Banca Transilvania S.A. (TLV) Earnings Call Transcript

Ladies and gentlemen, thank you for standing by. I'm Vassilios, your Chorus Call operator. Welcome, and thank you for joining the Banca Transilvania conference call to present and discuss the third quarter 2025 financial results. Please note that the conference is being recorded. [Operator Instructions]. At this time, I would like to turn the conference over to Mr. Omer Tetik, CEO; Mr. George Calinescu, Deputy CEO, CFO; Mr. Catalin Caragea, Deputy CEO, Chief Risk Officer; and Mr. Aurel Bernat, Executive Director, Financial Institutions and Investor Relations. Mr. Tetik, you may now proceed.

Thank you for connecting to the earnings call. I'm glad that we are here after closing our first 9 months. And as we were mentioning in our prior calls or interactions throughout the quarter without giving too much detail, third quarter was a strong one for BT in terms of loan lending growth, in terms of revenues growth. And also, it was a good quarter in terms of also cost control. Some of the efforts that we started deploying start giving results. And I hope we will be able to deliver better, let's say, efficiency and results in terms of cost control further in the next quarters. For Romania, it was an interesting quarter because after a couple of months, almost half a year of political volatility. Presidential elections have been finalized and the government was established and the fiscal reforms starting to being implemented. It's still too early to comment on the results of the actions. But on the other hand, it brought more visibility, predictability and also stability, both on the political environment, also in the economic environment. At least business owners, entrepreneurs, companies, banks could -- can do their business plans, strategies, investments now under the new terms and conditions that Romanian economy is operating with. But also when we look at the stance of the rating agencies, cautious, but still affirmative. We think that the first batch of actions, decisions are positive for Romania, at least as I said, in terms of giving more clarity. When we come back to our own financial performance, as we have presented already yesterday, maybe some of you had a chance to also look at our Investor Relations site and seen them. So our -- we have still strong net interest margin with growth of revenues from fees and commissions income, especially on the bancassurance, foreign exchange and trading side. But also, it was almost a unique third quarter in terms of retail lending growth as well, which usually is a more, let's say, stable or softer quarter in terms of growth, which is also encouraging us for the fourth quarter business growth. When we look back also the important things recently, not only third quarter, but recent news. As you know, we have had last week our general shareholders assembly where the shareholders, some of you as well have approved the payment of dividends from last couple of years reserves and also approval of a new program of debt issuances, bond issuances up to EUR 2 billion. Meanwhile, on Friday and early this week, you have seen Moody's has uplifted our rating and improved our stance. This is also good news in the sense that when there are a lot of concerns about Romania, Romanian economy, I guess, BT is the locomotive force of financial sector, but also economy is giving a good sign about what will happen or what will follow in general in Romania as well. We also did close one of the transactions that we have been pursuing. It was all the public information from Microinvest now -- which is now part of our group owned by Victoriabank. So -- as I said, it was a good quarter of growth and consolidation. But in order -- before we enter into details, I will hand over to Aurel to give a bit insight about Romanian economy, how we stand and how we look forward.

