good day and good morning ladies andgentlemenwelcome to mkb 2020 financial resultsand strategy update callwe must advise you that this conferencecall is being recordedbefore we start please note today wehave both russian and english-speakingcompany representativesalthough the primary call language isenglish at this time we would like tohand over the call tojulia titova acting deputy ceo atmkb good afternoon ladies and gentlemenwe are pleased to welcome you today atthe call dedicated to financial results2020 and strategy update of mkbin the course of our presentation todayour ceo vladimir tuber and businessleadersalexander kaznachiev in charge ofcorporate bankingalexia kisikov heading the retailbankingalec brunoff responsible for theinvestment bankingand sergey potensky head of our itwill give an update on the strategichighlightsour cfo mikhail pavlov will representthe financial performance of the bankfor the year 2020our presentation will be followed by a qa sessionand now i turn the floor over to ourfirst speakerso vladimir please go aheadthank you julia good afternoon ladiesand gentlemeni hope that all of you and your familiesare in a good healthand of course i am glad to start ourdiscussion on financial results of thebank for the last year 2020 and strategyupdate as julia said today you will hearkey people in my team and of course uhi will start with a joke because we justlooked at each other and said that thisis the first time wefor all of us uh just wearing a tieduring last year i think it's a good uhoccasion for uh such importantthings like we have for many years imean tiesand before we get into more details onour performance inin 2020 i would like to provide a verybrief snapshot of who we aremostly of course for those of you who isnot very familiar withour bank also it will be helpful to putsomestrategic context to our resultspresentationin 2020 we further consolidated ourposition as the leading non-state publicbank in the countryour assets reached almost 40 billiondollars and our equity exceeded 3.2billion dollarsbusiness scale broadens our strategiccapabilities and clientreach on a national wide basis we are auniversal bankserving corporate sme and retail clientswhile we traditionally have strongfootholds in a corporate banking we alsogrow our presence in retail and sme mkbis publicly listed on moscow exchangesince 2015 with a 20 free floatwe maintain strong credit ratingsreflecting our resilient performance andmoderate risk appetiteover the past 10 years we have deliveredstrong asset growth and profitabilityoutperforming most of our peersour assets increased at an averageannual rate of 33 percentover this period or 18 timessuch spectacular long-term growth hasbeen delivered mostly organicallythrough consistent expansion of ourclient basewe also delivered consistently strongprofitabilitywith average re of 15.2 percentand generated positive financial resulteach yearin spite of few crises i would attributesuch superior track record to ourfocused and adaptive business modelstrong credit culture and great superprofessional teamsince 1994 russian entrepreneur romanavdev is mkb's controlling shareholderas the majority participant of companyrussia mr avdev beneficially ownsa significant controlling interest inmk's mkb's sharecapital in the amount of 60 of the banksharesother strategic investors includereputable russian and foreigninstitutional investorscollectively owning their remaining 40as mentionedour free float amounts to 20 given thediverse shareholdersshareholder structure the bank hasalways been committed to strongcorporate governance standards we alsohavelong standing track record on capitalmarkets with roughly six billion equitysix billion dollars equity anddebt proceeds raised over the yearsin essence we believe mkb represents anattractive investment opportunitybroughttogether by a number of factors first ofall of course we succeeded in buildingcritical scale and leadershipin a very competitive market mkb stillaccounts for only two or nine percentmarket sharehence we have very big growth runwayahead of usi believe that we are well positioned tocontinue playing an active rolein further bank and market consolidationand deliver above market growthwe have proven business model thatoffersadequate diversification and moderaterisk appetite supporting stable throughthe cycle performanceour business is built upon our strongcustomer focus and continuous investmentin technologiesas mentioned we have a strongprofitability track recordwe have managed to grow our bottom linefrom year to year at times of economicgrowth but also during periods ofeconomic slowdowndelivering attractive returns to ourshareholderslast but not least we maintain highcorporate governance standardsand follow the best ehg practices ourstrong risk culture is deeply embeddedin ourcorporate dnain spite of challenging operatingenvironment last year we delivered avery strong set of resultsour loan portfolio increased by 28with a strong growth momentum in bothcorporate and retail businessesoperation income increased by 88 to 77billion rubleswhile net income increased by over 150percent to30 billion rubles such strong resultsonce again highlight financialresilience of our customers as well asour conservative