would say that the whole region is sleeping beauty. Dear investors, we are waiting for these magical keys from the prince. I wish you this growth of 190%, 120% every two years. We know that this is not sustainable, but at least it's a really stable and positive trend. We are ready for questions. Mr. Maravić, now a question for you. Your sister company, InterCapital Asset Management, created ETFs on Slovenian Blue Chip index and on Croatian Blue Chip index. Both are listed on Ljubljana Stock Exchange and Zagreb Stock Exchange, and you are providing market making activities with narrow spread to INAV. Are you thinking about listing this ETF on any other global stock exchange and opening this region's capital markets to retail investors in other countries? To answer it, yes, we do plan to go further abroad with the ETFs, probably in the regional markets, in parallel to creating an ETF for the local market, coupled with Croatia and Slovenia. In general, listing of ETFs has been highly successful, especially in Croatia, and it is another product to attract, as I mentioned earlier, retail to the market, because especially in Croatia, not the case necessarily in Slovenia, it's the most tax-efficient way for retail to participate in the market. It's a total return ETF, so no dividend, no dividend tax, and after two-year holding period in Croatia, there is no capital gains tax. It's for over two years it's actually a tax-free instrument, and you do get access to the best and most liquid companies in the region through a single click. It was in a way our way to attract new investors and retail to the market, and I think we succeeded that, especially in Croatia. We listed them in Slovenia a while ago and hope to develop at least the same level of liquidity and the same level of interest on that market as well. Going abroad is gonna be a challenge, but I'm sure the colleagues will pull it off. It was challenging, although it seems simple to list it domestically and it succeeded, so I really hope that soon enough we'll have it on another exchange. If I may, I wanna sort of tie to what Aleš was speaking to all the investors who are here and online. Yes, the liquidity is not great. It's not in line with Germany or U.S. We are aware of that. In this market, whoever wants to get in, can get in via block trade. It's gonna take time, but you will get a position, and you can build a position. I think that's very important. You do need some more patience. Again, if you're coming to this region and being patient, it is natural that you're buying at very, very good valuations. That's. I mean, it sort of ties together. You're not paying the multiples you're paying in Germany or you're paying in the U.S. for the same sector, for a similar level of the company. Don't be discouraged just because the liquidity is low. Brokers can get you a large block to enter the position. That's more for the institutional crowd, I guess. For the retail, as I said, we need to develop it. Okay. Yeah. I would just like to reply to Matko. Even more important for investors to come in is to get out of the positions. Yeah, I mean, this is the fear. I mean, that they would be stuck with the positions in this region. I must say, yeah, as Matko said, we cannot compare with Western countries. Regarding the small capitalization, it's also obvious that investors would not have positions in billions, so you don't also need liquidity in I don't know, in hundreds of millions per day. Liquidity is there, and it was there also when we were facing very, very dark days in March 2020, in February this year. Even more important, not only that it was this, there were not a single day without liquidity on Ljubljana Stock Exchange, but even though that, our index plunged for 30%, it recovered really fast and it was announced or ranked in 2021 one of the best performing indices in the world. It was 30% increase. Even now, after all the mess in Ukraine, we are still around 15% below the record high of the last 10 years. Not only liquidity, but also the recovery of the market was really fast. Stable. Yeah, you may go, Matko. Yeah. I don't wanna steal the show discussing with Aleš, but. Okay. The thing about exits, yes, but majority of the investors that came into the region, foreign investors initially said, "We want to be here long term because we do see a long-term value in the company." We don't have many investors coming in and going out in two days. That's not the fact. It's usually the long-term investors. Usually, those investors were exited when there was a panic on the market. Not necessarily domestic, a panic either with them having outflows in their funds, so they need to sell everything. Then they come sometimes say, "Look, it was hard to get out." Yes, it was hard to get out, and that's the fact. It's truly especially in these types of situations, like Corona style situations, it's even much harder to get out at a proper valuation. We didn't have many problems with international investor exiting when there was so-called a normal market, right? It's usually the problem when there are external shocks happening. That's the case, and that's the risk every investor needs to incorporate in their cost of equity when coming into the market. It's a risk that's known and should be incorporated. Okay. Also, I would like to encourage any of you gentlemen, if you would like to debate, you're open, we're open for debate. Unless that's the question, I have question for you, Mr. Erch. No, I mean. You may comment. I believe that's the one. Just let it. This one? Yeah, yeah. Perfect. Just give it something. Yeah, no, exactly. I would, you know, reiterate the comments that you made on, you know, the longer term attractiveness of the region. Yes, it's clear, the whole world's going through, you know, a cyclically tougher time at the moment. As we look at those, you know, the potential for massive FDI inflows over time, the nearshoring aspects that we're seeing, not just in manufacturing, but also in the kind of digital factories of the world, as you know, we're moving away from Indian outsourcing onto nearshoring in that sense. Significant secular tailwinds that are here. Yes, as you mentioned, it is a less liquid market. Comparing it to some of the other global markets that we invest in, it has slower population growth, it has an older population. Yes, it does limit the potential GDP growth rates, but the region will keep growing at 3%-4%, you know, sustainably, which is very, very attractive when you consider, again, valuations and the cost of equity that you're putting on the market. I think that speaks for, you know, yes, the cyclical, you know, headwinds at the moment, but over the longer term, I think, you know, the trajectory is very clear. Yes, like you said, it is a less liquid market, which means you need to have a long, you know, a longer term time horizon. You need to have long-term capital that backs that. Yes, you know, broader capital market development, market cap to GDP, if I take the SEE region as a whole, is 10%-15%. I mean, as we look at the larger emerging markets of the past 20 years, they also started at 10%-15% of GDP. They're now at 80%. It's clear we do need some more, you know, privatizations. We need some more participation and to get a true reflection of the GDP in the stock market. That'll come as the countries develop along that path of the economic development, I think so. What can we do or what we should do to improve our allure for the investors? Well, I think, you know, and something we speak to our holding companies about liquidity is, you know, usually a function of price. There is, you know, there isn't as much liquidity as there could be because, you know, sellers aren't willing to sell at this level. They're holding on for a better level. As the company keeps developing and the country as a whole develops along this path, at some point, you know, it'll trade on 1x earnings, and it'll be too cheap to ignore, and the liquidity will sort itself out over time. I don't think you can manufacture liquidity. Yes, you can help it. You can broaden the market. As the country develops, I think that works itself out over time, and we've seen that multiple times over. Mr. Goodacre, let me ask you. Shortly after the acquisition of Komercijalna Banka, you issued a favorable report on NLB. Can you share with us your views on the banking sector consolidation? The financial reasoning behind it, strategic rationale, what would be the price paid that would make you wonder or raise your eyebrows? Have you made any analysis on the correlation between banking sector profitability and market concentration? Yeah. Look, I think consolidation is a really interesting theme and actually a really important one. Biggest isn't always best, but I think in the concept of banks, they are, in effect, I would argue, scale businesses. If you have, you know, one client or 100,000, you need a branch or historically have needed a branch. I think what we're seeing across CEEMEA is that banks which have had subscale positions haven't fared as well either in terms of returns or valuations. I think echoing a point Victor said earlier about investing in a management team that you think has the correct strategic vision is really important. NLB obviously is one that fits the bill. A bank like OTP in Hungary also is sort of on that path. Because if you look across CEEMEA, banks or the top sort of five to 10 banks have on average a cost-to-income ratio between 40%-60%. Those in market positions 10 and beyond typically would have, you know, 80% or 90%. They are and have been very limited from a profitability perspective. I think the region is ripe for consolidation. I think the issue that we'll begin to face is, are there credible and attractive assets? Because there has been a huge wave of M&A over the last three to four years. In terms of valuations, I think when some banks embarked on an M&A spree sort of 15-20 years ago, they were paying a lot. I think one thing that investors will be mindful of now is any goodwill generated. I think if, I mean, again, using OTP as the example, they've been quite proud that they haven't paid on average more than 1x book because they no longer want to generate goodwill. As we've just seen from NLB, you know, if you can generate significant negative goodwill, that's very good for your capital too. Okay. Mr. Erch, back to you. You have been an investor in NLB for some time now and have witnessed acquisition of Komercijalna Banka that was well perceived by investors. Management of NLB is quite openly discussing preparedness to execute further value operative M&A. What would be your take on that, and would you be supportive of large scale acquisition at the expense of the dividends? Yeah, thank you. I would just, you know, reiterate Sam touched on a lot of points that I wanted to. Go ahead. You know, to mention as well. Like you said, we've seen, you know, over the last ten years, we've seen significant, you know, success stories. OTP is one. Banca Transilvania in Transylvania and Romania, you know, acquiring market shares as Western banks retrench from the region. I still think there's more to go in all of that. I mean, their market cap's gone from $500 million to $3 billion in that same time horizon, so been hugely successful. You know, if we talk about the Southeast European region, GDP is the same as Romania, $270 billion. Yes, it's more fragmented. It's in eight to nine different markets, which means it'll take longer, a longer time to, you know, piece that puzzle together. We think, you know, definitely for NLB, there's no other bank that is more local to the region than them. If they're patient and disciplined, we think there's a massive opportunity set. To your point, you know, as well, we have seen prices, at the moment with NLB shares trading on 0.6x book, that does put into question that discipline and how much are you willing to pay and sacrifice in favor of paying out a dividend. That is, you know, a question that we're battling with too. In general, like you said, we do need to see M&A that brings scale, not just revenue synergies, but cost synergies. M&A just for entering a new market, I think can prove a lot more difficult than nice tuck-in acquisitions like the Sberbank Slovenia assets, for example, which, you know, very clear synergistic qualities. I think those would be kind of the price you're paying and is it cross-border just to enter a new market? Those two would be important factor for us too. Okay, Mr. Goodacre, it seems that we have come to a dilemma: dividend versus growth. We can see that many banks in Europe actually that which have to meet more complex regulatory requirements try to juggle between the ambition of consolidating their market position and at the same time returning capital to shareholders. What would be your preference, dividend and share buyback or value-creating M&A? I think it depends on the region and the investor. Perhaps we could argue that an emerging market investor might be more growth oriented, you know, for example. I think there needs to be a fine balance. You noted earlier that one of the reports we issued was called Yield Play in Former Yugoslavia, because of course, when NLB first listed, the dividend underpin was a really important pillar of the investment case. When they came to market, the implied yield was about 11-12%, obviously in euros. That did attract a lot of income investors, not just a growth oriented EM investor. I think in Europe, the market began to get very excited about capital return in general, and specifically buybacks. The ECB approved in the last three years, you know, 10+ buybacks. They were important drivers of re-rating at the European bank level. I still think in emerging markets, particularly in CEEMEA, that a valuation support from a dividend yield is important. That can't be at the expense of capitalizing on the very high growth opportunities in the region. Okay. We have just a few more minutes, hoping that we will have also some questions from the audience. I'll just have one more question for Mr. Maravić. InterCapital employs a number of analysts that provide coverage for most of the largest companies in the region, and by that, help investors overcome lack of reliable and available information about the companies from the region. To invest in smaller and less liquid emerging markets, you need reliable and trustworthy local partners. How knowledgeable are your investors? Do you see improvement of financial literacy from your local retail clients, and are you able to sell to investors story of the region or only individual names? Well, we do see the improvement, definitely. We have been investing in the research department for years. We have four analysts plus three doing the macro. It's a big important department within our firm because whoever's coming to the region needs a solid piece of research to even put the region on the table, I guess. Our research was primarily focused for the institutional clients. It is sometimes long and fairly boring piece with a lot of information, but it was not channeled toward the retail. The retail does receive it or does read it, but it's not necessarily a piece for buying EUR 2,000 of stock. What we do plan and what we did in the past year or two, started to produce more lean, simple pieces of information in order to get retail to start investing domestically. Because what we saw as a trend, we as a, you mentioned in the, you know, in the beginning of the panel, we hold 25% market share in two markets, but still over three-quarters of our volumes is not in Croatia and Slovenia. It tells you where the retail flow, especially, is going past year, I guess, it's going more to the U.S. market. We need to bring them back, and to bring them back, we need quality research or quality research tailored for the retail investors. Okay, thank you. We have just a couple more minutes, so let me check whether we have any questions from. No. Okay, we are almost out of time. We have to follow the agenda because we really have a lot to cover. Gentlemen, thank you very much for your takes on these subjects and for your participation. Let's hear one round of applause for our panelists. Now our next roundtable is all about success and, of course, our region. We have very interesting and experienced guests joining us, guests that will show that this region really is one of success and how can we make it even better. I kindly welcome Mr. Matija Bitenc, CFO of Petrol. Thank you. Mr. Fabris Peruško, CEO of Fortenova. Mr. Živko Mukaetov, CEO of Alkaloid AD Skopje. Mr. Emil Tedeschi, CEO of Atlantic Grupa. Dušan Milićević, Comtrade System Integration CEO. Mr. Aleksandar Kostić, Vice President of MK Group and board member of AEC Banking Group. Andrej Sovrović, member of the executive board of Delta Holding. Welcome, gentlemen. Thank you once again for your time. Mr. Tedeschi, I would like to open with you. We prepared some questions, but in preparation of this talk, we came to another question, which is, how do we even define this region? That would be first question for you. How would you define the region that we talk about? I mean, I think. We just need to have. Yeah. Thank you. Hello, everybody. I think it's completely individual. There is no one definition. For me, region is very emotional, but also a practical term. For me, it's impossible to sit in our factory in Izola and not consider, for example, Italy as a region of us, or Austria, where we are a leader in the pâté segment. Or even if you are staying in Vršac and not considering Romania or Hungary or Bulgaria as a part of region, I think it would be insane. Sometimes, when we say the region, we are talking about the former Yugoslavia, but I think that the region also, historically, business-wise, could be much, much wider. I don't have authorization to define the region. For me, the region somehow is for sure, for Atlantic Grupa, the former Yugoslav territories and countries, plus, I would say, for sure, Austria and Italy, less Hungary, Bulgaria, Romania, Greece, Albania, because we as a company, we don't have a business there or not significant business, but I think it's completely individual. Yeah. Thank you very much. Now I would like to go with the same question for you, Mr. Mukaetov. Having in mind that as a pharmaceutical company, you sell your products all over the world, of course, but generate more than 50% of your revenue in Southeast Europe region. If the question is, what is our region? Thank you very much. First of all, I would like to thank NLB Group for inviting us here. Really, it's a fantastic event, and I'm more than happy to be here. Having in mind the region, definitely, as Emil said from his perspective, from ours, it's a little bit, let's say different, which means that for us, countries such as Albania, Greece, Bulgaria, Romania can be treated as a region. Of course, the countries of ex-Yugoslavia. More or less, it's how we are feeling more like regional, even more domestic, I would say, for us, because culturally and from the other perspectives, it's probably a little bit easier to approach these markets. Our logic is that we should be global, that the region is just a starting point, and that we are all. Starting from here, we should find the synergies here. We should find the, let's say, potential, easier way of building of the teams which can build this global strategy for all of us. Definitely, this should be a starting point. Maybe just, a combination of a fusion, let's say, our logic. We have production in Belgrade, we have chemical laboratory in Ljubljana, and on other side, our legal corporate team is in Zagreb. We have together a mix, a fusion of something which have the base in this region. Thank you. Because I see that Mr. Tedeschi approves, I would just like to remind you and encourage you that we are open for debate. If you have anything to add on any question or to follow up, please do so. Mr. Milićević, moving back to you. Actually, first time to you, your take on region definition, but from a perspective of technology company group. First of all, thank you very much for invitation for this great event. Thank you, NLB Group, for having us here today, inviting us and giving us opportunity to be on this team. It's really fantastic. Talking about the region in terms of IT company, it's very specific. When Corona happened, we figure out quickly that few months after Corona, region in terms of IT company is going to be planet Earth. We figure out that engineer who is working, no matter in which country in the world, has same price and same contribution to the company wherever company is located. When we moved from day one to day two to work from home, engineers started to one week figure out that their home company, their company can be wherever in the world. This is the challenges that we are facing in IT industry to date. Not just we as IT company, I guess that all of you are facing the same problems with IT experts because now they are global experts. Price of those experts are globally equal. The people who went from San Francisco and moved to Texas when Corona broke out, those companies in San Francisco decreased salaries of these engineers because cost of living in San Francisco was not equal to cost of living in Texas. They figure out if you're living in Texas and working from home remotely, why should I pay the additional 30% for extra cost of living in some more expensive states in the United States? In terms of IT company, our region is global and practically we as Comtrade are already operating globally in even before Corona. We have offices in Manila, we have office in Boston, San Francisco, all around Europe. We started from this region, and practically we use capacity of this region. I guess if you are going to talk about the capacity region to extend our business all over the world. In terms of IT, our region is global. Okay, quite understandable. Mr. Peruško, now going to you. Your company has one of the leading market positions in retailing in Serbia, in Slovenia, and in Croatia. At the same time, we do not see your competitors trying to have presence across the region. How would you compare strategy of choosing markets and companies versus the one where you try to build regional market leader? I think that we inherited a part of our markets and the positions where we are operating. What we did in the last couple of years, we actually improved our capital structure and we started to be, I would say, one of the good examples from being one of the troubled child in the region, being someone who is bringing actually hygiene and in the business world, good liquidity, et cetera. We have still some of our smaller issues, but I would say that we did a great step. I would like also to follow up a question which you had earlier about region. I think that the changing paradigm, which started with COVID, where initial response was, let's close borders, et cetera, and protect countries and societies from moving around. It was a first response where we try to actually minimize the damage of COVID, but we quickly realized that we are not able to operate in this environment. In our case, we are one of the largest, actually we are the largest oil producers in the region. Our sourcing is mostly done here in Serbia, so you're not able to close border without actually allowing others to trade with you. Slowly, as borders were opening and we started to communicate more, the recent war in Ukraine impacted this region and will impact this region in the way that we are much more open to each other, and it will facilitate this process because it's very clear to all of us that now we need to solve all infrastructural issues here in the region in order to be able to operate as a region. I think that Čadež actually mentioned earlier rail communication. There is a part of the gas pipeline which needs to be to connect Croatia and Serbia, which was never finished before the end of Yugoslavia, et cetera. Those are actually infrastructural projects which will now start here in the region because they will push region to work together even more than previously. Actually, it will sort of make it more solid because we will be more exchanging goods and everything else between the neighbors more than ever, maybe. Let me make a joke. Some of us will not look for a mother somewhere else. It's here. Mr. Kostić, having in mind that your group solidified your market position in Serbia by recent acquisitions, and having in mind this merger between NLB and Komercijalna Banka, what is your take on perspective and future of further consolidation of banking sector in the region? Maybe coming first to the point about the region. Yes, you may. Yeah. Može? Yeah, go ahead. Coming first to the point about the region. We see this region as ex-Yugoslavia plus Albania. That's how our group takes on it. We are very saddened that we couldn't finish the whole transaction of all those Sberbank subsidiaries that we wanted to finish due to the unfortunate events that we all know. Buying, I would say, one of those assets was of course better than buying none. We see that there's a huge potential for consolidation in the financial market in the region. This we see as our playground, and we will definitely continue forward with new acquisitions. We have few in mind. Looking also, I would say, on the NLB and Komercijalna Banka, I mean, it's a great thing. We were competitors. You know, we came second best, sadly. Nevertheless, we're happy for them. I think we have. The management of AIK Banka and the management of Gorenjska Banka has a very good relationship with the management of NLB in Slovenia and of NLB Komercijalna here. So I think we're good partners. I think I'm looking forward to the further consolidations and who knows where maybe our paths cross in five, 10 years from now. Okay. You may applaud if you would like. No problem. Mr. Bitenc, we talk about