Good morning and welcome to Banco de Sabadell's third quarter 2022 results presentation audio webcast. As in previous occasions, our CEO, César González-Bueno and our CFO, Leopoldo Alvear, will present the main highlights and details of the commercial and financial performance of the bank in the quarter. The presentation will be followed by a Q&A session. We've scheduled around one hour for the whole session. Let me now hand it over to César González-Bueno.
Good morning, everyone and thank you for joining us for Sabadell's third quarter results presentation. As usual, let's start by summarizing our most recent performance. Commercial activity remains strong across most of our core segments. New lending volumes keep growing steadily on a year-on-year basis. New mortgages lending grew by 7% in the first three quarters of 2022 versus the same period in 2021. New business lending grew by 6%. NII also grew in the quarter, posting a quarterly growth of 7%, driven by a higher customer spread and by ALCO contribution. Leo will explain later in more detail. Core banking results continued to rise in the quarter, mainly supported by core revenues, which include NII and fees. Hence, this quarter, we are once again increasing our profitability.
Our net profit year-to-date reached EUR 709 million and has almost doubled on a year-on-year basis. Our return on tangible equity reached 8%. With regards to solvency, we continue to build up our capital ratio. Our fully loaded Core Tier 1 reached 12.52%. Finally, I would like to announce that the board has approved increasing the dividend payout for the year to a minimum of 40%. The board has also approved the distribution of an interim cash dividend of EUR 0.02 per share to be paid at the end of December. Let's look at these results with a bit more detail. Starting with performing loans in slide five, we can observe the usual third quarter seasonality in the evolution of performing loans, which decreased by close to 1% in the quarter.
Despite this slight decrease, volumes keep growing on a year-on-year basis, reaching a solid 2.9% growth rate. Looking at the detail by geographies in the last 12 months, volumes in euros have grown both in Spain and in the U.K. In other international geographies, volumes in euros have increased by 9.9% year-on-year, although they have decreased by 2.1% under constant exchange rates. This is mainly due to the appreciation of the US dollar. The evolution of performing loans volumes by geography is totally aligned with our strategy and I will elaborate a little bit more on this later. At the right-hand side of the slide, you can see that on-balance-sheet funds were almost flat in the quarter, while off-balance-sheet funds were negatively affected by financial market volatility and decreased by 2% in the quarter.
On a year-on-year basis, total customer funds grew around 1%, driven by on-balance-sheet funds. On slide six, if we review the commercial activity in Spain, new mortgage lending in the third quarter was impacted by the expected seasonality and decreased by 2% versus the all-time high figure reached in Q2. On a year-on-year basis, new mortgages lending grew by 7%. In terms of stock, our market share of mortgages as of June 2022, which is the latest available data, decreased by 1 basis point versus December 2021. This decline occurred in the first quarter of the year when we focused on managing prices versus volumes in the context of rising interest rates and high competitive pressure on prices.
However, pricing in the Spanish mortgage market is normalizing and our market share of new mortgage lending increased from 6.5% in Q1 to 6.9% in Q2. Moving to consumer loans, new lending increased by 1% quarter-on-quarter and by 18% year-on-year. Our stock market share of consumer loans as of June 2022 was up by 18 basis points versus December 2021. On slide seven, new protection insurance premiums were down by 16% in the quarter impacted by seasonality. On an annual basis, we posted a 7% decrease. The evolution of protection insurance premiums is heavily affected by life insurance premiums originated together with mortgages. As we have explained in previous results presentation, we are shifting our commercial approach to life insurance.
We are moving from a single premium insurance fully paid by the customer when contracting the mortgage to yearly renewable premiums throughout the mortgage term to maturity. This results in a lower upfront payment by the customer, which is better for them but also will provide more stable results over time. Our market share of life insurance premiums as of June reached 8.7%, decreasing by 71 basis points versus December 2021, as it is impacted by the commercial approach I just explained. Moving to mutual funds in the lower part of the slide, assets under management were impacted by market volatility and decreased by 2% in the quarter. Although net inflows in the first nine months of the year are below those in 2021, the evolution in the third quarter was positive when compared with the market.
Our market share of new inflows in Q3 was above 10%. In slide eight, we can observe that payment-related services continued to grow strongly. Card turnover increased by 5% quarter-on-quarter and by 17% year-on-year. Card turnover in Q3 reached an all-time high and our market share increased by 4 basis points in the year. Regarding payments processed through our point of sale devices, quarterly turnover increased by 12% quarter-on-quarter and by 33% year-on-year. We also reached a new quarterly record in this business line. Our market share of point of sale turnover increased by 66 basis points year to date and stood at 16.7%. Moreover, our market share in terms of number of point of sale devices has reached 20%. 1 out of 5 point of sale devices in Spain are Sabadell's.
Finally, it is important to highlight that not only we are growing our market shares in point of sale turnover, we are growing our fees at an even higher pace than the turnover. In other words, we are improving our margins while we keep growing the business. Regarding business banking in slide nine, origination of loans and credit facilities decreased by 42% quarter-on-quarter, impacted by seasonality. This was somehow expected, as we can observe sharp decreases in the third quarter every year. On a year-on-year basis, however, it increased by 6%. On the other hand, working capital financing continued to perform well, staying flat in the quarter despite seasonality and posting a 29% increase year-on-year. This is another sign of strong activity in the economy.
