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Operator: Ladies and gentlemen, welcome to OTP Bank's Conference Call regarding the financial results for the first 9 months 2025. Please be advised that the conference will be recorded. [Operator Instructions] At this point, I would like to hand over the floor to Mr. Laszlo Bencsik, Chief Financial and Strategic Officer. Laszlo, the stage is yours.
Laszlo Bencsik: Thank you, and thank you, everyone, for joining us today. Good morning or good afternoon, depending where you are. Let me jump into the presentation. As usual, the deck is available for download on the website, but we are also projecting it parallel to the con call. So maybe we go to Page 3, where we have the most important numbers, yes. So first of all, we have this kind of noise in the data due to the fact that many -- most of these extra taxes or all the excess taxes in Hungary were booked in the first quarter for the entire year and some other supervisory fees as well in various other countries. Therefore, if you want to capture the -- properly capture the business performance, and we need to accrue those costs over the year. So you have -- you can see 2 sets of numbers, one at the bottom with gray that's reported and then this kind of the other set of numbers with green where between the quarters, we have accrued allocated evenly the one-off costs. So if we look at the kind of accrued numbers, then the first 9 months was HUF 886 billion. That's like EUR 2.2 billion, EUR 2.3 billion, 5% up last year first 9 months. But I mean, the actual business performance was stronger than that. If you look at the, for instance, the pretax profit, then this growth was already 8%. That's due to the fact that the extra taxes primarily in Hungary increased a lot. And we put these extra taxes, the bank tax and the extra profit tax into the tax line. And on that line, just in Hungary, the extra profit tax increased by HUF 38 billion year-on-year. So that's a major factor actually in the profit after tax number. Now if we were to look at the operating profit year-to-year performance, then it was actually 16% up for the first 9 months. And then obviously, risk cost was somewhat higher, as you can see on this chart on the credit risk cost rate and the total risk cost rate. Having said that, most of this kind of extra risk cost is coming from Russia due to volume effects, the Russian risk cost rate was 7.6%. So that's part of this kind of consolidated number. And if we were to take out Russia, Ukraine, Uzbekistan from the risk cost rate and the credit risk cost rate and the total risk cost rate we would get quite similar numbers to last year actually. So I think it's safe to say that we have had another strong quarter in the third quarter of this year. And there's no reason to believe that the following quarters will be anything worse. So we remain quite optimistic regarding the current trend, the current run rate and also the potential future developments. This profit growth has primarily been driven by especially the operating profit growth by volume growth. We indicated at the beginning of the year that we expected more than last year credit growth. Last year, we had 9%. And the good news is that already at the end of the 9 months this year, the year-to-date performing loan growth was 10%, and it's going strong. So I think it's fair to assume that we will not just have higher number than last year, but materially higher, substantially higher growth rate. And this seems to be the run rate at the moment. Return on equity, again, this kind of accrued ratio, 22.7%. Cost to income, 39%, below 40%, very good and net interest margin stable. And I already a little bit talked about the credit risk cost rates, which are higher than last year, but mostly driven by the contribution from Russia. The following slide is rather technical. It shows this kind of difference between the reported and this kind of accrued or even recognition special items. So I'm not going to dwell into this, but that explains this almost HUF 37 billion difference between the 2 numbers. So let me go to the core performance, OTP Hungary. Again, 5% up year-on-year, but this extra profit, the windfall tax increase is primarily here or substantially here in Hungary. So the pretax number again, with this even recognition of the one-off cost would have been 15% up. So after-tax profit, 5% up, pretax profit, 15% up year-on-year. And this was primarily driven, again, loan growth and some margin improvement. I mean, last year, first 9 months, the NIM was 2.84%. This year, 3.09% and slightly increasing quarter-by-quarter. Here, you can see this kind of detailing of the extra burdens in Hungary. And you can see how much the windfall tax, the extra profit tax increased. Last year, we paid HUF 7 billion altogether. And this year, we expect to pay HUF 54 billion. And there was a strong increase in the transaction tax as well. The tax rates were increased last year and that they became effective late last year, and the impact is actually quite substantial for this year. Having said that, there is plenty of good news regarding our performance in Hungary. So if you look at the recent novelty on Page 6, this is the home start loan program, another subsidized