the region itself and about big plans, but do we have appropriate and enough educated people in the region for all this to happen? Are people actually the asset which we can rely on? Do we have enough of, let's say, well-educated workers for all these things to happen? Maybe I'll try to answer it twofold. If you look at our sector, energy consumption, comparing us to our grandfather, grandmother, we consume three times more energy today than we did 50 years ago. That's enormous uplift. If we look at how much food we eat compared to the Roman times with the same stomach, basically, we consume two times more energy. Okay? I don't want to start with the water resources, where four billion people have water shortages today. Not in 100 years, today. That's half of the world population. We have issues with the land and so on. Today, we consume approximately six times our planet in terms of how much is capable to renew itself. Okay? Taking this awareness and applying that to our segment, so let's say we're talking about mobility. We know that there is a green transition going on in Europe. If you look at Slovenia, for example, today we have 1.7 billion vehicles. Out of that, 1.2 million personal vehicles. Out of that, 5,000 electric cars. If you look Croatia, we have 2.2 million personal vehicles. You have even less electric cars. We don't have established grid. We don't have enough infrastructure. I would say that we don't have the awareness that we need to change. That's on the demand side. We need to change. The people need to change to live in a better world in the future. On the other hand, if you look at the HR potential of our people in the region, there is a lot of potential. Of course, as all the regions in the world, we are fighting for everybody. Yeah. I would say there is enough knowledge with not enough people to do everything that has to be done in order to achieve our goals. We need to digitalize, we need to automize, we need to bring in the robot to robotize the processes. Really to focus on the most added value activities in our companies to achieve our goals. In a way, I would say, of course, there is a lack of talent if you take into account of today's way of working. If we can digitalize, automate, then I would say we have enough people to do that task. Well, Mr. Milićević, you already kind of answered a little bit talking about these workers in the industry, which can now be either San Francisco or Texas or God knows where. Talking about IT experts in the region, what is the situation? Do we have enough well-educated people? Because we are witnessing that there is, let's say, a growing number of programmers in the region. Do you find your skillful workers in the region and then outside, or it doesn't matter anymore, actually? For some reason, this region was ignored for many years. Practically, thanks to this generation of maybe foreign investors, somehow in last 20-30 years, we developed so many IT companies around this region. This moment, you have really big IT players who are existing in this region and operating elsewhere. Looking from that perspective, we practically had enough capacity in technical terms to grow our business. Today, when you have like, you know, Big Tech who is acquiring more IT experts in this region, you know, for EUR 140 million in one year, you cannot generate this number of people because today, IT industry is very friendly decision. Because we develop so many companies who are worldwide very known. We have to change our educational structure. We, the country figured out that like 10 years ago, and our owner seven, eight, 10 years ago figured out that we have to open IT high school. Three years after that, we opened IT faculty. Today, we have more than 800 students entering this faculty every day. Benefit out of that action, which we took 10 years ago, we are feeling today there is global shortage of the IT expert. We have to figure out, we have to adjust our studies programs to practical need of today's companies and today's economy. What Matija was saying, we are talking about automation, robotization. We have to, you know, introduce classes to the faculty in Ljubljana, Belgrade, Zagreb, that practically we get capable engineers who are ready to onboard in two months' time and to start working and bringing benefits to the company. We have capacity. Demand for IT capacity in this region is growing constantly, and we have to respond smartly on that occasion. Mr. Tedeschi, I think. Thank you very much. Mr. Tedeschi, I think you had I just wanted to add and maybe a little bit to create a little bit of turmoil, not that I would like to create the conflict, us versus someone else. The only lack what I see for the moment when we talk about the region is a lack of leadership. There's two main assets, people and the nature. There is limited resources. At the same time, I think whatever country we take, there is at least each of this country has two different society, like a wide, transparent society building creating the new values and the dark society which I would not define between private sector and public sector. Within the public sector, there are good people, quality people, sharp people which set up the right targets and want to help society. Generally, there is a lack of leadership. The leaders are the one who should create the floor for the discussion, for exchanging the ideas, for dialogue. The people generally with the certain talents, quality skills, they are around. The question is, are we capable to stop erosion of exodus of quality people, medical doctor, nurses, engineers, waiters, chefs, whoever, good salesmen, marketing guys, architects, builders, any human activities. The people are leaving because the good people, they have the options. It's our responsibility. I wouldn't say it's only politicians, because I'm very often for decades talking about lack of quality of leadership of elite within the societies. This is academic elite, it's a political elite, it's a religious elite, it's a trade union elite, it's a business elite, intellectual ones. They are extremely good example, positive example that there are companies and teams which are capable to grow, staying here and expanding the business, creating new values. Also there is a part of societies which is just asking, like, "Give me. I want salary. I want to be paid. I want to be paid double than today, and I'm not interested where the money is coming from." This approach is a sign for us, it's like alarm that the game is over if we don't wake up. I'm so glad to be surrounded and being the oldest one on this panel. I used to be always the youngest one among the panel. I think it's now your generation, even without dividing people to old and young, to change this paradigm. I think it's not the question, do we have enough engineers? I think this region is capable to produce even more engineers or number of engineers needed. It's a question of the leadership, much wider picture. What does it need? Change of educational system, vouchers, equalizing private education, public education, let students deciding, opening up the float. I don't have a problem that we are going to have a lack of engineers or importing engineers from India, from Pakistan, from Syria, from Argentina or who knows, from Ukraine or from Russia. It doesn't matter. It's always question of leadership. I don't buy the story that there is a lack. There is a competition for the good people. For sure, if you take, for example, Infobip, they don't have a problem. They attract the people all over the world. Take Mate Rimac. 46 nationalities work in the Rimac Automobili in Sveta Nedelja near Zagreb. It's possible that someone from Great Britain would come to live in our region. This is, for example, positive example. It's always question of a leadership. I will encourage all of us to take. It's in our hands. Are we going to be capable to create atmosphere, a legal framework, relationship, regulation to be sustainable? Otherwise, none of our companies will survive in this next 10 or 20 years. Today, average duration of a corporation is only 18 years. In the 1960s, when I was born, the duration of a corporation on average was 60 years, 60. Which means company exists, company disappears. The winner is going, who is going to stay. For that, you need a capable leadership. Simple as that. You actually led me to my following question to Mr. Sovrović, talking about sustainability. We can often hear that this region could be self-sufficient, self-sustainable. Having in mind how diverse is Delta Holding, what is your take on this sustainability? Is this region sustainable? Can it be sustainable? I would also like all of you gentlemen to take part in this answer as well. Definitely, yes. I mean, all that the previous my colleagues spoke about, it is about long-term sustainability. About what are the potentials in the regions, what are the work capacities in the region, and we are thinking about that. I would definitely say that the key point is what we spoke about is about the people. So definitely we are seeing acceleration of the business, all around the world and definitely in our region. What to your first question, I would say that the business itself is defining the region, and we are definitely looking to work in all the countries where we have the possibilities and we are welcomed. We are definitely seeing the lack of proper staff, and it is our fault. I mean, we cannot speak too much about what institutions can do. I believe what Comtrade is is a complete example, and in some of the ways, we did the same way within our company. We are trying to create the people according to our corporate culture, to our needs, and to tailor them. We are basically known for the fact that we are mostly hiring people without any prior experience. We are doing through different programs, and we are really trying to give them the best possible education in both in formal terms and in business terms. Going a little bit broader on sustainability, it absolutely connects to the energy sector. We are seeing probably the biggest energy crisis in the world, and we have probably came again a little bit too late to notice this. When there was this huge crisis in 2008, then the Queen of England asked the best economists who very well explained how the crisis happened. Well, if it is so obvious, how you didn't see it coming. Again, I would say that the alarm, as Emil said, is absolutely up for the wake. We need to take the matter of many different things within our companies into our hands. Look how we can educate, how we can not only educate within our companies, but how we can contribute to the society, how we can give back in many different projects. Definitely it is the only way for us to have a sustainable business. Because I believe we all in here, our companies are in business for decades now. One of our key advantages of the people living in there, it is that they are working here for a long time, that they see a prosperity. They feel they can find a new. They can grow in roles, and we really need to be thinking for future, not only for today. Yeah. It's in line with what Mr. Tedeschi just said, creating leadership. You are already doing something in that way. Mr. Peruško, I would like to hear your take on this, also what Mr. Tedeschi said regarding the lack of leadership and on the sustainability of the region itself. What do you think? If you are reflecting on sustainability, I think that our biggest issue is population decline, which is consequence of a number of things. Different way of living, but also, I think that the atmosphere in the region was not such that we created the environment where people will see a long-term growth for themselves. I think that the atmosphere in the society was not such that it would create positive enthusiasm that people will see that they are able to develop their, for them and for their kids place where it's good to live. This is the reason that we, in the last 20 years, lost around 10% of the society in the whole region. It's not only Croatia, Slovenia, Bosnia, Serbia, and South, it's also Hungary. The broader region with the accession to EU, number of people because of mobility moved. Now, we are in the position that we need actually to populate this region again. Definitely the shift in demographic which is now happening in Ukraine, where more than five million people left the country. This is one of the quick fix which could be for this region. If you are looking in the next 10 or 20 years, we are definitely not able to increase population just naturally. We will need to create more immigration. Emil mentioned Rimac, but they are also, if I'm looking out for Fortenova. We were able to attract people from abroad to work for us. There is a number of things which need to change locally in legislation and et cetera, but it's making us attractive to move here. This is taxation on salaries, et cetera. This will actually help us to be competitive with our offers to other regions in Europe, so that people will see this opportunity to live and develop here. Huge advantage is technology, because it doesn't matter where you live. You could live in Belgrade, Zagreb, Pula as Infobip, and work. Nobody knows where you are living. If we are changing the atmosphere in the society, if we are changing legislation framework, it will develop this region and provide much more opportunities for people to be here, to come here and enjoy life here and creating value here. We are not able to grow as a region without growth of population. This is one of the main drivers. Okay. It's productivity, one, but second, you are not able to grow so much with productivity if you are not growing with population. It will impact positively also real estate market, et cetera. This will provide a new fuel for the society here, and it will help us as a region to be competitive in the longer term. I would quickly agree with Fabris about the most important resource as being basically talent and people here in the region. That's one problem that we're facing as MK Group. We're really struggling to find in talent. Maybe it's the problem of the leadership, I don't know. But it's hard, I would say, to find the right talent for our group. The problem, I think, is also that the people who have left are young, the people who have stayed are older, and we don't only have a problem of decreasing population, but an aging population as well. Yeah, I absolutely agree with him. Food, which I think is a very important resource, I think we don't have a problem as a whole region. I think especially now with Serbia, who is a large net exporter of food, who has said the priority of Serbia will be to export to its neighbors, meaning Albania, Croatia, Macedonia. I think that's very important. I think it's very nice to see this cooperation, and the fact that we see that, actually we were one country before, and that's how we should behave, even though we are fragmented now into many. Energy transition, definitely an important thing. I think Serbia has plenty of solar locations down south and plenty of, I would say, wind locations on the east territory of our country. We are very active as a company there, and we very much believe that the renewables could be a very big opportunity for Serbia. I don't know. We haven't exploited Croatia so much yet or Slovenia, but you can maybe comment more on that. I don't know. You can, you can go, Matija, then I will go to Mr. Mukaetov. I would like to hear your answer also on the sustainability. Mr. Bitenc, go ahead. Yes. Maybe in terms of the supply of energy sources, of course, we are highly dependent on the world today. We really are facing immediate issues if the embargo, when the embargo is taking place, how to source the energy from other sources, other parts of the world. Even today, we have partners in the United States throughout the entire world trying to bring in the natural gas products, fossil fuels at the end. In this respect, it's very difficult to be self-sustainable and independent due to the scarcity of the resources in the region. It's a fact. Of course, what we can do in terms of the sustainability, of course, we can invest in renewables. We are doing that. In Petrol, we are doing that, I would say extensively. Two days ago, we just opened a new wind power plant called Ljubač in Knin with nine wind power turbines. Together, it is enough for roughly 30,000 households. That's our second wind farm. Now, we have started another solar power plant, 22 MW. We have a large pipeline in front of us. We are also in discussions with your colleagues from Delta to kind of start a joint project of solar power in the Delta system. I think we see that the awareness in the industrial part of our society has risen significantly. In particular, in Belgrade, where most of the multinationals have their offices, headquarters for the region. We see that there is a push from the Belgrade throughout the region, for example, through Heineken, Coca-Cola, that will require that their logistics services go to the, let's say, LNG, because it's more, let's say, environmentally friendly. We are together with them, we are setting the standards. Yeah. There is a lot of potential, in particular in wind and in solar, also in Serbia as well as Croatia. In certain countries, I can talk for Slovenia, we have to set up the institutional framework, so we are not satisfied with how much projects we've done at home. In Slovenia, for example, we have the largest solar power plant. It's 2 MW, so basically, it's very small size. There is a lot of potential which should be exploited. Of course, a lot of investments is required to do that, not only in building up the solar power plants, but also in building up the grid. A lot of investments will have to be made, so the government policies and also the funding is important in this respect. We have to work together. I believe that we can substantially increase the share of self-sustainability if we were running the same direction with the same pace. You mentioned the pipeline. Eventually, the name of the company will not be Petrol, it will be Electron, right? No, I wouldn't say that it should be Electron. Actually, the change from fossils to. No, we were discussing. It's a discussion which is ongoing in Petrol. We have a large piece, so maybe it could be power, for example. Ah. Because today, if you look at our portfolio, we are energy retailers. We are not in upstream. We are offering fossil fuels, we are offering LNG, LPG, we are offering electricity, we are investing heavily in production of hydrogen. Basically, we would like to be energy agnostic. If you're our consumer, if you're our industrial partner, whatever you need, you come to us and we'll provide it. Yeah. If I refer back to my first discussion, the consumption changed or increased threefold in the past 50 years. That's because our lives have changed. We drive more, the mobility has increased. We buy more, so we purchase more, so we are the capitalistic community. We have larger living spaces. We are heating, as well as we are cooling down our office spaces, our homes. Together, with progress, more and more energy will be needed. That's where Petrol comes into play, focusing, of course, on environmentally friendly solutions, which we started 20 years ago. That's when our department for, let's say, sustainable solutions has been founded. Great. Thank you. If I may, just one sentence. Yes, go ahead. Before Živko, just to connect all these things. I believe that the key to the sustainability is, apart from leadership, the knowledge. It is the world somewhere all around us. Because what is the sustainability? It is what we need to take the most of the resources that we have, and I believe this is not the case today. In terms of energy especially, we cannot invent something that we don't have. Of course, we are looking to improve and all the alternatives and renewables, but we need to use the resources that we have in the best possible way. Meaning, that we have the best possible people in charge in leading these companies, in importing the best practices from all over the world, and making the most of the resources that we have. I believe that is our first priority. On top of it, we can build on everything else. Maybe just to add. What happened really with COVID and this digitalization, we are competing for the same talent globally today. Yeah. That's why we need to kind of form attractive employer value propositions. Well, Emil knows the word. We retain the talent and we bring the talent in from the rest of the world. If you want to do that, we need to, I would say, upgrade our product, our services, to bring much more added value. We need to focus on certain sectors and align that from schooling on, from government policies. Yeah. We have to all run in the same direction with the same pace. That's the only way how we can manage the situation, because we face the same issue. We have very good schools, I would say one of the best schools in the world, so we produce a lot of talent, enough talent. How to keep it here, that's the question. Okay. I will go now to Mr. Mukaetov. The same question regarding the leadership talents. We all connected. Mr. Sovrović just connected it all in one sentence almost. Do you face lack of talents, lack of leadership? Do you? What is your take on sustainability of the region? First of all, I think definitely, that our biggest resource are people, and we should fight how to keep them here. I think that as a business community, as business leaders, we should be the advocate to society to increase the positive stories about good values, about how we should motivate them to stay here. It's a fact that we are living in society which is very much polarized, very much politicized, and that is on other side influencing, I would say, negative to the quality of life in which we are all living in this part of the world. Definitely, from this perspective, we should be proactive, we should be more aggressive in this promoting of these good values. I mean, I would say our example, we are aware that we can't expect too much of some of our, let's say, segments of society which are more related to the state. That's why we have, I don't know, program of practicing dual education. Now, we are starting education center, which we want to be a formal education school probably in the future, even faculty as you mentioned. Definitely, we should take more action, I would say. How to motivate the people to stay here, and definitely, the business community is, I think, one of the major players which can do that. Thank you. Go ahead, Mr. Tedeschi, yeah. We already mentioned the few dimensions or few items which are crucial to attracting talents which are born here or the talents which would like to come here, why they would do? I mean, first we need peace. If we are talking 30% of the time about next potential conflict, it's an end game. This is number one. Second, we need predictability because this is what people are looking for, especially the talents who have several options where to work and where to live. We talk about the quality of educational system because everyone would like to see for their kids, for our kids, what's here for them. With the COVID crisis, it's obvious that we are talking about the health service and system which has to be on the certain level. We have many positive things. We have infrastructure generally, which is in good condition. Yeah, there are project which has to be done, but still we have geographical position. We have a quality of water, air, and food, which is one of the best in the world. Take the expats which are coming to this our countries. Nobody would like to leave. People like to stay, but the moment kids has to go on the certain level of the school or university, you know, people are thinking maybe we should come back. Also, our local communities are not always welcoming foreigners. The big cities is one thing. There are certain region where the foreigners are not welcome. We have to become more global, more open and more respecting the differences. We have the lowest, one of the lowest density of the super quality geographical position, which is our asset. You know, density was a huge issue during the COVID time. It's our huge privilege. But we need. When I said leadership, we need a certain master plan which would not be only from the individual countries, but from the cluster of countries. Even individual countries can compete on certain level, but I think that we have a joint need. We need consumers, but same time we need experts on every level. How to attract, and we are not talking about the thousands of people, we are talking about couple of millions of people. It's up to us. If we have at the same time the people which want to keep status quo or can only survive in the certain crisis environment and conflict environments, then we slow down and then we are not competitive as a region. When I said about the leadership, I didn't want to criticize individual CEOs or board members that we are not capable. I'm thinking, it's our responsibility to be extremely active on that much wider frame. Otherwise, as Fabris said, 10% of population gone, it's not only lack of talent, it's a lack of the consumer for our goods and services. As Aleksandar said, our population is aging. Who is going to buy in 10 years' time our products and services? This is the question. I know who is going to sell drugs for the aging population. Okay, I would like, we already had some cosmetics. No comment. I mean still, for me the best Alkaloid product is Becutan cream. Becutan is for the babies. Yeah, for the newborns. Which means we need the newborns. Definitely. Okay, I would like to have a really interesting discussion, and we already learned about the region. For the people, for some investors and people watching us online and in the audience, which are new to this area, I would like to hear