Thank you, Omer, and thank you, everyone, for joining. I will be a little bit diving deeper into the Romanian economy, but switching a little bit from those places which we already mentioned in our previous presentations, such as why we believe in Romania in terms of potential growth, emphasizing more on the financial intermediation level, which defined as a nongovernment loans to GDP still stays at 23%, which is among the lowest levels in the European Union. So this, coupled with the large scale of the Romanian economy in the Central and Eastern Europe, along with our growth so far, they all represent the large potential of the country on long term. Now in terms of questions that were frozen during the last couple of months between deficits, I will give some details concerning the government deficit in September this year, which was at 5.39%. It's kind of similar to the last year's results and performance. Here, we have to keep in mind that Romania has an agreement with the European Commission of maximum level of 8.4% for the government side deficit. In terms of trade deficit, on the other hand, it is much improved. It narrowed to 4.3% year-over-year level compared for the first 9 months of last year when it was 15%. This narrowing was supported by the growth in exports. We had more than 9% growth in exports year-over-year and the import growth, which was at a lower level compared to what we have seen so far. Inflation meantime reached 8.6%. We strongly believe that it will have an impact, which during '26 will fade away. This inflation in September was mainly driven by tax increases and not by demand. So thus, we see a more calm and stable environment for the next year. In terms of public debt to GDP level, we are at 57%, which remains low compared to European average of approximately 82%. When we take a look to the GDP per capita, we see the same scenario. We are closing the gaps with the European Union. But here, we also must acknowledge that there are discrepancies between the regions. So Romania is not homogeneously developed, which also creates a positive advantage for the future because most probably investment in infrastructure, both highways, railways will compensate the lack of investment so far in many regions from Romania. And the challenge will be to develop and to grow all the regions of the country, and this will also help us in terms of GDP per capita overall. The banking sector's evolution was a positive one. On the corporate side, we saw a decrease in the overall lending margin or surplus in terms of dynamics. but so was the case of the deposits as well. The reasoning behind it is that usually the corporate side used during this year their available cash in order to return value to shareholders through dividends, repayments and so on. And on the other hand, they were in a more standing by-ish approach due to the first half of this year when we had elections and the impact of the fiscal packages, which were unknown. On the other hand, for the households, we have a very strong increase in terms of both loans and deposits, way above the European average. Still strong asset quality for the Romanian banking sector with a small depreciation nevertheless. So a small increase on the nonperforming loans. But this is coupled also with the capital adequacy ratio, which still remains high for the entire banking sector. Now in terms of year-to-date evolution, we can see on a monthly basis, the evolution of the corporate deposits and also the corporate loans. The specific reasoning behind it was already mentioned on the previous slide. For the households as well, we see strong growth, especially in the consumer loans side. So this points to strong domestic demand while we are monitoring the quality of the lending. In terms of market share, we remain the largest bank in Romania, 22% market share. I know it's history, but I'm still emphasizing on it. It also includes the OTP integration. And as you can see, the top 5 banks represent more than 65% of total banking market share. A couple of key highlights from the sector includes high liquidity coverage ratio, more than 230%. The evolution of asset quality in terms of nonperforming loan ratios, we are at 2.81% in terms of overall market, and Catalin will give you some more details on the BT side. Cost-to-income ratio, 51% sector average in terms of ROE, 18%. You will find out later on that obviously, these are the average for the Romanian sector. And as Banca Transilvania, we have a much better indicators overall. Capital adequacy ratio, 24%. Nonperforming loan coverage ratio 64%. The National Bank of Romania's policy remained at 6.5%. Here, I would spend a couple of more seconds mentioning that due to the higher inflationary environment, we believe that during the first half of 2026, we will be having the same policy rate. In time when inflation will fade away, we strongly believe that we could see later on cuts in terms of policy rate. One very relevant aspect is the sovereign rating, which was affirmed both by S&P and Fitch to the investment grade with a negative outlook for both of them. Nevertheless, some positive issues that emerged in time during the last couple of months were the fiscal packages, the first and the second one. You see the entire range of them on the left-hand side, lower left-hand side. The last 2 of them, health system reform and public enterprise government law, they represent the second package, which was approved. The first package had an impact on VAT, turnover tax, dividend tax, social health insurance contribution and many other points that were touched by the first fiscal package. The estimated impact for '25, we estimate between 0.6% and 1.1%, a positive impact for the fiscal deficit. But the full deployment of these measures will be seen during '26 between 1.7% and 3.3%. Now going further, we have the business performance. George, you have the floor, and thank you all.