risk appetite andunderwriting standards in terms of keymilestones we continued to invest in ourplatformin 2020 we successfully completedseveral bolt-on acquisitionsaimed at improving our market positionand certain regional markets we alsocontinued to invest in our retailbusinesslaunching a number of initiativesincluding new premium banking retailservice formatand in the digital investment platformon capital markets front we successfullyplaced 600million dollars euro bond issue at arecord low pricewe continued our strong focus andcommitment to esg principles and wererecognized as a top fiveleading bank in terms of sustainabledevelopment by wwf russiafinally in recognition of ourachievements euromoney and forbesextended to mkb several reputable awardsunprecedented kavit 19 pandemic hasposed a number ofchallenges impacting our clients as wellas our daily banking operationsone of our main priorities have been tostay closeand provide support to our clients underour ownmkb support program we provideddeferrals and loan repayment flexibilityfor the total amount ofof 61 billion uh rubles or almost sixpercent of our portfolioninety percent of restructured loans inretail returnsuh returned to the initial paymentscheduleand as a result npl ratio even decreasedfrom 3.6 in 19to 3.1 in 2020. to ensure efficientremote service for our clientswe have promptly expanded our digitalbanking capabilitiesour retail clients have access to up toeighty percent of our services onlinewhile businesses can similar seamlesslytransactand use financial services with thefully electronic document flow we arenew mobile appwe see strong adoption of digitalchannelsby our customers our mobile app wasranked top5 in russia and we issued 30 of ourretail loans in app while corporateclients execute75 percent of credit transactions onlineduring the pandemic we also focused onmaintaining goodproductivity with 40 of our employeescarrying their functions within remoteworkplacesin postcode 19 reality we still aim tomaintain large share of our employeesworking remotelyreducing the client servicing costsdespite the pandemic impact on ourclientsour asset quality remained intact thanksto our conservative risk approachand proactive customer support measureswe promptlyimplemented a wide support measures forthe affected client segments under thebank's own programs we approvedsignificant volumes of loanrestructurings mostly in marchjune last yearduring the nationwide lockdown periodwhich enabled our customers tosuccessfullyovercome the difficult times overall mkbprovided deferrals and repaymentflexibility for 5.5 percent of corporateloans and8.1 of retail loans and as alreadymentioned 90of restructured loans in retail alreadyreverted to the initialto the initial payment shuttleas you may see from cost of riskdynamics we conservatively provisionedvulnerable exposures in first and secondquarter of 201while in the third and fourth quarterour cost of risk has reverted in 2019levelsclearly our strategy on fog of focusingon large corporates with a moderate riskprofile and lessvulnerable to economic shocksfundamentally supported our resiliencethis year the russian economy isexpected to see strongre rebound on the back of substantialgovernment support strong vaccinationefforts as wellas oil price recovery of almost 160since march last year this shouldprovide positive tailwindto our business performance central bankmonetary policy has proved itsefficiencymaintaining the inflation in four fivepercent rangeduring the 2017 2020 addressing theshocksand supporting the investment in andcredit demandwe expect the central bank will keepinflation under controland annual inflation will stay close tofour percent within mid-term perspectivefinally strong resilience of russianeconomy going forward is supportedby the low public debt current accountsurplus and 600 billion dollarsinternationalreserves now i would like to pass thefloorto mikhail for further details on our onour financial performance mikhail pleasegoahead 4 is yours thank you vladimiras vladimir has already mentioned we seea strong positive dynamic of operatingincome for the periodtotal operating income before provisionsincreased by 88and amounted to 77 billion rublesdriven by a dynamic rise of net interestincome to59 billion rubles by 31 percent and30 growth of net fee and commissionincomethe ratio of net interest income to riskweighted assets increased by 40basic points and reached uh four percentour operating expenses remained flatat the level of 2019 despite strongbusiness growthand consolidation of two acquired banksand thanks tobanks management decision to increasecost efficiency during pandemic timecost to income ratio decreased to asolid level of 28.3for important period as a result ournet income reached record level of 30billion rubles in 2020in spite of the material impairmentallowancedue to the pandemic impact on the loanportfolio we delivered strong return onequityof 16.9 percent for the year that evensurpassed our summer forecastas demonstrated on slide 15 the bank'sbalance sheet has grown steadily mainlydriven byincrease in customer loans and depositsmkb assetsincreased by 20 in 2020.63 of total assets are represented byhigher liquid assetssecurities cash and deposit