takes on how would you describe, even though we described it in many ways, but how would you describe the main characteristics, advantages, and opportunities of this region? I will start with you, Mr. Peruško, and then go to the right-hand side. If you were describing this region to someone who has never been here or Texas or somewhere. What are the opportunities, characteristics, and advantages? We heard what flaws do we have, but let's try to attract somebody. I would actually put this in a more macroeconomic context, which I slightly touched earlier, that COVID and war in Ukraine changed a lot in terms of how we are behaving. On war in Ukraine, I think that this will facilitate actually, joint projects here in the region, especially in ensuring self-sustainability in food, in energy. There is a lot of projects which ended in 1980s and they never finished, which will allow us to work better together. There is a nuclear plant in Slovenia, where Croatia and Slovenia are working on developing a second block. This is part of sustainability because it's decreasing CO2 emissions. There is, you know, Europe was developing in the last 30, 40 years based on the cheap gas coming from Russia. Now, gas will partially be compensated with the LNG. You need the pipelines between Croatia and Serbia. A lot of new investments are coming in energy with solar, et cetera. This is driven by EU agenda of let's decarbonize society. But also I would like to mention maybe one anecdote. In the recent elections in Germany, and when we are looking at this from the context of war in Ukraine, actually in Germany, two major ministries which are in charge of foreign affairs and economy are run by Green Party. This is actually putting a tone of the future development in Europe, where we need to come up with a new paradigm, how we will develop our energy resources in the way that we are able to provide the cheap energy for the economy. Energy went up in the last year. We have a huge increase of energy prices in electricity and gas, et cetera. If we are not able as a continent to come up with an answer on how we will prolong our sustainable energy sourcing, we would not be able to develop economy in Europe in the future. I think that this will be a major answer. Major topic for our future here in the region. Now, coming back, I think that Emil mentioned earlier, we need here to get out of the conflict language in the region. I think that we have one particular area in the region where this is still a major topic in society. I think that all of us needs to, through our work, actually, to facilitate that this is demilitarized and that this is not top topic in the region. The region we were discussing up to now does not have a good density, so we are one of the least dense populations in Europe. It's a great nature, good geographic position, but somehow, in a global development, we still didn't find the right economic model on how to grow faster than other regions in Europe. I'm not looking this very pessimistic. I think that in a changing environment, this could be a new opportunity for us to find a way. Maybe when we were mentioning also newborns, I'm always taking this, so I'm luckily not born in 1960s but 1970s. In 1970s, in Croatia, you had 75,000 newborns per year. Today you have 37, so it's half. Means without actually our internal generation and immigration, we would not be able to grow enough to compensate this. Okay, thank you. Mr. Tedeschi, let's go to you. Actually, I believe you have one microphone probably behind your back, but it doesn't matter. What would be the main characteristics, advantages, and opportunities of our region? We already mentioned many of them, and I see that we already have some questions through the platform, and we will try to see whether we have some from the audience. We have still some time. How would you describe these three main things? Actually, characteristics, advantages, and opportunities of the region for someone, as you said, in Texas, right? I think that there is a several proof that our countries or surrounding region is a good place for living and could be great place for doing business. Somehow, we have to clusterize and in many aspects act as a cluster of countries. Knowing that sometimes we can be even competitor. For example, Fortenova and Atlantic Grupa in the food production and MK Group and Delta, we are in certain fields, competitors. In same time, Fortenova is our largest customer and opposite, we are their largest supplier. MK Group is our large supplier. Petrol is our strategic supplier of energy, and they are our large customer. Alkaloid is our strategic supplier, which mean that we came to the position that within the business, we don't need to take who is going to be winner among us. We have to find the things to create a new value. One plus one, we need to create three. Same things when we talk about the countries. Yes, we have a national politics. We have national parliaments. We have a national legislation. But on certain things, we have to promote, to communicate the cluster of countries, because individually, we are too small for the potential institutional investor coming from Texas or from North Dakota or from Mexico or from Argentina because they cannot even recognize. We would be always below the radar. I think it's all about the strategy of creating the legal framework, setting up priorities and also quality of communication. In communication, the important thing is that the people who are communicated have to be authentic ones. If we are authentic, then, you know, the people are going to start to believe. There is an old Jewish sentence that, you can cheat all the people sometimes. You can cheat some people all the time, but you can't mislead all the people all the time. It's not possible. When we just shift paradigm from the positive perspective, I really believe that the good examples, Croatia per se, we have two unicorns, which is per capita leading position in Europe, and we have to utilize. I'm so happy that today we are celebrating Infobip, brothers Kutić and Izabel Jelenić and Mate Rimac Automobili, and that we are proud like we are proud of Novak Djokovic or we are proud of the Slovenian skiers or basketball players or whoever is a superstar, Nikola Tesla like being the genius number one which is coming of this region. Instead of fighting where Tesla is belonging, which is stupidity, we have to be proud on him. He was global and he is global icon. When you have right communication, then you start attracting. If we are going to spend the time of insisting on our differences, how we are going to interpret the history, that means that we are not learning from the history and we are not focusing. I'm really positive that COVID decreased the buzzword globalization in terms that the company needs to be present in every and each market of the world. Somehow put more into the spotlights work-life balance, quality of life, and especially the new generation are more aiming to that. I think this is extremely positive situation for our region, that we have a good asset and potential good proposition for the families moving or to families staying, living, working here, in the greater environment. It sounds like a lot of blah, blah, but I really believe that there is a proof that we have the assets. The question is now how we are going to use our quality time to be productive in the end. We have to go for the value creation and not for the value destruction. Thanks. Thank you. Before moving to Mr. Kostić, I would just like to ask Mr. Milićević, because Mr. Tedeschi almost mentioned everybody, why aren't you selling anything to Atlantic Grupa? That was my takeaway. I figured out that we are just not partnering with you. After this panel, I'm sure that we should come to present our portfolio to Atlantic Grupa. Even I think that we have one security project, which is interesting. Yeah, but the question is in good company. The CEO is just a spokesman. I was not well briefed. I'm pretty sure that we cooperate on at least one project. This is always opportunity for developing more, and I'm inviting you here. I mean, I'm really open for the good talk. Actually, it was meant as a joke, but great. Probably you do already have something. I was thinking to mention that as well. Great. And if- Mr. Kostić, now going to you. Main characteristics, advantages, and opportunities of this region, but from the perspective, actually, imagine that we are talking with a large investor from Texas, Mexico or whatever, or wherever, Argentina. I mean, I think we have. How would you describe it? I think we have great talent. We just need to fight for that talent to stay. I think we have great resources, but we need to fight to utilize those resources in the right manner and to use them to maximize the use, I would say, of those resources in the right manner. I couldn't agree more that, you know, the time of wars is over and we need to grow over that, you know. There is still a talk about it in that 20 or 30%, and depending on which part of our region, there is more and there's also less talks on that. We should stop using, you know, these times or these, I would say, internal conflicts to get, I would say, short-term benefits because long-term wise, I think they are affecting us a lot and long-term wise, I think we are losing a lot of smart people that are just leaving and don't wanna be part of all of that, and they are the ones who we, I would say, wanna keep and they are the ones who we wanna stay. I think joined together and working in synergy, as we saw in some of the presentations before, Balkan region is a huge potential. We grow. I think that's very important. We grow economically. We grow faster than all the developing European economies. If you put it in perspective, if we can grow faster working together, and if we can continue growing over the next 10 years, we're not just gonna be, I would say, comparing, you know, always that far away from them. We're gonna be closer to them in the way of standard of living. If we work together, we can maybe grow faster, and I'm sure we can grow faster. You know, on that chart, you know, the Balkan 6, and I don't believe it's 6, I believe it's eight or nine, I don't even know, but it's few more names, you know. We're not gonna be compared to, you know, Czech, or we might not be compared to, you know, to the. We might be larger than all of them. Probably not larger than France or maybe Germany, but we'll be larger than those economies, you know. A better place for living. A better place for living. Yeah, I absolutely agree. I mean, there's no. I believe that then you can. You know, Jahorina and Kopaonik, there's nowhere in the Alps you can, unless you're a super professional skier, but there's nowhere in the Alps you can ski that level with the level of, I would say, after skiing, I would say, content that you can have in Jahorina and in Kopaonik. It's great. You know, if you look at the Croatian islands or if you look at the sandy beaches in Albania, nothing better than that, in my view, right? If you look at living in Belgrade or Zagreb or even Ljubljana. Of course, depends on what type of person you are. Ljubljana is more calm. Belgrade is, I would say, you know, the most dynamic out of all. You know, there's no better place to live, you know. I think we need to join together and we need to work together. We are huge potential, but we need to overcome our differences, you know, because some obviously still have some differences. I don't think that here we have any differences, you know, and Emil just rightfully pointed out, we're all working together, you know, so there is no difference. We need to work together more. You know, Emil pointed out that he used to be the youngest one, now he's the oldest one. Generations are changing. Managements on top of those companies who managed to survive, I would say, this transition period are changing. It's our role not to be this ego, you know, first generations, you know, competing one against another. We need to work together. I don't care if, you know, Emil's company will have more revenue or Delta will have more profitability, for example, than us, or Comtrade is gonna employ more people than us. Because without Comtrade, Delta and Atlantic in this region as large companies, we cannot be a large company. If you don't have, you know, 20 or 30 large companies, hundreds of, I would say, mid to large companies, thousands of mid companies and, you know, thousands and thousands of small businesses, forget it. I mean, we're nobody. Yeah, only synergy and working together. That's the key. Okay. I believe Mr. Tedeschi had no reply. Okay, no. Mr. Sovrović. Yeah. Your take. I'm fully in line with everything being said. I just don't want to repeat everything because we're short on time. I would just add two things that I believe are changing within the region in a positive manner for the investors. On one side, I believe that there is a real passion in people for success here. I would say there is really healthy hunger in people to see people grow, to learn, to live better. With this buzzword globalization, I believe we really opened up to the world, and I really believe that there is a talent to work with, and it's our job to find a way how to do it. On the other side, I would say, what I'm really glad is that what we are speaking today and the culture within the society is changing so that it's not a shame to be a businessman. There was this business owner's buzzword, I would say, in this region for a long time. When I was studying, you know, there were even some different words connected to the world. When we came back to sustainability, we as Delta are publishing corporate social reports every years together with EMCA. The first pages there are what are our profits. Why? Because our first role here is to generate profits. Why? Because we are reinvesting into the society. We are by this giving security to our employees, and we are really on a way up. That's why I really hope and I'm really happy that we've seen in the trends some very good foreign direct investments in the country. I also hope that in the future our domestic investors will really have a similar conditions to work in, because I really believe that we have a lot to offer. Definitely, I believe it's a culture where we are understanding more, where we are speaking more about the unicorns that Emil said. In Serbia, there are also some fantastic IT examples, many different examples. I really believe that not only we'll be known for sports and that when somebody speaks about Serbia, says, "Oh, Novak." It's great, I mean. We'll speak also about some very good business examples because I believe we are capable of this, and this will attract even more business and show our countries and our region in the best possible manner. Nikola Jokić, back-to-back MVP. I mean, also, I mean, for us following NBA, back-to-back MVP. Blaž opened it with this this morning, so. No, actually, we have Dončić as well. Okay, we have MVP back-to-back, but also great examples from the region. Mr. Milićević, your description of characteristics, opportunities and advantages of this region. It's getting more and more difficult to speak after those guys because each of them can have a very nice conclusion to the audience and I mean, the characteristic of this region is this energy. Leadership, what Emil was saying, and organization culture with energy, this is something which brings benefit to all of us. I mean, I will not add anything to everything what was said. I just want to prove what Živko was saying about the energy of Belgrade and how Belgrade nightlife look like. You will have a chance tonight to see it for all these foreign investors who came, and we have to prove what we are saying today. It will always be interesting to have meeting minutes of those panels to send to regional governments to say, "Guys, everything what we need to do is here." We are talking about. I mean, Yugoslavian economy was the fifth economy in the Europe in 1980s, I guess, when we, some of us were born. This region has capacity. We have to open the borders, we have to speak directly. We have competitors are bringing benefits to other competitors. We need competitors. This is what we are saying here, that we are helping each other to grow. I want to thank you for opportunity. The energy is here. We have knowledge, we have capacity, and I really hope that we will get to know each other during today. In this scene, we will prove what we are saying during this panel. Thank you very much. Mr. Mukaetov, your take on characteristics? I will say only one saying which, I think, we can say for the Balkans. The ambassadors, when they are coming to the Balkans, they are crying, but when they are leaving the Balkans, they are crying more. I can testify to that. I used to work in one of the embassies. Mr. Bitenc, your take on the opportunities in the region. It's difficult to follow up on my colleagues. You may just say I concur. It's okay. What we found out, so we have the sun. Yeah, we have a lot of sun. It's beautiful to live here. We have beautiful Adriatic coast. We have beautiful water. It's a region where you can jump in the water in the middle of the night naked, and nothing will eat you. Not many places like that in the world. It's true. It's true. It's true. We need to do the energy transition. As I spoke before, we have only one planet, only one sky. We need a lot of investments to do that, so we are inviting everybody who is listening to join us. With our passion, we can make it. That's a fact. Thank you very much. Mr. Tedeschi. I would like to emphasize what Živko said. We are living a different decade, changing paradigm. It's not a way having one large empire and wanting everybody to be slaves. We are here building the society, culture, that we celebrate other people's success, even if they are competitors. Because having successful individuals, teams, corporations create a much wealthier, a sounder, and more prosperous for the future. I think it's extremely important, it's crucial that we learn how to celebrate other people's success. Ego is, again, very, very important. It's needed, but has to be controlled. Every time when I see the interview of successful business leader creating positive results, new acquisition, new market, new formulas, new product, awards, et cetera, et cetera, for me, it's personal stimulus that it's possible and there is zero envy. For me, this is because dreaming that you are going to be the best, it doesn't mean that you are going to be better than the other. Every one of us is competing with our own self, being better than I was yesterday, I'm going to be better tomorrow. I'm competing with myself, and our teams are competing with ourselves, not with other people. The business, it should be like this. Then it create good feelings. Mutual cooperation is never going to be ideal, but it's up to us to create a real better world. In that sense, starting for quite lower point, let's be fair, we have in next 30 years in front of us, I would say great horizon for the potential investors. Because they are assets, they are good companies, they are capable teams. They are countries which deserve to be invested in, and they are great examples. I invite all the investors, thanking NLB, headed by the president, Blaž Brodnjak, to organize all this for us because it's not only promoting NLB, promoting all our companies, promoting our society. Because investors can stay and go, but it's important and the winners is the companies and team which are going to stay here in 10 or 20 or 30 years. I really believe it's possible. Thank you very much. On that bombshell, we shall finish this talk. Thank you very much. Gentlemen, thank you very much for your time. I believe we had a very interesting talk. We had some questions. I encourage you to approach these gentlemen in the following pauses that we will have, because I believe it was more valuable to hear them here on the stage. I hope you enjoyed. I sure did. Thank you very much once again for your time. Thank you, guys. Thank you for your patience between the changes. Since we are in a National Theater, of course, there we need to have the scene change between the plays. Now, I have the opportunity, and I'm delighted to present new NLB board members. Please welcome Hedvika Usenik, Antonio Argir, and Andrej Lasič. I would like to start with first question for you, Hedvika. What will you bring to the management board of the NLB? Thank you for the question. First of all, I would say 20 years of banking experience. I have already been working now with the team for almost four years. The last 2.5 years in the capacity of Assistant Management Board for the area of retail. The results that we are presenting today and that we published yesterday are, I think, also partly a result of my work and the work of the colleagues because we are already really strongly working as a team for some time. I would say, having worked 20 years in banking, but mostly sales, marketing, product management, you know, corporate retail, I was always under pressure of results. You know, it was never easy and you cannot hide anywhere. You either deliver or you don't. I think I'm bringing to this management board for sure the ability to deliver results, the ambition. I don't like status quo. I like delivering results that are outstanding. I think, and this was mentioned really a lot, in the previous panel, also cooperation. I think it's super important not only in the region, but sometimes, also in the organizations, we tend not to cooperate, but compete among each other. I'm always saying, "Why? Because we have a market outside, we have to compete in the market, not internally." Some healthy competition internally may be productive, but not too much. For sure, I think I will be bringing good cooperation to the team. I think we have a good energy, for sure. I think I'm the first woman in the board of NLB in the history. Thank you for that. A small contribution to ESG topics also from our supervisory board. I was not seeing it as very important, or I was not dealing with it too much because the process was intense. We need to deliver results. When I was nominated, I heard so many, you know, compliments, positive comments, especially from women who really within the organization, but also outside, who felt somehow proud that I made it. If this opens the path to some other woman to, you know, get off the comfort zone like I did today to come to this stage, my first investment day, then, you know, I have also done my contribution to ESG, I believe. Okay, great. Thank you. Andrej, going to you. You know the bank inside out, and you have an excellent insight into your clients. How important is the human touch and personal relationship with clients? Yeah. Thank you, everybody, also from my side, and thank you, Hedvika, to come to bring this humanity to the management board from the women perspective. Back to the question. In any service industry, in actually any industries, as we heard before, but especially in service industry, especially in banking industry, talents, human touch is key of any success. I will just give you, let's say, a recent example. We all know, we are all aware that last year results, last year business performance of the whole region, of the all the companies in the region were among of one of the best. The GDP growth was record high. Balance sheets were the best one, and usually, the bankers are looking last year balance sheet, putting into the scoring model and then are deciding. Just now, we actually got all the results of last year. With all the war in Ukraine, especially the war, all the problems in the delivery of all the goods, raw materials, especially the energy, it was discussed before, a lot about that, in the previous round table. We know and those results tell us nothing. We have to understand the challenges, to understand the needs of the clients. In changed situation, we actually have to be every day, every single minute with our clients. Otherwise, you are out. You cannot properly structure, advise, help, and jointly prepare. Because my main mission actually is and my commitment, success of our clients is our success. Success of our clients will improve GDP in our region. Improved GDP in our own region will improve living condition in our countries. Only that when the, let's say, average salary in the our countries, we know that in some of our countries in that region, the average salary is still very low. They cannot think realistically about sustainability. Everything what we discussed, when we'll improve the living condition with that average salary, success of our clients, success of us, then we will have the precondition to discuss about sustainability and so on. The human touch is actually everything. Thank you. Thank you, Andrej. Antonio, if we paraphrase a bit, you epitomize the so-called Balkan dream. You started as a loan officer in North Macedonia, continued your journey to the CEO's position of NLB Banka Skopje, and are now a board member in the largest banking group headquartered in this region. Can you tell us what mattered the most to make such a progress? First of all, thank you for that comment. I am convinced that everyone can do it. Really, everyone can do it, which is ready to step aside, to step in front, to take decisive actions individually and professionally. What it matters the most, I am dividing it in two aspects. Let's say internally, individually, and externally. Externally, meaning the environment, meaning the company for which you are working, meaning the group for which you are working. If the company is ready for new ideas, if the company is offering really challenging and inspiring tasks, and if you are surrounded by colleagues which will support you, challenge you in the same time, and you will together as a team deliver excellent results and celebrate