Bank Handlowy w Warszawie Stock

Good afternoon, everyone. Welcome on Citi Handlowy earnings results for second quarter 2026. My name is Adam Piotrak. I'm the Head of Investor Relations. I'm with Maciej Krywoniuk, Head of Strategy and Investor Relations Department. We will go through the key highlights of Citi Handlowy in second quarter and the financial results. The presentation is on your screen, and also you can find on our website, Investor Relations, Citi Handlowy.

So Maciej, over to you.

Thank you very much Adam. Hello everyone, thank you for joining the Q2 earnings call for Citi Handlowy. We will start with the presentation, and I invite you to the Q&A session at the end of the meeting. So Q2, quite an intense quarter for us, so we have completed the sale of our consumer business as we have informed all of the stakeholders, and we embarked on the new chapter for the bank, which is the Bank for Global Business chapter, where we laid out the plan for the dynamic growth in Institutional Banking.

More about the highlights of the second quarter results. For the total bank, the revenue reached PLN 878 million. This is including consumer bank and the net profit reached PLN 321 million. This left us with ROE at the level of 21%, so healthy returns. And it was the quarter characterized by the growth of the balance sheet with loans growing at 16% and deposits growing at 12%. This is post the exit from the consumer banks because at the end of the quarter, the balance sheet did not improve the consumer banking assets.

In a nutshell, that was the sixth consecutive quarter of the lending growth. The global clients remain a key pillar of the lending portfolio in the bank, They called a 38% share in the lending portfolio. We have been growing our tax volumes, which grew by 14% Q-on-Q, reaching record high levels. It was a quarter with strong transactions executed both on the equity and debt markets, which the volume amounted to PLN 7.4 billion.

And briefly on Page 3, we want to touch on the new reporting structure for the segments, post exit from the consumer banking. As you can see, we have implemented two new operating segments, reflecting our integrated business model, the first one is Corporate Banking, which encompassing the services and banking. By services, we mean transaction services that has to do with liquidity management, payment products, trade finance and custody services. The relationship banking represents the investment banking and financing solutions for our clients, and the Financial Market segment is what at Citi terms is called markets, and it covers both the client activities, so the tax risk management, capital markets and brokerage as well as interbank operations, with this we mean the financial instruments and derivates.

We are capitalizing on our competitive advantages, primarily globality. We are present in 24 countries in Europe, and the global clients are responsible for 41% of the bank's revenues. The relationship we have in the bank are the long-standing relationships with having products loads with 3.8 products used by our institutional clients on average and almost 60% -- around 60% of clients are with us for at least 10 years, so really long-standing and deep relationships that we have with our clients.

Moving on to volumes, which are on Page 4. So the lending volumes in Corporate Banking grew by 2% quarter-on-quarter. It's been 16% year-over-year, and a primary driver in terms of the segments was the Corporate Clients segment with growth of 17% Q-on-Q and 22% year-over-year. The deposit volumes were also growing. We reached, in fact, a surplus PLN 47 billion in the deposit volume in the second quarter, and the deposit portfolio grew by 3% Q-on-Q and 12% year-over-year.

In terms of the business volumes, you see the growth rates on the right-hand side on Page 4 in fact, in every product line, and the volumes were growing, especially strong transactional activity in our services area, our trade finance assets grew by 34% year-over-year. Assets under custody were up 22% as well. We have granted PLN 1.4 billion of new financing to our clients. It includes also increases in the current facilities.

Moving on to landmark transactions, which are on Page 5. These are just the flagship deals from Q2, and these are public. Of course, that's what we can share with you, but there was much more behind the results. So as you see, the key flagship transactions range from syndicated laws through DCM transactions and also capital markets transactions. We have been also granted best funding solution for the Adam Smith Award for Play, where we have concluded the export agent based financing. We have been also nominated to receive the Poland's Best Investment Bank for M&A Euromoney award, 2026.

Traditionally -- moving on to Page 6, Q2 and specifically, June is the month where Global Community Day happens around the globe, and Citi Handlowy was also active here with 1,800 Citi volunteers supporting 117 organizations with 24,000 beneficiaries, so this is our effort to be engaged in the communities we operate in every day.

Coming back to the business. So Page 8, which is the revenue picture for the quarter. The total revenue in Corporate Banking was -- the total revenue, the top line reached almost PLN 700 million which is a decline quarter-over-quarter by 28% and also year-over-year on a quarterly basis. However, if you look at the segment of Corporate Banking, it was up 7%. The drivers behind the growth were ranging through different product areas, from tax volumes, strong payments, from trade finance as well as brokerage. And in financial markets, the quarter specifically was down by 53%, but that's a reflection of the calendar organization in fact because when you look at market results more in the long term, which we did, as you can see on the page, looking at the first half of '26, vis-a-vis, the'25, so in the corresponding period last year, the revenue was lower by PLN 130 million. So '26 represents 20% growth H1 to H1 year-over-year. And a pretty balanced view in terms of the segment revenues, it's a well-balanced model in terms of the operating segments.