Thank you very much, Aurel. Going to the business performance of the bank, I would like to mention that the bank and the group had a very strong evolution in the 9 months of the year and especially in the last quarter of 2025. And our net result is underpinned in this period, of course, by the contributors that we have and we have discussed in previous meetings like net interest income, net fees and commissions income, net trading income so -- or a very good cost control, especially relevant in a period where taxes have increased quite significantly. Going first to the first contributor of this evolution at the consolidated level, net interest income reached almost RON 6 billion. This is almost a 19% increase versus the same period of last year and is driven primarily by the increase in net interest income coming from the business side. On the loan side, where we have a growth of 16%, triggered by organic growth at the level of the loan portfolio, and that is a 12% year-on-year increase in terms of growth of the loan portfolio. And because we look at consolidated level, this is purely organic growth because we do have as a comparative last year, OTP included in the consolidation. So it's not affected by the fact that like we have at the individual level, we merged with OTP during the year. Now going to individual results, we reached almost RON 5 billion in terms of net interest income. And here, the contribution of the loans, it's higher because we do have the inclusion of the OTP portfolio. We do have a 20% increase in net interest margin coming with a 30% increase in the period coming from the loans. In terms of net fees and commissions income, the increases of 12%, both at consolidated level and also at an individual level. And this double-digit growth is underpinned by the increase in the number of transactions that we have, both at the level of the current clients and also by the new clients joining the group and the bank in the second part of the year. We have reached an increase overall in the number of transaction of 19% in the 9 months of the year compared to the same period of last year. In terms of overall other contributors, we do have a good evolution in other income as well in the 9 months -- first 9 months of 2025 with dividend increased from Victoriabank. We talk about approximately RON 30 million in terms of dividend payments, but also some very good evolution in terms of FX income where we do have, especially in the second part of the year, evolution positive evolution, but also in Q2, as you remember, an increase due to the volatility of the FX rate. Bancassurance as well increased quite nicely with a 25% year-on-year in terms of growth. At the level of the operating expenses, we do have an increase in terms of the analysis year-on-year at consolidated and individual level, 17% consolidated and 16.4% at individual level. But what we can say is that we managed to stabilize the evolution of the growth. And we do not have the one-offs that we had at the beginning of the year when we had the integration with the OTP Bank, where we had some expenses, both consolidated and at individual level. In terms of stabilization, if you look a little bit later in the annexes, you will see that we managed to kept the growth in terms of salaries at individual level at a little bit above 1%, while at the group level, this is kept at 3%. And in terms of operating expenses, the growth is driven primarily in this quarter by the increase in turnover tax, which is causing the growth overall, while the other operating expenses are not increasing versus the previous quarter. In terms of, let's say, analysis of cost of risk, the bank has a cost of risk at consolidated and individual level, which is higher than last year for the same period, but it's coming down from the amounts that we've seen at the beginning of the year in the first quarter. As we have indicated, the evolution in the first quarter was impacted by some one-offs. And we will be getting to the amounts that we have indicated in our previous communication as we move towards the end of the year, those being the budgeted amounts for the year. In terms of overall profitability, the bank had a very nice evolution at the individual level with 7.9% increase in terms of net profit. We reached almost RON 3 billion, RON 2.922 billion at the end of the first 9 months, while at consolidated level with almost RON 3.3 billion, we do have a decrease versus the same period of last year. But I remind whoever is watching that actually, in the first 9 months, we did have some extraordinary revenues at consolidated level, which were representing the bargaining gain from the 2 transactions that were closed last year, and those exceeded RON 800 million. So coming back to an evolution in terms of cost-to-income ratio. Cost-to-income ratio at the level of the bank decreased. And this is especially important to note with 44.26% versus 45.55% last year. This is including the turnover tax. And if we exclude the effect of the turnover tax, we managed to get below 40% cost-to-income ratio at the level of the bank, which is an extraordinary result in terms of cost control. In terms of return on equity, with 26% at individual level and 24% at the consolidated level, we are definitely above the levels of the banking sector in Romania. We've seen earlier in our results presentation that banking sector had an average of 18%. So with 26%, we are much above that. When you look at the evolution of the balance sheet, total assets increased both at individual level. individually, of course, we do have the impact coming from the merger with OTP. But there, again, I remind you that on the liability side, we have done some cleanup of the higher-yield deposits that we had, but by not renewing them. So the growth is coming also from the organic growth in the second part of the year. You see this at the level of the consolidation where we do have a 3% increase in overall total assets. Loans are increasing as well, consolidated 8.7% and individually at 22%. Half of this growth is due to the fact that we have brought in the portfolios from OTP and the rest is coming from the organic growth. Loan-to-deposit ratio is increasing quite nicely. We do increase with 8 percentage points at the level of the bank and with 5 percentage points at the level of the consolidated results. And you will see how does this impact the net interest income when we look on the next page in more detail at the evolution of the net interest income. I will not get into a lot of details on NPL and capital ratios because I know Catalin has details on this in his slides. But I will go into trends in income where we do have an evolution that's primarily driven by net interest income. As I mentioned, the improvement in loan-to-deposit ratio is bringing a nice increase in terms of net interest income, both at the individual -- at group level with 20% increase in net interest income at individual level and almost 19% increase at the group level. And if you think about it, roughly 70% of the banking income is generated by the net interest income, which is a very nice evolution with a very nice net interest margin that at consolidated level reached 3.97% and at individual level, 3.49%. In other contributors, of course, net fees and commissions and net trading income. Net gains from -- or losses from financial assets and gains has a much lower contribution than in previous years due to the fact that we have streamlined the balance of favorite OCI versus held-to-collect portfolios. If you take a look at the evolution in operating expenses, the biggest contributor in terms of overall expenses, it's personnel costs. We do have 12% increase at individual level and 9.8% at group level increase. As I mentioned, we managed to stabilize this in the last quarter. When you look at the evolution per quarter, you will see that it's 1% at the level of individual and we talk about 3% at group level. And in terms of other operating expenses, as I mentioned, the biggest single contributor is turnover tax, which is presented here in comparison with the previous year, you see that the increase is quite significant. And of course, going further into the fourth quarter, that will be -- will have an impact as well, a significant impact and also in the next year. Other operating expenses are increasing by 24.6% at the individual level and at the group level by almost 30%. And here, what I want to mention is that when you look at this evolution, you have to remember what we have said in the previous meetings as well, the fact that even though we have these one-offs by implementing cost control initiatives, we will be managing to maintain the overall operating expenses within the budget for the year and therefore, meeting the budget for the year 2025. Cost-to-income ratio, as I mentioned, below 40%. If you exclude the effect of the turnover tax, 39.9% more specifically and including the turnover tax, 46% and 44% at the group and bank level, respectively. I will let Oberto continue with the growth in terms of portfolio.