together, that's really one of the preconditions for success. I have to say that I'm really happy and proud that I work for NLB Banka Skopje and NLB Group, which really offers this all, which I said. Then I'm coming to the, let's say, internally or individually. My belief is that every person should have his personal vision and he should really strive, devote time and energy to that vision, not to be addicted to that vision. I believe then that every conscious and even unconscious everyday actions will go toward that vision. If you have a combination of these two things, actually, which I had somehow, I was called, what, middle of 2020 during COVID time, from the NLB leadership from Ljubljana to take over the group steering position as a CEO. I have to say it was not an easy call, not an easy decision. Again, if someone wants to really grow, really contribute to the society, to the team, to the company, to the countries, to the region, you have to grow, you have to take courage, you have to go out of your comfort zone, take the opportunity and together achieve really, really good results. Again, I will underline, everyone can do it who is willing to take the ownership, who is willing to take decisive decisions personally and individually. Thank you. You mentioned steering functions overseeing the group steering functions. Strategic foreign markets have nearly EUR 10 billion in total assets and have contributed 40% to group's profit after tax in 2021. Which is very, of course, meaningful. What are your priorities, and how are you planning to ensure that these sometimes very different and specific markets will continue to deliver expected results? I will stress out that actually the expectation from the strategic markets will grow in the future even more. We base this expectation on the economic development that we are seeing coming from the region, and I will not repeat what was already said previously on previous panels, because all countries have their EU agenda. We are all almost EU candidates. This means we are striving for the development, for big infrastructural projects, et cetera. This is opportunity for us to grow as societies, and we as a bank, as a group, we have this role in this goal. In order to seize this opportunity, actually, we have to develop steering function within the group which will have dual, let's say, approach. One is assuring that group vision, group standards, group guidelines are implemented across the countries, across the banks. On the other side, not to forget and even strengthen the importance of local management board and local team. Because local management boards, they know the specifics of every country, of every market. They are delivering even today, and they will deliver even more in the future. In order to do this, we have to have good professionals, good team in the bank, in group steering, but also in other areas of the bank, where we will actually focus and develop the right set of KPIs. It is important. Beside the regular financial KPIs, which we ever have, we are developing, let's say, additional three setups of KPIs. First one is transformational, our transformational KPIs, where we will focus on transforming the business model of our banks, preparing for the future banking, and focusing on digital, digitalization, productivity, leverage on the information capital, ESG aspects, so environmental and social, governance, et cetera, et cetera. On the other side, we will focus on platform approach, where actually we will try to develop group sharing services in order to use the synergies on a group level. Because we are big regional group, but not that big worldwide, if you see. We have to somehow keep this entrepreneurial spirit and keep this touch to the region every day. The second set of KPIs is focusing on, I would say, the bread and butter business, so focusing on key segments, retail and corporate, where we still have enormous opportunity to grow the market share, to increase the cross-selling, to develop the distribution aspects of the business. The third KPIs are really important for us. These are focusing on delivering and promoting the group values. Where we are actually focusing on people, developing and growing people in Sberbank, in Sber Group. Where we are encouraging promoting entrepreneurship. Where we are focusing on improving the life of all our stakeholders within the region. Thank you, Antonio. You mentioned retail banking within the second set of KPIs. Hedvika, retail banking is an important part of NLB Group's business, and we often hear, and Antonio also just mentioned it, that regional markets offer opportunities for further growth. By implementing the right strategy, retail banking can prosper, of course. What are your plans and strategy to support and enable growth and best-in-class service for your retail clients? I believe that the gentleman from JP Morgan was mentioning that the banks in this region are simple. Indeed, we also have a very simple strategy, I would say, for retail banking. It is basically growing retail lending. I believe we have still a lot of potential because the markets are growing, we are well-positioned in terms of customer experience, NPS. Also penetration of loans is not too high, so for sure we can grow. We can grow with the market, but we can also grow higher than the market. If we manage to do it in, for instance, in NLB, in Slovenia, which is a market leader, and for a market leader it is always hard to grow market shares, but we did. We did grow really immensely in the last two years, so we can do it everywhere, and we actually see it in practice already happening now. The second topic is, was also mentioned before already, is the fees and commissions. The share of fees and commissions on total revenues is in some markets still on a very low level. While in Slovenia we are already in retail at 45%, in corporate even 50%, we still have the potential to grow, and investment funds were mentioned, so a lot of potential in this area. Also, cross-sell can be improved, so these are the two important topics. The third one I would mention is business transformation. More or less, trying to put out of the branches all the simple transactional cash business, not all of it, but as much as possible, move it to digital channels, move it to cards, POS, ATMs at least, and then focus in the branches on more value-added activities. Really a good advice to customers when they need advice, when they're buying a home, or when they need to invest, or when they need to manage their personal finance. This means that our branches in the future, there will be less of them. We will have less staff, but the staff will be more qualified. All the simple transactions, as much as possible, we should be doing digitally, and we should have a strong contact center to support this digital transformation. Of course, it's not happening overnight, but it's also not super complex, no? We know what we have to do. In your opinion, how long will it take? It never ends. It never ends. Okay, actually branches are going to become advisory channels. Yeah, more and more. It's a transformation journey. Andrej, moving from retail to corporate, some say that corporate banking is the end all be all of banking. Whether you're a large multinational corporation, SME, or a startup, corporate banking has a solution for you. You service all types of businesses in various industries and sectors and provide lending, trade finance, investment banking, and much more. What is your strategy for corporate and investment banking clients? To be the best in class in the region, very simply. Simple. No, maybe. Yeah. Firstly, it's really intense hard work with the clients, together with the clients to understand the clients, to be in proper time with the proper product, with the clients to have best team, this we just discussed, and to have the best offer in the right moment, for the clients. To digitalize, to improve internal productivity, to decrease internal cost and to decrease time to time to money, all this stuff that we are discussing usually. I'm really glad that also the corporate CEO meeting prior discussed about robotization. We just, these local hubs that Antonio was discussing, we are just implementing the first robotic system in Sarajevo, for instance. We are thinking about how to create ESG team here in Belgrade, especially of opportunity. Actually, our best clients, Petrol, were just discussing the opportunity in Serbia. We will establish the branch hubs, how to jointly structure all this project. It depends on some region. Actually in Sarajevo, we are robotizing, we are improving productivity. To go more into the details regarding the strategy, it's actually, I would say, four main pillars. The first one is to improve the non-interest and interest income ratio. As Hedvika said, we are in Slovenia at around 50%. We are not yet in the group. In the group it varies between 20%-30%, so the level of non-interest income. But it's easy to say to come to 50%. We have to bring proper products, proper advice with that, I'm speaking about the acquiring, which we have to improve, especially for SME business. I'm speaking about cash handling, to decrease the cost, to improve the efficiency. I'm speaking about the advisory service, investment banking, and so on. We have to bring and come with a proper product to all the countries in our region, not just to be a simple bank, as one of our investors said. The second thing is to grow. I strongly believe that if we have excellent basis for growth, my personal wish, vision and the vision of the team is to grow from currently 18% in Slovenia to 25% in next five years. It's a similar story in Serbia. We just finished the transformation integration of both banks in NLB Komercijalna Banka. Current market share in Serbia is 8%. Our vision in next five years is 13%-14%. I strongly believe that this motivated team, with our energy actually, and also with our funding and the equity position of the group, is very much possible, and also to continue the growth together with the current market trends on all other markets. I will not mention all of them. Interest and non-interest growth of the market share. The third, maybe it's still a dream, I don't know, I hope not. My biggest actually vision is to enter the Croatian markets. Currently, we cannot yet work there or bank there with Croatian companies. We just heard the previous round table, so I'm constantly speaking about them, how they are interconnected. Our region, especially economically, it's very much interconnected. Tedeschi, his company is working actually in all the countries. Unfortunately, currently, we cannot yet bank in Croatia due to some reasons from recent or a bit longer history. The third vision is to enter into the Croatian market where I strongly believe that we have huge opportunity and great knowledge about those companies. The fourth is this ESG sustainability agenda, which we are actually constantly discussing. We will grow in that aspect. We are having strong KPIs in that aspect in all the countries of that region. We will promote sustainability and transformation. We are fully aware it's not possible from today to tomorrow, but this will be promoted and we will bring proper advice also for the companies how to cope with that because the investment will be quite heavy as was discussed. Thank you. Andrej, you mentioned, well, of course, growth and corporate banking and investment banking, but both of these worlds need experienced workers, right? How important are skilled and motivated employees, and what kind of employees are you looking for? I believe everybody is thinking about the talents. Yes, it's the key of success. If we would like to be the best in class in the region, we have to be two steps ahead of our clients. To be two steps ahead of our clients, we have to be together with the clients constantly to understand their needs, their opportunities, how to attract those things. What we are looking at our people and what I believe we strongly possess, and also regarding the talents, our biggest mission is to be the best employer in the region. I strongly believe that we are becoming because as I see, our bank is very much attractive for the young talents and maybe not for some industry like IT, which is actually global thinking. I strongly believe that now to work in NLB is a privilege, and I'm seeing that the people wish to come and to work with us and to work with this team. To continue what we are looking for. For sure, everybody who is working in bank and in corporate banking has a great knowledge about the banking, about all the banking product and about the financials. That this is, I would say, first precondition. Secondly, has to have sectorial knowledge. We are all aware. I will mention COVID. It was mentioned several times. COVID has different implication of different industries. War in Ukraine and this proximity has different implication on different industries. Great historical and sectoral knowledge about the implications on such in today's rapidly changing world. The third story is, of course, social skills. Without social skills, without being, thinking, dreaming, smiling with the clients, you will not create long-term partnership relation, which is actually our dream, because I strongly believe that long-term profitable cooperation, it's only with long-term partnership and especially mutual trust. You need social skills for that. The third, fourth, I don't know which is the most important, it's for sure not the last one, it's agility. Agility. Without agility, you will not seize the opportunity that are in front of you. These are actually the four element that each of the banker that work in NLB Group has to have. Okay, thank you. Antonio, besides group steering, which we already mentioned, you're also covering payments. This is a heavily discussed topic with pandemic accelerating the adoption of digital and contactless payments. With consumers now becoming more comfortable with these payments trends, do you expect to see continued innovation and acceleration in the payments industry? How is NLB Group positioned to embrace these trends, and how will you compete with other providers, be it other banks or fintechs already? What is your plan? What is your game plan? I would like to emphasize one really clear message with the new setup of the management board, with the support of the supervisory board and our old colleagues from the management board. Payments are not any more simple operations part. This is really important because now we are looking at payments as a business opportunity. This is really important change. When we say payments in our bank, in our group, we mean payments from cash to regular payments, cards, to the most developed, I don't know, wallet or whatever kind of payments. Having this in mind, I have to say it is not an easy call to define the strategy, how we will develop the payments in the future. We all know that everything will be here, but how, with which application, what kind of approach, which role we will have, we have to still define. It is not the unique dilemma for NLB Group or NLB banks. It is a worldwide dilemma because you can see this, the different, really different practices all across the world, all across the Europe, where actually somehow we have at least standardized the regulation or whatever. But again, different practices from different markets and different, in different groups. I perceive payments as a everyday service that our clients are using, embedded in their normal, regular life. Primary actually service of any banking app starting. I perceive payments as an entry gateway of FinTechs into the banking and payment industry in general. Having said all this, defining all this, for sure, the innovation in payments will accelerate even further in the future. Here, not only banks, but different players will try their role, their approach, et cetera. When we think about our experience, I have to say that COVID was really excellent opportunity for us to learn even more which payments, which payment services, which payment channels are really relevant for our clients besides the cash, which is only present and will stay for sure for a long period. We are with mBanking, eBanking for almost decades in our group. Our NLB Wallet is only present in the region, and I think it is one of the, let's say, most known banking wallet in the region. Still there is huge way to go. As I said, 70%-80% of all payments are still cash. Our aim is, for example, to go below 60%, which again is huge potential. Besides developing new services, new apps, new approaches, we have to also work on education, convincing our clients, ourselves, drive the change for new payments, for new way of payments. For example, I will use some survey related to the Slovenian market, where Slovenia is fifth in the world regarding contactless payments, but only 1.5% of these payments are through mobile wallet, which I am using every day for three years, and 99% of my payments are done through the wallet. We have a lot to do on education and driving the change toward our clients and ourselves personally. Every change starts with ourselves. What will be important for us in developing the payment strategy or the payment approach, listening to our clients, I would divide in three aspects. Building the best user experience, which was several times stressed out by Hedvika and Andrej. The payment should be really seamless, easy, convenient. We have to focus on safety and affordability of the payments. Safety because if we want to increase digital penetration our clients, they have to feel safe when using our applications, and at the same time affordable, but again addressing best-in-class user experience and safety. In the end, developing value-added services on payments, leveraging information capital that we get from payments but also from other interactions with our client. Developing new ways of interaction with our client, leveraging on open banking, open finance, developing an ecosystem where we will all win together. In order to do this, we have to add some, I would say, FinTech characteristics to us, to our trusted brand. Adding FinTech characteristics to our trusted brand, I think it is a winning strategy, and we are working on a solution of partnering, cooperating, probably even investing in FinTech company. Thank you, Antonio. We already ran out of time. I had one more question for Hedvika. Can we have a short answer? I apologize. My previous roundtable killed my agenda. That's the problem. Hedvika, the question is, as Antonio talked about payments, when it comes to retail banking in general, digital penetration has been growing steadily over the past few years, but banks are still working to make sure that they can fully meet their customers' needs through digital offerings. Clients of course want more seamless experience across all touch points. As Antonio said, it is simple. It's simple for the end user, but behind it's not simple at all. What has been your experience, and how are you planning to further enhance customer experience and provide them with value-added services in the future? I will first share my personal experience with our bank. It was just a few days ago. I was traveling to Spain for the 1st of May holidays and of course, in the last time, I remembered that I need a higher limit on my card because otherwise I would not be able to pay for hotel. I called my personal banker and I said, "Look, can you increase my limit?" He said, "Yeah, sure. In two minutes, you will have your, you know, to sign in your mobile banking the increase." It came in two minutes, I signed, and my problem was solved. Two channels working well together, you know, even easier would be that I do it myself, but somehow it's the personal touch sometimes still matters. No. We would like to create these kind of customer experiences, remove the frictions where we spot them, and continuously improve the customer experience. Of course, we want to build a better platform than the FinTechs have, or at least comparable platform, but more services on it. But sometimes we are in love with developing stuff, but we don't take too much care to activate customers to digital channels. This is very important because you might have a super platform, but if only 10% or 20% of customers are using it's not really helpful. You need to work on all fronts, basically. Customer experience, developing, but also making customers use your platforms. Thank you very much. Ladies and gentlemen, new board members, Andrej Lasič, Hedvika Usenik, and Antonio Argir. Thank you very much. Ladies and gentlemen, thank you for your patience. Let's discuss host country and its opportunities. We will discover what opportunities Serbia is already utilizing and which ones should be chased with the help of NLB Komercijalna Banka board members, Mr. Vlastimir Vuković, Dejan Janjatović, Dragiša Stanojević, Dubravka Đedović and Igor Stebernak. Welcome. Thank you. Thank you once again and we will start, Mr. Vuković with you, obviously. On the 29th of April, NLB and Komercijalna Banka merged to form one of the largest banks in Serbia, NLB Komercijalna Banka. In doing so, reached an important milestone in the process of becoming the leading bank in this country. Can you share with us some reflections on the integration process itself? Well, Miloš, first of all, thank you for the question. You know what, Novak Djokovic will answer to this question? No. What? Not too bad. Not too bad. Not too bad. Not too bad. Not too bad. Great. Joke aside, I think that we did a great job. This integration is, I could say, probably the best in banking sector in Serbia and probably one of the best in region. We are witnesses that we finish last week operational and legal merger. This is something which went very smoothly. What I mentioned several times that we didn't receive any complaints from customers, from public, social networks, and it means that we did a great job. How? I think that there is a lot of factors, but I will just give you some maybe five and five decisions very important. First, to organize the team in a manner that there is a group of people who is working solely or at least 50% of their working time at the project. We had 14 stream leaders. We empower them. We were also all hands-on, but not to jeopardize their authorities. It was very important to empower them as a leader. Of course, we have the great majority of the bank who is working daily business. We clearly communicated that there is no high value or low value work, that we are all working for the integration and also showing to the market and ourselves that we are really leaders. The second very important thing in the process is that we say no to some complex projects and some complex changing of IT system and usage of IT resources. It was a very hard decision, but we took it. It is also increased our capacity for integration. At the same time as a team, we think about it, what is the next steps after the integration, and we develop very comprehensive plan of 25 different initiatives in order immediately after integration, so today to start with those projects, which will change the bank. The third one is unique, I could say, for the market. We moved almost 90% of sales force from NLB Belgrade to KB in first working day in January. You know that January is not so productive month in sales. We did it. It was really a change in the procedures, mindset and everything, so they needed time. We have enough resources for their onboarding. After a month and a half, they're starting to produce and we are very proud that we grow 2.5 x up to 3x more than market in the months of integration. This is a huge success for us. The fourth thing is, of course, communication. All the time, constantly, objectively, and timely, we communicate each and every steps in the integration for internal, external public, but also to our customers. We prepare ourselves for this. Uncertainty is the biggest enemy of changes and also integration. I think that we did a great job because we informed them and also, Dragiša is godfather for our name of the project, Aurora. We have a contest and survey to employees to include them and to vote which is the best name of the project. He proposed Aurora, we proposed Victor, you know the Victor in Belgrade. But Aurora won. I think that also this show that we include from the beginning, people just realize that this is our project and that the last one, great teamwork. I could say that we are all proud that we established such a good cooperation of understanding, and this is the best foundation for us and for future wins in the market. Mr. Vuković, this is really impressive what you said that actually the sales was rising at the time of integration, which was quite a big challenge. I would like to ask Mr. Stebernak, what were the biggest challenges you had to overcome in the last 16 months, and what positively surprised you? Investors would probably be interested to learn about the success and timing of extracting synergies. Can you tell us some more about that, Igor? When you say challenge, immediate reaction is resources. That's the main challenge always at the project. Especially because it's not only the integration, actually it was the line business, the regular business that, as Vlastimir mentioned. It was integration, not only one, actually two, because we integrated Komercijalna Banka into the NLB Group, and we integrated Komercijalna banka and NLB Banka Beograd into NLB Komercijalna Banka. We started already with the transformation. That's the part that we'll continue now once we finish the integration. I would also emphasize one of the key success factors, the dedication, the focus of the team, and the energy of the team. Here I come to the surprise, the positive one. You're asking about. I mean, the team was assembled from different members from different cultures. There