Moving on to the next page, Page 9, which is the net interest income page. We have generated almost PLN 46 million in NII this quarter. The growing lending volumes were supporting the growth in the clients' interest income. When you look at the Corporate Banking segment, the 2% growth is the reflection of the landing portfolio growth I've just mentioned. In the Financial Market space, the NII was down 9%, and the drop was driven by the interest expenses. This is linked with the liquidity that was required to be accumulated for the consumer bank exit transaction, so a bit specific quarter in terms of the nature and the transactions that we have executed.

And when you look at the interest rate forecast, we -- the house view is that the rates will remain at 3.75%, which most likely will have to stabilize the net interest income levels. Very strong quarter on Page 10. So very strong quarters in net fees and commission line. In fact, contribute -- all business has contributed to the to the result of PLN 119 million, which is 10% up Q-on-Q and 11% up year-over-year. Strong fees related to capital markets, I mentioned the transactions in the capital market space, and today we're also supporting the fee line growth. The trade finance assets, which grew by 34% year-over-year, also contributed to the fee line.

Moving on to Page 11, which is the Financial Markets page. The numbers, the treasury results numbers that you see on the page are the view that is post transfer pricing, and Q2 revenues reached in treasury PLN 273 million. Again, what's behind the change, so the primary components of the change are the trading results and the AFS results, but it's more a function of calendar when you look, as mentioned, into our first half to the first half last year, this year was PLN 850 million and last year, it was PLN 722 million treasury results. So looking at this in the long term, quite strong first half in terms of the treasury results. As you see on the page, lower and specifically in Q2.

I think what's worth noting on the page is also that despite of the growing volumes, so there is a slight drop in the income on FX client activities, 3% drop. It's attributed to the higher ticket transactions where -- which are characterized by the slightly lower spread, and this is the explanation for the 3% drop in the income on FX. What's good news, that's right bottom graph, where valuation reserve is growing, there is a positive change of around PLN 200 million that improved the position and the evaluation results, so positively impacting our capital position.

Moving on to expenses, Page 12. Again, it's a quarter where the costs are down Q-on-Q by 37%, but it's important to remember that Q1 is a quarter where we need to include the regulatory expenses in the P&L. So in fact, in the quarter, both the staff expenses and the admin expenses are slightly down by 4% and 3% Q-on-Q. They are traditionally lower in Q2, so it's also a calendar effect in a way.

Moving now to year-to-date. So in the first half of '26 versus first half of '25, coming into more details. The staff expenses were up, and the growth is PLN 28 million. And there was also growth and IT expenses, that, in fact, the execution of our strategy of investing in platforms where we want to be more connected to better serve the global needs of our clients, and in fact, the PLN 40 million growth is the reflection of our investments in the IT platforms, and it's both front and back office, so client facing and more process automation and tools for our employees linked to the automation. The regulatory expenses are up by 29% this year in the first half, and that's primarily a contribution to the restructuring fund of the bank guarantee fund.

Now moving on to Page 13, which is the cost of risk page. The cost of risk, as you have noticed, is up, and in fact, this -- the growth that you see in the cost of risk line is a representation of two client relationships that have been reclassified to Stage 3. I want to stress that these are pretty much isolated cases and the overall portfolio quality remains good. And when you look at the cost of risk, 4 to 7 basis points this quarter. It's elevated, but excluding the one-offs, the cost of risk remains at a healthy 19 basis points level, so we are working with the clients to restructure and we are heavily engaged with them at the moment.

Yes. And it's, in fact, this is it. Page 14 is a summary. I will just maybe point to strong returns with ROE at 21% and ROA at 2.3%, stressing this PLN 321 million of net profit and some one-offs included in the results linked with real estate sale of one of our headquarters building. And this is also representation of how we handle the stranded costs. So post consumer exit, we did not require so much office space, and we have decided to sell one of the Warsaw buildings.

I think it's important to note that the core revenue line, which is PLN 578 million, which is our underlying core business is pretty stable, and the strong capital position with capital ratio at 25.8%, as you can see on the page, this is a function of the lower credit risk requirements post customer bank exit. So this will be a brief summary from my side in terms of the quarterly performance of the bank and happy to take questions.

I see there are no questions. So thank you very much again for joining, and if you need anything from the IR team, please reach out to us. And in terms of the quarterly earnings, we see each other in November.

Thank you, Maciej. Have a nice evening.

Thank you. Bye-bye.

Okay. It's 2:00 p.m., Warsaw time. Hello. Welcome on financial results of Citi Handlowy for first quarter 2026. My name is Adam Piotrak. I'm Investor Relations Head. I'm with Maciej Krywoniuk, Head of Strategy and Investor Relations Department. We will go through this presentation. The presentation is available on the screen and also as well on our website.

So, Maciej, the floor is yours.