in creditinstitutionsas for essential part of the balancesheet cash and cash equivalent anddeposit and credit institutionsit's worth mentioning that over 96percent of securitiesthat surface collateral under reversereport agreementshave investment grade the share of theloan portfolio has increased from32.5 to 34.6with a focus on corporate landingconsisting of84 percent of the portfolio total shareof reverse repo operation in totalassets reducedfrom 48 as of 2019to 44 in 2020 in line with the bank'smid-term strategy to reduce the shareof the asset class mkb's main source offundingis represented by term deposits fromcorporate and retail customersfunding base was improved by attractingmore customers depositscustomer deposit expansion by 30 percentreflects the bank's strong reputationand the ability to attract funding fromdifferent customer groupsin a challenging yearforest capital developments are depictedon the upper diagram ofslide 16. afres total capitalincreased by 10 percent to 332 billionrubles due to strong financial resultsand perpetual and subordinated bondsrevaluation during 2020.the core tier 1 capital ratio of the mkbgroup calculated in accordance withbazel 3requirements based on frs financialstatementshas increased to 12.5 from11.9 percent a year beforethe dynamic of capital ratio on therussian accounting standardsas shown on the bottom graphs on theleft sideyou may see regulatory minimumsincluding buffers forapplicable for systematically importantbanks on the rightdiagram actual mkb capital adequacyratiosare represented the bank demonstratedstrengthening its capital positionprecisely n11 ratio amounted to eightpoint nine percentand point zero reached eighteen pointseven percentas of january well above minimumregulatory requirementsand now i would like to turn the flowback to vladimir thank youmikhail thank you so much forthe concise overview of our strongperformance in the last yearnow i would like to provide the view onthe mid-term development of mkb andpresentour 2023 strategy looking forwardwe remain committed to the universalbanking modelthat provides stable puff or tosustainable long-term growthand balanced diversification we wouldlike to setus apart to focus on providingcomprehensive banking solutionstailored for each client segment andbring in real value to our clientsin order to achieve this we setourselves four key strategic objectivesdelivery of great customer experiencethat will differentiate us againstcompetitcompetition great service leads toexpanded client relationshipsand client loyalty seconddeveloping our technological platform tosupport best customer experience andmaintainstrong cost leadership building missiondriven organization with a strongentrepreneurial spiritwhere all employees have ownershipmentality andare empowered to perform at their bestfinally focus of our businesson core esg principles based oncommitment to clientsemployees community and environmentthese are the building blocks forexecution of our strategy thati will share with you in a minute and mycolleagues will follow with thisuh as stated we focus on customercentric strategywhich means that we intend toconcentrate on customers and their needsnot on products we would like to have atailored and differentiated propositionfor each customer segment that we targetin corporate banking we intend toactively offerbundled multi-product proposition thateither address a specific client needsfor instance cash management solutionsfor retailers orand provides complete end-to-end bankingservicefor the whole industry value chain forexample residential developmentan sme an sme uh our goal to marketstrategy is based on active shift todigital channelsand transactional driven service modelin retail we intend to focus onproviding tailoredoffering to each client target segmenthistorically our retail has been mostlysource of deposit fundinggoing forward we plan to increase shareof transactional clients thatview mkb as a first choice bank andexpand into younger demographics we areour mostcard and mkb investment offeringwe also see significant potential inmortgages andplan to grow share of mortgage loans intotal retail portfoliosignificant part of our product offeringwill be focused on generation of fee andcommission incomewhich we intend to materially increasein our overall revenue poolas we discussed pandemic acceleratedevolutionof the banking business towards greater[Music]reliance on digital channels we agreethat consumers behaviorpatterns changed permanently hence weneed toadopt we forecast that by 2023 over 75percent of our clients will be usingremotechannels and therefore our service modeland our investmentsgoing forward will be alignedaccordinglywe have already made considerableprogress in this area buildingbuilding strong digital capabilities inretail and corporate businessesand my colleagues will discuss this in agreater detailsat the same time we believe that thatcustomers will continue to usetraditional branchesespecially in case of more complexproductstherefore we remain committed to ourbranch networkand we will focus on improving itsefficiency as a vital service channelenhancing customer experiencewe are also expecting that our originalfootprint may continue to expand furtherand this