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Good afternoon, everyone. Welcome to Bank Millennium First Q '24 Results Call. As usual, Mr. Joao Bras Jorge, our Chairman of the Board and CEO; and Mr. Fernando Bicho, our Deputy Chairman of the Board and CFO, will present the results. After that, we'll have a Q&A session. My name is Dariusz Gorski, I'm a Head of Investor Relations, and I will try to navigate the call. Thank you very much.
Thank you. Good afternoon. Thank you for joining and for your interest. We will guide you through our first quarter results presentation. And we will start with Page number 4 with a summary of the main achievements of the first quarter.So starting with capital. We kept even slightly improved, a very solid level of capital ratios at the group level. The Tier 1 ratio even slightly went up by 18 basis points to 14.9%, so Tier 1 and core Tier 1. And the total capital ratio slightly dropped by 5 basis points to 18%. So it means that we have a significant surplus over the current minimum regulatory requirements, respectively more 5 percentage points than the minimum requirement for Tier 1, and more -- and 5.8 percentage points surplus over the total capital ratio requirement. At the same time, we continued, of course, to fulfill the MREL requirements.In terms of profitability, we posted a net profit of PLN 128 million in the first quarter, or PLN 668 million, excluding extraordinary events. And this is already the sixth consecutive quarter with a positive net result, despite still the relatively high costs connected with FX-mortgage.For these good results contributed especially the strong growth of net interest income, which grew by 7% year-on-year, but especially grew 5% quarter-on-quarter, at the same time that the net interest margin grew by 12 basis points versus the previous quarter to 4.36%.As a consequence, we had a growth of core income by 6% year-on-year. The cost to income continues at a very low level, 31.7%, and the cost of credit risk was similar to the first quarter of 2023, while asset quality remained stable.On the business front, we had a strong growth of deposits year-on-year by 12%, especially driven by deposits from households, while consumer loans grew by 7% year-on-year, PLN mortgage by 5%, and investment funds by 30% year-on-year. As a consequence, we have continued to increase the substantial commercial liquidity surplus that reached more than PLN 39 billion at the end of March and bringing further down the loan-to-deposit ratio to 65%.And last but not the least, we continued steady but relevant pace of growth of the customer base, reaching 3.045 million active customers in retail, with 91% of them digitally active.Pages 6 and Page 7 show some key profit and loss items and balance sheet items. The most important of them I already mentioned and some of them I will further explain down in the presentation.So moving to the Page 8. Apart from the highlights that I already mentioned, the ROE annualized and reported from the quarter was 7.4%. If we adjust it by extraordinary events and also if we adjust the equity, the ROE stood at 17.4%.We continue to have a number of achievements in terms of external recognition including the title of Top Employer 2024 and Reliable Employer 2023. And also, the recognition as Best Bank in Poland in 2024 by the Global Finance Magazine.On Page 9, as we already mentioned several times, this is the last year of the current strategy cycle, where we have been regularly reporting on the achievement of the targets that were announced almost 3 years ago.And what we would highlight in this quarter is also the fact that as a consequence of the effort to decrease the FX-mortgage loan portfolio, at the end of March the share of gross FX-mortgage loans, meaning without deduction of the legal risk provisions, as a percentage of the total gross loan book fell below 10%.On Page 10, we can see that the quarterly reported result was very similar to the previous 3. It was in fact slightly higher than the fourth quarter 2023. Of course, it's slower year-on-year due to the fact that in the first quarter of '23 we had an extraordinary gain resulting from the insurance transaction that was then reported.The net profit without extraordinary items and also accruing linearly the contribution to the resolution fund stood above PLN 700 million. So in fact, looking at the last 4 quarters systematically, the net profit excluding extraordinary items has stood always above PLN 700 million.Now, going into more details of the financial performance. On Page 11, we had a very good quarter in terms of net interest income. So as I mentioned, we had a growth of 5% versus the previous quarter, a 7% growth year-on-year. And this was driven by several factors, including a reduction in the average cost of deposits, partially offset by