Thank you very much, Adam, and welcome, everyone. Thank you for joining. I will walk you through the set of results for the first quarter '26. It's my pleasure to share that it's been a solid quarter. I will walk you through the drivers behind the results. Maybe before we start, just a few words of explanation regarding sale and exit from our consumer banking business. The midyear date for the demerger that we announced some time back still holds.

We will be informing the clients and all relevant stakeholders about the process in due course, the first messages went out yesterday, 14 days prior to the demerger date, we are planning to have more communication regarding the details. In terms of the highlights of the quarter financially, the net profit reached PLN 386 million, has been 17% above the consensus. The return on equity is solid 19.2% and strong capital ratio with TLAC TREA at 23.5%. The balance sheet has been growing this quarter. At quarter end, the loans were up 13% and deposits 15% year-over-year.

I'll walk you through more details on the following slide. We are -- have been focused on execution of our strategy, which is the bank for global business. And in terms of the institutional loan growth, we reached a record balance of PLN 17.1 billion in this segment. It's been 5 consecutive quarters of growth in the institutional lending book. And we have been observing quite significant client activity. When you look at the deposit volumes, they were up 13% quarter-over-quarter and custody business recorded growth of transaction volume by 18% Q-on-Q.

We have been investing in the technology platforms, including the AI tools. And these were primarily focused on enhancing our client experience and enhancing the global connectivity as per our strategic directions. And we implemented tools for relationship managers as well to improve their experience in terms of how well they can access information about their customers. On the consumer banking side, the consistent growth in wealth management, the number of clients in -- Citigold private client segment was up 3% quarter-over-quarter.

Moving on to the next page, Page #3, we will walk you through the business volumes. So in terms of the lending book, when you look at the graph, the loan portfolio was 18% up year-over-year. It's been growing more than 3x faster than the banking sector. Q-on-Q growth was also positive with 5%, and primarily contributing to the growth in terms of the year-on-year view were the segments of global and corporate clients. The deposit volumes, I mentioned them in the beginning of the presentation, but in the institutional banking, they were growing double-digit growth with 16% Q-on-Q and 22% year-over-year.

Strong performance in the financial markets with -- it's also a reflection of transaction value, which among others in the brokerage departments were up by 50% year-over-year. On the services side, 38% growth of our trade finance assets and the volume of assets under custody was also 23% up. When you look at the red arrow at the bottom of the page with 49% decline in the new financing granted in the quarter 1, it's the base effect of last year where in Q1 '25, granted a large facility and this impacted the growth rate in a negative way.

Page 4 is just a summary of landmark transactions executed this quarter. I mentioned that the client activity was strong, and that's just the evidence of a few transactions that we have executed varying sectors from P4, which is a play operator, automotive and trade sector as well. So that's the side with transactions.

Moving on to the slide on the consumer banking volumes, which is Page #5 in the presentation. Flattish loan volumes in consumer bank with 1% decline quarter-over-quarter. They were up 2% year-over-year. The deposit volume is stable with 1% Q-on-Q and 2% year-over-year growth. What's important is the wealth management business with private banking growing both in terms of the total relationship balance that we hold for our clients, which was up 9% year-over-year and number of Citigold private clients increasing by 16% compared to last year.

It's my pleasure to share with you what's on the next page. Our Citi Handlowy Foundation is 30 years old this year. And as you can see on the slides, the contribution for social activities amounted to over PLN 110 million in terms of the budget. And when you look at number of beneficiaries, they were -- they sum up to over 10 million, so significant numbers here. And we have been and will be committed to support the communities we operate in. And it's going to be executed continuously through the Citi Handlowy Foundation.

Now moving on to some details behind the financial results, starting with the top line. Just briefly, the total bank revenue was at PLN 1.2 billion, which is the second highest historically. The highest historically was 3 years ago, but just to remind you, the interest rate level was 300 basis points higher compared to where we are now. So something to be proud of in terms of the top line.

The total revenue amounted to PLN 971 million in the institutional banking. It includes almost PLN 200 million of gains from sale of debt securities in the quarter. When you look at the growth rates, both 33% Q-on-Q and 24% year-over-year, represent significant growth. In terms of the contribution from different areas, that's the management view on the right-hand side and the revenue dynamics are positive in each of the product categories that you see ranging from financial markets through services and relationship banking. The consumer banking revenues were at PLN 228 million. They were down 8% quarter-over-quarter. It's a function of lower interest rates. But all in all, summarizing the page, it was a strong quarter in institutional banking definitely.

Moving on to net interest income page. So the net interest income was slightly affected by realized gains on the sale of the debt securities. And that's primarily what's behind the decline that is 8% Q-on-Q. It's been offset by growing lending portfolio. And what we want to share with you is definitely that we are very focused on discipline around interest expenses. They were down this quarter despite the growth of the deposit book in the bank.

And the net interest income on the consumer side, PLN 186 million, down by 8% Q-on-Q, again a function of declining rates. When you look at the net interest margin graph, the NBP reference rate was at 3.75% in Q1. Our house view is that there will be no change in interest rates by year-end. And our CFO shared this morning that we are expecting the stabilization in the NII line this year.