were people from Komercijalna Banka, from NLB Banka Beograd, from other banks in the NLB Group, from external partners. But what surprises me that from the very beginning, actually, the team clicked together and they worked as one team with one focus and one goal. Honestly, I thought it would take more time to come to that level. Okay. Then for the investors. Our estimated synergies we are going to realize they will be roughly EUR 20 million recurring on a yearly basis, and they will be to the full extent in our balance sheets from 2024 on. I mean, we are gradually adding them into the P&L, of course. What's also important to mention, the cost of integration is inside of what we projected, so it'd be slightly less than EUR 28 million. Again, impressive. NLB Group was quite open about its intention to build a leading bank in Serbia, and your role as an executive board is to implement necessary steps to deliver on this ambition. Vlastimir, how will the merged entity compete on the market? Actually, how will NLB Komercijalna Banka differentiate from other banks? I think all banks will tell you the same story, but each and every story is completely different. When we are putting our strategy and ambition, we put, I could say our four Ps, like you have marketing mix for four Ps. The first one is people, processes, and then proposition or maybe personalized proposition. The fourth one, of course, for you is profitability. This is the four main focus of our intention. Why people? Because, you know, all of us are people, so employees, our customers, shareholders, we are all people. We need starting from this customer. We need to develop, and also this is what I mentioned, 25 different initiatives and project here in the customer experience. We need to offer unique experience to the market. It's easier said than done, but I'm sure that with this energy which we all have, we will do this. Why, for example, processes? We are just starting a TOM project, Target Operating Model project, where we will have, of course, looking on our procedures and processes within the branches, sales, back office, in order to be faster and to reduce time of transactions in favor of advisory and sales roles. For you, just information that only 6% of all time spent in the sales are sales time in the branches. Only 6%. Try to imagine how many opportunities we have only if we do the right thing in the right time. Also, there is, of course, some gaps, and this is actually good news if we compare ourselves and our competitors, especially in cross-sell, up-sell potential. Of course, we know how to fulfill this. First of all, we need to start from the people's need and employees' need and to create what all gentlemen and one lady, now we will have Dubravka second lady, to tell and told that, of course, the people capital is most important, and to keep the talents with us and keep also the employees who are producing value. Value proposition is very important. We will be faster. We will give, for example, our customers very soon much faster digital loans, automated loans in cash and also housing solution because this is anchor for the retail. We need to be one-stop shop for our customers and offer them really unique experience because this is the moment in their time to solve the maybe with the marriage. I could say that the second big decision in life. Of course, at the end, we will deliver profit what we promise. I think that this is really what we will do. I'm sure that Dubravka, Dejan, Dragiša will give the insight, but this is it in a nutshell. We will be the bank who will produce something else in the market, and I think that we have more than capability to do it. Great. Talking about naturally, I will also apologize to you as well since I killed the agenda with that front talk, but I believe it was interesting. So let's try to be consistent and concise. Dubravka, now moving to you. How to achieve these ambitious targets in corporate and investment banking in years to come? What is the game plan, as I was asking Antonio? Thank you for the question and, welcome to all the investors to Belgrade, my hometown, and also thanks to our clients who are here because we are here for you as well. How to deliver on the ambition? Well, very simply, we are very ambitious. We have demonstrated this already in the first quarter of this year. We have grown our corporate portfolio three times faster than the market. We have increased our market share by 50 basis points, and we have delivered on some new products. What we want to focus in the future is continuing delivering on those products, but also delivering very valuable services to our clients because it's both product and the service. This is what was missing in the old Komercijalna Banka that NLB Group and this team will bring. We have chosen an adequate team of people with right capabilities and knowledge to help us deliver on that. We are establishing the processes, and we will be very close to our clients to deepen the relationship, to exploit the relationship in order to deliver also the services that they need, as efficiently as they need. To start from the products, we have enriched the portfolio by starting to work on project finance, both in real estate and in renewable energy, because this region needs better air quality, better soil quality, and this is what we need to help the private sector together with the public sector to deliver on this. Wind farms are in our focus, solar projects, biomass, biogas. We are already working, as I said, with some of the same clients that were here today and that are here today with us to deliver those, but also with municipalities. Because Serbia as a whole has a lot of issues on energy efficiency and renewable energy targets that has to deliver in line with the agenda and commitments it has signed with Paris Agreement, et cetera. We want to enlarge our small and medium-sized enterprise portfolio because SMEs are the backbone of Serbian economy. They produce more than 60% of value added and employ majority of workforce. We will, and this is our target, and we already delivered on this in 2021 and also in first quarter, is to grow the SME portfolio of some 2.5x in the next three years. We have growth of some 12% already in the first quarter. In this segment, we have basically scaled four regions in Serbia that will deal with this group of clients to be close to them, to understand their needs. We have put together the quality team from some very experienced banks in the market, such as Banca Intesa and OTP and others. Knowledge, experience, and together we will deliver on that as well. Very important part of the segment that we are focusing on and will continue is the documentary business, the trade finance products, the LCs, factoring, which we introduced last year for the first time in Komercijalna Banka. Those additional products besides the lending that is very important and the aim is to be the bank number two in this segment. We already grew year-on-year in this segment 120%. Very important, of course, is the cross-sell, and there I tied it up together to non-interest income part of the share, which was traditionally very low in Komercijalna Banka and which NLB expertise and all our aims and goals go towards that end. It's really to give additional service through currency exchange products, hedging products. Enhance payment operations with clients, as well as all the fees this team, for example, from project finance transactions, be it agency fees or others. These are our goals and we, part of reorganization, started delivering on that. Organizational change such as incorporating treasury sales into corporate function to be closer to clients to have our sales teams closer and deliver on those products in order to enhance, of course, the profitability and additional revenue which we will and we have to do. Thank you. Let's move on to you. How about the risk appetite and how efficient processes can contribute to achieve all these goals? Thank you, Milos. Regarding, Just the mic. Regarding risk appetite, our goals and business strategy are well aligned with risk appetite, and we are adjusting them all the time. The challenge for us in this year and probably in the next one will be how to balance between ambitious targets and the risks that originate from this uncertain geopolitical and macroeconomic environment. As always in this uncertain situation, smart cautious and brave approach will bring us safely to the destination where we want to be. When talking about how to achieve advantages in the market, efficiency of the processes are one of the most important thing. We also need to put client experience and employee experience on top of our priorities when designing such processes. We also need to develop and nurture the culture of respect, the culture of cooperation and continuous improvements. Digital end-to-end credit process supported with smart data models, real-time analytics will bring us needed efficiency and will bring us the quality of service to our customers in the way and at the time they actually need them. We aim not only to build the best time to decision and time to cash in the market, but we also want to offer the high professional service to our customers. If you like to sum this in one sentence, we actually want to simplify daily life of our customers when banking. There is no great customer experience if there is no great employee experience. We are going to offer to our employees very positive working environment, the great culture, flexible working, and also opportunities to learn and to develop both professionally and personally. Our new headquarters building will be modern, energy efficient, pleasant home for our employees, where they will find their inspiration and where they will find the space and time to socialize, to relax with their teammates and colleagues. I remember last year, immediately after acquisition, when we came to the commercial bank, we told to our new colleagues what is in front of us. We told them that we need to integrate both banks to harmonize with the group standards, to grow in business, to reduce NPL and all that in very short period of time. They looked us probably as we are kind of lunatics, but we invite them to journey, or that journey with us, and promise to them that if somebody of them get to sleep today and awake in May this year, they will not recognize the banks in terms of the standards we follow today, in the way how we cooperate and communicate between each other, and how efficient we are in breaking bureaucracy and bringing needed changes. Today, when they are convinced that the promise was real, we tell them now we need to transform the bank. This time next year, we will be all very proud to be the part of this unique transformation process, and we'll be very proud to work in the best bank in the market. Great. Oh, this calls for an applause. Yeah. Igor, back to you. In order to differentiate, because we talked about how the bank is going to differentiate from other banks, but you need to have good data management, right? Of course modeling. When will it be achieved, and how? Can you explain on that one? Yeah. We believe that data governance or data strategy is also one of the piece in the puzzle, together with other pieces that colleagues explained already. It's interesting that we started actually one project before we started the integration project, and that was the project to build up the data warehouse. It proves to be a very good decision because it helps a lot in the integration. It enable us to do the proper financial reconciliation, and it's also bring a piece into the successful integration project, and it's a good foundation for the future as well. We are going to with the new organization increase also the importance of data governance. We are centralizing data governance on one side, and on the other side, we are building data expertise by business lines. They will have the access to the single source of data, and they could be as agile as they want in providing data analytics for the business lines. Actually we will use this data to fit in the models that we are going to develop in NLB Komercijalna Banka and of course we will fit all the models developed on the group level. Here I see the big advantage actually because getting the competitive edge on a group level is much faster and much more efficient than doing that on a standalone level. We are going to continue with development in this segment. There is no big bank foreseen. We will continue the development as we are doing till now. Each month we deploy a new version. We map additional data into the data warehouse. We release some new reports. Of course, now we will focus on sales and the risk to support all the ambitious goals the colleagues just presented. Okay. Again, it takes a team, right? Okay, now let's go to Dragiša Stanojević. Dragiša Stanojević, what are the key steps in acceleration of digitalization? Well, I could notice that my colleagues plus Antonio already answered this question. My topic here is to how to realize that. That maybe the toughest job here, but let's do that. After finishing integration, now we are in opportunity starting to new journey in the context of improving digitalization. Actually, in the previous period, we have facilitated our clients that could actually sign the contract remotely for wide range of services, including cash loans and overdraft. Also, we introduced digital wallet and support NBS initiative that's specific regarding Serbia to actually allow our business clients that in instant payment transaction use only phone number instead of client account, which really convenient. You can pay using only phone number. Actually, new services, in combination with a change of client behavior. In the previous period, we actually understand that clients changed due to education, but also due to pandemic. Let's be honest and say that's the case. That's helped us actually to increase the number of active mobile users by roughly 35% in comparison to previous period. Definitely position mBank as a primary digital channel. Yeah, despite these good results, there is still significant room for further growth, right? Yeah, yeah. Definitely, right. Actually, to achieve that, we plan to utilize the capacity and the knowledge of the group in order to introduce new digital banking platform, which will be based on a big data solution. This is actually the key component of our future digital footprint. We are already working on that area and actually first service on that platform will be digital onboarding. That's actually covering video verification plus KYC process. Frankly speaking, we are on the realization and hope that next few months actually, not weeks, will be in opportunity to launch that. I hope that till July, that's the target and hope to provide actually new service that will be the first service on our new digital bank platform. One short sub question for you. What is the role of the recently established NLB DigIT company in Serbia? Yeah. We actually recently established. That's the new company of the youngest company in NLB, that's NLB DigIT. We hope a lot. We expect expectation from. It's very high actually. In that way, the role is very important, the context that they work on development common platforms and actually responsible to achieve the same user experience in the whole group. From the KB point of view, actually expect that NLB DigIT will be involved in all processes, what the colleagues already mentioned. Maybe to emphasize that we actually plan to introduce loan origination platform. Dejan already mentioned that we have to actually for retail, for corporate to optimize the KYC. Additionally, we work a lot on those topics, but now we in the area of activity could continue with this. Also, in the context of data management. You know, we're starting a lot, but definitely that's a quite long journey in that context. Maybe to mention that we also want to introduce operational CRM. That's a topic what Vlastimir Vuković is especially interested in the context that we want to improve sales activities in that area. Maybe to mention, maybe colleagues didn't say, but Hedvika Usenik already mentioned that we actually want together to put cash transactions from the branches. We actually, in that way, we want to renew completely our ATM networks. We plan to introduce 250 multifunctional ATMs with cash in, cash out function to finish that by the end of this year. Actually, we completely renew our ATM networks in one year. That's actually challenging task, but I hope that we successfully finish that. Okay. Well, I believe that answers my question. Vlastimir, I have a personal request for you. We have 6.5 minutes left, but we are already well into our lunchtime. It's my fault because of the mishandling of the agenda. If you agree, because I have another question for you, which I may move then to our press conference, if you're okay with that. What is your perspective on further bank consolidation, banking sector consolidation in Serbia? I would like to save us some more time for the lunch break because we need to be here back at 2:30 P.M. sharp in order to continue and get back on track with the webcast and everything else. If that's okay with you. Milos, this is in the heart of our strategy. The customer experience, so lunch is quite okay. Okay. Thank you very much. Ladies and gentlemen, furthermore, on the perspective of banking market consolidation from Vlastimir Vuković, we will have on the following press conference. Enjoy your lunch, but be back at 2:30 P.M. sharp. I believe we can make it. We can make this happen. See you back here at 2:30 P.M. Enjoy your lunch break. Thank you. I don't have a presentation here, but let me try. It is there. I don't need it. What we want to tell you now is, in principle, something that is new, and it's more or less a follow-up to what we've done so far. There is a lot of greenwashing, there is a lot of paperwork, there is a lot of promises that are more or less, you know, fake. For me, sustainability starts with everything we do every single second of our life. It doesn't start with what NLB has written there, and it doesn't start with any of your businesses or whatever has written them in papers, right? It really starts with our behavior, and it starts with, you know, our habits. In this respect, of course, NLB has joined certain initiatives, and initiatives are nevertheless important because they put a structure to it. There is a methodological framework. There are clear requirements. You have to think of things. You have to, you know, start setting targets. You have to start measuring, actually delivering because you're then being, of course, assessed against the delivery, and so on, right? This all makes sense, but that's not enough because if we don't change the person in the mirror, we don't stand a chance. Here, I'm just simply being practical, and I take my some personal commitments that even my family, you know, is struggling with, which is we do not heat our house any longer to more than 20 degrees centigrade during the winter, and we will not cool it below 25 in the summer. This means that I don't drive ever again more than 120 kilometers per hour on the highway, right? This means that the light is not on if there is no one in the room, and if there is, you know, enough light to actually see, right? These are small, little things. NLB has decided to become a paperless company because we firmly believe that, you know, you can sign any contract and you can store any contract in digital form, right? Of course, you then have to understand the whole scope of the carbon footprint of the digital record. You know, it's a bit more complex than simply saying we will get rid of paper. In principle, there are commitments we've made. There are promises we stick to. There are things we advocate and heavily promote, be it from governance. In the governing bodies of NLB, you have people from ten countries. We don't have 26, as you know, colleagues were saying before, but ten countries. It means that we have 55% of women at managerial positions. Unfortunately, you didn't see many women so far on the stage, right? Only two, I think. We are working on it sincerely. You know, in B-1's positions and B-2 positions, there are of course 55% of ladies. This means that really, with paperless, we mean that our clients' lives when it comes to usage of banking services have really been improving because they don't need to travel anymore at all. By that, not producing emissions because they don't commute to our branch. You can sign, at this point of time, any contract as a private individual client of NLB d.d. in Slovenia via mobile phone. There is no paper at all. Contract gets emailed to you, and of course, you do with it what you want. But in principle, there is no physical signature. There is no need to come to the branch because even if you don't do it through the mobile app, there is a video chat feature in the mobile app that within 24. It's working 24/7. You can close any transaction apart from mortgage collateralized housing loan on spot, real time, 2:00 A.M. from the, from South America, right? This is client experience relation of sustainability, where we actually improve lives of people, but at the same time, clearly reduce also carbon footprint. There is the entire inclusion element. There is entire, obviously, societal governance element. Here we have really been vocal, and some politicians don't like it. We know. We understood that. They don't like it. We tend to call things by the name. If we see deficient governance with our clients, we don't lend against such clients, right? To such clients. These are material decisions. We start asking our clients, obviously, what are the principles applied in terms of how they actually measure carbon footprint, what are their commitments, and so on. Nevertheless, I will come back to you then later. I will pass the words to Hedvika because there is a concrete step NLB is going to make today in a couple of minutes. Thank you very much. Thank you, Blaž. I will come back to the same messages that I was sharing before, so in terms of priorities that we have as NLB Group. I will, you know, do it with a bit more data so that I, you know, Archibald Kremser and I like data. I'm a salesperson, but I really like data. This time I will bring some more data also to bring some more juice into what I was explaining before. First of all, why we see a lot of opportunities still in retail lending. A few things. First of all, if you look at the chart below, you see that the indebtedness of households in our region is on a rather low level. We expect that it would grow in the future. There is potential to grow, and we intend to grow with it. The second topic is you can observe also housing loan and consumer loan penetration on active clients in different markets, and you see it's quite diverse, and you see it's also quite low. For instance, housing loans from 1.5% to 6.6% in Ljubljana, and even 6.6% is not really very high. Consumer is a bit more diverse picture, but still there is, especially in the markets where we have many clients like Slovenia, like Serbia, like Macedonia, also for instance, Banja Luka area, there is a lot of potential to also grow housing lending. Plus, in most of these markets, we are positioned in a way that our deposit market share, retail deposit, is typically considerably higher than lending market share. These are all the data that make me think we have a lot of potential as the group to grow. You know, we have shown it also in real life. You know, we have some success stories already to share. The second topic, which was mentioned many times, already today, is the fee business. We are quite proud of the numbers that we managed to make in Slovenia so far. 50% of revenues coming from sustainable fee business in corporate and 45% in retail, but still we believe there is possibility to grow. Of course, this will be a bit under challenge in growing rates, but for us it's really important also to grow in absolute terms. You can see on the upper graph that again, we have a lot of diversity. We have the possibility to grow both in Slovenia, but especially in the region. To bring numbers at group level closer first to 40% of total revenues and then further up. This is one topic, and the other one is diversifying the fee income. If you look at the bottom charts in terms of the structure of fee business, the taller columns are Slovenia, and you see that the structure of fee income is much more diversified. We have quite a considerable contribution coming, for instance, already from bancassurance, asset management, which is not so much the case in the region, where the region is more dependent on accounts, payments, cards, but not other sources of fee income. You know, if we are able to grow also in the region, in bancassurance, asset management, investment banking, trade finance, then we will have a more diversified structure of fee business and a more stable structure. Another chart supporting this thesis is look at the differences of cross-sell rates between our countries. We are ranging from 1.4 to 3.3 on the total customer base. If we observe the cross-sell rates in some of the segments, for instance, premium clients in Slovenia, average cross-sell rate is 4.7. Private, even 5.8, almost. An average customer who takes a housing loan has a cross-sell rate of 6.6. In a way, things are connected. If we do more housing lending, consumer lending, we can also cross-sell more, and we do more fee business. The third one that I also mentioned today is transform the business model. It's very important simply to increase first the digital penetration. The chart on the right-hand side is showing how we were growing digital penetration in Slovenia. This is penetration on active clients. A client using either online or mobile banking actively against all the active