will be the main driver behindpotential roleout of new branches general goal forretail businessculture is customer centricis customers centricity and office spacetransformation this implies opening newgeneration bank officesfocus on communication with the clientand discussing their needswhile all manual processes automatedin terms of our key strategic targetsfor plan 2continue deliver above market growthwith average loan growth on incorporateat ten to twelve percent per annumand in retail at twenty twenty fivepercent per annum until 2023in ib our ambition is to consolidate ourposition as top three investment bankingplatformon the russian market considerablyenhance our transactional incomegeneration with fee and commissionincome forecasted to achieve30 percent of total operating income in2021 2023 versus 21in last year deliver average return onequity of not less than fifteen percentper annumwe expect to improve net interest marginto two point seven percentand maintain our ny nii to rwaat four percent focusing on highermargin productsegments so now let the business leadersopen up the main strategic developmentsacross the segments and we will startwith alexander kaznachev to covercorporate banking please alexanderthank you vladimir i am pleased topresent our corporate banking strategymkb is one of the leading corporatebanks in russiawe serve over 20 000 companies across kindustries of russian economy withspecial focus on large corporate clientswhere i'm on top of five largest banksin russia by the size of our corporateloan portfolioover the past few years we have beensteadily growing our businessboth credit and deposit client basesconsistently farabove market average in 2020 our loanportfolioexpanded by 29high quality of our client base andstrong risk management are reflectedin our superior asset quality metrics asof 2020 corporate overdue loans amountedto 2.6 percentwith npel coverage ratio exceeding 1.5timesthe success of our corporate businessmodel is based on three main pillarsfirst our disciplined approach to clientacquisition andunderwriting supported by predictivecustomer analyticsand well-balanced incentive system forour corporate bankers second our smartproductstailored to specific client needs andthus driving significant value add toourclients with such approach it's mucheasier to become a real partner bankand differentiate against competitorsand thirdlywe operate within a risk orientedpricing frameworkwhen asked what is our minimum lendingrate i respond that it can be evennegativewe don't focus on how much we earn on astandaloneloan product what we really care aboutis to earn target risk adjusted returnon capital for each customerand maximizing customer wallet sharewe try to avoid direct competition inplain vanilla productsand we do not strive to win all thedeals of the marketwhat we are really focused on is beingpart of the most profitable dealsthat is why we will continue to focus oncomprehensive higher margin solutionssuch as project finance internationalfinance supply chain and trained financeand cash management solutionsin spite of our scale we still seeconsiderable opportunity for expansionand plan to grow faster than the marketour activities for the next few yearswill be focused on further enhancingour client service model includingfaster decision processas well as digitalization of all ourservicesthey expect by 2023 70of our corporate clients will be bankingremotelywe are actively developing full scope oftransactional products for corporateclientsmkb already retains leading positionacrossseveral product segments we are one ofthe most successful and active banks intrade finance in russiathe bank actively participates in expertfinance programsand is accredited with all largestexpert insurance agencieswe expect our international tradefinance portfolio to doubleby 2023 we also successfully cooperatewith asian financial institutionswe plan to continue supportingtransactions in national currencies andbecome one of the leading banksin servicing russian chinese traderelationswe have strong competitiveness in cashmanagementuh and in 2020 we were awarded for thebest service inthe cash management survey 2020organized by euromoneyfinally we develop innovative productsfor treasuries of large corporationsincluding tech advanced products such asvirtual treasurythat allows our customers to deliverconstruction projectswithout the physical advanced paymentswe're also working on creatingmultiplank treasury system for ourclientswe plan to increase volume of proceedcorporate payments by three timesby 2023 and we expect our fee andcommission incometo increase further by over 50 percentby the2023a successful example of comprehensiveintegrated corporate banking solutionis the ecosystem we build for theresidential construction sectorthroughout the entire process from byland plot for projectsobtain the necessary permitsconstruction to the sale of real estateand its separation mkb is able toprovide profitable solution for bothdevelopers and all the participants inthis marketgiven the bank enters into financing theproject at a very initial stageacquisition of a landlord at eachsubsequent stage we have a competitiveadvantage including our preemptive rightto participate in financingof