Moving on to fees line. So PLN 107 million in the institutional banking for Q1. It's slightly lower compared to last year. There were some episodic transactions executed in Q1 '25. No major episodics this year in Q1. But when you look at the main contributors behind the fee line, it's custody and transaction banking, they represent more than 80% of the revenue. And in fact, in the consumer banking, the fees amounted to PLN 39 million and they were kind of stable Q-on-Q and year-on-year, no major changes in the consumer banking side.

Moving on to our treasury business. It's been a strong quarter for our treasury area with PLN 918 million of revenues. They were up 35% Q-on-Q. Definitely very strong trading results, as AFS gains that you see on the graph, were both close to PLN 200 million. It's in a way preparation of the balance sheet for the demerger. And as you are aware, our consumer business is very liquid. It's got more deposits than loans, and we need to prepare for the demerger plan for midyear and the liquidity requirements for the upcoming transaction.

In terms of the balance sheet, you see the mix on the right-hand side. And we are kind of more towards short-term investment securities at the moment. And the revaluation reserves that you see at the bottom of the page at negative PLN 108 million are the function of the macro environment changes linked to the war in Iran and the changes that happened in the operating environment that followed.

Moving on to expenses, which is Page #12, which is PLN 335 million in institutional banking this quarter. It's a quarter where seasonally, we are booking the regulatory expenses at the elevated level. The Q1 is characterized by the Banking Guarantee Fund contribution. This time was no different, slightly higher regulatory expenses, you see PLN 118 million compared to PLN 88 million last year.

When you look at more details in Q1 in terms of the type of expenses that were growing, I walked you through the regulatory expenses that were up PLN 30 million compared to last year. The IT investments are behind the PLN 17 million of growth. In the expense line that -- these are the investments in the tech infrastructure and linked with our ability to increase the client experience and the global connectivity and staff expenses with PLN 11 million growth, that's our focus on keeping the salary levels competitive.

And I would draw your attention to the cost-income ratio, which you see for Q1 was at the level of 34%, very healthy cost income for the institutional banking despite growth in some of the areas, we are still very committed to the cost discipline that the bank is well known for. The operating expenses on the consumer banking side were PLN 214 million. They were higher by 31% Q-on-Q. They were also up 8% year-over-year. The growth is primarily linked with the incurred migration expenses and the preparation for the transaction that's ahead of us.

In terms of the cost of risk. So cost of risk is at PLN 17 million in the institutional banking area. We have booked additional provisions. That's the growth which is linked with the provisions related to the portfolio growth. So nothing that is to worry about in terms of what's in the PLN 17 million. When you look at the -- both the coverage ratio and share of Stage 3, they are at much better levels compared to the banking sector with coverage ratio at 64% in the bank and share of Stage 3 at 2%.

Cost of risk in the Consumer Banking segment amounted to PLN 3 million, which is a positive result of write-offs. And we have also executed the sale of the nonperforming loan portfolio in Q1 this year. So briefly, that's the summary. When you look at Page 14, maybe I would just draw your -- again, your attention to the total revenue level at PLN 1.2 billion, very strong top line results this quarter. Also that helped to generate the ROE at 19.2% and keep the ROA at high level at 2%. The net profit of PLN 386 million -- all this with significantly higher tax rate, which grew from 19% to 30%. And that's, in a nutshell, all from my side. And now I open the floor to questions.

If there are no questions, thank you very much for...

It's Peter Priisalm from Avaron Asset Management. Maybe I ask a question on loan growth. So now that the retail banking is out of the system. So in which segments in corporate lending do you see perspectives for growing? Or what could be the strategy for speeding loan growth going forward?

Well, we are not changing the targets. Thank you for the question, Peter. So we are not changing the target market as such. So you would not expect to observe that the risk profile of the bank will be changing. The 2 growth engines that we are looking for as per our strategy are defense and energy security and energy transformation in general, so these are the -- from a project perspective.

And when you look at the segment, in fact, there is no single segment where we are expecting more growth. We have been executing very long-standing relationships with our clients. And we observe some projects that are executed at the corporate levels, and it's always the case that there are such transformational deals -- we are part of such transactions. They also include some cross-sell elements. So whenever we land, we also make sure that the cross-sell is included so that our profitability profile is also maintained going forward. So I hope this answers the question.

Maybe just a follow-up on that. Do you see those defense and energy security segments mostly in kind of state projects or you are more focused on kind of private, kind of, companies doing those projects? And a follow-up, if these are state-owned, how is the kind of margin outlook there? Because I think the state-owned banks are also very keen to invest into those projects. So is there some kind of appetite for you to go for those low margins?

Well, you're right on the competitive side of things. Definitely, it's been and it is a very competitive market. And we are observing some margin compression in those high demand products around security and energy transformation. That's why we usually offer a full range of products, including some treasury related hedging solutions as part of these transactions. And so there usually is some element of risk management component since quite often the tenures are longer.