a smaller reduction in the average remuneration from loans, and also the contribution of the bond portfolio. And as a consequence -- and also of the volume effect due to the fact that we had a strong growth of deposits. And the combination of all these factors brought an increase of the net interest margin by 12 basis points to 4.36%.And of course, this despite the fact that we have incurred since the end of September higher interest costs connected with the MREL issue and also from the securitization transactions that were done during the last year, especially the last one that was booked in the end of December.Regarding net fees and commission income, here the picture was more or less in line with expectation. In fact, even a growth of 5% versus the previous quarter and virtually flat versus 1 year ago.On the cost side, we had a total cost growth of 15%. And here, of course, we had some relevant growth of staff costs by 18% year-on-year. And also, other admin costs without BFG grew by 29%. However, here there is partially, a base effect from the last year, where the costs in the first quarter of last year were supported by some settlements regarding 2 cards that decreased the cost of the first quarter, while this year such a positive impact will happen in the second quarter. So we would not take this growth that is reported as let's say, the normal growth and this effect will no longer be visible after the second quarter.The cost-to-income ratio continues at a very low level, so at 31.8% on an adjusted basis.Moving now to the next page of the presentation. [ Audio Gap ] Sorry for this small break. So moving on to the next part, connected with capital and liquidity. So we had -- we continued to show strong levels of capital ratios. So as I mentioned, core Tier 1 and Tier 1 at 14.9%, so slightly up versus the previous quarter. Already incorporating the results of the second half of last year in the own funds. And at the same time the total capital ratio is more or less stable at 18%, so showing a significant surplus over the minimum capital requirements. And also, the MREL, also comfortably fulfilled.Regarding the liquidity indicators, as a consequence of the significantly higher growth of deposits versus loans, we had a further decrease of the cost of the loan-to-deposit ratio to 65% in the end of March and keeping an LCR above 300%.Now, moving to the FX-mortgage portfolio. So we had already previously announced the level of provisions for the quarter, but starting first with the inflows. So we had in the first quarter of this year, inflow of court cases at the level of 1,588, which is lower than the previous 2 quarters. And at the same time, we had 1,104 amicable settlements with clients, which was the highest level of the last 5 quarters. Of course, bringing associated with it also some additional costs.The share of FX-mortgage in total loans has been dropping significantly, and especially if we deduct the provisions that are allocated to the portfolio, the share is already around -- is only around 3%. And also, we continue to decrease the outstanding amount on one side, and also, which fell in currency -- measured in currency by 5% quarter-on-quarter and 16% year-on-year.The number of amicable settlements reached already 22,500, which is equivalent to 37% of the number of active agreements that existed at the year-end 2019.On Page 16, the level of provisions in the quarter was lower than in the previous quarter, but still at PLN 507 million. And the stock of the balance sheet level value of provisions was at PLN 7.2 billion. So it means that the ratio of total provisions over gross outstanding increased to 91.5%. At the same time, we did not have significant changes in the main assumptions that are shown on the bottom right part of Page 16.So moving now to the second part of the presentation regarding business highlights on Page 18 we can see that -- we had this, first of all, strong growth of customer deposits driven by retail, but also a [ strong ] growth of consumer loans and PLN mortgage loans portfolios.Also, we see the first signs of revival in the corporate lending activity with the volume of leasing new sales in the first quarter of 2024 growing by 14% year-on-year.The growth in the number of customers was significant, 122,000 more versus 1 year ago. The growth in active digital customers is even faster, 176,000 additionally. And so we have now more than 3 million active customers in retail and at the same time this is also followed by a significant growth in payment cards by 117,000.On Page 19, some deep dive in terms of loans and deposits. So starting with loans, total loans grew by 2.4% year-on-year if we exclude the impact of the reduction of the FX-mortgage loans. And in terms of structure, there are not yet significant changes apart from the significant dilution