As I mentioned at the opening, indeed, third quarter, which, again, traditionally a slower quarter had been a strong one for BT. When we look at first 9 months, actually, our loan book growth -- gross loans growth was over 22%, including OTP loans. But even if you exclude OTP, our retail loans grew over 10%, almost at, let's say, double the pace of market growth. And our corporate loan book also was growing fast over 10%, a couple of percentage above the market growth. So we have been also capturing in the third quarter organic market share in terms of lending. good part in the retail loan book was -- is also the fact that 35% of the production was consumer unsecured and credit card loans, 65% was mortgage loans. So this brought our mortgage lending in our total portfolio and retail portfolio to 58%. Although it's a very competitive market and relatively, I'll say, aggressive pricing, we see mortgage loans are even cheaper than government bonds or government programs like Fidelis. But on the other hand, it's an excellent opportunity for cross-sell and upsell from salary cards, credit cards, bancassurance and BT Pay type of products. We also extend our offer to our mortgage customers from BT Asset Management and BT Pension, BT Pensii. So we are very happy about seeing that this segment is growing very fast. Also, we are accelerating our, let's say, online business with the customers. In the third quarter through BT Pay, we granted almost 40,000 new loans. This is -- these numbers will be growing very aggressively from now on because both us and our customers and Romanian market learn how to do it better, faster and safer. So we are looking with great confidence to growth in online lending through BT Pay in Romania. Corporate loan book was mainly focused on the areas of interest, energy, agriculture, R&D production, renewable energy definitely. And we have been also a main player in the big tickets were Arranger syndicated loans for club loans, big transactions like -- done by like Transgaz, Digi, Electrica all have seen that we were one of the leading arrangers. So I can now comfortably say that Banca Transilvania after many years of being an underdog in this segment, now it's not just, I would say, capturing market share, but is already the market leader, the bank to go for not only medium-sized companies, but also for multinations and larger companies as well. We do grow also quite fast in the specialized segments that we enjoy like Healthcare division [indiscernible] and Agribusiness, in -- especially in agribusiness, our market share according to the offshore data reached over 26%. And we believe in the future of agriculture and food industry in Romania, and we see high potential of growth, high potential of investments, and we will be active supporting our customers, growing our customer base there. As we were mentioning also in the previous quarter discussions, we are not very aggressive because of our comfortable liquidity ratios and liquidity position. In deposits, in funding, we are not very aggressive, but still, we have seen growth in our deposit base. And we see also that both in the corporate and retail segment, customers trust, confidence in Le is coming back. So most of the, say, new transactions, new deposits are being done in Le. So together with the increase of almost EUR 1.5 billion equivalent in different currencies, including Le coming from OTP, we have seen a growth of 7%, over 7% in our deposit base. Something that we see is our strong point because we are in cash processing, salary cards and current account business, payments business, which supports the growth of our current account, salary account business, CASA accounts, which reached over 42%. This is like a core deposit base at 0 or very low interest rate, offering us very efficient funding source. And we see, as I said, both the existing structure, but also new deposits are coming mainly in Lei. This also is in line with our view about Romanian lay that it will maintain a very stable stance as per monetary policy and interest rates are not expected to decrease very aggressively in the next period. In terms of the, let's say, capital position and risk items, I will leave Catalin to give more insight.