And basically, to your question on whether it's more state-owned or private, I would say it's both, and we are active in both areas. And basically, where we are also active is some of the projects that are executed by -- on the private side, by large corporates that are multinationals, that are present in Poland, and they are behind some of the energy projects, energy transformation projects. And since we are the home bank in a way, so basically, this is where we are also active on the private side. Okay. Any more questions that you would like to ask?

Okay. So thank you for joining. Thank you for the time, and have a nice rest of the day.

Thank you for joining, and see you soon. Bye-bye.

Okay. Hello, everyone. My name is Adam Piotrak. I'm the Head of Investor Relations at Citi Handlowy. Welcome on earnings call for fourth quarter of Citi Handlowy. I'm with Maciej Krywoniuk, Head of Strategy and Investor Relations. We will go through the presentation, earnings presentation and -- which is available on the screen and also on our website. And after the presentation, there will be a Q&A session. Maciej, over to you.

Thank you very much. I will be walking you through the presentation that was shared with you. It's also available on our web page. And let me start on Page #2, which is a brief summary of 2025, which was a year for us where we converted client activity into growth. Just maybe as an introduction, in terms of the migration of our consumer banking to VeloBank, it's pretty much on track and the planned migration as shared with you previously is mid-2026. And in terms of the institutional banking, we -- it's my pleasure to share with you that we are executing the strategy of growth in this segment and quite a number of details will follow in the presentation.

In terms of the '25 summary, very healthy growth of our institutional banking loan book. The growth was plus 22% year-over-year. It's translated into the highest level of the loan portfolio and the institutional banking in the history. It's at the same time, 3x higher than the market growth dynamics. So we, in a way, walk the talk here.

In terms of the revenues, we increased revenues in every product group in 2025. We have 40% market share in the custody business in Poland. And when you look at trade finance, which is one of the few engines of growth for our strategic directions is plus 29% year-over-year in terms of the value of assets.

We have been implementing AI tools pretty much to increase employees' productivity and effectiveness. Some of the tools are aimed at improving client experience. And all in all, we were focused on generating value for shareholders. Our ROE for the year was 19.7%. And since we are a dividend company, 75% of dividend payout, the regulator allowed to pay out up to 75% of net profit for 2025.

Coming back to fourth quarter, which is Page 3 in the presentation. In terms of the top line numbers, the revenue at PLN 980 million, very solid net profit in the quarter at PLN 596 million. I shared the ROE levels with you. The balance sheet was growing 16% growth in the total loan book and 13% growth in total deposits. I mean the total bank here and growth details on the institutional portfolio will follow on the pages I'm going to share with you in a second. So strong capital position with TLAC TREA at the level of 25.4%. I mentioned the institutional banking client assets. The new financing amounted to PLN 1.4 billion that we granted to our clients in the fourth quarter. It translated into 2% growth quarter-over-quarter of the loan book.

We were active in the client transactions on the capital markets. We were investing in our technology and digitizing the processes. It's well received by our clients when you look at the number of transactions that were processed online. The volume increased by 7% quarter-on-quarter.

Lastly, the consumer banking business. Despite some of the migration-related activities, the business volumes are growing in this segment. And I mean here, both the client portfolio and assets under management, the details will follow shortly.

Now moving on to Page #4, which is the institutional banking and the business volumes. I've shared with you that the loan book increased by 22% year-over-year. The quarterly growth was 2%. I think it's important to note that when you look at the portfolio level, which was above PLN 16 billion, we were able to increase the book by more than -- by almost PLN 3 billion, which is a representation of the 50% of the consumer banking loan portfolio. So we have been declaring that we are going to rebuild the client portfolio of consumer banking, which will be demerged and last year, the 50% of the size was already booked and the growth represents that.

The deposit volumes year-on-year growth, 19% in terms of the quarter, slightly down, which is a year-end situation, and it's total to PLN 39.6 billion. The business volume dynamics, FX was down 16% of the transaction volumes, it was linked to the strengthening of Polish zloty versus USD. However, the value of transactions conducted through our brokerage department was up 65%. Pretty strong transactional activity, maybe not so visible in the number of cross-border money transfers, which was slightly down 2% year-over-year. But if you look at the value of trade finance assets, it was 29% up. The relationship banking area, the new financing granted and current financing volume was up 15% year-over-year.

Page 5 is just a brief summary highlighting the key transactions that were executed recently and you see the different types of transactions from syndicated facilities through accelerated book building. We are -- our clients are executing the transactions. We are helping them grow and expand their business activities.

Page 6, coming back to the consumer banking business volumes. The loan book was slightly up year-over-year and flattish quarter-over-quarter. The deposits at similar levels, both year-over-year, slight growth, 2% and 0% dynamics quarter-over-quarter. Kind of similar trends in FX to the institutional banking, slightly lower volumes in Q4, 3% down year-over-year in terms of the volumes. However, number of transactions was up by 6% in terms of the CitiKantor transactions, which is our online FX exchange tool. The important thing is that the client portfolio is growing. When you look at the private banking dynamics, number of Citigold private clients was up 13% year-over-year. And it's not only the client portfolio what follows the AUMs, and they were up last quarter. In fact, we have reached the record level of the assets under management portfolio.