of the FX-mortgage that I already mentioned.And also, interesting to say that although year-on-year we still have a drop of corporate loans, including leasing and factoring, this drop of 6% is already smaller than the drop of 8% that we were showing in the end of December. And already there was a small growth in the quarter.On the customer deposits, of course, significant growth, mainly driven by retail, that grew by 16% year-on-year, bringing the total overall growth to 12%.And also in investment products, a much more positive environment, leading to a growth of investment funds outstanding to close to PLN 8.9 billion, a growth of 30% year-on-year.On Page 20, in terms of overall growth of the retail portfolio, it reached 6% year-on-year without FX loans driven by the growth of consumer and mortgage that I already mentioned. And in terms of sales, the sales of mortgage loans were at a similar level of the previous quarter, at PLN 1.6 billion, while the cash loan new sales were also very similar to the previous quarter, at PLN 1.49 billion, with a market share of 9%.On Page 21, the number of active retail customers grew by 42,000 in the quarter. The number of micro-business clients grew by 16,000 year-on-year. And this is also followed by the growth of cards and current accounts.On Page 22, the numbers regarding digital users continue to have a strong growth. So at the end of March, we had 2.77 million digital users, a growth of 7% year-on-year. 2.55 million mobile users, a growth of 9% year-on-year. and 1.8 million BLIK users, a growth of 21% year-on-year. And at the same time, the Bank continues to be in the top rankings regarding best mobile app, best online banking, and best remote process for opening the current account.The same effort of development continues and is illustrated on Page 23, illustrated, for example, by the fact that applications to 800 plus benefit was done by 71% of the customers via mobile app.On Page 24, also sales in digital very relevant with 80% digital share in sales of cash loans in the first quarter, 43% digital share in sales of current accounts, and 95% in terms of time deposits. And also, digital channels share in credit card sales in March '24 reached 71%.The same effort of development and growth is followed in the micro business or small business segment with a high acquisition of current accounts in SOHO segment in digital channels and also a growing customer interest in the process of opening -- of registering their own businesses. Just in February, we had a market share of 19% in terms of new companies registered online via banks.And regarding Goodie, on Page 26, we continue to show significant growth versus the homologous period of last year.Moving to corporate business, I already mentioned that the most positive aspect of the quarter is the fact that we start to see some rebound. It's still shy, but already starts to be visible with a growth of total lending by 2% quarter-on-quarter, although still 6% lower versus 1 year ago.And a growth of company deposits by 5% quarter-on-quarter and 4% year-on-year. At the same time, this is followed by growing transactional activity with higher volumes of treasury transactions, in which FX transactions grew by 54% year-on-year, domestic transfers by 4% year-on-year.The revival in leasing is already visible on Page 28, so total sales reached almost PLN 900 million, a growth of 3% quarter-on-quarter, but especially a growth of 14% year-on-year, while factoring turnover remained stable.The same effort of investment in digital processes for customers in the corporate segment continues and we would highlight the fact that already 74% of FX transactions are concluded through our Millennium Forex Trader platform. 65% of guarantees were issued in the electronic form and 91% of customers use eBOK website for leasing services. And this is accompanied by new developments in the Millenet for Companies and also a number of other functionalities are shown on Page 30, including in terms of user experience, AML surveys, and also the mobile app for companies.So these are the main highlights of our first quarter results, and now we will answer to your questions. Thank you very much.
Thank you very much, Fernando. We're opening the Q&A sessions. First questions have arrived. Before we start, maybe I'll share with you a hint because I had a couple of discussions about the FX-related costs, and I would like to point your attention to the existence of a segmental note in our report. It's on Page 75, and it quite comprehensively allows you to allocate FX mortgage-related costs across P&L lines. So please do have a look at this note. I think it's very helpful and will help you to understand better our results.
Now to questions. Fernando, would you like to start from cost of risk or OpEx? Because we have a choice for you.