Good afternoon. When talking about the capital position, I would say that we can look in a mirroring approach when looking to both group and the bank stand-alone. The level of the capital adequacy ratio being around 20% for both of them. This being in line with our risk appetite and also with our guidance that we are frequently giving to the market. If we look to the evolution when compared with June, we have seen a slight decrease in the capital adequacy ratio this being on a basis of 2 factors. One is the portfolio growth. This is visible also in the RWA growth, which is given by the loan portfolio growth, but also by the new dividend payout that was approved by the GSM and that we will talk about a bit later in the presentation because this dividend payout was already factored in according to the standards in the own plans. However, we should mention that this is just a temporary decrease because for the year-end, we expect to go back to a higher level of the capital adequacy ratio. When going and looking to the asset quality, I would start with the NPL ratio where we reversed the trend that we have seen in the first half of the year, which -- and we are -- we ended up with 2.56% NPL ratio, which is still below the market average, although if we look to -- in the market to the competition, we are seeing increases in the ratio, but we can proudly say that we -- due to our strong portfolio quality, we can stay below the market and also reversing the trend. And this is visible in strong correlation in the cost of risk where we continued to decrease the risk cost ratio, ending up at around 70 basis points and now being very close or being in line with the budget and with the guidance for the year-end, which we said that it will be around 60, 70 basis points. When looking to the liquidity and MREL strategy, we continue to benefit out of our strong depositor base and showing a very strong liquidity position, again, much above the market average and much above the minimum regulatory and the appetite. We can probably observe also an increase in the loan-to-deposit ratio on a basis of loan portfolio and healthy loan portfolio growth because the quality of the portfolio growth is factored in this ratio and is visible here. And when looking to the MREL strategy, here, we are seeing the effect of the new issuance that we successfully concluded in July. And here, it is visible that we widened the gap between the actual level of MREL against the minimum regulatory requirement. This being much above of our risk appetite, which is saying that we look on a continuous basis to stay with 50 basis points on top of the minimum regulatory. So this is again showing a very strong position when looking to the MREL strategy. I will finish my presentation with explanation about the new release coming from Moody's on Banca Transilvania's credit ratings, and I will start with the BCA rating, which was reaffirmed at Ba1. And I will end up with a very positive evolution when coming about long-term deposit rating and long and short-term issuer rating, where Banca Transilvania received an upgrade from Moody's an upgrade, which we should be mentioned that this is limited by the sovereign standing. This -- from our perspective, this upgrade, it should send a message towards our depositors and our investors showing the resilience and the strength of our capital position, balance sheet position as well as strong profitability results that we are envisaging and that we are showing also. Now about the GSM.

Exactly. Coming back to GSM decisions, our shareholders, investors have decided a distribution of RON 700 million dividends to be paid on 11th of December with date of 24th of November, coming from the net profit reserves of 2015, 2016 and 2019, corresponding to a gross dividend of RON 0.64 per share. But also in the extraordinary gathering of the shareholders, we have received the approval of EUR 2 billion of issuances. These are mainly related to, first of all, definitely to offer a stable and strong capital position and diversification. enhancing our capital position for MREL capacity and -- but also offering good yields to our shareholders, good returns. We are planning to also come to the markets at a date soon with AT1 and alternative Tier 1 issuance, but the program has been approved for the next 5 years.