mortgage program, which was -- which started in September this year. And you can see -- I mean, the -- if you just look at the stock numbers, the impact is relatively modest given that it was -- it only started in September. But if you look at the applications, you can see how much the applications increased. So the September level was kind of 3x, more than 3x on average monthly level. So this is a very popular program. It provides opportunity for clients to take mortgage loans at 3% fixed. So this is what they pay, and we receive an interest rate subsidy. And with that subsidy, it is actually a reasonably profitable product. So it is clearly beneficial for clients, and it's also a profitable product for the banking sector. Now this means that the current run rate of, let's say, annualized 12% because the first 9 months, as you can see on this chart, mortgage loan growth was 9% year-to-date. We annualize it just roughly, it's like 12%. So this 12% annualized run rate can increase, and we definitely expect this to increase for the next year, for the next 12 months at least. And that can be up to, I mean, high teens, even closer to 20% till at least till the end of the second quarter next year. If we look at the other product segments in Hungary, consumer loans going strong, almost 39% higher contractual demand in the first 9 months of this year than last year. Our market share is very strong. Now this is a quite attractive profitability product. That's one of the profitability drivers for us in Hungary. So having this strong market share and having this strong growth rate, this is quite good news. Our market share recently increased. The other kind of important market share number on this slide, I think it's in the kind of lower right corner, 41.4% is our market share from retail deposits, and it's again, quarter-on-quarter increased a little bit. You may remember that the first half of the year, a large chunk of retail government bonds were repriced and that caused some reallocation of funds by retail clients. And the good news is that we seem to manage -- be able to manage this transition well and our market share again started to grow in deposits. Corporate. Corporate is probably even more exciting it does seem to be that finally, we see a turnaround in corporate loan growth, especially in micro small. So as you can see on this chart, micro small year-to-date growth rate was 12%, large corporate or total corporate 5%. And that's a big improvement compared to '23, '24, where volumes were basically flat. And we read this now as an indicator of a potential turnaround, at least in our client portfolio. Obviously, this trend reversal has been supported by the current subsidized scheme, which is the called Széchenyi Card MAX+ scheme targeting like small corporates in Hungary. Our market share is very strong in this product. And due to all these changes, as you can see on this page, we reached a historic high in terms of our market share to Hungarian corporates, loans to Hungarian corporates above 20% historically highest number, very good news. We are very happy about this. On Page 9, you see some of the -- or well, all of the non-Hungarian bank performances. It's -- I think it's quite solid across the board. Maybe the only kind of pledges in Uzbekistan. We talked about this. As you can see, both the nominal profit declined materially compared to last year and the ROE also went down. I mean, this is something we discussed in detail in previous presentations. We had to limit the volume growth of consumer loans for quite a long period for almost 1 year until we fixed the IT infrastructure and then kind of restarted the growth of consumer lending somewhere in the second half of the second quarter this year. And these results are very strong and very, very promising. I will show you in a few slides, I will show you the details how well new production is building up in Ipoteka, Uzbekistan. So I'm very hopeful that starting from now quarter-by-quarter, we will be able to improve our performance and reach back potentially to previous levels. The NIM development, net interest margin development, again, it's fairly stable quarter-on-quarter, even on a basis point level. And since the beginning of the year, 5 basis point improvement. The improvement is primarily coming from Hungary. Hungarian margin keeps improving, while in some of the other banks in Uzbekistan, where cost of funding increased in Bulgaria, where it's a euro rate environment, and this is due to the euro somewhat lower rate than last year overall and Serbia having some hit. But primarily, the improvement, as I said, was driven by Hungary improvements. Let's have a look at the volume trends, the performing loan volume trends. across the group, 10% year-to-date. And again, we don't have any reason to assume that growth slows down. It's actually quite the opposite. In Hungarian mortgages, we expect definitely acceleration in the first -- in the last quarter, in this quarter. And also in Uzbekistan, as you can see, this 13% increase year-to-date is not evenly distributed between the quarters. First quarter was flat. second quarter, 4% growth and third quarter, 9% growth just in 1 quarter. So this is when we are kind of up to maybe not 4%, but a much higher