So both of them were high, yes? So no, I'm joking, but the answer is very straight.
Let me read the questions so that the other participants benefit. So OpEx or cost of risk?
Cost of risk.
Cost of risk.
Cost of risk, okay.
Cost of credit risk.
Cost of credit risk. Okay. The question was, the cost of risk was above your through cycle guidance of 50 basis points. They expect it to run higher in 2024. What trends do you see in your consumer book?Another question on that subject is that what was the reason for the increase of cost of risk? Any large tickets there? Do you expect your cost of risk to lower in the coming quarters?
So first of -- so starting with the cost of risk in the first quarter, the cost of risk was almost exactly at the same level as in the first quarter of 2023, although higher than in the previous 2 or 3 quarters. There was nothing that we can consider abnormal in the first quarter. But for example, we did not have any impact from sale of NPLs. And last year, we had 2 quarters in which we had sale of NPLs, namely the second and the fourth quarter, so this -- which contributed to lower cost of risk. So this is one point.And second, the fact that now the cost of risk was slightly above 60 basis points over total loans does not mean that we change our view and our guidance regarding the full year cost of risk expected for 2024. So we still believe that for the full year 2024, our cost of credit risk will be around 50 basis points over total loans, which means slightly higher than the 44 basis points that we had last year. But as you remember, last year we almost did not have cost of risk for corporate, which we don't think it is sustainable. We expect to have always some cost of risk associated with corporate exposures. And regarding the others, we just took normal assumptions about the evolution of the credit portfolios. So first quarter, a little bit higher, does not destroy the guidance, and we stand by the guidance of around 50 basis points overall for the full year.So this is the -- in terms of specifically about the consumer loan book, we don't see any relevant signs of the deterioration in the consumer loan book. And there may be several reasons that justify why the quality of the loan portfolios, especially in retail, has been so resilient. We cannot forget that although in the last year, there was still relatively high inflation in Poland, at the same time there is a double-digit growth of remuneration in Poland, and especially minimum salary grew 20% last year and 19% this year. So it means that although on one side facing higher inflation, at the same time there is a general increase of average remuneration in Poland that allows that, in fact, to offset a potential -- some tightening of some tougher conditions for the average, let's say, of the population. So we don't -- also, interest rates even are slightly lower than they were 1 year ago. This is another factor. And so for the time being, we don't see signs that could lead us to anticipate some deterioration in the asset quality and consequently in the cost of risk of the consumer loan segment.
Okay, thank you very much. Now question on OpEx. It's coming from Mediobanca. Cost went up by over 20% year-on-year. Were there any one-offs? The guidance for the year was up in double digit. Could you please give us more color? Will it be 20% year-on-year?
I already tried to partially address this during the presentation. So there is a base effect here. So in the first quarter of '23, we benefited from some settlements regarding cards that lowered the admin costs in the first quarter of last year, while this year they will be reflected in the second quarter. So this creates, let's say, a higher percentage increase than the normalized one. So we are completely -- so we -- the answer to the question, if it is around 20%, no. This is not at all our scenario. Our scenario for the current year in terms of cost growth is around mid-teens, I would say. Also, we have here some stronger growth in the first quarter of staff costs versus 1 year ago, but this is also the effect of the timing of changes of salaries and sometimes also variable remuneration that made a little bit more heavy the impact in the first quarter, especially versus the previous quarter.But the answer to the question is, we believe that costs will grow double-digit. This is one. But not at a run rate of 20% at all. And after -- we believe that after the second quarter, with this exclusion of these base effects, this picture will be more clear to everybody.
Thank you. Now a question which relates to the income tax line. It's coming also from Mediobanca. Could you comment on the drivers of your income tax line? Was it related to the tax deductibility of FX provisions? Could you help us understand the trends in the coming quarters?