Regarding our market share of total business lending stock, this has increased by 7 basis points year to date. In slide 10, we analyze our performing loan book ex-TSB. In Spain, on the left-hand side of the slide, quarterly evolutions is driven by growth in lending to individuals, which includes both mortgages and consumer loans. Lending to SMEs and corporates remained flattish, driven by seasonality and by the fact that companies are, to some extent, delaying long-term investments in the current uncertain macroeconomic scenario. However, the SMEs and corporates loan book grows by 4% on a yearly basis. Other lending in Spain was impacted by the reversal of Social Security payments in the quarter, which is an expected seasonal effect.
As you can see, we have managed to grow our loan book on an annual basis across all segments, resulting in a 2.4% increase. Regarding our other international businesses, on the right-hand side of the slide, we have grown performing loan volumes in the quarter. This growth is more modest if we exclude the impact of currency exchange evolution. As I said before, this is aligned with our strategy. When we presented the strategic plan in 2021, we explained that our strategy was to decrease our exposure in these other international geographies, maximizing our return on capital. However, during the last year and a half, Mexico and Miami have improved their performance and as of today, they are delivering a solid contribution to the profitability of the group.
In this context, our approach has evolved and we are currently willing to grow in Mexico and Miami, of course, without losing focus on profitability. Moving on to TSB in slide 11. New mortgage lending increased by 25% quarter-on-quarter as a consequence of high application volumes in the second quarter. Over the year, we have seen some volatility in our market share of new mortgage lending, as we explained in our last webcast. At the lower left-hand side of the slide, you can see that our market share of new lending peaked by October 2021. As you know, during the first part of 2022, there was pressure on pricing dynamics in the mortgage market in the U.K. In this context, TSB managed mortgage origination for margins instead of for volumes, which resulted in a lower market share of mortgage origination.
Nevertheless, our origination market share in recent months is again above our stock market share. Finally, in the lower right-hand side of the slide, the stock of mortgage lending grew by 0.6% in the quarter. Year on year, the stock grew by 5.6% and our market share increased by 7 basis points. Moving to slide 12. Looking at TSB's financials, we can see a remarkable performance across all P&L lines. TSB has achieved a net profit of GBP 42 million in the quarter, which translates into GBP 103 million year to date. NII and fees show sustained growth, while costs exhibit a downward trend. This positive dynamic drove TSB core results up by 27% on a quarterly basis and by 81% year-on-year.
Provisions and impairments are growing significantly in the first nine months of the year but this comes as a result of write-backs in 2021 of COVID provisions that TSB had booked in 2020. Profit before tax posted growth above 52% year-on-year. Net profits grow by 6.4% due to the impact of bank levies, both in 2021 and 2022. In 2021, TSB was positively impacted by the change in bank levy in the U.K., which had a positive impact of GBP 20 million in the valuation of deferred tax assets. In 2022, the bank levy had a negative impact of GBP 13 million in the valuation of DTAs. All in all, TSB's return on tangible equity in Q3 in pounds stands close to 8% above Q2 return on tangible equity.
Finally, in slide 13, I would like to summarize the financial performance that Leo will explain in more detail later on. All the main P&L lines made a positive contribution to improving our net profit. NII grew by 7.4% on a quarterly basis and 6.2% on an annual basis, underpinned mainly by higher customer spread and ALCO contribution. Fees and commissions also performed remarkably well thanks to the post-COVID business recovery, while recurring costs continued to trend downwards thanks to the restructuring plans undertaken in Spain and in the U.K. As I pointed out at the beginning of the presentation, the evolution of core results is very positive, improving by 13.6% in the quarter and 21.1% year-on-year. Provisions decreased by 5.9% quarter-over-quarter and by 22.1% year-on-year.
The year-to-date net profit stood at EUR 709 million and the return on tangible equity reached 8%. Finally, our Core Tier 1 capital ratio stands at 12.52%. We continue to build capital organically, even after increasing the dividend payout, as explained earlier. With this, I would like to hand over to Leo.
Thank you, César and good morning, everyone. Moving on to the financial results, I would like to start by emphasizing that we have had another quarter of positive results, reaching, in some cases, even the highest historical level of that line, like for example, core results. Net profit in the quarter reached EUR 317 million, the highest level since TSB acquisition back in 2015. Which, when added to the former first half results, drove the first nine months' net profit to EUR 709 million. This amount is almost double than that of the same period last year. Going through the most relevant lines, NII growth has been strong in the quarter and is accelerating, delivering an increase of 7.4% Q-on-Q and 6.2% in the first nine months of the year, supported mainly by higher customer NII.
This, together with the better-than-expected performance and fees, drove core banking revenue to grow by 6.6% in the quarter, accelerating the year-on-year growth to 5.7%. It was 3.8% in Q2. Recurring costs continued to reduce in the first nine months of the year, specifically by 3.8%, excluding the EUR 301 million of non-recurrent restructuring costs registered in the third Q of last year. Q-on-Q, costs increased by 1.2%, driven by general expenses and exchange rates. The combination of core revenues and costs drove our core results upward to double digits. This is 13.6% in the quarter and 21.1% year-on-year. This, together with a reduction of cost of risk, drove the evolution of net profit figures. This quarter, the P&L was clear in terms of one-offs.