clients. I can proudly say that we reached in April this year 50% penetration, and we intend to grow further. Our current ambition is above 60, but hopefully, we can manage more. In the region, we have a lot of potential to grow because you see that the typical penetration rates would be between 10%-20%. We have Skopje higher, comparable to Slovenia. Our ambition is to grow to 55% active penetration at group level by 2025, which is not an easy target. It's quite an ambitious one. If you calculate how much we have to grow per year, it's quite high numbers. I'm sure, you know, working together in a focused way, we can make it. Then when we have a higher penetration, it's a question of how much we are also selling via digital channels. Another KPI that we started following is sales via digital channels, ideally end-to-end. In terms of transformation of the business model, it's not just digital penetration. We also want to position branches in a different way. I said before already, less transactions, more advisory. This is an example for NLB. We have designed during COVID time our channel strategy and made some KPIs, which we are then adjusting every year. We have already in two years' time decreased the branch network by almost 20%, and also the people in the branch network for the same percentage. At the same time, we were selling more. We were selling, for instance, more than double housing loans and double asset management products. In this way, we were able to improve the productivity also because we are changing the structure of employees in the branches. Less cashiers, more advisors, less or no cashiers, more advisors, and more advisors who are able to sell mortgage loans and have a license to sell asset management and bancassurance. This is our ambition. We will develop, and we have already developed such ambition for each of the subsidiaries, and we will make sure to follow up. Because currently, in some countries, even up to 50% of the resources is tied into transactional business, which we don't want so much going forward. The last one, but super important is the focus on customer experience. This is just one of the metrics that we are following. It's a brand track, NPS. It's how the people in the market, not necessarily our clients, are perceiving us and our brand. You see in most of the market except Slovenia for historical reasons, we are really well-positioned. But also in Slovenia, we were coming from really low numbers, but in two years' time, we managed to make a huge step forward in terms of brand perception. I hear from marketing specialists that this is not so usual, that it's very unusual to make such a big step forward in the positive territory for a brand. We are confident that we will come to the maximum levels, but for sure, our strategic direction will be to position ourselves very high on the top of the market or towards the top of the market to be able to grow and attract new customers. Back to Archibald. Thank you very much. First of all, welcome also from my side. It's great to see you all in person, and I really appreciate the high turnout. At this point, also, thanks to the teams in PR communication, the local colleagues who helped organize this. I really enjoyed the event so far, and I hope you did as well. I had already plenty of very interesting conversations, and I think that's the main point of this event. We kept it lean on slides, because the main point of this event really was first share the good news we have. We'll have a webcast as well coming up. The story as such hasn't changed that much. In reality, we keep doing what we do very well already. I think the facts speak for themselves. We had really a good run over the last couple of years. In this sense, nothing stops us from reiterating our existing ambition, which is, from a financial sustainability point of view, of course, deliver ROE 12% exceeding that in a good case, even in a base case. We heard about macro base cases this morning. We absolutely see the glass not half full, but two-thirds full. Yes, there are many challenges, but we believe this position is uniquely positioned to overcome these challenges. We see plenty of opportunity. You've heard Hedvika, Blaž talking about how to go about it. I think this forum, this event, and the touch points you had with people, I hope show you that this is backed up by a credible team because this is all what matters. We can have the best and most fancy slides. Ultimately, we are people that are more into acting and doing than putting fancy slides together. We also have plenty of those. I think for you, what matters most is, you know, to be credible, to believe us that we deliver on these ambitions. The ambition is, in this sense, as I said, stable. You said we are a high-yield play on the Balkans. I think we still continue to be that. We grow from a EUR 200 million business, give or take, to a EUR 300 million business. That was very clearly facilitated and enabled by this transformational acquisition of our Komercijalna banka, now NLB Komercijalna Banka, which will of course contribute last year EUR 100 million exactly. The reason I'm confident we can do that is not just the relatively good macro outlook, of course, conscious of the challenges. You heard our clients speak. I was really inspired by the forum of the CEOs and CFOs of our customers. I think this backs up our story in the best possible way because these are the guys that we support being successful, but ultimately, they drive the success of this region. We are just helping them achieve that. You've heard Andrej, Hedvika speaking about that. We believe there is enormous potential, and we are of course committed to capture this also in financial terms. Yes, there's also a very substantial capital return. EUR 500 million is nothing else than over the next four years, give or take, we will generate something like EUR 1 billion in profits and a very good, decent share of that we want to return in cash. The only thing I learned in INSEAD is cash is king. That's a business school, and that was basically all I remembered from that school. Here it is. Of course we see also growth beyond the organic growth. The other part of that equation is we want to reinvest. We want to be part of investing into this region. That means some of these earnings we have to deploy, of course, in all the organic growth opportunities we see, and we talked about it, but there's also inorganic growth. You've seen us going very planned and conscious about Serbia. You see us prepared, but we planned to capture the opportunity of Sberbank. The reason we could do this so fast is not just sheer luck. It was that we were ready for such a step because we were working for months on executing or being transaction ready. The reason we could transact over the weekend was thanks to a team working in the background for a year or so on getting transaction ready. These things don't happen randomly. We want to have this capacity. Of course, what facilitates this transaction readiness is capital, ultimately. Capital markets these days are difficult. Colleagues from JPMorgan I talked to on-site, yes, it's difficult, but we believe capital markets will open up again. There will be a normalization at some point when the dust settles on rate outlook and, of course, the political situation. We believe that there will be opportunities to grow, and of course, we want to be ready for them. Outlook, I'll skip. Just we keep it basically slightly improved. You see now for 2022 this year, based on a very strong Q1 on which we will talk anyway later in more detail, we have improved outlook to close to EUR 700 million. This doesn't include N Banka. If you include N Banka, we are already in excess of EUR 700 million. The 2023 ambition with the N Banka acquisition, which of course was not part of this original outlook, is already done. That was an enormously value creative acquisition, not just generating something like EUR 30 million revenues on top, but of course also delivering synergies going forward. I'm looking forward to this process. By that, I would pass back to Blaž. This was now the important part of sustainability, which is being profitable, right? We are still a business. We are addressing, of course, all sustainability initiatives, but we want to show you that there is a robust thinking of how to sustainably operate and deliver stakeholder value. Stakeholders, of course, vary. They are not only shareholders. We are talking about societal aspect as well and all the others. In this respect, we have committed couple of years ago to no coal direct financing. You know, we can be writing whatever strategies. We simply took a decision. No new financing to coal-based technologies. Current exposure of NLB Group to coal is EUR 2.4 million. It's immaterial, right? It's quickly amortizing, depreciating. In this respect, you know, these are concrete decisions we took. We, at the same time, were the only first. I'm not sure we're still the only, but the first bank that has actually signed U.N. Principles for Responsible Banking from our region. In this respect, we are committed to several other commitments via several lines we actually signed with the EBRD, so European Bank for Reconstruction and Development. At the same time, we also signed with other bodies, various instruments that are requiring from us a very strict and comprehensive agenda of sustainability issues. Well, we decided to go another mile, right? By that, NLB is today joining also the Net-Zero Banking Alliance. This is entering the club of the ones that are committing it the most seriously and the most genuinely. By that, we are really going to transform the way we think, the way we set targets, the way we act and behave in our own actions and in actions of our clients. This is committing to the green transition, but this is also committing not only to that, because there are also societal and governance elements that of course, we all understand on the sustainability. To a certain extent, they have been more important even in our part of the world, right? We still need to mature as democracies on somehow. As of now, myself and Archibald will sign this commitment. Thank you for being with us at this moment. That's a very meaningful point for us. Thank you very much. Archibald. Okay. Great. Congratulations. Ladies and gentlemen, welcome back again. We love to talk, but we love results even more. On the following roundtable, we will have presentation of first quarter 2022 results, and it will be presented by Blaž Brodnjak, CEO, Archibald Kremser, CFO, and Andreas Burkhardt, CRO of NLB. Gentlemen, if you are ready, the stage is yours. All right. Okay. First, the disclaimer, obviously because it was not announced. Clearly, disclaimer is very important thing, and everyone, you know, dealing with us and any other investment understand this very well, so I will not spend time on a disclaimer. Actually, we came to Belgrade to discuss Q1 results, right? Everything else was, of course, additional program. It has been meaningful and you have liked it so far. At the end of the day, we need to discuss what we have delivered. The first quarter of 2022 was a very robust one, from various dimensions. In all client segments, in all product lines, basically geographies, we have had a very robust loan demand. We had very solid progress in fee income. Of course, in the meantime, we on the go during the weekend, also bought a significant bank, actually in Slovenia. While clearly delivering final stages of the integration of NLB Banka Beograd and Komercijalna Banka Beograd. This was a very rich quarter in terms of activity, but above all, very rich quarter in terms of delivery of results. I'm specifically happy about the recurring trends, right? I was mentioning strong demand, but I was also mentioning in principle revenue pickup. If you look at the net interest income, if you look at fee income, if you look at above all pre-provision recurring results and operating recurring results, we are growing significantly the business. That's an important message. We are in the midst of the war. We are still, you know, not fully out of pandemic, but we have had a very solid quarter and we see, you know, this demand happening still. We have been mentioning clearly, of course, uncertainties regarding gas supply and oil supply. So far, first quarter is showing that, of course, especially March was extremely strong. After there was obviously a war in place, March results were very, very strong. As mentioned, happening in all dimensions, there has been significant improvement in even NPL books. There has been solid results coming out of cost of risk. Despite N Banka's acquisition, clearly and one-off recognition of certain elements, total developments are still pretty much in line and above expectations. That's really encouraging. We have been further gaining market shares. In Q1 alone, in Slovenia, for example, we gained 0.6 percentage points of market share in three months in housing lending alone, right? This comes on top of 1.9 percentage point last year, which means 2.5 percentage points in 15 months. That's actually the size of the absolute stock of a mid-sized bank in the country we simply gained and added incrementally in a single year. We've had a solid growth of books already in Serbia, despite integration still not being finished, right? These guys were really heavily engaged day in, day out, you know, more or less on integration, but have delivered growth of corporate and retail books. You know, and this was north of what the market was growing, so they have been growing the market share on the go. This I also see as a very strong achievement of Q1. KB, NLB, now NLB KB, started delivering growth in absolute but also relative compared to market terms already despite not yet being integrated, right? Of course, now we will support this post-integration period with strong marketing campaign, which was clearly subdued because we didn't want to support two brands. But now it really starts. This is really something that is a very strong progress, and this is something that we are really betting on, especially obviously in Serbia. Uncertainties have been there, of course, especially, you know, around explosion of war. So far, situation has been not only contained, but very solid. You've seen growth of Slovenia for last year, published in Q1 of 8.1%. We've seen this year's forecast at around 4% still. You know, which is of course, people are talking cooling down. You know, if we were discussing this in 2017, we would say, "Are we overheating?" Right? This is a completely different perspective in this respect. I mentioned, but we just add again, positive trends in asset quality despite these turbulent times. You know, books in relative terms and generally further improving, and that's really encouraging. Capital strength is there. Clearly, we are waiting for the recognition of negative goodwill. You have seen it communicated, the number is out, right? Now we need regulatory recognition to be able to count it in as a, you know, accountable equity. This will of course then further strengthen the capital base. This we somehow in, you know, expect within H1. In H1, we believe we would be able to actually communicate significant improved capital ratios deriving from the negative goodwill recognition. Key events more or less after that. Yesterday we were blessed by the upgrade, so we are really happy. In such volatile times, we only hoped for it and it crystallized, which proves that the rating agency has understood the potential we've got within this region, and the loss absorption capacity and robustness of what Archibald calls a fortress balance sheet for the times to come. In this respect, this is very solid basis. We place hopes that this is going to help, of course, bank's ambition to issue capital instruments. We have clearly informed you that, you know, for already now four or five months, we have been more or less trigger ready to issue Tier 2 instruments. You know, we have been discussing potentially 81 instruments. Nothing to concretely disclose yet. We are thinking of these opportunities because we believe there would be potentially many alternative opportunities to grow organically on one side and on the other hand, clearly through further M&A. Nothing concretely on the table as we speak, but there will be pretty volatile period in front of us, and NLB wants to be ready. Wants to be ready to keep providing stable dividend payout, but at the same time, of course, also growing the business significantly. By that, I would pass the word to Archibald Kremser to give you more on financials, a standard routine, and then Archibald Kremser on the asset quality. Thank you. I'm not gonna read out all the numbers. The report was published. Blaž gave you the highlights. You see here the balance sheet inclusion of N Banka. Be mindful this is a balance sheet of some EUR 1.5 billion. I think the highlight really, especially in a year-on-year basis is the recurring pre-provision result. That's a very impressive performance, and it's both interest and so rates and non-rates. Cost is, I would say developing, so that's for sure a space to watch. We are conscious of pressures on cost. Inflation is a fact also for us. Also we pay utility bills and things like that. For sure we'll have to keep paying attention. Of course, we keep investing in what we call value-added costs. Everything associated to building the brand, supporting the brand, building technology, hiring talents, these are spends we are willing to take because they are building the future. We will not drain the business while we're trying to grow it. Pre-provision even net of costs, I would claim, hugely impressive. We are very proud and very happy at this point. It obviously shows in all the numbers. Here you see that the margin environment, which is stable, which for the time being is good. I mean, people are expecting. Q1 was, you know, a huge market volatility already seen. The swaps went up substantially. Of course it takes time till this feeds through in our balance sheet because our liability side is basically fixed with deposits still coming in, actually. We had a few outflows in Serbia, but by and large, we have run a hugely stable deposit franchise. That is, of course, in times of rising rates will now very much come to our benefit. Of course, on the asset side, we will start slowly pricing up. We had of course lively debates with Hedviga is not here on retail pricing because she still runs for market share. We still want to slowly shift the market upwards. Of course, that's gonna happen, not because we want or have to be more profitable, but simply this is where rates are going. We have to start educating also the market, our customers, that this is where we are headed. It's of course gonna come. Fees was mentioned. This is really a success story across several dimensions. A very big, I think contribution increasingly from value-added products. Selling non-bank products, asset management, bancassurance, especially in Slovenia, this is a true success story. You remember that we ultimately decided not to divest NLB Skladi, our fund manager, our local fund manager in Slovenia, because simply the market was not there to offer value. We will keep a vertically integrated model for now. Of course, we'll look for opportunities to expand that in other geographies. Serbia will be very high on that list. There are many, many other initiatives driving fee. I mean, the colleagues talked about offering a broader service spectrum to corporates, cross-selling more in retail. Our subsidiaries are just getting going really on this, because of course, so far they were very much a rates business. Now it's increasingly also a service business. Cost, I mentioned. You see and huge kudos to the team in Serbia, not just that they integrated and grew the business, they also helped us manage cost. Extra rewards for that and recognition. It is necessary. We have to come to a sustainable business model also in such a situation. That means to also address costs. In essence, it not just reduces cost because we are too administration-heavy, it also improves substantially the customer experience. At the same time that costs went down, the time to yes in housing went from 30 to some 10-11 days in Serbia. It's not just about cost. Too complex and people-heavy environments are simply also not a good customer experience. This journey continues. We talked about loan growth. I mean, year -to -date, something like 4%, if you exclude N Banka, is I think very impressive. Of course, we wanna really keep riding that wave. As we explained, we deliberately here go for market share, especially in retail. Yes, we sponsor it a little bit with, let's say not immediately, aggressively rising, rates as my ALM colleagues would want me to do, but we capture here clients and client relationships that will be with us for the long term. I think this win in market share, especially in housing, extremely relevant also for the long-term sustainable success. Capital, of course, we are now a little bit in a tight spot, because we immediately had to digest risk-weighted assets of N Banka and, not yet, recognizing negative goodwill. Of course, with inclusion of negative goodwill will be immediately, let's say, above our risk appetite again, visibly above. In this sense, we are in a good spot. Of course, you all know that the EUR 100 million cash planned to be paid in 2022. EUR 150 million already announced, the other EUR 50 million coming up. I'm still looking at the cash or the high-yield play on the Balkans. Yes, there will be cash yield coming your way as shareholders. It's all, of course, provided for in this capital. This is already deducted. By that, I pass on to Andreas. Thanks a lot. Hello, and a warm welcome also from my side. Since we have a little bit wider audience today, maybe two, three sentences more than you're used to from my side. Okay. On asset quality, I mean, we have a very well-diversified portfolio, which is to a large extent in our core markets. Actually, we have a split corporate retail 50/50. Here again, you know, on the corporate side, half is bigger corporates, half is SME. On retail, also very well split between retail and so between consumer and between mortgages. From the regional distribution, obviously, we are still big in Slovenia, so a good half of the portfolio is in Slovenia. The next biggest market, obviously, is Serbia. If you see the growth in the first quarter, then on the corporate side, obviously here for a good part, N Banka is contributing. On the retail, it's both N Banka, but also, as mentioned by Blaž, I guess, our strong growth. On asset quality, Blaž also mentioned we're still improving. Actually, for these times, honestly speaking, quite impressive. Stage 1 portfolio remains very high. What you shouldn't be surprised is that Stage 2 is now flat because in the recognition of the Stage 2 from N Banka, this becomes a Stage 1, right? Because it's a fair value recognition initially. So that's why in Stage 2, nothing is changing. Now asset quality. I don't know, I always use the wrong direction. On asset quality, we have EUR 378 million non-performing loans left. Actually, that's again a slight decrease. Obviously, since we are growing percentage-wise, a decrease. Nevertheless, EUR 20 million more than at end of last year. That's obviously due from N Banka, and that is actually a good news because that tells you that also here the size of the NPL portfolio from their side is very, very small. If you see the coverage ratios, and you're used to that, they are very, very solid. I mean, obviously, no bigger changes since the last quarter. On impairments and provisions, we actually built EUR 4.4 million additional provisions in the first quarter. Actually organically still releases. Again, a very successful quarter from NPL resolution, also from off-balance items again. On the other side, you see the one-time effect of EUR 8.9 million from Sberbank. That's of course, to a large extent, which you can also then see on the lower part due to the fair value recognition. Now, just don't be surprised that the cost of risk is -77 basis points, despite the fact that we have a positive cost of risk. That's from the one-time effect. The EUR 8.9 million, because it's a one-time recognition, are distributed over the year. If you divide that by four, obviously, we are still slightly negative. As for the figures, before I'm then handing back to Archibald, actually, maybe just a few more words. I mean, we are obviously, again, in very challenging times. You see sharply increasing energy prices. You see also strong inflation. Obviously, for a risk manager, that's always something which gives you a high attention point, right? I have to say so far, it's almost too good to be true. I mean, again, like in COVID times, we are very, very carefully going through our portfolio. Of course, there are some attention points, but so far, no negative news. As you probably also read, we had some EUR 20 million Russian bonds at the beginning of this story, whereas something like EUR 12.5 million matured and were paid. Actually, we are down now to EUR 7-something million, which is obviously also very good news and otherwise, no direct impacts from this region. But of course, you know, we have some clients which are working with the region. This is also very limited, I have to say, but of course, we have them. For me, I have to say first time maybe since I'm in this group, a little bit higher attention than usual is retail. Retail was always very, very solid. It's still very solid. We don't see changes. Of course, you know, consumers, if the income is moderate and you go in the supermarket and prices are 20% up, that's a stretch, right? We will follow this very closely. We will keep you very closely informed. I have to say also here, so far, everything looks very solid. I also