Yes, in fact, it's a combination of a few things, and most of them connected with FX-mortgage. One, is exactly that depending on the type of provision, some of them are considered as tax deductible, so this is one effect. The second one is described also in our quarterly report, on Page 49, and it is -- and as we explained, we have recognized a deferred tax asset in the amount of PLN 51.5 million done as a result of future adjustments of interest income earned on mortgage loans in foreign currency, which are the subject of court disputes. So this was an adjustment that was done in the first quarter that also significantly decreased the tax burden and in fact, brought that the gross profit extraordinarily this quarter was almost equal to the net profit. So these were the most important adjustments. So summarizing some deductibility in terms of tax of part of provisions and second the creation of this DTA.
Maybe now let's get Mr. Joao Jorge a bit involved here. There was a question about a drop in market share in originations year-on-year. And there was a related question on that is what our thoughts on the volume developments in '24 are?
Well, in mortgage, yes, there was a fall in the market share although the volume is 50% higher than 1 year ago. It's clear that also we are adjusting a little bit to all the changes and all the impacts of the mortgage production. So we know there is also questions about it. There will be a new indicator for long-term financing. And so this also needs to be assessed in terms of the production of mortgage. There is a change of the rate usage, although we are producing fixed rate, but then there the contracts there is [ indiscernible ] and there is also this change. And there is, of course, the cost of the credit holidays. So it's -- the bank is already quite exposed in mortgage and we have been producing in a smooth way the levels that we want. We don't excuse ourselves to do much more in the future, but also needs to be in the right pricing and in the right conditions. So it's not -- we are not obliged ourselves to make 10% of market share in mortgage. So we are -- today we are producing, as I said, 50% more. The volume 1 year ago was 10% market share, now it's 6%, but there is not any radical consequence for that. We are keep more active in things that we need to do more in the daily basis, like customer acquisition and deposits, but I would not extrapolate any change of big behavior in terms of mortgage.
Thank you very much. Inevitable question on NIM. It's coming from JB Capital. Where do you expect your net interest margin to go from here? What is your current sensitivity to changes in rates?
We had the same question today from journalists in the morning. I think that the scenario of interest rates now in Poland, I mean in general, the expectations are rather for stabilization of interest rates during the current year instead of reduction of interest rates that were expected 6 months ago. So in an environment of stable interest rates, we expect also some stabilization of the level of the net interest margin. So of course, sometimes marginally up, marginally down, but we expect to have it relatively stable in the near future.What -- in terms of sensitivity, we are also disclosing the sensitivity in our quarterly report. We have been decreasing a lot the sensitivity of the bank to changes of interest rates. And so let's say we are more now naturally hedged versus what we used to be in the past. And the number that we are putting in the report shows that for 100 basis points variation down, of the yield curve, we would have impact of close to 2% in terms of NII for the subsequent 12 months. So this is the sensitivity that we have disclosed also today in our first quarter. And of course -- and this sensitivity is, of course, much lower than what some periods of the recent years that we were reporting.Of course, also what can -- of course, we are also expecting that gradually we will have some rebound in terms of loans, right? Because until now, the excess of liquidity is mainly invested in bonds. In the future, we expect part of this excess to be channeled for growing lending. And then, of course, it's also, the structure of the assets may have also some influence in terms of the average NIM. But I would say that the base scenario there is some stabilization.
Jovan from Raiffeisen is asking us a very specific and detailed question about the drivers of the NII growth, and I think we'll have to come back with that because it's very--
But just to -- there were several drivers, so it's difficult to isolate one, but we have lower cost of deposits on one side, which is much more beneficial in terms of P&L impact and the small drop in the average remuneration of loans. Then we have a significant growth in the outstanding amount -- we continue to have a growth in the outstanding amount of bonds and bills, which also brings additional margin. So also, which is somehow a kind of volume effect that is also beneficial, has been beneficial especially in the first quarter because all this volume of deposits that came in contributed also to the growth of the NII. So I would say that these--
Some amortizations because the question is also -- there is always also some amortization, so it's active portfolio, there is some bonds bought in the environment of lower interest rates that they mature and we reinvest in new instruments with the new rates. So it's a mix by growth of volumes, reduce the cost of deposits and also a renew of the bond portfolio, let's call it like that.