TSB, on the other hand, continues increasing its positive contribution to the group, with EUR 39 million registered to the group net profit in the quarter, while the contribution in the first nine months stood at EUR 93 million. To sum up, these are, again, a solid set of results with a healthy performance in all relevant lines, allowing us to keep improving profitability. We will now go through different items of the P&L in more detail. Starting with NII in slide 16. Group's NII increased by 7.4% on a quarterly basis, which shows good momentum and we believe this will continue growing in the coming quarters. On the top right-hand side, you can see the bridge of NII evolution in the quarter.
Moving from left to right, customer NII increased remarkably, contributing EUR 44 million, underpinned by higher yields, the start of the repricing of Euribor and higher loan volumes. The second positive driver of NII has been the contribution of the ALCO portfolio, which has brought EUR 27 million of additional NII, as we keep rebuilding this portfolio gradually while benefiting from higher yields. This has been partly offset by the increase of wholesale funding, which have increased EUR 13 million, with both items adding a net EUR 14 million in the quarter. The funding cost evolution reflects the impact of EUR 1 billion of cover bonds issued in May, as well as EUR 500 million of senior non-preferred debt issued in September.
We have an additional day count in the quarter and represents an impact of EUR 6 million and the rest of the evolution is small and is explained mostly by TLTRO. Since I assume this is going to be a hot topic, let me explain how we are accounting for these elements. On the one side, during the quarter, we have accrued the cost of TLTRO as the average deposit facility until the end of September. Considering deposit facility rates started to increase in July, we have accrued a cost of TLTRO at an average rate of negative 43 basis points. This is, it has represented a positive revenue of 43 basis points for the bank in the quarter.
On the other side, this cost of TLTRO, positive in the quarter, has to be combined with the rate at which excess cash is deposited at the ECB. This quarter, the average rate has been close to 0, therefore, it has represented no income. While it should be positive in the following quarters, all things being equal. All in all, the net contribution of TLTRO to NII in the quarter, combining both sides, amounted to EUR 35 million. This is EUR 3 million less than the contribution in Q2. Finally, I would like to highlight the evolution of both our customer spread and our NIM, both starting to reflect the impact of higher rates. As mentioned earlier, we believe that this is a trend that shall continue in the coming quarters.
Moving to the following slide and continuing with NII expectations for the end of the year, let me highlight that NII has kept improving its year-on-year performance throughout the first three quarters of 2022. We expect NII performance for the last quarter of the year to remain healthy and strong. Therefore, we feel comfortable to further raise our 2022 NII target to around double-digit. The drivers that support this upgrade on guidance are basically, in the first place, higher loan yields, with customer spread currently at 2.34%, outperforming our assumptions. Therefore, the benefit of current and further rates repricing, especially Euribor in all geographies, along with the new lending with higher front yields, will keep on improving. Secondly, loan volumes continue to grow year-to-date at low single-digit, despite the increasing complexity in the macro environment.
Finally, we can continue to reinvest further in the ALCO portfolio at higher yields than previously expected. On the other hand, there are also some headwinds that, in any case, will be more than offset by the previously commented positive drivers. Increasing wholesale funding costs, the end of the contribution from volumes at negative interest rates on corporate deposits and finally, let me highlight that we have assumed that TLTRO conditions remain as they currently are until December, because we have no further information. With these current TLTRO conditions, NII should grow at double digit. In any case, if TLTRO conditions are changed, NII will still grow at high single digit and in any case, at better rates than the current evolution for the six months. For the first nine months of the year, which stood at 6.2%.
Now leaving NII line to one side and moving on to fees. This quarter, fees have increased by roughly 5%. All main fee-generating business lines contributed positively to the quarter growth, particularly service fees, good performance, which was supported by commissions related to sight accounts and especially to payments and cards, as we had a spike in transactions during the quarter, especially boosted by the summer season. Also, despite some negative seasonality in corporate and SME volumes in the quarter, credit risk fees made a positive contribution, driven by contingent risk operations. Despite the volatility in capital markets, asset management fees also contributed positively to the quarter. Now when comparing on a year-on-year basis, fees increased by 4.5%. This year-on-year growth is underpinned by positive growth rates, again in all main fee-generating business lines as well.
In any case, despite this high year-on-year evolution, we stick to a low single-digit growth guidance, as this year we believe that performance fees related to AUMs, typically recorded in Q4, shall be lower than last year. Moving on to costs now on the following slide. Our current cost base was down by 3.8% on an annual basis, while it shows a slight increase on the quarter, rising by 1.2%. This increase in costs is mostly driven by our sourcing costs and advertisement, as well as exchange rate of the U.S. dollar and the Mexican peso. In any case, this negative impact of exchange rates on costs is more than offset by the positive impact on revenues, obviously.
I would like to highlight that the reduction of the cost base, driven by the efficiency plans deployed, together with this steady increase of income, can be observed on the evolution of the efficiency ratio, showed at the right-hand side of the slide. Our efficiency ratio, ex-TSB, has gone from almost 62% two years ago to circa 50% this quarter. Looking forward, our efficiency level should keep improving due to the expected growth in our income lines. On the following slide, we take a look at core results. This is NII plus fees minus costs. This quarter, core results achieved the highest quarterly level ever. Also, when comparing 2021's quarterly results, we can see a very positive evolution with growth rates ranging between 16% and 25%.
