Bank Handlowy w Warszawie (BHW) Investor Update summary

Transaction highlights and strategic shift

• Announced sale of consumer banking business, including credit cards, loans, deposits, and wealth management, with transaction value up to PLN 1.1 billion and a net loss on sale of PLN 380 million recognized this quarter.

• Transaction involves demerging PLN 6 billion of loans, PLN 22 billion of deposits, and transferring half of employees; proceeds to be distributed as extraordinary dividends, subject to regulatory approval.

• Bank will remain listed on the Warsaw Stock Exchange and continue as a dividend bank, targeting 75%-100% payout of current profits and additional extraordinary dividends from sale proceeds and undistributed profits.

Strategic focus and market positioning (2025-2027)

• Conditional approval granted for new Institutional Banking strategy, pending completion of Consumer Business sale.

• Strategic shift enables concentration on Institutional Banking, leveraging global expertise and client base, with focus on national security, energy transformation, and supporting Polish companies abroad.

• Institutional Banking already delivers high profitability and cost efficiency, with a diversified product mix and majority of revenue from global clients.

• Aims to be the top choice for internationally oriented companies, leveraging global Citigroup presence.

• Focus on strengthening foreign exchange, custody services, and tailored solutions for new economy clients, including instant payments and high-volume transaction processing.

Financial targets and capital management

• Targets ROE of 19% and ROA of 2.6% by 2027, with cost-to-income ratio below 30%.

• Plans to fully replace consumer business net profit with higher Institutional Banking profits by 2027, diversifying revenue mix and maximizing dividend payouts.

• Extraordinary dividends up to PLN 1.1 billion planned for 2025 and 2026, in addition to regular dividends.