Page 7 is the social page. So we are active in the social activities through our Kronenberg Foundation. You see that there was a number of projects that were executed and also a significant number of employees that were involved and were behind the help that we have been providing to the community and the projects range from support for refugees from Ukraine, to improving access to sport for children with disabilities, food security. Different types of projects that are forming part of our social agenda and our contribution to the environment we operate in.

Moving on to Page #9. Before I jump into the quarterly numbers, just maybe a step back and a brief summary of 2025. So net income of PLN 1.666 billion. It's a strong result achieved in declining rate environment. As you know, the rates were down by 175 basis points last year. It's impacted the net interest income, which I will discuss in a second. However, if you look at the interest revenue in the annual view, it was up 12%, which is a reflection of our loan portfolio growth.

I mentioned the dividend. The dividend payout totaled to PLN 1.8 billion, which was a record payout for the bank and translated into the dividend yield of 13%. So it's among other priorities to create value for shareholders. The capital position is and remains strong. I would only comment that it will slightly improve post the demerger, having in mind the structure of the transaction.

The presentation that I'm going to share with you, the following pages are in terms of the presentation format are splitting the business into continued operations, which is the institutional banking and discontinued operations, which is the consumer banking. So coming to total revenue in the institutional banking, when you look at the Q4 at PLN 732 million, it's comparable to last quarter despite the rate cuts. The lending book, as you heard, is growing. The trade finance book is also 24% up quarter-on-quarter.

When you look at the consumer banking revenue, it's down by 7% quarter-on-quarter, 13% year-over-year. It's primarily impacted by the rate impact and I think it's important to note that in general, client revenue is increasing its share in the total revenue of the bank, and it's ensuring the more recurring character of the revenue mix.

Moving on to Page #10, which is the net interest income page. PLN 511 million of net interest income in the institutional side last quarter, flattish versus Q3 and down 7%, which is a function of rates and NII on the consumer banking side at PLN 202 million. It's above the PLN 200 million mark. However, it's 7% down quarter-over-quarter, which again is primarily the impact of rates. I will draw your attention to the bottom right-hand side of the slide, where we are showing the client view and the dynamics of the interest income from clients. The quarterly view is plus 4% Q4 over Q4, and it's plus 12% when you look at full '25 versus full '24. So this is a reflection of our efforts in terms of building the client revenue and net interest income.

When you look at Page 11, which is the net fee and commission income slide, the full year fees are up by 8% year-over-year. What's behind the growth is the custody business, it's the brokerage business and then that's the trade finance business as well. PLN 108 million recorded in institutional banking in the fourth quarter is 2% up quarter-over-quarter and behind the numbers is primarily brokerage and lending products. The fees line in the institutional -- sorry, consumer banking side was at PLN 40 million, down quarter-over-quarter by 13% and 3% down year-over-year, kind of seasonal effects here. And what's positive here is the investment product sales and growing client portfolio, which are positively contributing here.

The treasury results, Page 12. This is where we booked PLN 680 million in the revenue line, and you see the composition of it. The most impacted line was the net interest income line and also a function of portfolio size, which reduced in Q4. The trends in the income on FX, which is the left -- bottom left side of the slide is the client activities in institutional banking and the client activity usually in the fourth quarter is seasonally strong, and it was the revenue from FX was up 5%. You see the mix of the balance sheet with slightly reduced share of the securities portfolio as a result of client receivables growth. And this is the trend that we are showing consistently and which you can observe in our quarterly disclosures.

Moving on to cost of risk. Cost of risk -- sorry, not cost of risk. Before we jump to cost of risk expenses first. So expenses, we have been and we are characterized by strong cost discipline. We, in fact, are the only bank among peers with decreasing expense base. So when you look at the institutional banking, the cost base was down 3% Q-on-Q and 5% year-over-year. When you look at the cost income level at 23%, it's in line with our strategic commitments and the KPI that our cost income will be below 30% in the long term. Going through more detailed analysis of expenses, which is on the right-hand side, you see that the 2 line items that are growing are the staff expenses and the regulatory expenses.

And the consumer banking, a few words here. The operating expenses amounted to PLN 204 million, significantly down 14% quarter-over-quarter. Lower costs are primarily linked to lower costs that we incurred, which are linked to the project of consumer bank exit.

And now Page 14, which is the cost of risk, very healthy situation in our lending book. The Q4 in institutional banking, minus PLN 3 million. It's a result of the move between stages, some of the outstanding swaps from Stage 2 to Stage 1. It's linked with the improving financial standing of our clients. The consumer banking cost of risk amounted to PLN 5 million. And maybe briefly, if you look at our NPL levels, they are at 2.5%, whereas in the banking sector, the NPL ratio is at 6.6%. So significantly better vis-a-vis the market situation here.