In this context, core results have increased by more than 13% in the last quarter, driving the annual variation to more than 21% at group level. On the right-hand side, you can see the bridge of core results evolution year-on-year. The increase in these metrics is supported, again, by remarkable positive contribution from all lines. This is EUR 159 million of NII, EUR 48 million in fees and EUR 88 million in cost savings. Going forward, again, we expect core results to improve in the coming quarters on the back of growing core banking revenues. In slide 21, we cover credit cost of risk and the remaining elements between pre-provision profit and profit before taxes.
The group credit cost of risk at the end of the third quarter stood at 39 basis points, while total cost of risks stands at 55 basis points. Both figures have remained stable QOQ and performed in line with our guidance. Taking a look at the breakdown of total provisions on the top right-hand side, if we follow the graph from left to right, we can see that we booked EUR 158 million of loan loss provisions in the quarter, reduced versus Q2, which shows a sign of no increased deterioration in our books. We also booked EUR 5 million for changes on foreclosed assets, EUR 33 million of NPA management costs, which remain stable versus Q2 figures. Finally, other provisions, which are mainly related to litigations, stood at EUR 38 million.
This line is exposed to some volatility and this quarter we have recorded some non-recurrent provisions. All in all, credit cost of risk is in line with our guidance, which is in the range between 2019 and 2021 levels, means somewhere between 32 and 49 basis points. Finally, in Q4, we will review our macro scenarios, as we always do, which could imply a top-up in provisions but in any case, we expect total cost of risk to remain below 60 basis points for the year. Moving now on to the next section, I will walk you through asset quality, liquidity and solvency. Before reviewing these topics, I would like to stop two minutes to review the composition of our loan book and how it breaks down into sub-portfolios of products.
It is a very high-level picture but it may help to have an idea of the weight of each portfolio and some of the key features. Looking at the left-hand side, let me point out that half of our loan book is made up of mortgages to individuals with a similar split between Spain and the U.K. 40% corresponds to SMEs, including within that universe the self-employed and micro-enterprises. These are companies with a turnover below EUR 0.9 million. Lending to public administrations and consumer loans account for a small proportion. Within TSB, the mortgage portfolio is a very granular one. It shows prudent risk metrics, such as a low weighted average loan-to-value of 53% and an average mortgage size of GBP 130 thousand, while the average loan-to-income ratio stands at 3.4 times.
Mortgages in Spain, our average new mortgage has a size of EUR 82,000. Almost 50% of the stock has been amortizing for more than 10 years, while the most recent part of the portfolio represents 52% of all the mortgages. This portfolio have been mostly originated at fixed rate. 75% of the new mortgages granted after 2016 were granted at fixed rate and its weighted average loan-to-value stands at 64%. In other words, this reflects a portfolio that has been originated under robust credit standards and which is a vast majority of customers won't be impacted by higher interest rates. Focusing on SME and corporate portfolio, SME employed in micro-enterprises represent a minor part, with only a weight of 4% of the overall loan book.
Looking at the whole business segment, the average longevity of more than 10 years of the overall SME and corporate segment gives us an idea of the long-lasting relationship with our customers, while the average loan duration is below 2 years. Finishing with consumer loans, this portfolio is very granular, with an average size of 8,000-8,500 EUR and more than 95% of the new lending is being originated among Sabadell or TSB existing customers. This is with information of these customers and with the bank being able to perform a rating on these loans. In the new slides, we show the evolution of our problematic assets. Let's start with P&L. We start with NPLs on slide 24.
NPLs increased by EUR 100 million in the quarter, which reflects some seasonality in the recovery activity in the month of August and no NPL portfolio disposal this quarter. Accordingly, the NPL ratio grew by 9 basis points to 3.4%. Total NPL coverage remained stable at 55%. Our stage three coverage is 39% at group level and 42% at ex-TSB level. This is due to the fact that TSB's portfolio is mostly over 90% made up of mortgages, as seen earlier and thus demands less coverage as it holds real estate guarantees. Moving on, in terms of foreclosed assets, it is worth noting that the stock declined by EUR 68 million in the quarter to just slightly over EUR 1.2 billion. The coverage ratio for this portfolio remained unchanged at 39%, while 95% of foreclosed assets are finished buildings.
If we consider both NPLs and foreclosed assets, total NPAs, the amount remained broadly stable at around EUR 7 billion, while the total coverage remained steady at 52%. Therefore, the gross NPA ratios stood at 4.1, 4.1% and 1.9% respectively, with a stable Q-o-Q evolution. Moving now on to liquidity. The group ended the quarter with an ample liquidity position, reflected in an LCR of 217% or EUR 53 billion, both of high-quality liquid assets. Loan to deposit ended the quarter at 97%, so all our loans are more than funded by our deposits. In terms of central bank funding, it remains unchanged from previous quarter, as we currently have EUR 32 billion of outstanding TLTRO III and GBP 5.5 billion outstanding under the TFSME.