Now, let's make a slight detour to FX-mortgage and legal risk because it's inevitably coming as well. First, settlements. The question from JB Capital is about the outlook for the trend for the amicable settlements in the rest of the year. What do we expect?
So it's, I think we were always a little bit very transparent and also challenging ourselves during the initial moments of the settlement process, which challenge all our ourselves to achieve 2,000 per quarter. As soon as we went through our list of clients, of course, after so many settlements we had to put ourselves, of course, with the different targets. We said ourselves that we would like to achieve a 1,000. It was difficult in the last 2 quarters. Now we achieve it, so we are very happy. Since the beginning we always said that the settlements are the only way to have solutions, so it's not just making provisions. Making provisions, it's to make the accounting registration of future losses, but does not solve the problem. So the losses stay as a potential, and they even can grow in the -- as the court case goes. So we have this. We want to keep this activity of reaching settlements with the clients, as we see more unfavorable decisions in courts, in European Court of Justice, or in Supremes, wherever it is, of course the expectations of customers on the settlement also increases. so it's normal that the settlements become more costly. Also, lately we have been quite successful also in making the settlements in court cases. And the cost of a settlement in a court case is always higher than a settlement of a pre-court case. So it's obvious that we keep our mindset that we need to maintain this activity.Now we will be more and more engaged also in reaching settlements in the courts, not only the pre-court decision, but also after court decisions, making setting-offs with customers, making agreements and closing the situation. And this is complex. This involves a large group of employees. This involves a lot of know-how, energy and systems of the bank because the banks are obviously not prepared to address thousands and thousands of court claims. Even the courts are not prepared for that. But we believe that this is important. And we have been able to prove that we were good in the amicable settlements pre-court, and we believe that now we will be able to show that also the bank have competence in terms of people and processes to make court settlements. Of course, materializing the cost of this Swiss Franc saga, but closer and closer, eliminating completely this risk and this problem.
There's also a question about the repaid FX-mortgages, whether we see an uptrend in new claims coming from these, what is the amount and risk? And what sort of provisions related to this particular part of portfolio we expect going forward?
So in our quarterly report, we are also providing some details about the most important assumptions behind the provisions for FX-mortgage legal risk. So I just would like to remind the most important. The first one is that we are considering in our methodology that 84% of active loans are already or will be in the court. This is number one. Currently we have slightly over 30,000 loans in active loans still. And so here it's already a quite high percentage that we are assuming.Regarding the repaid loans, excluding settled loans, we are assuming that 16% of them will be in the court, including those that are already there. So these are the -- of course, we are also assuming some probability of success in the negotiations, both with out-of-court clients and with court clients. So these are the most important assumptions.Regarding, I think that the question is more connected with the inflow of the court cases. And there has been some increase of the share of repaid loans in the inflow of court cases, although in terms of absolute number, the difference is not substantial. Just to illustrate, I can say that during the first quarter, from the total number of new court cases that we faced, this 1,588 and around 21% were connected with repaid loans. But this is a natural thing because it must be reminded that every year there is a natural amortization of loans, or also there are some early repayments of loans. So by nature it's obvious that in terms of percentage, the share of this group may be higher. What matters, at least in my opinion more, is whether there is a substantial change in terms of the absolute number. So there is some increase, but for the time being is still more or less within the assumptions, but it's something that we will be regularly monitoring.There is a related question regarding, so there was a question about how much of the amortized amount of FX-mortgage we could still claim, but I think it's not what is the person that can still claim, it's the percentage that we are assuming that we'll claim that I just have mentioned. And also, there is a question what are the level of provisions related with these -- which what are the level of provisions related to this that should be expected over the coming quarters. SO of course, we -- it's not possible to give exact guidance for the level of the quarterly provisions for FX-mortgage legal risk. But as we showed in the first quarter, the level is lower than in the previous few quarters, so this is one indicator that should be taken into consideration.Second, several negative developments that 1 year ago were still not sure actually happened and are already reflected in the level of the provisions. And so for the time being, we don't see a reason to anticipate worse than what we have faced in the first quarter. This is what I can say for now. So we have been saying in different occasions that this year is still going to be relevant in terms of FX-mortgage legal risk provisions, although lower than last year. This has been something that we have been saying.How much lower? Of course, it's more difficult to be precise, but we believe that in the first quarter, for now, helps to confirm this view that the final number of provisions for legal risk during the current year will be lower, clearly lower than last year.