I think in summary, that will be it from my side in terms of going through the presentation, we are happy to take questions. So I open the floor for the Q&A session.

Okay. If there are no questions, our contact details remain the same. So feel free to reach to us either by phone or by e-mail. You've got all the contact details on the web page as well under the Investor Relations tab. So thank you very much for today. It was a pleasure to share the Q4 earnings with you and looking forward to hearing from you soon.

Thank you, Maciej. See you, bye-bye.

Bye-bye.

Hello, everyone. Welcome to financial results disclosure of Citi Handlowy for third quarter 2025. My name is Adam Piotrak. I'm Investor Relations Head. I'm with Maciej Krywoniuk, the Head of Strategy and Investor Relations Department. He will go through the presentation. The presentation is available on our website, investorrelations.citihandlowy.pl and is available on the screen. So Maciej?

Thank you very much, Adam. So it's my pleasure to share with you today the financial results of Citi Handlowy for the third quarter 2025. It's another quarter where we are executing the strategy that we have shared with you in the first half of the year. I will be discussing the growth in lending volumes that we shared with you, we're going to deliver some key transactions where we participated in and also the dividend that we have paid out. We paid out PLN 1.3 billion initially. And in October, we paid out PLN 450 million to our shareholders as well. So this is part of our dividend policy and that we are executing upon.

Coming back to numbers. So Q3 2025 in terms of the results. For the total bank, the revenue was above the PLN 1 billion and net profit reached PLN 469 million. This translated into a return on equity at 17.1%. Talking about balance sheet and the dynamics and volumes. At the total bank level, the lending volume grew 14% year-on-year and deposits were up 16% year-over-year. The capital position, this remains strong with TLAC TREA ratio at 25.6% at the end of the third quarter.

A few of the highlights in terms of the lending volumes I shared with you. Institutional Banking, the lending volume grew by 4% quarter-on-quarter. It was the fourth consecutive quarter where we recorded growth.

In terms of financial markets, we arranged 2 debt securities at the amount of PLN 1.5 billion. We have shared with you some time back that we will be investing in platforms for our clients. And so we launched Citi Velocity onboarding -- gradually onboarding new clients to our FX platform. The CitiDirect, we are digitizing the services for transaction banking clients. When you look at the number of transactions processed by CitiDirect, it amounted to 9.8 million, which is 2% quarter-on-quarter growth.

The Consumer Banking, the Wealth Management business volumes growth continued and the number of clients in strategically important CPC segment, so the Citigold Private Client segment was up by 4% quarter-on-quarter. When you look at assets under management, the average amount increased by 6% quarter-on-quarter. It's my pleasure to share with you that we are also implementing AI tools aimed at improving quality and effectiveness of the services to our clients, giving more time for our employees, and we implemented Citi Stylus and Citi Assist, which are globally used tools in Citi.

Moving on to Page 3, which is summarizing the business volumes in the Institutional Banking segments. It's my pleasure to share with you that we have recorded growth across all 3 segments in the third quarter and growth -- year-on-year growth in our Corporate Clients segment was the most significant with 45% year-on-year growth. Both Global Banking and Commercial Banking clients were growing as well. And we grew 4% quarter-on-quarter. If you look at year-on-year growth, it's more than 4x the market with 27% growth of the lending book. And deposit volumes slightly down quarter-on-quarter, but if you look at year-on-year, the growth was at a very solid level of 20%.

In terms of the segment performance, the first markets, you see that FX transaction volumes grew by 3%. The brokerage house very strong growth of 84% year-on-year in value of transactions. The services and transactional activity, cross-border were up 7% in terms of the money transfer. The value of trade finance assets was up 33% year-over-year. And banking was focused on deepening our relationships with our clients. We granted new financing in the amount which was higher by 32% compared to last year. And all this proves that we are executing the repositioning of Citi Handlowy towards institutional only bank.

I'll be covering the consumer banking in a while, but moving on to Page 4, which is just a brief snapshot of key transactions in the quarter. As you can see, we were active in debt capital markets. You see the issuances of debt securities on the page. The [ Kaucja.pl ] is the example of transaction where we are involved in the sustainable area. We were a part for the recycling system introduced in Poland on October 1. And the transaction from the core lending area is just an example of financing for energy sector transformation and decarbonization-related projects, which are also at the core of our strategic priorities for the next 3 years.

Moving on to Consumer Banking. It's a discontinued from an accounting point of view, segment of our activity, but also an important element of -- still important element of Citi Handlowy. So loan volumes flattish, both year-on-year and quarter-on-quarter, but growth in the deposit volumes and growth in the wealth management volumes. I have shared that the AUMs were growing. So the average assets grew by 6% quarter-on-quarter. When you look at other dynamics, the private banking with Citigold Private Clients portfolio was 13% year-on-year growth and some declines, but not significant declines in the cards area where transaction value in terms of the domestic and cross-border was down year-on-year. But all in all, a pretty strong quarter in terms of the business activity among our clients in the consumer banking area, especially in the wealth management space where we are growing both the client portfolio and the business volumes are growing as well.