Regarding our credit ratings, we would like to highlight that last week, S&P upgraded our issuer credit rating. This is our senior unsecured rating to BBB. Along with this long-term rating improvement, the agency also raised our short-term rating. Turning now to slide 27, we can see our current MREL position. As of today, we are compliant with current MREL requirements based on both total risk-weighted assets and total leverage ratio exposure, as well as the subordination requirements. We are already meeting the 2024 requirements and our funding plan aims to keep on maintaining capital buckets full and an MREL buffer. In this regard, let me highlight that we issued EUR 500 million of senior non-preferred debt this quarter. Finally, as per our capital position, we continue to generate capital organically as our profitability improves.
Our fully loaded CET1 ratio stands at 12.52%, having increased by four basis points in the quarter. When we look at the quarterly evolution, first, we can see an organic capital generation of 21 basis points, assuming an accrual of 31.8% dividend payout in cash. However, to include the aforementioned increase of dividend payout ratio to a minimum level of 40%, as previously mentioned by César, we have incorporated a decrease of seven basis points to adjust the CET1 ratio for the first nine months of the year. Secondly, the fixed income portfolio fair value reserve adjustments had a negative impact of six basis points as a result of the higher bond yields observed in the quarter.
Finally, the evolution of RWAs was marginally negative in the quarter, impacting by 4 basis points as the volume growth mix was tilted toward higher density loans. From a regulatory perspective, CET1 ratios stood at 12.65% on a phase-in basis, which implies an MDA buffer of 418 basis points, comparably above our target of at least 350 basis points. Finally, in terms of shareholder value creation, tangible book value per share increased by more than 7% year-on-year, including the distribution of cash dividend of EUR 0.03 per share approved in our last annual general meeting at the end of March. With this, I hand over to César, who will conclude our presentation today.
Thank you, Leo. Just a few closing remarks. Firstly, commercial activity in the year continues to be robust. We have seen no slowdown in the Spanish economy, nor our customers' activity aside from usual Q3 seasonality. Second, we are upgrading our NII target for this year to double-digit growth, driven by the rising interest rates environment. Our core results continue to show positive evolution underpinned by rising NII, strong fee growth and a significant cost containment effort. These results have improved our profitability, achieving a return on tangible equity of 8% for the year. In terms of capital, we have consistently built capital throughout the year and are fully loaded. Quarter one stands at 12.52%.
Finally, as mentioned before, the board has approved an increase of our dividend payout to a minimum of 40% and the distribution of an interim cash dividend of EUR 0.02 to be paid in December. Thank you very much. With this, I think we open the questions.
Thank you, César. Let's now begin the Q&A session. Although you will all receive instructions on how to request a question and how to unmute the system, please let me remind you that you need to press star nine to request a question and star six to unmute your system. You can actually press star six as soon as you hear your name from the operator. Operator, could you please open the line for the first question?
First question is coming from the line of Maksym Mishyn from JB Capital. Please go ahead.
Hi, good morning. Thanks for the presentation. Now I'm gonna ask the questions. I have three. The first one is on the repricing of loan book. I was wondering if you could tell us how much has already repriced and give a little bit more color on the repricing mechanics to understand what to expect for the coming quarters. Then the second question is on the recent news in Spanish press regarding the changes to good practice codes and what potential impact do you expect on your mortgage loan portfolio? Also, could you indicate the affordability rate for your mortgage customers? The last one on litigation. You mentioned there were some non-recurring provisions. How much of them were one-off and what are they related to? Thank you.
Thank you very much. In terms of repricing of the book, on a qualitative basis, I would tell you that it is necessarily progressive as we have seen 50% of the book is mortgages. These take time to reprice, because from the moment you make the offer, the prices have already gone up in the sense of that the high increase, the very rapid increase of interest rates, both in the U.K. and in Spain, have a lag there. There is discipline and therefore we are catching up. I think the market in general is catching up with the mortgages at an ever healthier speed and rate.
On the corporate book, I think, the pass-through on the asset side is very positive and we see that it is happening much faster than on t he mortgage book because of the nature of the business. On the liability side, we are not seeing pass-through. It's stable. I think that is significantly helped by the fact that there is liquidity in the market, that the banks are liquid. The loan to deposit is much healthier than in the past and also a sense of discipline from all the actors and certainly from our side. What we are doing is that we are increasing on the retail side and also on the SME side for customers that have a pressing urgency for higher rates.
What we are doing is basically offering guaranteed funds and that is being a quite successful commercial activity. I will leave afterwards time for Leopoldo Alvear to respond on the three questions. I will take the call now, if you think so. Okay. I think the jury's still out. There are being conversations between the administration, the ministry and the representative associations from the banking area. I think what is very important is to understand that, for a number of circumstances, the amount of mortgages that could potentially be at risk is not significant. That is for a very simple reason. 75% of the mortgages, I think, Leo explained that before. 75% of the mortgages in Spain, of the outstanding since 2016, 75% are at fixed rate.
What that means is that they will not suffer increases from the rates. Furthermore, the previous ones, the majority are previous to 2000 and 2011 and therefore, the amount of principal outstanding is really low. It's almost less than half than the other part of the book. Furthermore, what happens is that of these, a small percentage are vulnerable and from those, even when we do the further analysis, an even smaller portion are really at risk. Although there will be, logically, for the vulnerable with the high increase in interest rates, an impact, the percentage of that in our book, we believe it's very low. Therefore, that's the main driver, because we should do what is right for our customers.