speed than previously. The other, I think, important development is Ukraine. As you can see, we -- somewhere at the end of last year, we decided to be more active in lending in Ukraine, and that resulted in more than 50% growth in consumer lending. Obviously, this is from a relatively low base, but nevertheless, we started to grow and also corporate and leasing started to grow meaningfully this year, and this is in line with our kind of strategic decision to be active on the lending side in Ukraine, obviously, selectively, but we believe that there's a well defined, actually broad segment of clients who are quite able to take on some leverage and loans. Maybe a few more words about the Uzbekistan development because this is important for us strategically. As you can see, we -- on this one, you see the cash loan volume changes and disbursement numbers by quarters and our market share. And we had this difficult period starting from the first quarter last year, which period pretty much ended a year after. And in this time, we lost market share, our operating results declined. and our profits declined, but now I believe we have reached a turnaround. And as you can see, our market share started to grow in the third quarter. And you can see how much we were able to ramp up production of cash loans. And now this is -- now we believe that we are giving these loans based on sound understanding of clients' creditworthiness and it's well supported by data. So we feel confident that these are going to be quite profitable vintages what we are churning out. In terms of deposits, Again, a strong performance year-to-date, 9%. And just to remind you, the net loan-to-deposit ratio of the group is 74%. So nominally, we have 50% more deposits than loans. So despite the somewhat lower growth rate, the actual nominal increase was substantially more in deposits than in loans. So the group level kind of liquidity situation improved due to this. And the primary drivers here are in Hungary core and Bulgaria and in the retail. These are the 2 countries where we have dominant market share in retail deposits around 40% in both countries. And in both of these countries, retail deposits are very profitable. So this is a kind of growth and profit engine of the whole group, retail deposits in those 2 countries and so far, so good. quite strong performance in both sides. In Bulgaria, there's an additional big event. By the end -- by 1st of January, Bulgaria finally joins the Eurozone after around 25 years in the currency board in a fixed currency -- successfully fixed currency regime, very well deserved, and we expect further positive ramifications from this -- from the accession to the Eurozone. And the only -- I mean, where we had decrease, it was Uzbekistan, But again, funding, especially retail deposits is quite expensive and the growth -- the volume growth in retail loans was not as strong as we originally planned for. So therefore, we scaled back somewhat the deposit volumes in order to optimize for profitability. But again, this recently as the volume growth recovered, we again started to somewhat increase deposit volumes. So this is subject to pricing basically. On Page 14, credit quality. Again, Stage 3 ratio compared to the end of last year improved compared to the second quarter, flat, strong coverage, as you can see, in comparison to some of the other players as well. There's no major development on that front. In terms of capital adequacy, 18.4%, which is still a decline compared to end of last year, but that's mainly due to the Basel IV impact, which kicked in 1st of January, 90 bps negative. And still a 20 basis points transitionary measure is being out phased by the end of this year. So the kind of fully loaded number year-end -- if you fully load with the changes expected till 1st of January, then it would have been 18.2%. Nevertheless, strong and well above regulatory requirement. In terms of liquidity, I mean, quite liquid. The liquidity coverage ratio, 235%. Again, the minimum required is 100%. We -- during this year, we started with a Tier 2 in January, and then we have done 2 covered bonds, very successful, quite -- we're quite happy with the pricing levels and a senior preferred and offshore yuan bond, another one. We are trying to diversify our investor base on the debt capital markets as well. Now -- so this is the kind of internal performance and then some reflections in the mirror, right, how others see us. First of all, rating, there have been many upgrades. Moody's was the very recent one. They improved the counterparty rating of OTP Bank to A3 and the senior preferred bond, the negative outlook disappeared. So it's Ba3 stable and also the Tier 2 rating improved to Ba1, and then prior -- previously during the year, S&P improved our rating. So there, the senior preferred rating is BBB, which is actually a notch higher than the sovereign rating, which is BBB- the Hungary sovereign rating. So again, this is, I think, a rare event that the bank is rated higher than the sovereign, but I believe this is very -- that's a realistic situation. So scope rating even higher. And we have a Fitch rating for Ipoteka Bank, Uzbekistan Bank, which also improved during the year, and they have been through a very successful