Thank you very much. Interestingly, this pretty much addresses the interests in the FX-mortgage book. Now we're moving to another sort of--
There's a question about costs related.
True, but there's also -- I think we partly answered that, but okay. There's also a question about the legal risk related to consumer book. And [ indiscernible ], as we call it in Polish, and so how many cases we have, what's the verdict, and what's the value of litigation?
The litigation [ indiscernible ]
Provides some detail, but obviously we're happy to share it with you right away. It's in the legal risk notes.
So in the quarterly report that we also -- that we have just today issued in the morning, in Chapter 9, 9.1 of the report we have lawsuits. And on the page -- sorry on the page. [ Audio Gap ] Okay, it's a page 87. So we have in total 532 lawsuits regarding this topic. From those cases -- from these lawsuits, we have already 33 cases that have been legally concluded, in which in 32 cases the bank won the dispute. So this is the status of this topic as of the end of March.
Moving back to capital funding, question from PKOBP relates to so-called [ WFD ] ratio. What would be the level of the long-term financing indicator based on rules presented by the KNF?
We are not yet providing estimations for this. This draft came in fact, during Majówka, so during the holiday week, the draft has some changes also versus what was discussed in the third and fourth quarter of last year. And so we need to assess what are the implications.This is still not the final regulation, so we also need to wait for the final regulation. I think what is important to say, just as a general comment regarding this, are that first, we will tend to increase the surplus of capital over the minimum requirement, and surplus of capital is one of the elements that contributes, although strange enough, because capital is not, let's say, it's not the same concept as liquidity, but anyway, abstracting from that, we tend to increase the surplus of capital over the minimum requirement. So this is one which also will be beneficial through time.The second thing is also that we have put in place a mortgage bank already a few years ago when it was not mandatory or we did not face any regulatory pressure for that, but we took a preemptive measure of setting up a mortgage bank that would allow us in the future to issue covered bonds. The bank is up and running. In fact, the bank is going to test in the first -- in the second quarter, the market for the first covered bond issue. So from a practical point of view, we have one important tool that also can help to fulfill some needs that will come from this regulation. But, of course, not only the covered bonds will contribute to that, but also potentially other MREL issues in the future or subordinated debt in the future. So there is a number of instruments that can be eligible to cover this requirement. So we are not able yet to advance estimations. We prefer to wait for some clarity regarding the parameters. And then we will be able to provide some more concrete guidance. Anyway, this also will be something that, according to the draft, is supposed to be introduced until 2026. So there is also still some time. But it needs to be digested. So we don't want to run now into concrete estimations.
Okay. Step back. Did you implement changes in your consumer loan contracts in order to mitigate the legal risk of the consumer credit?
I think we are always trying to look at what we have and always making, through time, the proper adjustments. But this is something that we do for all the products. It's not exclusively dedicated to consumer loans.
Question to Joao. Should we still expect Bank Millennium to return to banking tax in the second half of '24? Obviously, it's within the context of--
If it will not be abolished, yes.