the next stage arising from the loanagreementand we also obtain deeper knowledge of aproject thanany other bank in 2020 mkbentered into new partnership with 19major developersby 2023 we expect to double the numberand as well triple the volume ofmortgages loans issuedone of the priority areas for corporatebusiness is our platform for smesin 2020 we launched development ofonline bank for sme clientsan important step was the strategicacquisition ofwestern bank which has significantexperience in working withsmall and medium-sized businesses andhas built a quality platform forservicing itwe also made focused target qualityhires from the leading smu no banksthe online bank will be primarilyfocused on transactional servicesand provide complete product offeringcovering all daily business needsincluding acquiringcash collection account management fxtransactions and morewe are also developing an onlineplatform for the self-employedwhich will cover the entire life cyclefor this cyclefor the self-employment from registeringthem with the tax authorityto generating the necessary reportingand paying taxesin addition to transactional income wesee synergy for the bankin the form of cross selling for boththe self-employedand their corporate customers by 2023 weaim to onboard to our platform over 100000 sma clients and 40 000 self-employedensuring high quality customerexperience is critical importancehence we commit to get 100 nps for 70of our clients we also plan to breakinto topfive by number of sme clients in threeyearsnow i would like to pass the floor toalex adear attendees please note next speakerwill bepresenting in russian please make sureyou switch toenglish channel for englishinterpretation find the globe iconin the toolbar and click on englishlanguagethank you[Music][Music][Music]perspectivealexanderforeign thank you alexeyi'm pleased to present our investmentbanking business andstrategy mkb investment banking platformprovides our clientaccess with the full line of financialproducts includingbut not limited to dcm ecm repostructured finance brokerage effects andderivatives2020 year end result confirmed thebank's sustainable performance inrussian financial and investment marketsor banking is constantly opening upopportunities of investment productswhich comfort any client's needs andpreferenceswe got ranked the top five organizers ofmarket bondissues according to bloomberg the bankis proactively involved in thestructured finance marketand is one of the leaders in the repomarket the bank launchedan investment platform called mkbinvestmentsit combines products and services forretail investors as well aspremium segment and the private bankingclientshe successfully started the fix onlinewidget for real-time conversiontransactions for legal entitieswe are actively expanding our positionin the cis marketmkb became organizer of the issue ofkazakh ministry of finance bondsparticipated the bond placement of thelargest bill russian retailin 2020 the income for the investmentbusiness amountedto 79 billion operating income reached22 billion qb's portfolio is sustainablein terms of the risksat the end of the year more than 33of the bank's securities portfolio werated triple bminus and 96 percent of reverse repotransactions were secured bysecurities with the rating triple minusand higherthe quality of investment essencecontributes to the efficientuse of the capital average risk weightof thesegment don't exceed 18 in 2020.based on 2020 results mkbremains one of the leaders in therussian dcm marketin total we organized the 75 bond issueswithover 1 trillion total volumespc bonds our dcm market share excludingthe bank's own issues amounts to morethan10 percent our client base is graduallyexpanding and we arestrengthening our collaboration with ourlonger standing clientswe are regularly working with the largerstate and private russianand international borders includingrussian railwaysgas prominent utility uhm fk systema andmany other fromdiverse industries the bank continues todevelopits business in the cis region there isonelandmark transaction to highlight whichis the organization of theeurope-dominated debate issue of kazakhministry of financein 2021 we are planning to developfurther in say space for instanceentered in the new marketof the uzbekistan it's worth making apointon our result on the esg track first thebank acted as thearranger of the russian railway socialeurope bondsissue this transaction in the esgsegment is unique by nowrussian railways became the firstrussian borough to play social europeansin the international debt capital marketfinally we also acted as a arranger ofthefirst and russian financial marketperpetual bond in economics withprincipleof igma green bonds the volumeamounted to 100 billion which isabsolutely accurate among the russiancorporate marking bond issueson the 2023 horizon where ourstrategic vision is to promote thedevelopment of client businessby trusted partnership and excellence inthe providing investment banking servicewe determine the setup of being auniversalbank for key corporate clients with theenter scope of investment bankingcorporationswe call it one stop shop approach weexpectmore than 40 percent shareof client business and operating incomeand assume