issuance. They just printed a bond recently, which was very well received by the market. Page 18, that's the -- we like to show this one. This is S&P kind of capital Global Market Intelligence unit. It's just a financial comparison of -- comparison of financial performance of the largest European banks. Last year, we were #1, this year, #2. So next year, we want to get back to #1 as well. And then EBA stress test #13 that was done during the early part of the year. So we are in the first kind of 1/4 of the participants. And just very recently this week, there was an ESG upgrade. MSCI upgraded our ESG rating to A. So I mean, forward-looking, we are I'm sure you will ask questions about that. But as usual, we will share with you our expectations, our guidance for next year when we present the annual numbers, and that's going to be the first week of March, as usual on a Friday. So I won't talk much about next year. But I think it's clear that we have a strong momentum, and there's no reason to believe that this strong momentum should deteriorate. So I mean, especially if we look at the macro environment, on a very high level, we expect basically GDP growth improvements in most of the countries where we operate. And where it's not improving, the kind of slowing down is quite moderate and from quite high levels. So Bulgaria slowing down to 3%, Croatia to 2.9%, but these can be better numbers, to be honest, because the recent data in these countries actually outperformed our previous expectations and maybe Uzbekistan also slowing down. But in the case of Uzbekistan, again, the latest GDP data was much better than what the market expected. So even these countries are doing well. And the biggest kind of improvement in terms of GDP growth is expected in Hungary, where, I mean, next year, our expectation is 3%. It's an election year. Consumption. The order the strong consumption is going to further accelerate and then we don't expect further decline in investments. So this actually seems a quite realistic expectation to go up to 3% after 3 difficult years, '23, '24 and '25. The short-term expectation, we decided not to kind of formally change them compared to what we did in the -- at the end of the second quarter. But I think it's very obvious that loan volume growth, which already 10% compared to 9% last year. So this 9 months year-to-date 10% and obviously, we expect the run rate to continue or even somewhat improve, as I said, in case of Hungarian mortgages and in case of this big consumer loans for sure. So we are not just going to have higher number, but I think it's going to be a materially higher number in the loan growth, and that's going to have obviously positive impact for next year earnings. Margin, again, I mean, the -- it's actually very stable. So again, no reason to believe that it's going to be otherwise. Cost-to-income ratio, this is where we kind of improved the guidance at the end of the second quarter. And now the new guidance is close to 41.3%. We are still below 40%. So I think this is, again, quite likely. And in terms of risk cost, the risk cost rate Actually, first 9 months was higher than last year. But again, this was primarily driven by especially the Russian volume growth and higher rate there. And ROE 22.7%, again, strong number. And it's -- I mean, the denominator is obviously much bigger than last year. We are accumulating capital faster. That's the reason behind the return on equity somewhat lower still this year than last year. In terms of capital actions or capital strategy, I'm sure again, that you will have questions, but we will keep our usual custom and announced how much dividend payment the management will propose to the AGM next year when we present the annual numbers first week of March next year. What we do now, we are executing this buyback program. We did HUF 60 billion at the beginning of the year, and then we started another HUF 150 billion program at the end of April when we got the second package approval from the Central Bank. And we are at HUF 88 billion, and we continue this program. So that's pretty much the kind of short presentation going through the highlights, so to say, of the year or the third quarter. And please, if you have questions, ask them and we try our best to answer.
Operator: [Operator Instructions] the first question is from Gabor Kemeny, Autonomous Research.
Gabor Kemeny: The first question would be -- I would pick up on your points on loan growth, please, which is indeed pretty strong, I believe, around 12%, 13% annualized in -- as of Q3. And yes, I was kind of blown away by the home start numbers you showed on Page 6 by the applications. It seems like there's a broader strong trend. So how do you think about the loan growth outlook going into '26, accelerating towards the mid-teens, possibly the high teens? Is that conceivable? And related to that, do you think your NII growth will be kind of proportionate to the loan growth? Or would you like to highlight any possible changes in customer spread, securities income, which could shape your NII going forward? And my last question would be on M&A. I believe you were linked to ForteBank in Kazakhstan recently in the press. Can you share any views about your appetite to enter into Kazakhstan, please?