The social responsibility Page #6, we have been and will be active in the social space. I just wanted to share with you that Polish Foundation perspective, which is an educational foundation, got a grant in the amount of USD [ 1 ]million for their activities. We are part of the series of programs aimed at helping locally in the Polish market, also giving access to the Citi Foundation and their activities that are available for Polish participants.

Moving on to Page 8, which is the revenue page. So starting with the Institutional Banking. As you can see, the rates impact is visible in the top line that we are sharing with you this quarter, the 5% decline in revenue line year-on-year and 11% quarter-on-quarter. It's worth underlining that the base for that is second quarter 2025 was positively impacted by gains realized in the markets area. There were no such gains in this quarter. So this is why -- and that's what's primarily behind the decline in the top line.

When you look at the segment's performance, the client revenue was up 7% despite the rates. And record high level revenue of transaction banking customer and relationship banking this quarter. On the Consumer Banking, almost PLN 107 million in the revenue, down 3% quarter-over-quarter, primarily driven -- and the decline was driven by the rates impact that we have recorded following the rate cut cycle. The net interest income also impacted by the decline of NBP rate that was down by 100 basis points when you look at the trend. So 7% down year-on-year, 3% down quarter-over-quarter. All this was compensated by growth in lending volumes. When you look at the dynamics of the interest income from our clients, it was up by 8% year-over-year. So we were able to compensate the rates impact by the volume growth.

On the Consumer Banking, the net interest income amounted to PLN 217 million, down by 7% quarter-over-quarter. Moving on to fees. So fees were solid this quarter. The year-on-year growth was by 9% and stable level versus second quarter of '25 with PLN 106 million in fees generated in the third quarter of 2025 in institutional banking. This was also driven by strong performance in the transaction banking, primarily trade finance area. The transaction banking fees were up 10% Q-on-Q and 6% year-over-year.

Custody, this is where we are #1 in the market. When you look at year-on-year growth, it was up 32%. The net fees and commission income in the consumer banking area, it was at PLN 46 million in the third quarter, 14% growth quarter-on-quarter, 5% growth year-over-year. This was driven by higher AUMs, which translated into stronger performance and fees in the consumer banking.

Moving on to Treasury. I indicated that Q2 was very strong in Citi Handlowy, where we recorded AFS gains north of PLN 100 million. The treasury line in the third quarter at PLN 762 million was close to Q1 levels and average recorded last year. We always share with you that looking at this line of our P&L, it's more -- we need to take more long-term view than analyzing single quarters. Some underlying trends when you look at income and FX, the client activity in institutional banking, it was up by 2% quarter-on-quarter.

Looking at the mix of our balance sheet and the structural balance sheet, primarily high-quality liquid debt securities, which constitute the majority of the balance sheet reflecting the quality of the portfolio. And the revaluation reserve in September 2025, PLN 137 million, we are actively managing balance sheet, recognizing the gains we were able to achieve the positive revaluation in the third quarter. Expenses, definitely, we remain disciplined in expense line. The expense line is pretty much stable both year-on-year and quarter-over-quarter despite recorded inflation.

When you look at the expenses, the type of the expenses, the staff expenses and regulatory expenses were the one that were growing. And would characterize the quarter as solid in terms of the cost income at 23% in Institutional Banking in the third quarter. Even including regulatory expenses in Q1, we would have around 26% cost-income ratio, which is a very healthy number for our institutional banking and Q3 expenses in the consumer banking area amounted to PLN 189 million, which is down by 15% quarter-on-quarter, slightly higher by 8% year-over-year, primarily driven by staff expenses in our retail business.

Last but not least, our cost of risk. In Institutional Banking, we have reclassified a few exposures from Stage 1 to Stage 2. This is where the PLN 19 million cost of credit is coming from in the Institutional Banking segment in the third quarter. You can tell it's elevated vis-a-vis the trends recorded in the previous quarters. However, with cost of risk at a very low level at around 20 basis points. There are no worrying signals for us. These are just a few exposures that were reclassified, but we do not see structural issues in the portfolio quality at this stage, which is reflected in the right-hand side of the slide, if you look at both the coverage ratio and share of Stage 3 in our lending book, it's significantly below the banking sectors in terms of share of Stage 3 and where we are well provisioned with coverage ratio above the banking sector levels.

The cost of risk in Consumer Banking was at PLN 3 million, and this is also a reflection of the quality of our consumer banking lending book. This will be it from my side in terms of the summary of the performance in the third quarter. It's time to open up for questions.

Okay, Maciej. Thank you very much. I think that everything is clear. So thank you for joining. If you have any more questions, you can -- we are available. You can find our address on the website. So thank you very much, and have a nice rest of the day.

Thank you for joining. Have a good rest of the day.