the synergy between thebank'scorporate and investment divisions andeventually the cross sellto be a milestone to reach our 2023targetsespio 2023 strategic guidelineswe are seeking to achieve and retainleading positions in the russian ncaacs investment market it has aambitious goals for each investmentstreamtop three in the total dcm market toptwo in greenbonds market from three up to five mand dcm deals annually substantialgrowth in derivatives andfixed transactions uh 30 and 15accordingly more than 25 billionportfolio ofsocially important projects on the basisof private equity and special situationseach project is expected to have anerror higher than 20 percentwe target to develop client-centricbusiness modelthat is why we are actively relaunchingour privatebanking division with the high qualityteam and the new approach as well asonline investment platform for anyretail investors both retail and premiumsegment as for mkb investment we expectto betop 5 broken by the number of activeaccounts on the moscow exchange withover 300 000 client accountsand three and 30billion total assets under management by2023as for now we are in top 2500 massesby the number of active accountsrelaunching ofmpb private banking will attract morethan100 billion ruble assets undermanagement by 2023with the 40 kagara with the framework ofsuchsetup we stick to the principles ofdeveloping the product lineand increasing the share of the clientbusiness the listed principles are thekey drivers of ib profitabilitygrowth now i would like to pass thefloor to sergeythank you alek i'm pleased to presentour technological platform and icstrategywithin last couple of years we werefocused on building flexible and robustit organizationtechnological function evolved throughservice provider to business partnerrole and now is organizedas matex dedicated it teamscooperating directly with business andsharing business apisit teams are geo distributedand remote workplaces are introducedthe maturity of i.t function grewsignificantlyand last year we replaced our legacycore banking systemwith the factor market standard systemprovided by biggest russian core bankingsystem withvendor center for financial technologieswe have focused on improving efficiencywith higher digitalizationthe usage of paper was reduced by threepercent and three percent of back officeoperation stuff was replaced withrobots constant operational costs werereduced by thirty percentseveral new technologies were introducedsuch as speech analyticsomni-channel communication platform rpaand data quality governanceour key priority for 2021is build an end-to-end digitalization ofcustomer experiencewhich enables us to use deep machinelearning techniques and behavioralanalysisto improve customer experience and ltvin 2021 2023 we will continue furtherdigitalization of our products andservices aiming to reachuh 100 mobile banking penetration forsmb clientsand over 75 for retail we believe inpragmatic approach to digital andtech innovation investing intechnologies which can improveexisting business or how to create newbusiness products and servicesand we have following results we arefirst in the market to use speechanalytics not to improve uh to improvenot only quality of serviceas some players do but to boost teddysales conversionby 20 25 with speech analytics andcomputer visionwe are building the technology to firstin the market fully digitizedcustomer experience in both digital andphysical channelsno one has such a technology for now andwe expect itto increase ltv by up to 50robotic process automation rpa hasalreadyoptimized three percent of back officestaffand in two years will reach 15 percentof back officeoperations start privatizedfifty to seventy 70 of internal b2b andb2cprocessors will become paperless by theend of the yearwith further use of electronic signaturetechnologyaiming to combine the strange oftechnological bank and flexibleinnovative fintech servicewe set the following goals for 2023we aim to employ advanced advancedcustomer analyticswidely across all processes and productdevelopmentwe focus on developing uh efficient openapi platformwhich enables rapid integration ofthird-party service providers into ourdigital channelswith effective and the generalityfunctionwe aim to improve our time to market by20we have zero tolerance for cyber attacksand will insure it acrossdifferent functions at the same time wecontinue to invest in technologyplatform support anddigitalization and leadership in costefficiency for the banknow i pass back the floor to vladimir toprovide an overview of esg developmentsand strategy thank youthank you sergey just give me a second iwillyeah no it's okay uhit is a systemically important bank weunderstand that our activity affectsnot only the financial market or ourcustomers partners butthe whole economy and the societythe results of our work should bereflectednot just in solid financial indicatorsbut also in support and socialinitiativesand in a fair share of our contributionto the environment and culturefor years mkb has supported socialinitiativesresponsible business conduct and wasactively involved inenvironmental initiatives and greenfinancingas a result of the strong adherenceto the best hg practices mkb became thefirst