With this said, the third question I leave to Leo and of course, point out anything you feel on the first two.
Thank you. The first one, it's the affordability ratio in mortgages in Spain. It's just south of 30%. It's high 20s, if you wish. On the loan book repricing, let me put a little bit more color on mortgages. Basically, they take about 12 months to reprice but it's important to take into account that they reprice with a delay of two months. In other words, mortgages which are repricing today in October are repricing to August Euribor. In other words, this translates into the fact that we have just started to reprice Euribor this quarter because Q2 mortgages were repriced to basically Q1 Euribor, which had not moved so much, you know?
Q4 should be fairly strong, because, for example, mortgages in November will start to reprice to a positive Euribor of 2.5-2.6% and certainly much more positive all due 2028, 2023. I think there was a last question. I'm not sure I covered everything, Gerardo.
Litigations.
On the one-offs, right?
Yeah.
Basically what we had this quarter, it's especially at TSB around GBP 20 million or EUR 20 million of litigations regarding basically customer conduct. Customer conduct, you know? Well, we don't expect any further charges in this regard, at least nothing sizable in the coming quarter.
Okay, thanks a lot. Operator, could you please give access to the next call?
Next question is coming from the line of Ignacio Ulargui from BNP Paribas Exane. Please go ahead.
Hi, good morning. Thanks for taking my questions. I have two questions. One, on the loan growth, on lending growth, what is a bit the outlook, how you are seeing corporate lending demand evolving from here? So we have seen a seasonal stop a bit in the quarter. Whether you would expect you have seen any sign of deterioration given the uncertain macroeconomic environment. The second one, if you could provide a bit of sensitivity in your IFRS model on provisions to the key macro assumptions like unemployment, GDP growth, so that we can just assess a bit better what should we expect in fourth quarter top-up, like you mentioned, Leo, over the presentation. Thank you.
Thank you, Ignacio. Leo, if you agree, I will take the lending growth and you go for the sensitivity.
Very good.
Okay. I think it is quite satisfactory to see that all the activity and the forward-looking indications of October are very healthy. That's why we maintain our low single-digit growth in volumes for the year. Year-on-year, it has been up to now at 2.9% but what we can see is that in mortgages in Spain, for example, simulations in October are similar to the ones of Q2 2022, where there was a very good generation quarter, no? On consumer lending, where we have a growth year-on-year of 18%, we are also seeing the strong activity maintained. You specifically asked about the corporates and SME book and what we see is that the new entry, the pipeline of new applications remains very healthy.
In October and therefore doesn't seem to indicate any, for the time being, any lowering of the activity and with this pipeline, I think we have a very good indication for the end of the year. In cards and payment services, we see also a growth that are not far away from this year-over-year average figures of 26%, no? You have to note that on Q2, we included the Social Security advance payment, which entailed EUR 600 million. So that's a seasonality effect. In mortgages in the U.K., of course, they were affected by the swap volatility and there was during some days of October a slowdown and even a stopping of the generation of new mortgages. But that is behind us as we speak.
In general, we see a strong activity and we can therefore maintain our vision for the year of single digit growth. But in general, we are positively impacted because we all thought that at the beginning of the summer, there would be a slowdown, that then it would be in September, in October, whatever. We're not seeing it yet. It might come because of the pressures on inflation and so forth but for the time being, not. This is together with higher front book yields, no? Which are happening and are yielding already initially because it will take time to go through the book, higher NII, no? As I said before, we are not seeing pressure on the cost of deposits, with the exception, as was mentioned also by Leo, on corporate deposits.
We were charging negative interest rates before and that will disappear. The activity is strong.
With regards to the IFRS 9 model provisions, no? Well, we're in the middle of budgeting, so I don't have an answer, a precise answer, of the outcome. In any case, these models have been working on the basis of three levers in the last few years or number of years, basically GDP. GDP, well, it's expected to be around positive for next year, so it's not going to be dramatic, at least, in Spain. Unemployment, which all the numbers that we see now of consensus also show a reasonable number for next year, basically to remain more or less where the levels are today. More important than the unemployment rate, in my opinion, it's the number of affiliates to the Social Security and we are at the maximum level ever.
The third lever has historically been real estate prices, no? I don't expect or we don't expect, real estate prices to go negative with this kind of inflation, no? Once all that said, there's a newcomer into the models, you know, which is inflation and this is something that we have not been working with in the last number of years, no? We need to include this assumption into the models and to see what's the outcome. On top of that, we will have to put some management intelligence and we may come up with a top-up. I don't know the number now. I don't know how much it might be.
Because of the evolution that we are seeing in terms of asset quality, because of the trends that we are seeing, because of the reviews that we are doing, as I mentioned before, total cost of risk for the first nine months stood at 55 basis points. In any case, even with this top-up, I don't expect anything extremely material to come in fourth Q, you know. That's why I guide it to be probably below 60 basis points for the full year in terms of total cost of risk.
Thanks a lot. Operator, could you please give access to the next question?
Next question is coming from the line of Carlos Cobo from Société Générale. Please go ahead.