I will just jump into customer satisfaction. because it can be seen as a core of our ESG strategy, and this is a pain point we didn't touch during previous meetings so far. So what is very relevant for all of us is that we have a Net Promoter Score of 66 for the retail side, which is 6 points above the market average. So it is the case also for the corporate side with 5 points above the market average for Banca Transilvania. So this positioning is a very healthy, sound and with future potential for Banca Transilvania. How we reach this good indicators is that on the retail side, we have a very good blend between product offering and the employees' approach. in terms of being there for our customers, also the brand, which has enormous strength in Romania. We are transparent and customer-centric. At least these are the things that we believe in, we trust in and from the feedback that we gather from our customers, it seems that we are doing it right. In terms of corporate, we have dedicated account managers, also the brand reputation, which helps us and the in-branch experience so far is excellent. This is the reason for which corporate loyalty on the loyalty of the corporate customers is 90% loyalty, meaning that these are the customers that consider BT as their primary banking partner. On the retail as well, it is high, above 78%. And for our most used and Romania-wide most used banking app, BT Pay, the satisfaction is also relevant. It's 90%. Going into digital, back to you, Omer, and thank you.

I mean, definitely, our attention to our cost base, how we service our customers and what is the cost of each step in our product and services offering. is encouraging us, not only pushing but also encouraging us to invest more in our channels in I would say, a few weeks from an ecosystem of 5 applications, we are consolidating our ecosystem to 2 applications, BT Pay, which is already utilized by 4.5 million customers in Romania with very good reviews in Apple App Store or Google Android store, but also direct responses and for retail customers and also BT Go for our company customers. It's -- I would say, in the first 6 -- in the first 9 months, sorry, of the year, we have seen 236 million mobile and NFC payments done with BT Pay. We are also very happy about the performance and solidity and safety of our applications. As we have also yesterday issued a press release only on Friday in the Black Friday of Romania, we have seen 11.5 million transactions have been processed by -- shopping transactions have been processed by BT. On the other hand, BT Pay is not just, I would say, a payments app. As I said, it is also having online lending features, but it addresses also the financial well-being of our customers. And now we already have BT Asset Management and BT Pensii in BT Pay. BT Pensii joined BT Pay recently, I would say. But we see more than half of BT Asset Management customers are using BT Pay and most of the new, let's say, money is coming from through BT Pay. This is something that we will invest and focus more. And BT Go, our future soon to be the main and only application for companies has already 0.5 million customers enrolled, around 75% of our customers are actively using the application already. And we see the numbers improving together with the facilities because BT Go is not just for, again, payment and account management application, but it offers also invoicing, reporting, cash flow management features as well. So especially for smaller companies segment, solar micro businesses, it is a good business partner for our customer base. George?

Thank you very much. We're moving on to the evolution of the group. The group had a very good evolution even the companies that maybe don't have yet a positive result like Sal Bank is growing quite nicely with 600,000 users already on the Sal mobile app and deposit increasing loans starting to increase as well with the new products issued and also investment options with foreign shares and ETFs launched quite recently via the mobile app. The third quarter, from the point of view of the group marked, I think, the most important change is the launch of the Inno investment subsidiary, which received its license among the few funds in Romania managing alternative investment funds. And even though it's not quite in the third quarter, but it was immediately after the end of the quarter, and it was announced as a subsequent event, we do have the closing of the deal with Microinvest in Moldova. Victoriabank will have a subsidiary in the biggest nonfinancial -- nonbanking financial institution in the country that will bring additional added value to the results coming from the businesses in Moldova to us. In terms of other evolution, Beta Asset Management increased in terms of evolution of the active accounts and Amber mentioned them being present in BT Pay from the 350,000 active accounts, 150,000 were opened through BT Pay, which is a tremendous evolution. Assets under management, almost RON 8 billion, an increase of 13% versus the end of last year. BT Capital Partners, 28% intermediation market share with almost EUR 18 billion value of transactions and international transactions increased versus last year by 50%. BT Direct growth its assets of 11% in terms of comparison with last year. BT Leasing had a July historical growth in terms of sales with RON 91 million, the highest in its history and launched tools that can be used by its clients like multisign, multiparty electronic document signing and partnership for projects in green fleet of cars. Each HA has a very good evolution in terms of managed [indiscernible]. Bet MIC more than 40,000 customers. BT Pensii, the second place in terms of Pillar 3 contribution, and it's up from 5 years -- #5 in terms of 5 years ago with 180,000 participants and a record in terms of new participants in the month of August. And I will stop here and give time a little bit for Q&A.

[Operator Instructions]

Hello, everyone. We have a first set of questions coming from WOOD & Company from Miguel Dias. One, there has been strong dynamics in the loan book development. Can we expect something similar in the last quarter? And more generally, how do you see the evolution of the loan book development in the context of the Romanian economy? Two, where are you seeing the biggest opportunities and weaknesses? And three, in terms of net interest margin development, what can we expect for the last quarter?