This is a very interesting way of approaching this. So it's obvious that we are in a very fulfilling moment because in summer 2022 when we started the recovery plan, we said that our plan to exit recovery plan would be the summer of 2024 so we are very happy that we are reaching this moment. We execute the recovery plan in a very strong discipline, so not only by reducing RWAs and with that preserving and saving capital, making a lot of securitization transactions. The last visible step was the issuing of MREL bonds with EUR 500 million. We waited also to see the impact of the credit holidays. So it's obvious that we are in, unless there is a cataclysm now from now up to June, which we don't expect. We -- it looks like we are going to, in June, to exit recovery plan. And from that, [ they're ] starting to pay banking tax. But anyhow, for us, it's obvious that it's a happy moment because it's the conclusion of the cycle of the turnaround of the bank.What we are particularly proud and happy is that we were able to do this and not always these turnaround moments. It's possible to combine with strong customer acquisition, quality of service, digitalization. So we were able to solve the short-term but also preserving the long-term so it's so far so good. So it's we -- not happily, but we will be fine to paying the banking tax again. And of course it's also we expect improvements of rating later on improving of this -- we hope improving of ratings, improving of expectations of analysts, improving of stock price that today is suffering, and et ectara.
As for the share price, I think it's doing quite well. It's only minus 3.8%. So we've done a fantastic job, clearly, gentlemen. So keeping up the good job. Maybe 2 more questions in the interest of time. And there's one large regional bank that is about to start the conference at 3 o'clock, so we need to hurry a little bit. Questions from Trigon. Very specific. One relates to this legal cost that we already commented on, which were very high and elevated in the first quarter. And if we could comment on the outlook for the subsequent quarters.
I think we have to say it is above average. So this is not the amount per quarter that should be expected for each of the next quarters. So there was some additional costs connected with courts and so on that were booked in this quarter, but we should not extrapolate this amount for each of the next quarters, this we can say.
And the other question from Trigon. Proves that the analysts have very diligently read our tax note. And he's asking whether the DTA that we have created, how much we see DTA related to FX gain and fees and commissions? So we created DTA on interest income only so far?
That's a good question, fair question. We are assessing this, so it is possible that during the second quarter we will conclude this assessment and also, we'll make the -- we'll assess potentially booking also related to these other items in the second quarter. So this is still something that is being assessed.
Okay. In my view, we have addressed, I mean, there was one question about CRR, CRD, whether we have any comment on the implication, but I think--
Too early.
It's too early.
Too early.
Too early. Okay. So [ indiscernible ] question needs to wait a little bit. Any question that you found particularly fancy, interesting, challenging, and we still want to ask -- answer?
No. Nobody asked questions about credit holidays. So I think--
True. This is disappointing, yes.
But I think -- but I just [ due to ] -- we published a current report instead of trying to provide an exact number, we provided a range, which we think is more appropriate, also taking into consideration that it will enter into force in June. So by the end of June, we will see already what is the first wave coming and then we will be able to assess in more precisely. But we provided a range and we hope that will be -- that the cost will be between within this range.
Joao, time for concluding remarks.
No, just thank you very much for following our Bank and keep tracking about what we are doing. We expect to have this year a quite strong year in terms of business activity. Don't ask me how and why, but looking back, it looks like the last year of the strategy is always very strong in business terms, and this have been in the previous cycle, so we expect to do the same. And even what we saw already in deposits in the first quarter, what we see already in consumer loans in April and first days of May, looks like we are having this trend. So it's -- this is one part. From another part, as it is clear and all of you already know, we expect to present a new strategy that finished this year. We present -- we are going to present it in the results of the third quarter. And it's still far away to know what will be the guidance of this new strategy, but we expect that exiting this recovery plan and finishing the Swiss Franc saga, we could -- can allocate all of our talent people to business development and growth.
Gentlemen, thank you very much for your time and your insightful inputs and answers. Thank you very much, all the participants. As usual, if you have any further questions, any questions, call, write, or come. We're happy to help, and we are at your service. Thank you very much. Have a good weekend. Bye-bye.