Laszlo Bencsik: Okay. Yes. I mean, I share your enthusiasm regarding loan growth. I think this is, as you said, a strong run rate. And if you look at the forces -- the current forces shaping the future trajectory of the loan growth, they seem to be positive, right? Certainly, Hungarian mortgages, very clear. Certainly, Uzbek consumer loans, these are trend kind of new trends, which have already been set, and we expect them to continue. The other positive development is in Hungary, right? The Hungarian corporate has started to grow finally. And now I think it's kind of -- we believe that now it's actually a new trend. And all the other countries are doing well and the GDP numbers that I showed, we expect to get stronger or remain at elevated level. So again, allow me not to give a concrete guidance for next year because just kind of policy-wise, we are not doing it now. But I think your observation is very correct that the run rate is 12%, 13% and the factors which may influence the future growth rate seem to be rather positive. Now I mean -- and that's obviously supportive for NII. Now in NII, I mean, there are 2 factors which are very important here. One is actually deposit growth and more specifically, deposit growth in retail and especially in Hungary and Bulgaria, and these 2 countries have been growing quite strong and Bulgaria joining the Eurozone. So then it's conversion, we might end up having somewhat higher kind of one-off kind of current account volumes as well. In Hungary, we -- I mean, disposable income growth may accelerate given the -- that it's kind of pre-election period, and there are various kind of disposable income increasing factors for various parts of the retail, so that, that's also kind of marginally positive. In Bulgaria, we are going to -- when they join the Eurozone, the current 12% reserve rate is going to go down to the Eurozone 1%. And we don't -- and currently, we don't receive any interest on the 12% reserve rate. So that's going to be a boost. Plus we have the kind of replacement of the kind of old lower-yield Hungarian government bonds with higher-yield ones. So that's also kind of supporting factor. So again, in terms of NIM without net interest margin, without giving a numeric guidance, again, I think the kind of factors which influence the NIM forward-looking seem to be rather supportive. And plus, there's a big plus. So it doesn't seem to be the case that the euro rate is going to plunge substantially further and the reasonably stable euro rate going forward is again, a support for the NIM in the euro-related part of our book. Sorry, I cannot comment anything specific regarding M&A. In terms of geographies, I mean, we have been clear about this before that we consider Central Asia as a region with high growth potential, and we consider the whole region attractive. And we are quite happy with what we did with the investment in Uzbekistan despite the difficulties what we faced, but that's -- I think that's okay, given that it's a new market and we brought a bank through privatization. And so yes, I mean, the region we quite like. And the country you mentioned is part of that region. But no specific comment, sorry.
Operator: The next question is from attendee joined via phone.
Unknown Attendee: I have a couple of questions on -- related to growth outlook, if I may. First of all, I've seen that in a number of locations, be it Russia, Serbia, Croatia, you had been facing somewhat negative regulatory environment, which affected both fees as well as NII development. And I'm wondering what do you think, what the future holds in those countries and maybe some others where the credit growth is pretty high like Bulgaria. What do you think in general, the regulations, how that's going to affect the growth going forward? And second question also related to growth is on Slovenia. Probably if I'm seeing right, your year-to-date loan book growth after the merger is somewhat falling behind major competitors, I believe. So if you could comment how you're going to, in a way, fix the situation and come back to a more growth-oriented strategy there?