have to say, through the relatively big portion of the mortgage book, we are also here very solidly covered. If you create an NPL, the next question is, will you have a loss? Should be also very moderate, but so far, I have to say we don't even create NPLs, right? So far so good. But again, a challenging year, which after two years of COVID, I was somehow hoping that this would now fade out a little bit for me as a CRO. We will keep it watching, but so far, I have to say I'm happy. With this, thanks a lot. And as I said, I'm handing back over to Archibald Kremser. Okay. I'll be short on the KB integration. You had a full panel on it. In short, a really good success story. The team delivered everything that was promised, in time, in budget. I can just say thank you again at this moment, to a lot of people that were involved in both Slovenia and Serbia. Literally hundreds of people working on it. I think what worked well for me personally is to keep really close touch with the key people in both entities. We had a weekly call to sort out outside big formal meetings what needed to be discussed. I think collectively, we have created here something like a methodology, a path to how to integrate. We really learned as an institution how to go about such a project. We have partially codified this already. We are really ready, more or less a part of the team seamlessly transitions already, including myself, to integrating N Banka now. We will onboard a consultant and repeat the exercise. It is a bit emotionally tiring to run the whole program again. The colleagues in Serbia can happily move on. That's the topic. Okay. Here we go. The role play, the role book or the playbook is defined, as I said. There is nothing to be invented here. We have really all dimensions covered. Of course, IT is gonna be a bit more complex. You know that I help oversee the IT function together with Jernej, our CIO, and Bojana, his deputy. We run, of course, now three core banking systems in Slovenia, so that's gonna be tricky. We were just about starting a consolidation of the Slovenian system of our own systems. Now we get a third system. We probably will just accelerate the integration still into our legacy environment and then consolidate. There is, of course, let's say technically a little bit of a more challenging situation than what we faced in Serbia, because here we actually had the two core systems from the same vendor. This admittedly helped, of course. We don't have this luxury with N Banka. Otherwise, this is pretty much now established playbook. As I said, the key people will run this project again. By that, I think, Plaz, are you gonna cover that? Thank you, Archie. Archibald said that some of these figures are not yet including N Banka's effects because there is still some things we need to figure out, obviously. He was simply mentioning revenue dimension, right? EUR 690 million guidance here is still without N Banka. We are very solid in EUR 700 million territory, right? As we speak. Details and, you know, more reliable numbers will be provided, you know, at the next interaction. In principle, this is a very robust revenue evolution and development. On the other hand, still a robust asset quality, which means cost of risk is not overwhelming. The books have, in relative terms, still improving counterintuitively, but being the case, coverage is even increasing, right? Good news from the risk universe. I guess, of course, everyone is somehow questioning the decision of the management board and supervisory board of the bank to suggest to the AGM. Clearly, this is at the end of the day, shareholders' decision, right? To hold actually a qualified discussion with you twice a year. We believe there is value in splitting dividend payments because by that you a bit, you know, reduce volatility of share pricing around dividend cut-off dates on one side, and you keep more stable shareholder commitment. On the other hand, we believe that in upcoming period, there will be many opportunities eventually requiring also discussion with you. Is it still a high dividend play or is it a growth play, right? If this were a more sizable acquisition, this would allow for to us actually and to you to actually discuss this in a structured way twice a year as an automatic mechanism, not calling ad hoc AGMs, right? This is a bit easier to predict. It's a bit easier to plan, right? One thing is to really have a bit less short-term volatility around dividend payout dates and cut-off dates. On the other hand, it's allowing us a twice-a-year dialogue with our key stakeholders. We believe this is important. This is, you know, simply facilitating such a structured debate. If your will was different, you could, of course, decide differently at the AGM. This is what we suggest. We see a value in such a mode, right? Operating mode. Simply because of that, we have suggested it this way. Our commitment for EUR 100 million dividend payout this year is here, right? It is provided for in capital, right? This is something which we can openly and clearly explain. So that's why I think it was necessary to explain the suggestion a bit more. There are only these two reasons, nothing else. There is no other, you know, dilemma or whatever to be associated with it. So far, robust evolution. What remains to be a challenge is the delivery of oil and gas. Of course, it's you know, these inflationary pressures, which we still need to understand in relation to how European and regional regulators you know, would simply absorb this within their monetary policies. This is a fact that is more or less impacting capital markets to the extent that we have not been able to issue yet the instruments. We have announced we are working on issuances of capital instruments, which would further strengthen the capital base on one side, and would, on the other side, of course, reassure that, you know, the dividend payout capacity is even stronger, not impaired. Thank you very much. This was it from our side when it comes to simply presenting and introducing and now it's your time. You will have, of course, a chance to raise any questions. Thank you. Thank you very much, gentlemen. We already have some questions from the platform, but we will give advantage to the questions from the audience. If you have a question, just raise your hand and just wait for the microphone. Let's go first to the first row. Sorry, first row, then the fourth row. Yeah. Go ahead. It's on. Hi, Sam Goodacre from JP Morgan. Firstly, thanks so much once again for a really eventful and successful capital markets day. Congratulations on all the milestones you have delivered upon including first quarter results. I've got a couple of questions on the results and then some clarifications on your guidance. Firstly, with the N Banka transaction, you've recognized nearly EUR 173 million of negative goodwill. Could you clarify what the fair value adjustments on the acquisition are given in the results you were guiding they could be as much as EUR 100 million, but it seems that actually they were significantly lower than that. In short, things were better than we conservatively anticipated when we announced the transaction. I mean, we had very little time to run a due diligence. We identified a couple of question marks in this due diligence. We put conservative price tags on all of them. Then we of course systematically ticked off these question marks and could, with a lot of engagement. I mean, these things don't resolve all by themselves, so we started to chase money all over the world from Sberbank places across Europe, practically. Most of these situations we could successfully resolve. That's the short of it. In this sense, you know, it's a robust number, this EUR 170+. Of course, there'll be another go on it, because we now run a full review of this number because we have to apply to ECB to recognize the capital also from a regulatory point of view. There'll be another test on it, but we are pretty confident that it will hold by and large. In terms of the capital impact, when the ECB approves the recognition, what, at the moment, how much capital do you think it will add? Or where do you think your capital ratios may end up at the end of the second quarter? Not just because of the negative goodwill, but also any things you might need to do around RWAs or such like. Well, it'll be pretty much the negative goodwill. We might also add Q1, because technically it's gonna be Q1 result, a part all of NLB d.d. Q1 if we consider that we want a bit more comfort. I can't give you a precise number because. We want it to be comfortably above our management targets. We don't wanna run capital stress. We also run a bit of MREL need. Obviously, we started to run MREL needs, so we might also just wanna be more comfortable for MREL purposes. By that, we will use this leeway to position us comfortably. Okay. Thank you. Then I've got just three questions on the guidance to 2025 that you presented. When it comes to the side where you spoke about the pillars of growth to EUR 300 million+ of earnings. On the revenue side, you mentioned loan growth and fee income, without perhaps alluding to rates. Could you remind us what your rate expectations are, what the sensitivities are? Is that indeed baked into the EUR 300 million or not? It was originally with a very limited amount baked in. If you ask me, if anything, it has improved because by no means did we expect such a rapid change in the rates environment as we've experienced now in Q1. If anything, it, you know, it's rather a bit on the upside. Of course, we have to be careful because if this is not happening in a controlled way, the feed in through EURIBORs, I mean, Andreas alluded to, you know, we also run a bit of downside risk here. In this sense, for the time being, the base case is a controlled uptick of the rate environment, and that rather provides more upside. Okay. Thank you. On the dividend commitment of EUR 500 million in the next four years, could you just clarify how that sits with what you had previously said about EUR 300 million to 2023? This is not an additional EUR 500 million. No. It's It's not that high, high yield. I mean, that would be high yield. No. It basically from the EUR 300, EUR 200 are still due, right? That's the basis on which we add the EUR 500 outlook. In other words, for these four years, EUR 500 million to be paid. Final question, the 1.5 billion of RWAs that you think you could absorb, is that based on the current situation or would that be post any issuance? You said you're ready to go with Tier 2, and you would consider AT1. Is it reliant on issuance, or is that the sort of the... Depends a bit. You know, if as Blaž Brodnjak said, I mean, if we were running any tight spot and wouldn't have the capacity from Tier 2, let's say, we currently have a lot of headroom for Tier 2. So obviously we would like to use this headroom and issue more Tier 2. Our risk-weighted asset base has grown considerably, so we could issue. Just that capital markets for the time being are not very much supportive to that. So in this sense, I'd rather see us doing the capital markets deal, be prepared for M&A and not be rushed into any other conversation. But that's the base case scenario. As you know, situations can develop dynamically. We got a phone call on Sberbank. I don't know, was it a Friday, Saturday? I hope next situation is gonna be that spontaneous. Still situations can evolve fast. Okay. Thank you very much. Thank you. Mr. Goodacre. Now, gentleman in the fourth row. Hi. Thanks very much. It's Simon Nellis from Citi. Thanks for the opportunity. I'd be interested actually in you elaborating a bit on your risk weight optimization plans. I think your risk weight density is now 60%. Where are you targeting that going forward? That would be interesting. Also on the risk side, you mentioned that the impact of new macro forecasts will only be in the second quarter. I guess given the challenges the global economy is facing, what kind of IFRS 9 forward-looking provision changes might be coming from that? And I guess in a worst case scenario, what would be the impact of some kind of immediate oil and gas embargo, do you think? Maybe a difficult one to answer, though. Thank you. First of all, on risk-weighted asset optimization. I mean, what you can see is that the equivalent treatment now we have in the meanwhile in three countries. This will only contribute over a while because in Bosnia, for example, what we don't have yet is we don't have insurances in many cases for the collaterals. That knocks it out for the time being. Of course now the teams are working on that, right? That will help a little bit. Obviously, we will continue to try also on the other, well, working steps on which we are working to further improve. That will not be a revolution. That will be gradually. Now help me again with your second question. It was on the risk cost from changing your macro forecasts. Yeah. In a worst case. Here, obviously, I mean, we only had in 2020 extraordinary this booked already in Q1. Usually, this is due in Q2, as you said. Here, of course, I do expect an impact so far. As I was discussing with the team, the impact should be less sharp than in 2020. Not a drama, but obviously visible. In 2020, I mean, COVID was simply something which, well, such a kind of impact we didn't see the last 100 years, so it was a little bit hard to model. What we see now is, of course, very dramatic, but in a sense, let's say more something which can be modeled. So far, again, impact should be less dramatic than we saw in 2020. Let's see. I mean, team is working on that. The very interesting question is your question number three, I guess. What happens if there are, well, if there's an oil embargo, if there's a gas embargo or the other way around, actually, so if Russia would stop. I think the more sensitive question here for the region is the gas. Slovenia, for example, is largely depending on gas. There's a dependency also in Serbia and so on. I mean, what we are doing is, we are in very close contacts, first of all, with corporate clients which are potentially impacted. Here, honestly speaking, the two questions are very relevant. One is, we see sharply increasing prices, and this we see now already for a couple of months, right? Here, honestly speaking, so far that for our clients has proven to be very manageable. They were largely handing this on. We didn't see any bigger disruptions here. Obviously, a bigger shock is to be expected if just suddenly someone turns the wheel. It's a little bit hard really here to work with a scenario, because which scenario in that case would come? As far as I understand, Slovenia has, for example, to stay with Slovenia, an example from before, very limited reserves, practically no reserves, so it's depending from Austria, from Austrian reserves. Austria, on the other side, is depending to a good part from German reserves, and so on. What would really happen? How suddenly would that happen? What would Germany do? Would Germany try to cover also these smaller markets, or would they just try to cover for themselves? Here, I cannot really help you with a concrete number. Obviously, we have to understand if that happens too ad hoc, I would expect solid impacts. One thing, and we saw this actually in the last crisis, so in COVID, one thing has proven to be true, which I said then, so two years ago, the very good thing with the companies, but also retail clients here in the region is people are used to a lot of trouble. They're very creative, and they are well educated. What we saw in the last scenario is that in reality, things turned out to be much, much softer than we were afraid of initially, simply because, especially companies found solution, and that's what I would honestly speaking to a good extent also expect here. What is a little bit a higher tension point, which for us as a group, of course, is unusual, is also retail. That's not immediately, you know, just a turning the wheel question. If you see increasing prices, if you see further increasing energy prices, however, then energy would be supplied. If you have a certain income, and incomes in this region are still relatively moderate, and you go in the supermarket and everything is 20, 30% more expensive, if your heating is getting much more expensive, the gasoline for your car and so on, the question is how many of these clients would not be able to repay their loans anymore? Of course, we are following this very, very closely. So far, honestly speaking also from early warning signals, nothing visible yet. Let's see how that might change. This is of course for me at the moment, let's say unusual high attention point. The least worried here I'm in Slovenia, because Slovenia is low indebted. Households are low indebted. People are very conservative. They have savings. They are living a lot in owned properties. So these are all elements which, if you ask me, make it the smallest question in Slovenia, but outside Slovenia, that might look a little different. Of course, what is true actually for outside Slovenia much more than for Slovenia is that family as a concept where people keeping together still works much more than we are used in the Western world. So that should for sure also help here. Again, we have a lot of mortgage loans. On the impact then on our P&L, it's still the next question. Of course my first value would be the NPL increase rather than the P&L. Let's see. Far, I have to say, everything very controlled. To an extent your question is the $1 million question, which I guess no one at the moment can answer in a simple way. The real question is what would be a systemic support, right? In Slovenia, you've seen through COVID, but through governmental measures, so much support that now that people have actually piled up the savings, right? We saw now in Slovenia, immediate reaction was regulation of pricing. The government simply regulated, started regulating oil pricing, you know, so suddenly fuel was 1.5 EUR fixed for three months, right? This is happening. Slovenia can, it seems, afford it. Other countries not necessarily have this firepower, but the improvisation capacity Andreas is talking about is enormous. You know, these guys have been used to continuous crisis of this or other nature. We would see them resourceful to overcome the situation. Of course, the real question is embargo at all, full embargo at all realistic? Because, you know, some of Eastern European countries, you know, might be suffering a lot and then would simply condition it with support from other core countries of the European Union. Thank you. Any more questions from the audience? You just need to raise your hand, and we will provide you with the mic. Oh, first row over here. Just a second. Mic is coming. Hi, gentlemen. Mladen Dodig from Erste Group. Thank you very much for picking Belgrade to organize your first investor day. I think it means a lot for the country and for the region. Thanks for all the promotions you made for... Balkan countries. Just one question first, a small one. Are there any new rumors on Constitutional Court decision on Swiss franc? Nothing. Okay. We expect s six months to two years for them to rule. Six to two years. Six months to two years. I heard yesterday three to nine months. Obviously everybody has their own opinion. Look, I believe there should be no other outcome than annulment, but of course. Of course. We will know when we know. Good. In light of today's rate hike by Serbian Central Bank, so 50 basis points to 2%, can you remind us? I think you spoke about it in the pre-earnings call about the structure of your portfolio, which is exposed to variable rates. Can you remind us? I think you spoke about EUR 1 billion, but I was not sure whether this is only for Serbia or... No, on group level, we have something like EUR 3 billion, give or take, variable EURIBOR-linked. EUR 3.3 billion. Roughly. Long positions. Yeah. More variable on asset side than the. Of course, there was a shift a bit to fixed in the last year, so this number has gone down a bit. The housing production in Slovenia, for example, a good part of it was fixed because people wanted to lock in this low rates. Serbia in particular, I mean, the colleagues will know better, but again, the variable space is very much the euro-linked business. The corporates are borrowing in euros, EURIBOR-linked. Again, not necessarily local rate linked, but of course the in our liquidity is here the question. Consumer lending, I think, is a fixed business mostly the local currency. I don't expect a lot from Serbia. I think Serbia is very prudently managing its macro position. I was in Kopaonik the other day, and I listened, of course, very careful to what the finance minister and governor had to say. To me, it was very I mean, reassuring. This is a very, I think, big picture, long-term view, managed situation. So far it was very successful. I have a lot of confidence. The biggest priority of the finance minister, if you remember, was to achieve a triple B rating for the country, which Yeah. Seems ambitious now, but it tells you that there is a lot of thought process around how to manage the macro environment in a non-disruptive way, which I think for us is the most important thing. Thank you very much. That's all. Congratulations on the result and all the milestones you made it. Thank you very much. Maybe just adding, right? We have been investing liquidity reserves into, for example, 10-year Slovenian bond, right? A year ago at -0.03%. Now it's +1.8%, right? It's repricing also liquidity reserve, but gradually. You don't even see the rebound yet of the margin, but this will significantly impact the margin on the go. Any more questions from the audience? If there is no any, I would switch to questions which arrived through the platform. Gentlemen, we already broke our timeframe, but let's try and be concise. First question, Serbia and energy dependence on Russia. Have you modeled potential energy shock scenarios on your loan book? I guess Andreas responded. Yeah, already. Yeah. Exactly. We're gonna skip that one. That was my guess. How are you viewing potential impacts of inflation which has ticked up considerably in other countries in CEE? I believe we touched this one as well just now, right? As long as there is moderate uptick of the interest hike, right? I mean, one thing is of course non-euro, but if you look at the 15-year average of EURIBOR before actually, you know, negative rates experiment, it was 2%, right? You know, in 2% EURIBOR level, it would not introduce overwhelming credit risk for our clients and would significantly improve profitability of the bank. Moderate hike is absolutely in the interest, right, we believe, of normalization of specific elements in the weighted average cost of capital calculations in any of the business models, because negative expectations from the banks or, you know, zero lending rates are not normal. Thank you, Blaž. Let's move on. Komercijalna Banka, discrepancy between net interest income and loan growth. Can you please explain the year-on-year growth of interest income of 3% year-on-year versus loan book expansion of 17% year-on-year? Very technically, but of course, one part of the answer is dynamics, right? Loans start contributing over time, and a lot of the loan origination came from CIB, and there was a bit of heaviness on second half of the year or even last quarter, as I recall. It's a bit of a timing question. There's a technical dimension as well in the fair value consolidation in the group versus the standalone result. For this one, I would really refer you to the detailed disclosures, which we will of course provide to explain this in more technical detail. Thank you, Archibald Kremser. Do you stick to your EUR 100 million profit target in Serbia? Yes. I think we've been loud and clear on. The message was also loud and clear. Then let's move on to the following. Considering that we answered already this one. Pressure in the region on banks from politics, regulators to expect, like in Hungary, Poland, though given sharp rate hikes there. Well, we've been discussing Serbia. Other more or less countries of our presence are practically linked to Europe, having practically fixed rates and solid reserves to actually maintain the situation. We've seen Swiss franc experiment, right, which didn't come from regulator, but from the, you know, the legislator. It is now with the, you know, the judicial system. This was a surprise. There might be such populist surprises, but at the end, we you know we believe in sanity and we believe it would not prevail. Great outlook in Serbia. I mean, we touched a bit, you know. I mean, here, the Central Bank has excellent publications on their website. I think they're more qualified to provide guidance here. My expectation from what I said before, this is a very forward-looking and responsibly managed macro policy for asset stability, rate stability, asset reserve stability. They really cover all dimensions very thoughtfully. Let me just check whether we have some additional questions from the platform. No, that's it. Okay. Gentlemen, thank you very much. This was queue one. Okay. Yeah, go ahead. This was it for the webcast. I will still have a wrap-up short address later on. Thank you very much for your attention and the guys online. Next time, hopefully, we see you live at the Investor Day. Right. Thank you very much. Now it's a very interesting piece because we will host now three special people. Don't run away. Three special people, half an hour, and then we finish. Thank you very much. Thank you. Ladies and gentlemen, Mr. Brodnjak just announced, we have three very special people on the stage. Great. Now we're lifted. Okay. As Blaž just announced, the idea is to hear the story which is titled From Zero to Hero, and to show that it is really possible since we should talk about some local examples or opportunities