bank in russia with easy ratingand was assigned the highest triple bgreat among russian banks mkb is the onetop five russian banks in implementingsustainable development principlesaccording to wwfwe follow aberdeen ifc compliantpractices in corporate governanceand broadly in esg framework we alsomaintainhigh transparency of our esg disclosurewith sustainability reports publishedsince 2019in compliance with the global reportinginitiative standardsour eg commitment can be splitinto two key areas first of all it's ourresponsibility forour impact on the environment communityand employeesas such we introduced concept ofresponsible product offering in allbusiness units and minimizing mkb carbonfootprintwe are taking care of our most valuableassets employeesand aim to become top 10 employer amongrussian banks andensure 85 percent employee engagementlevelsecondly we support our partners andcustomers in theirtransition to sustainable business forthe next three years we plan to providefinancial support of 100 billion rublesfor greensocial and for the end transitionprojectsin february 21 mkb has establishedstrategy and sustainable developmentcommitteethe committee is responsible for newfunctions related to formulatingand implementing the bank's sustainabledevelopment strategyand improving its internal esgprocedures and processeswe aim to strengthen our leadership insg among financial institutions inrussiaby 2023 we expect to improve the esgrating to alevel and get a broader coverage byinternational esgrating agencies beforewe conclude i also wanted to update youon our medium term strategic financialtargets we expect to continue deliverabove market growthour corporate loan book is forecasted togrow at10 to 12 per yearwhile retail loans at 20 25 percentaverage growth ratetill 2023 we expectto maintain strong profitability ourambitionis to maintain our net interest incometo recreateassets at four percent and improve netinterest marginto roughly 2.7 percent on the back ofincreasing focus on higher marginbusiness opportunitieswhile considerably improving ourtransactional revenue generation with afee in commission incomeforecasted to reach 30 percent ofoperating incomewe commit to delivering about above 15average return on equity in the range ofthe next three years average cost ofrisk will remainat roughly one percent reflecting ourconservative risk appetite and prudentapproach to underwriting lastly we weremain committed to our internal targetof cet-1 so-calledn-one-one ratio in russia of at leastnine percent inin the medium term with an objective ofdistributingexcess capital to our shareholders inline with ournewly adopted dividend policy that iwill cover nowhistorically mkb capitalization levelwas sufficient to ensurestable business operations and meetingregulatory requirementsin the february 21st advisory board hasapproved our new dividend policystarting from the next year from 2022 weplan to allocateminimum 25 percent of ifrs net profitfor dividend distributionsuch dividend policy ensures properbalance between financing our growthand rewarding shareholders with the cashreturns recommendation on dividends forthis year for 2020 financial year willbe taken by the boardlater this year this concludes ourpresentation for todayand now of course we are happy to answeryour questions within the q a sessionthank you for listeningdear attendees now we are opening the qa sessionif let me share with you the instructionof how to ask a questionuh if you would like to ask the questionyou can do it in the following waysfor those using zoom app on your phoneor your desktopplease use function raise hand and waitfor your line to be unmutedalternatively you can type in yourquestion in the q asession it is a q a iconat your control bar and it will be readout andanswered by the company and if you'recallingin from the phone you will need to pressstar9 on your phone and wait for yourline to be unmuted and we kindly ask youto introduce yourselfnow the floor is open to the questionsthank youit looks like we have a question uhwhich was writtencan i ask the colleagues to read ityes so we have a question from theaudience uhin the first quarter uh our piano waspositively impactedby high fiend commission income and by ahigh income from the recognition ofloans socould you please comment on these twoitemsand give your outlook for the net fishand commission incomefor this year thank youyeah thank you for the question it wasfrom ruslan gadevhe also said that thank you for thepresentation and congratulations withthe solid resultsthank you ruslan for the good words lookuh so we'll give theuh the forecast so we are planning tohave about 25of our uh of the fee andcommission income in comparison to the30 percent for the next three yearsuh so which we plan and the next year wehave we we will have uh something like25and uh in uhyour question about uh comments aboutuh income from theirtheir their recognition uh yes you askedabout to confirm there was stage two noit wasn't stage two loanslook uh the explanation is quite simpleduring the last yearsuh during the last year uh thethe number of the long long term loansuh which were originated before uh wassold or repaid in advance by thecustomers anduh the bank received upon fee