Laszlo Bencsik: Well, yes, I mean, there have been some macro prudential measures, Russia, Uzbekistan. But this -- we usually welcome macro prudential measures because make lending kind of more rational business, and it discourages players who have, in some cases, very different risk appetite than we have and can kind of do harm to the market. That can -- that happens, right? So macro prudential measures, we are usually happy with, even if they slow down somewhat the overall growth of the market and so on, but we welcome them. Now Serbia was different. In Serbia, the measure was that we -- it's a forced lowering of the consumer loan APRs, right? We -- all the banks were strongly suggested to voluntarily decrease their APRs, the interest rates of consumer loans to clients who have less than the average wages and income. And that's very harmful. So that's a distortion to risk-based pricing. It's a kind of rude interference into the market conditions. So it's a kind of mixed basket. But in Serbia, this change, it's not going to slow down lending. It's going to boost lending, obviously, right, because it means that we have lower rates potentially higher demand. Now Slovenia, I mean, Slovenia, the problem is pricing. Some of our competitors and unfortunately, not exactly the small competitors follow pricing strategies, which we -- which are very difficult to understand, put it this way, what was the economic rationale behind that. And this is a challenging situation. Well, we try to do our best. I mean the other thing that -- I mean, this is a country where we recently got a new CEO of a very dynamic and very experienced colleague who has very ambitious targets and aspirations. But even with this comment, I think kind of 6% year-to-date growth, I mean, annualized 8%. It's actually a well-developed Eurozone country. I don't think that kind of 8% annualized run rate growth rate is not kind of acceptable in a way in a Eurozone mature market. Having said that, again, this is probably the country where we have the biggest challenge in terms of pricing behavior of some of our competitors.
Unknown Attendee: Yes. Understood. May I also maybe revisit the case for subsidized mortgage lending in Hungary. During the conference, I just want to confirm if I got it right. I think a figure of around 20% annual rate was mentioned. And I just wanted to specify, did you allude to the segment or subsegment of Hungarian subsidized mortgage outstanding? Or was it the figure which was related to Hungary for all outstanding loans? I presume you referred to mortgage segment, but I'm not sure whether that was the total mortgage segment or the subsidized mortgage segment only.
Laszlo Bencsik: Yes. As I said it, I think, today as well that the current run rate without this home start program was annualized 12%. And our original expectation and early experience regarding demand suggests that this 12% run rate can improve. And I said, yes, that it can be for the next kind of till the end of second quarter next year, at least, can go up to high teens, even close to 20%. We don't know exactly, but it's very clear that acceleration should be expected. And again, as I shared with you, the early data do support that previous assumption. And this number refers to mortgage loans altogether, mortgage volume growth in Hungary, not just the subsidized but total.
Operator: The next question is from Simon Nellis, Citigroup.
Simon Nellis: Just a few questions from me. I guess the first one would just be on risk cost and how you feel about the outlook going forward. I think risk cost has been a bit more elevated than in earlier quarters, last 2 quarters. So just would be interested in hearing your thoughts about any imminent risks or lack of risks going forward. And then my -- maybe let's start with that one. I have 2 more, if that's okay.
Laszlo Bencsik: Yes. I mean, if you look at the third quarter risk cost of HUF 57 million, HUF 29 million came from Russia, and that's just related to the I mean, the nature of the product there. We do consumer lending, it's growing and it's a high kind of normal risk cost level. And I mean profitability is really strong there. So it's not a concern at all. And other than that, we increased provisioning in Bulgaria. It's related to consumer loans as well primarily. But it's, again, within the expected range and quite okay, and we have strong loan growth. And we actually had a corporate -- actually 2 corporates in Uzbekistan, which resulted in another couple of billion more. So these are the kind of focus points of the provisions what we created. We don't see reason to be worried or we don't see a change in the kind of underlying portfolio quality dynamics anywhere. So no.
Simon Nellis: Okay. And could you update us on the core banking system upgrade and if there's any implications for cost growth going forward there on that front?
Laszlo Bencsik: Cost growth. No. We are actually doing very well. So the first 2 products, we -- I mean, very niche products, and it's kind of small volumes, but they actually started to operate. So far, so good. So we are progressing according to plan. we are happy with the vendor. We are happy with the system. I mean, it's a lot of work in the problem with core system replacements that is the positive business impact is not that obvious, right, because you typically don't have a whole range of new functionalities. It's just a simpler and more efficient and easier to develop environment in a more sustainable environment. So no, we don't expect cost to increase due to this at all. And in a kind of midterm scenario, there might even be over -- I mean, we expect a kind of overall reduction in the total cost of operating this environment. But I mean, usually costs we like to talk about when we manage to reduce them. So this is -- but the expectation here is not that we are going to have a huge peak in the OpEx in Hungary because we introduced the system. No, that's not the case. The extra effort, extra expenditure and cost, which is involved with the core banking system replacement, it's already there in our cost structure this year. So the full team is engaged. No additional cost increase. And hopefully, midterm, when we are done, there might be some improvement in the cost structure even.