used perfectly. The mystery of how to get from the region to the world and become global success story will be revealed by Mr. Vlade Divac, former professional basketball player and philanthropist. Rade Šerbedžija, actor, director, and musician. And Mic Melanšek, Chief Marketing and Creative Officer, co-founder of Hooray Studios. One piece of announcement, we will have bilingual, most probably. Rade, Okay. We will have kind of a bilingual mix. If you need translation, as you know, you have the translation earpieces on your chairs. If you need additional one, just raise your hand and we will provide one for you. Okay. We have one for Mr. Goodacre already in the first row. The idea is to feel comfortable and to finish this day, this beautiful day with a cherry on top with these three amazing people. Rade, Rade Šerbedžija, I would switch now to our local language. You actually represent the generation that lived in a completely different setup that we are in today and that we function in today. You're actually a person who left a deep trail here in the market in the region, and then you were on a completely other side. Everything fell apart around you, and you emerged in a place where you had to go to castings. How did it look like? How did this path look like? How did you succeed in addition to the charm and the qualities that you possess? How did it look like to leave the environment where you're well-known and start from scratch? Well, that was quite impossible. Coming from a country where, as you said, you played the leading roles in films and in theater, and all of a sudden, due to war, I left because of the war, because I was in favor of peace, I was against the war, and that's why I left the country. I lived in London. I was almost half refugee there. That was a difficult position to audition for some parts. I was happy. At that time, 1993, one young director from Macedonia, but he grew up actually in New York, Milcho Manchevski, great director. Somehow he found out at the time in London, he got my number, and he called me, and he asked me to have a drink somewhere in Soho. I came there, you know, met him, and he said that he's preparing a film. Then he would like to give me a script to read it. I remember I read it that night, and when I finished the script, I read it again. Tomorrow, I met him again, and I said, "Hey, Milcho, that's fantastic. That's great script." He said, "Okay, then you must know I wrote this part for you, main part." I said, "How is it possible? We never met before." He said, "Yes, but you played five main parts in films of Živojin Pavlović, and he's my favorite director." After that, Before the Rain won Venice Film Festival, and I won award there. Pasolini is the best actor suddenly. This film got nominations for Oscar, and it opened a door for me for American films. That was. Which means I was lucky. Yeah, it's a short, the sum up of the situation, but again, that was the guy from the region. Yes. No, but he grew up in America. Yeah. Yeah. Yeah. Yeah. Of course, he knew who Rade Šerbedžija is. Okay. I would switch now to Mr. Divac. Vlade is a top sportsman, someone who did so many things on your way to the Hall of Fame. How do you stay motivated? How do you fight with the fears, and how it looked from your perspective going from one completely, maybe we can say even school of basketball, then going to some completely different? I remember I was just a small kid. "Oh, Vlade Divac is in Lakers." I saw the picture. I couldn't believe. How did it look from your perspective, and what is the main change you had to go through? I had the opportunity to have a drink with Mitch, so I went through that story. I couldn't believe it either. When I show up in the locker room, when I see all those legends, starting with Magic Johnson and guys that I had the opportunity to see all those guys on TV playing basketball in Europe. Well, I would say, just like Rade said, you know, it's a little bit of luck there, but, you know, when you believe in something, you don't have a fear. You just go for it. I was 21 and, my agent back then, you know, told me to sign some papers, so I can be drafted by some teams from NBA. Told me about story that everybody loves me, you know, and I'm so talented, you know, blah, blah. Told me, like, I should be between 10 th and 15th on that particular draft, but nobody picked me up, you know, until 26th, and I was very disappointed, right? Then the Lakers took the chance, and they picked me at 26, so it was great feeling to know that you're gonna be part of the one of the best sports organization in the world. They were ready to invest and make me feel comfortable, and they did everything right to help me to adjust for a new culture, a new style of basketball. Of course, opportunity came in, and I just grabbed it. Of course, there is a presence of natural talent in your case and as natural born talent and work. Now I would just. You wanted to say something? Yeah. I mean, when we talk about luck, obviously it's a lot of work and talent behind it. When we are talking now, you know, from the distance, we say luck, but it's a lot of work and talent that we both or all of us have, you know, in that regard. As I say, you are the right person to fact-check this, but they say for late Dražen Petrović and for late Kobe Bryant, they were very talented, but they were always there to do their 200 shots first before the practice. Practice, practice. Talent without work is almost nothing, right? Well, we always talk about, you know, the successful people, you know. It's nothing coming from the sky. It's a lot of work. We assume that's. We don't need to talk about it. Without work and without dedication to whatever you do, it's not gonna happen, you know? You have to earn the luck. He was born that way, but he must have worked for it. Absolutely. Yeah. Okay. Now let me introduce you to Mic for those who don't know. Hooray Studios made something really interesting. We talk and we usually can hear in these days that print is dead, and that nobody's reading any more books. Everybody's reading it online. But what Hooray Studios did was actually they used the old technology. They made books which are personalized, and instead of selling maybe 500 copies, they went up to 1 million and more copies worldwide. Mic, your take and how did it look, where did you find the inspiration, and for instance, somebody would presume that, okay, what else there to be invented in the book world, in the printing process? How did you come up with the idea, and can you tell us just a little bit on your First of all, listening to you, sir, today, I must say I understand my mother why she was in love with you. Thank you for making my mom happy couple of times, probably numerous times. My dad says thanks as well. Anyhow, to answer your question, it started really slow. My partner, Rade, is here in the audience- Yeah. in the office today. Yeah. Okay. We started basically with the intent to make something nice. I know this sounds like really cliché, but we both came from previous jobs that we were kind of forced to, let's call it, sell things that we wouldn't believe in or would not be proud of. At that time, we both became uncles, et cetera, and this was not the only idea. You know, it was not like when you look, you know, back in time, you said, "Yeah, I knew it." No, we didn't know it, you know? It was just one of the ideas, but we knew that we were hardworking and I was joking before. No, I was not joking about rakija, so this is not a joke. We started with rakija and Bosnian cheese. We had it on a plate. We talked a lot about what should we do? How should we do it? We knew that. We don't have the finances because we are both students. We only had like 10 grand, like 10,000 euros. We knew that we can easily compensate the lack of money with energy, with enthusiasm, and we don't like that. You know, this was an open book, so we were like 29, 28 years of age at that time. Nothing was impossible, you know. That's why, you know, choosing the branch, which was kind of a dying. Me especially, this kind of, let's call it, pisses me off. I want to prove to myself first that something can be done, and I think we did a good job, and we are super proud of it, you know. Actually, you had this kind of a spite. You wanted to show that it is possible, but you also used local resources from the region, Bosnian cheese and rakia, right? Exactly. We can talk about region the whole day. Opportunities. In the region, right? Mr. Šerbedžija, I would like to ask you regarding the. We heard how it happened that Milcho Manchevski wrote a part for you. At what point of time you knew, "Okay, now I'm okay here, and I succeeded"? You said it opened the door. Of course, there's maybe one, the other movie, third. When were you feeling relaxed and, "Okay, I'm back at my own"? Okay, you're not in your former country, you're in a completely different continent, but when did you knew that you made it? Well, after that, I made some films, really. I mean, big films like The Saint with Phillip Noyce, opposite Val Kilmer and Elisabeth Shue. I made South Pacific. I was singing this main part with Glenn Close, yeah. Some Enchanted Evening and all of this stuff. Somehow, it was very important for me, this experience with Stanley Kubrick. I had a small part, few scenes, in this film. Working three months with him, it somehow, you know, showed me something special and somehow, yeah, made me, how you say, relax. Relax. I remembered that he said after this film, he said to Tom Cruise, we were drinking something, he said, "Listen, this guy will not stop now 10 years shooting films." It's really happened like that. Actually, if there is a kind of a Eastern Russian accent bad guy in the movie, most probably. Yeah. It will be you. You know what? I'll tell you something. I did a lot of these Russians, as you said, but I made also some great Greek characters, yeah, or Romanian, even Croats or Serbs, you know, in my American films. It's only what I can do with my English. Okay. You know, because if you have accent, you can't reach main part in American films. Very, very rare. It happened for me a few times. Let's say this film, American-Canadian co-production and Greeks, it was Fugitive Pieces, where I played with Rosamund Pike and Stephen Dillane, and I got main part, you know. It can happen, but very rare. But you know what? Even Antonio Banderas. Banderas. Yeah. He has a strong Spanish accent, right? Yeah. Yeah. He has a strong Spanish accent, but he's also playing foreigners also, you know. Never Americans. Yeah, of course. Actually, it's my personal angle. When I was dreaming about going to the States, everybody asked me, "What would you do there?" You know, I would try to do some auditions. Mr. Šerbedžija has to go to retirement one day. You know what? Even British actors- They cannot go. Very difficult they'll get main parts in American films, but they are the only guys who are playing good guys in American films. Okay. Vlade, going from the city of 13,000 inhabitants to the one of the best players on the planet is one part of the story which we already just started. What is that, what we can say for our sportsmen from this region that is so distinctive for them? We are witnessing that Jokić is now again MVP, Luka Dončić, all the other guys. What is so distinctive with our players, other sportsmen from other sports, Novak Djokovic as well, which is so different comparing to others? What is that? Is it just this wish for success and talent and also a lot of work, or there is some kind of secret recipe? Well, you don't have a secret recipe. It's a lot of. First of all, I can talk about myself, and I can see you mentioned Luka and Nikola. They have probably same. It's a love for the game, and you always, every day you try to be better. I was lucky to play with one of the best players in the world, and they made me who I am. Then, I had the teammates that I tried to pass on experience that I got from all those years with the Lakers, where I tried to make them better. It's a love for the game. I'll tell you a funny story. When I was 15, 16 years old, and I got some first money from playing basketball. It's a few hundred dollars or whatever back, I don't know, early 1980s. I was so happy to bring, you know, those money back home, and my dad actually forced me to take the money back because he was asking me, "Do they know you would play basketball even if they don't pay you?" That was a good message that, yeah, I really play basketball for fun, for a love, and all those contracts and the fame came just as a natural thing. Yeah. As the old slogan said, "I love this game," right? Exactly. Yeah. Okay, great. It's one of the adages, do what you love and you will not work a day in your life. We need to get there. Okay, Mix, the question for you. Do you think that in this region there is enough freedom and courage for this innovative approach to things? As you said, one of the things that motivated you was everybody says that the industry is dying. No, I wanna show that it's not dying. Do you think that we still have some space here? I would argue that mostly we have that in the region. We started in Slovenia, which is, you know, very small country, very small market, and then going abroad. A very big bank. Yeah. Very big bank. Exactly. We started here, and then going abroad and, you know, everybody was saying that you—because Germany was our first market, "You should not go to Germany unless you have EUR 250,000 on a bank account." We had nothing, you know, basically. But, you know, we were stupid. I mean this in a very good way, you know. You don't see obstacles when you know failure is not an option. I'm sure a lot of people who succeeded, whatever branch they are in, that they have this mentality because. I don't mean this in a bad way, but us approaching businessmen outside of the region was pretty hard for us, you know. It was. We saw that we wanted to make things big and stupid and fun, and they just wanted to make them safe. You know, which I don't think playing things safe at the beginning. Let's call it only in business, but I'm sure as well, it's not the way to go, you know. Then you become mediocre and people don't take you seriously because you have to make mistakes. You have to break things down, you know? Yeah. Okay. Mr. Šerbedžija, can we say that the personal potential that a person has can only thrive and can only blossom when we are kind of together? You mentioned working with Val Kilmer and all the other actors, and Mr. Divac just mentioned that he learned from other players and tried to teach other players. It's not possible just to have personal potential or is it? Or you need other people and then have kind of a community and work together. I always prefer working together in everything, in life and in art. It's maybe why I like more theater than film. I must tell you know probably that I'm running with my wife and a friend of mine, Duško Ljuština. We are running theater festival Ulysses on Brijuni. Yes. We are trying to make international theater, but we did really great productions. You probably know or see some of them, and I'm happy because of that. I'm most proud of something what we are doing 22 years. During our festival, we have some special workshop that, our friend of ours, famous Scottish musician, I mean composer, Nigel Osborne, professor in Edinburgh on music academy. He's always working with music, working with disabled children to help them, to healing them, actually. He has great, big success with this method. Every year we are doing this. This year, we will organize one month. We invited some artists from Ukraine or some people, some artists who actually escaped and who are now in Poland or in Germany, to come in our camp for one month working with this Nigel Osborne and with these children, disabled children. We will teach them how to do this with the children so that they can be able to do this in Ukraine, and they will have a lot of work. Thank you. That's a great thing that you're doing. Vlade Divac, I would like to ask you a question regarding advice. Actually, what we are also doing here, and we are trying to send a message to some people in the audience and people watching. Can you remember some advice, piece of advice that you regret not taking, and also piece of advice which you remember that was crucial for your further development in the career? What would be your advice to the next generations? Well. I don't regret about anything, you know. That's all past. You know, what you learn from the past is just experience that can help you in the future. Advice that I remember that helped me, you know, during my career is my dad telling me, you know, when I start having like small success and, you know, going from my hometown to Kragujevac and Belgrade and LA. Before that I was young, you know, and he was telling me that to make sure that that journey on that road is more important than. Than the goal itself. Than the goal. I always took that seriously because I really enjoy my journey, you know. The goal can be different from what you really feel. Are you gonna be happy to reach the goal or not? The journey is always very important for me. It's all about the journey, and we should probably not forget to stop sometimes and smell the flowers. I agree. As said, you know, it's very important that who you are on that road to success. Are you gonna be happy when you reach the goal, you know? A lot of people, you know, reach the goal, but they don't find that success and happiness. It's probably been too fast or maybe too abrupt. Yeah. They find the goal, but they didn't enjoy the journey and that's Yeah, whatever, you know. Yeah. They start missing, you know, all the stuff. I mean, on my journey, I learned a lot, I grew up a lot, you know. I see the world from different perspective, you know. What I was thinking, you know, that is important when I was fifteen, I realized it's not, you know. Things like that. Okay. I will go back to you, Mic. What I didn't mention earlier when we talked about your great invention of personalized books for our kids, that you actually had growth of, I believe we're still here, so I should talk in some percentage, 4,900% rise, if I read correctly. At some point, yes. At some point. When it struck you, how did you feel? Is there a syndrome of a drunk millionaire? I mean. Was that, "Oh, we succeeded"? Or. Yeah. It refers a little bit to what Vlade Divac said. No. You know, it's not a bad thing, I would say. We started this company because you need to somehow fulfill your ego. I think so, right? You have different ways to do so. You have illegal ways and you have legal ways. We wanted to be more on the legal side, doing things correctly. You know, it was never a matter of how many books we would sell or how many people we would have, but it feels good. Okay. It really feels good. You know, for us, the main thing, the point in time when we said we succeeded, first of all, it didn't happen yet. If I would need to choose one, I would say it was the time when we were able to put our egos aside and said, "You know, it's not only the two of us who are the limit of the company, but we should hire smarter people to join us." Which sounds simple as I say it, but, you know, coming to that conclusion at age of 34 was not that simple. Yeah. Okay. Mr. Šerbedžija, for you, the question. Do you think that there is still space for further development of the culture pattern which could make a great impact on the world scene? Or we have seen it already all? Do we still have some space to develop a new culture pattern? The question that was said in English. Maybe we've seen everything. Me or you? We are just recycling. To everybody as well, but first of all, you all, because you are artists. You know, I would like to believe that we can live in a better life and a better world. These things, this war, make me unhappy. Somehow I even not thinking about art right now. I think that we, all of us people, not only artists, not sportsmen, not successful businessmen, have to think more about world, about others, about peace and all. That we have to try to love people, to understand different people with different culture, different problems. We have to try make ourselves better. It looks like we lost empathy. Yeah. caring for other people. Yeah. Okay. Yep. I would now switch again to you, Mr. Divac. I'm switching from Mr. Divac to Vlade, and I'm going first name basis and then last names. Pardon. What would be the message? How would you describe the region? We had a really great crew of CEOs from the region earlier today, and I asked them to define. To some people watching us somewhere from somewhere around the world, how would you define this region? I would also like your answers on that. What would you. You probably did it so many times, but what would you say in order to describe the region and define the region? What is the region? Is it just former Yugoslavia or it goes even broader? It's just part of the world and I lived in, like, Rade knows, we lived in most of the part of the year we spent in Los Angeles, so. I realized, you know, when I was 20 plus, you know, that I mean, we are same, you know. It doesn't matter, you know, where you're coming from or it's what you believe here and how you act, how you approach. For me, I have a lot of friends all around the world. Your region is the whole. Exactly. Planet actually. This is my homeland. I love it. The world is my country. I think, you know, it's talking specifically about people that lives in this area of the world. We like to. We have a tendency to take a lot of excuses. It's always something, you know. We always should take, you know, charge. You know, what I can do to make this theater or city or country better? What I can provide, not wait for somebody else to do it. It's about us. We should be the power of change. Mic, also question for you. When we talked just a little bit a few days before this happening, you said something which is, it almost doesn't matter from where did you start this. Yeah. It could have been garage in Prague, right? Yeah. From that point of view, and in this new entrepreneurship, in which you are living and which you created, how would you define the region? Is it even? Vlade Divac just told us that it's not so important. Important is what you have inside. Every region is your region. But how would you describe this region? I mean, definitely my generation, and especially younger ones, are now, they're not bound by borders. Citizens of the world, right? Exactly. Things are becoming, on one hand, they are becoming more accessible, but it's becoming a bit more scary as well. I think handling these two things, it's a task we all in business should take care of, because you can easily make a mess if you don't pay attention. What I did learn coming from the region is that, our, I would call it inferiority complex. It's a good joker to have, you know. Because it takes you a long way, because like Vlade Divac said, you always count only on yourself. You know, this is what we realized, that we never even going abroad and hiring, now we have more than 100 people in the company, we never relied on somebody else to solve our problems, you know. In the region, we are really good at doing this. Not just the region, but if there is something that we are good at, I think it's that. You know, our competitors get funding of EUR 100 million, and they are on the same level as we are. You know, do the math. Okay. Don't do the math. Don't do the math. I mean, the message is that the region is so resilient, and probably because we've seen it all, that's why we from this region are kind of more ready to adapt to some new circumstances. Even if you go from the basketball player in this country or a great artist and then go from zero to hero. Mr. Šerbedžija, I would like to finish with your message and your definition of region. One of the CEOs, Mr. Bitenc from Petrol said, we have beautiful landscapes here. That's just one of the facts. He said, "You can jump in the sea in the middle of the night and not get eaten," which is not the case in Los Angeles, right? Your definition on this beautiful region. You know what? There were times I was the most proud of all this region called Yugoslavia or Balkans, even our neighbors, Bulgaria, Romanians, Hungarians, people from these Greeks, from this region. Then, when war happened in my country, what I never believed it would be possible, I was so unhappy and stopped to be proud of my region. But I'm still proud of many friends I know, of many talented sportsmen and people and artists in my country. I just think, and I must say one thing, you know, that we deserved all these years, last 30 years, better politicians. Thank you. As Mr. Tedeschi said, leadership. We like leadership. Okay, gentlemen, thank you very much. We are so honored that you devoted your time for us on this stage. Thank you once again, and. Thank you. Thank you for the opportunity to listedn to your advice. Thank you. Thank you. Okay, the one who started this whole event should be the one to close it. Ladies and gentlemen, CEO of NLB, Mr. Blaž Brodnjak. Dear all, I hope you realize that you are in the center of Europe, that we share the same values, and that we share creativity, innovativeness, and ambition. Rade Šerbedžija said he was proud. I'm belonging to the generation that sees the light that is shining on us in a way that we will again be enormously proud. My generation not only has a chance, it has the responsibility to put things again right. We see this region really, authentically, and genuinely as the region of opportunities. As I said at the beginning, it is not only right, it is also just to give the whole region a chance to really accelerate accession to the European Union, by that secure stability, prosperity, and peace, and then you all will be proud of us. Thank you very much.