Thank you, Miguel. First, Indeed, it has been a good strong quarter, especially being the third quarter. We are happy about this. It is mostly recovering, compensating for the slower start to the year. So without creating too much of expectations, I would say -- I would reiterate that we are very comfortable that we will deliver our budgeted numbers as it was approved by the shareholders. In some segments, we are also expecting some, let's say, better results. But on the other hand, although the fourth quarter traditionally is our strongest quarter due to holiday period, it's also a shorter quarter. So although per day production productivity is better, at the end, we are losing 2, 3 weeks because of the holiday period. still, as I said, we will deliver and we might slightly overdeliver for the numbers that we have presented in terms of growth. In terms of the next year, we didn't finalize our budget yet. And definitely, we will come to our shareholders' attention the numbers to be analyzed and to be approved, hopefully. But what I can tell you is that we are not budgeting -- we are not willing to budget, I would say, low growth balance sheet. And we think that our loan book should be growing high single digits next year. Despite the challenge, maybe I'll try to also answer the question related to the opportunities and challenges, but they are very much also related. And on one side, we see the infrastructure investments going ahead. Romania, if the fiscal consolidation will be as successful as it seems at least for the moment, will have accelerated amount of European Union funds and recovery and resilience funds to be released. In infrastructure investments will be a catalyzing factor in the economy. But we also see from defense to renewable energy to agriculture, food processing and automotive production, we have more and more better numbers. Some investor interest -- foreign investor interest is also being seen. One of the opportunities is definitely that in the second quarter of next year, we might have Romania self-sufficient in terms of its own energy production. But on the other hand, the implementation of the, let's say, fiscal consolidation and all the measures is happening in a very fragile political environment. So political stability is very much important. Political support is very much important. And all the efforts of especially public sector companies and on the public sector in the central administration to reduce the cost base to reduce number of employees, while it will help private sector on the wage inflation side to be kept under better control. On the other hand, higher unemployment may put pressure on the consumption, may put pressure on loan performances. However, I mean, we are not just anchoring our growth or plans to economic growth. BT has been growing faster than the GDP growth year-on-year every year. And I guess also next year, regardless of the economic growth, we can deliver, as I said, high single-digit growth. There was another question that I missed that. There was a third one, I guess, margin. Net interest margin, sorry. I mean, as I said, we are not expecting a big change in monetary policy. And we think that definitely over 300 basis points net interest margin is sustainable for BT and for our growth. And we will try to keep both our funding costs, but also lending returns under control with our size now also we are trendsetters market makers in many segments. So I'm sure market will align also to our strategy.

Next set of questions comes from Osmosis Capital from Mariia Kuznetcov,a, and is related to capital adequacy ratio. One, please explain the drop in capital ratios year-to-date. Second, is the bank still targeting a 22 capital adequacy ratio by year-end? And how do you plan to achieve it? And third, what would the capital ratios look like if the temporary benefit related to unrealized losses on the sovereign portfolio were fully removed or if all temporary measures scheduled to phase out on January 1, 2026, were excluded?

Thank you, Maria. to start with the capital position, as I was saying also during my presentation, the September level and because in the presentation, it's true that the slides might be misleading because we are showing just year-end. But if you look also to the other September, you will see this evolution because this is normal because each and every half year, we are incorporating the profit at the year-end. So that means that at this milestone, so half year and year-end, you naturally see a higher capital position. And then the capital position slightly goes down intra half year because of the portfolio growth. for this particular trimester, we have seen also the -- as I said, the incorporation of the dividend payout that was just approved, and that's why we see this around 1% drop. What we are expecting for -- because you are mentioning the 22% for year-end, the answer, yes, it's yes because as I was saying, we have our regular process of self-capitalization, so profit incorporation. And as it was also just mentioned, we are also contemplating for an AT1 issuance. So this will, for sure, ramp up our capital ratio above the level that what you mentioned. Moreover, just tackling your last question about the transitional provisions, the bank has to build up a bit of a buffer at the end of the year exactly for accounting for the transitional provisions, regulatory financial provisions effect, which will be occurring in 2026. The level of this -- the impact of the transitional provisions altogether, it is between 1.5% and 2%, but more towards the lower range of 1.5%.