Simon Nellis: And then just one last one on me on capital return. So I think you have an ongoing buyback. If that buyback completes before the year-end, would you do another one? Or would we expect some new news on capital return only with the full year result?
Laszlo Bencsik: There's no -- we haven't decided on this. But I mean, we seem to be strong in capital generation. And if you ask me, the share is still undervalued. So I'm quite supportive personally to continue the program. But we are not close to the end. So we are only -- there's still -- we brought back HUF 88 billion, I think. And so there's still quite some to go.
Operator: The next question is from Gabor Bukta, Concord Securities.
Gabor Bukta: I have 2 questions. First of all, just a follow-up on capital allocation. So I think you have executed around 60% of the current share buyback program. And if you won't finish it until the year-end, is it possible to extend it? Or what's going to happen with the remaining shares? Because I'm a bit concerned about how you can execute by the year-end because the liquidity of the stock is relatively low versus what you should buy back on the market? And the second question is regarding the provisions, but not on loan provisioning rather than on the Russian bond portfolio because as far as I know as I see the provisions you created for Russian bonds amounted to HUF 97 million by the end of the quarter and stopped setting aside any provisions for these bonds. What is your strategy? And once you think you created any provision for this bond, how would you see when you ref those provisions of the coverage?
Laszlo Bencsik: Yes. I mean the extension of the program is possible, but it requires supervisory approval. I mean, given the level of capital adequacy and all the numbers around our performance, I don't see why this would not be given if we were to ask for it. So yes, it is possible, but it requires approval. Indeed, this kind of 79% coverage on these bonds, which majority of these bonds are actually paying regular interest. That's a question. We increased this coverage based on the very firm requirements of our supervisor. So this is conservative. And to be honest, I don't know. I mean this reflects the current view. There will be an event in early December, the first of the bonds, which are kind of performing at the moment, we have a repayment date. And so this is going to be the first principal repayment. And if this happens without any problem, then -- and we don't see any -- we don't foresee any problem sir. So if it does indeed happen, then I think that's going to be a kind of trigger point where we have to discuss with our supervisor if they want to change or don't want to change their view on the required level of provisions or required level of conservativeness on the -- regarding the these bonds. So I mean -- and this is just assuming the status quo. Obviously, if this terrible war ends and the sanction environment potentially changes, then there's, I believe, an even bigger room to release these provisions. But today, I mean, the official answer is that this is the level what we decided conservative enough to reflect the situation and to respond to our supervisors' requirements.
Operator: [Operator Instructions] the next question is from Máté Nemes, UBS.
Mate Nemes: I have just a few questions left. The first one would be on corporate lending on Slide 8. I heard you clearly that this might be the green shoots we're looking for in terms of the turnaround in corporate lending, the 5% year-to-date. Can you talk a little bit about the nature of the corporate lending here? Are these -- is this essentially pent-up demand for investment type of loans or we are not quite there yet? That's the first one. The second question would be on growth of the various countries. It's clear you're seeing really high loan growth in a number of markets, including Bulgaria, including Russia, including Hungary. Can you talk about perhaps the mix effects you're expecting both in terms of top line and bottom line in the next few years? What sort of weight do you feel comfortable with for one or the other operating countries that are currently showing high growth? And the last question would be on the cost/income ratio guidance. I think you've been quite clear that the FX adjusted organic performing loan volume growth north of 9% is basically not a problem, and that's just a conservative guidance. Is it also the case for the cost/income ratio? Or shall we expect the usual sort of strong seasonality in the cost base in Q4, and we could see that 39% pro rata number deviate materially?