Hi. Hi, thank you for taking my questions. Two questions and a quick one on TLTRO III, starting by this last one. You mentioned a guidance for NII being growing by double digits in the year or high single digits if the ECB changes the terms. Just wanted to understand how you're thinking about that potential change. Is it a way to stabilize the TLTRO III contribution to NII or you are embedding in that assumption no TLTRO III NII, combining both the funding yield and the asset reinvestment? Then in terms of pricing and volumes in the U.K., we're starting to see weakening mortgage applications in the US on the back of higher interest rates. How do you think about that for the U.K. market?
Because rates have jumped as well, primarily into next year. Are you anticipating falling mortgage volumes, falling mortgage production? It'd be interesting to know your thoughts about the strategy to pursue in the U.K. Finally, you mentioned that you wanna grow again in Mexico and Miami. If you could touch quickly on it. I know it's not very material but wanted to understand what's the strategy there, where are the targets. Thank you.
Shall I start with TLTRO III?
Yes, please.
Yeah. This is an easy one. The guidance that I gave, it's double digit with TLTRO III under the current circumstances. We don't know what's gonna happen in a few hours. In any case, high single digit without any contribution of TLTRO III in the third quarter. Okay. As per the pricing and volumes in the U.K., you wanna?
Yeah. I mean, the Q3 has been a very strange quarter. As you have all observed, politically, in terms of interest rates, all the events there have shaken up the market. At this point in time, we see again a normalization and it's difficult to give a forward-looking expectation in a very volatile environment. As we stand, we don't expect a major change but the foundations of this assertion in a situation in which there's so much noise in the market is difficult to assess. In any case, the stock of our book has continued to grow and our market share has started to grow again, as we showed during the presentation. As for Mexico and Miami, I don't think there should be any big hype here from my comments.
The only thing we are saying is that when we were defining the strategy in the very, very early stages, it was not as evident to us as a team that we would be able to grow and to increase our capital generation simultaneously. Therefore, we thought that the place where we could control the growth of our risk-weighted assets and therefore to take care and nurture our capital, would be more easily done outside of Spain than in Spain. That restriction is gone. As you have seen, our capital is growing healthy, in a healthy manner. Our P&L is growing in a healthy manner.
Therefore, the only nuance that we are introducing to the strategy is that we don't need to be as tight on the potential developments of Mexico and Miami but with no change in strategy, just a focus on what they are doing.
Thank you. Operator, let's please move on to the next question.
Next question is coming from the line of Alvaro Serrano from Morgan Stanley. Please go ahead.
Hi, good morning. Just a follow-up on U.K. Obviously, new mortgage rates are closer to 6% and the back book's probably below 2%. Have you done any analysis, I'm sure you have but anything that you can reassure us that the affordability, what pockets within your mortgage book in the U.K. could be vulnerable, in with that interest rate sort of delta that we've seen and maybe reassure us that that's not a big number? Or in that specific cohort that might be vulnerable, the LTVs or something that could give us some sense of framing the risk in the U.K. My second question is regarding the deposit pricing in Spain. At what point do you think you're gonna start seeing sort of deposit pricing increase? I know it's difficult to know but what's your working assumption?
Related to that, post TLTRO, you've got an LCR above 200% at the moment. What would that be post TLTRO repayment? Thank you.
In the U.K., I will pass it on to Leo, who among other things is a board member at TSB. The main thing is to tell you that all the simulations have been done all along with a 7% interest. The stress test on concession of mortgages has been done with 7% interest rates and now it has been increased even further. In terms of affordability, we think it's a very good book. Please, Leo.
Yeah, no, I agree. Moreover, I think the well, as we tried to explain before, the loan to values are fairly low. The product is completely different, mortgage product is completely different to the mortgages in Spain. The duration is fairly short, as you know, because mortgages are usually repriced. And therefore, there's a big rotation of the books among the banks. There's a big origination each year also because of this. Therefore, when we look at historically at cost of risk figures for the mortgage books in the U.K., not only in TSB but also in TSB, it has been extremely low. I mean, think, the highest peak that we've seen in the last, I would say 30 years in the market has been 8 basis points, no? So.
Along with this and because of the affordability ratios that we were doing on or to our clients, you know and we are doing, we don't expect a significant hike in terms of asset quality, nor in terms of cost of risk in this product.
Yeah. As you acknowledged, pricing and when we will see pressure on the liability side, it's very hard to predict. What we're going to see is a widening of the spreads in the sense that, no matter what, we think the speed at which we are going to reprice the asset book is going to be significantly higher than the speed at which we need to reprice the liability book. For the time being, we are seeing no pressure, as we mentioned before. The only thing that has changed is that we have gone from charging corporates for the deposits to not charging big customers for their deposits. Another thing I have to say is that the position is very different, certainly at Sabadell but in the industry in terms of liquidity.
We don't see the market becoming extremely active on remuneration. Our strategy, as I mentioned before, is to hold on. In any case, it depends on the speed and rise of interest rates, with just expanding. We will be very disciplined in the management of the liabilities. That has a lot of focus and this bank is very disciplined in execution. We are confident that we will do the right things.
If, in case it helps, it's different markets but taking advantage of my experience in the U.K., what we're seeing is that the pass-through to deposits has been much less than what we expected when we budgeted, you know, for example a year and taking into account the hikes in rates, you know and the speed of those hikes. Can that be translated to Spain? Well, I'm not completely sure but I think there's one thing that's pretty different to previous movements of rates, you know and that's the loan-to-deposit, you know. Banks in Spain have now loan-to-deposit, as we do, below 100%. In other words, all our loan books are funded by deposits, you know. In other words, we don't need volumes of deposits in order to keep on growing our loan books, you know.