Laszlo Bencsik: The corporate -- the large corporate growth is not investment driven. That's mostly working capital, to be honest. And that's -- so we don't see a big new investment cycle coming. There's still a potential upside. And I don't think this is going to happen in the next 6 months. But at least working capital demand is getting there. And where we see actually more fundamental growth is the micro small segment, which is kind of -- and these are the typical kind of small Hungarian mid-caps, put it this way, which are more consumption-driven and more kind of retail oriented. There's actually new investment on their scale, obviously. And there's kind of capacity increase as well in line with the strong growth in consumption. So I think in the micro small segment, there's underlying fundamental, I think, improvement. On the larger corporate, it's not yet a new investment cycle. Now this mix effect, again, I mean, there are 2 clear pockets or segments where we expect acceleration. It's Hungarian mortgages and we expect consumer loans, right? That's clear. Other than that -- and Hungarian corporates started to grow after kind of 2 years of kind of 0 growth. And Ukraine started to grow as well, which was, again, not growing much or actually declining in '22 and then kind of flat '23, '24 and started to grow this year. So this now seems kind of strong across the board. And if you further adjust with Hungarian mortgages for the next year and for Ipoteka consumer loans, if you just kind of -- you increase this year-to-date to the run rate, the quarterly run rate, then I think you got a picture which reflects the current situation. And I don't -- and I don't see why there should be big shifts in the mix, except when the -- if the war ends, if the war ends, then Ukraine can be substantially stronger. I mean there will be a huge opportunity then for -- and that opportunity will only be kind of constrained by our risk appetite. So I think this is the kind of potential further structural changes in the future should the war finally end, which I hope is near. Cost-to-income ratio, I think the usual kind of seasonality can be expected. So the rate will be somewhat more -- the cost-to-income ratio will be somewhat higher than the first 9 months. But we already improved the guidance because we originally expect -- the original guidance was higher than last year. Now it's around last year. I mean, we try to do our best and not to have too much seasonality, but some seasonality is actually quite natural. So yes, somewhat higher than 39.3% is realistic.
Mate Nemes: Got it. That's very helpful. Can I just follow up on the second question on the mix effects and very, very helpful color there. Do you see any areas where you feel like this or the other markets may be running too hot or certain product groups and that perhaps might not be sustainable at these levels beyond the next 2, 3 quarters?
Laszlo Bencsik: The last 3 years, the kind of fastest growing was Bulgarian mortgages, and that's actually quite a ride, what we have seen there. And there came macro prudential measures, which somewhat calmed down, but not too much the growth. So this is a question, and we expected slowdown this year and the growth rate actually exceeded expectations. So that's -- I think if you look at Page 11 and the kind of across the group growth rates, it's Bulgarian mortgages where I think it would be natural to slow down.
Operator: The next question is from attendee joined via phone.
Unknown Attendee: Given the credit market running quite hot and spreads level being quite tight, are you considering AT1 issuance? Or is that a possibility only if M&A opportunities come up down the line, as you suggested in the past?
Laszlo Bencsik: Issuance of?
Unknown Attendee: AT1 additional...
Laszlo Bencsik: AT1. No, no. I mean, AT1, again, this is the -- our earmarked reserve for a potential big acquisition, right? So if a potential -- if a big acquisition happens, then we issue.
Unknown Attendee: Okay. I thought maybe given where spreads are and different players doing the AT1, it could have been a good timing also for you, but it seems like not. And for next year, maybe in terms of funding, would it be every currency euro? Or I mean, you talked before about diversifying your investor pool, et cetera, et cetera, and you currently have deals with different currency out there. So just wondering.
Laszlo Bencsik: We are typically opportunistic between dollar and euro. And we -- as you see, we have started to open up to Chinese yuan and so far offshore. But we always swap back to euro. So whenever we issue FX on a group level, we swap back to euro because that's kind of one of the core balance sheet currencies of the group.
Operator: [Operator Instructions] As there are no further questions, I hand back to the speaker.
Laszlo Bencsik: Thank you very much. Thank you for participating. Thank you for your very good questions and for your interest. I wish you all the best, and I hope you join us when we present the annual results early March next year. Thank you. Goodbye.
Operator: Thank you for your participation. The first 9 months 2025...