We are not expecting huge movements or increases in the loan books because of our context and we're not seeing any kind of usage of savings so far on the deposit side. The loan-to-deposit ratios are being very stable. In this context, I think it's less likely that we'll engage in a deposit war or whatever we wanna call it, you know. We don't know when it's gonna come, we don't know how much we're going to raise. We'll probably raise but I think it's going to be a completely different environment than the one that we went through, I don't know, back in 2011, where loan to deposits were at 150% or 160%, you know. As per the LCR, yeah, we have an LCR of 217%.
In any case, we have liquid assets over EUR 45 billion, ex-TSB and we have a TLTRO III of EUR 32 billion, you know. So in other words, we have much further excess of liquidity than the TLTRO. We will assess in every quarter window whether it makes sense to repay in advance, depending on conditions and in any case, in our planning, we expect to have a management buffer above, obviously, the requirement once the TLTRO III is repaid in full. Actually, we had that in our budget this year but then we decided to keep TLTRO III. We will work with a buffer, an ample buffer on the requirement.
Thank you. Let's please move on to the next question.
Next question is coming from the line of Andrea Filtri from Mediobanca. Please go ahead.
Yes. Good morning. A bit of detail, if I may on NII, please. How do you foresee the evolution of the TLTRO contribution in coming quarters, if nothing changes today? Where is the contribution from negative rate fees in the Q3 results? When liquidity will go, i.e., TLTRO III repayments by banks, what do you expect the pass-through to become and what is it at TSB now? Finally, do you think that if today the ECB will claim back some excess returns from excess liquidity by banks, could this affect the approval of the banking tax move in Spain? What do you expect the cost of risk in the U.K. to be going forward? Thank you.
If I wish, César, on the first one, on the TLTRO, well, it depends. I mean, as I mentioned, there's two parts of the TLTRO. On the one hand, it's the cost. This quarter, I mean, the way we account for it is basically the cost of the loan from the moment it was granted to today's deposit facility. In the quarter, it was a negative cost, therefore an income for the bank of 43 basis points. Then deposit facility in 3Q was zero, basically, you know. We will see in the coming quarters how this evolves. On the other hand, it's what we get out of depositing the excess of liquidity at the ECB. Again, in the third quarter, it was zero. Today, the deposit facility stands at 75 basis points.
We will see what the ECB does, actually today, you know, with regards to that. In the coming quarter, we would have the two things, the -43 basis points going down, obviously, because deposit facility is now positive. But on the other hand, the income coming out of depositing the excess liquidity at the ECB, which, whatever assumption you may make of, how the rates may evolve in the coming couple of months, you know. As per liquidity, I tried to answer in the previous question. We stand at very high ratios, 217 but we have EUR 45 billion of liquid assets and EUR 32 billion of TLTRO. We will decide each quarter how much to repay on the TLTRO. In any case, we will work with an ample buffer on the regulatory requirements in terms of liquidity.
Yeah. As if the TLTRO and the tax in Spain are related, we think that they are not connected and the jury's out. We will know a little bit more about the TLTRO probably as of today. On the tax, as you know, it's under legislation and we will have certainty before year-end. Probably they are not really connected.
Thank you. Let's please move on to the next question.
Next question is coming from the line of Borja Ramírez from Citi. Please go ahead.
Hello. Good morning. Can you hear me?
Yes.
Thank you very much for taking my questions. I have two quick questions, if I may. The first one is related to NII. If we were to assume the current forward rate, I would like to ask what would be the outlook for NII in 2023? Also, if we were to assume no TLTRO benefit and what deposit beta you would expect. Then my second question would be regarding asset quality. Some press articles indicated that you could be selling some NPL portfolios. What are your expectations for NPL ratio going forward? And also, if you could please remind us the macro provision outstanding. Thank you.
Okay. If I may, on the first one, I'm really sorry but we're budgeting, so I cannot give you any number. In any case, taking everything into account and the repricing of your Euribor and so on and so forth, the tailwinds that I tried to explain during the presentation, well, without having the numbers of the budget, I would expect 2023 to go up certainly in terms of NII, you know. There is a lot of moving parts and we need to see what's the final numbers that come out of the budget, what's the final conditions of TLTRO, what are the rates at the end of the year and so on and so forth. In any case, as I explained on the repricing of the asset side, it should certainly improve materially in 2023.
As per asset quality, well, we do some portfolio disposals from time to time. They're nothing massive but there is a lot of interest for specific segments of different portfolios and this is the normal analysis that we carry out every quarter, the keep or sell analysis that we carry out every quarter, you know. In 2022, I certainly do not expect any kind of hike in NPLs because what we're seeing on the ground in terms of asset quality is absolutely normal, you know. We're not even seeing the first signs of deterioration, you know, which for example, could come.
One of the things I look quite a lot, you know, it's for example, in turnover of payments in cards, whether the average transaction is going up but the number of transactions are going down, which could indicate, you know, that inflation is pushing consumers to do less consumption. That's not the case. Number of transactions are up 15%. We're not there yet. Therefore, this will be something that we need to establish within the budget for 2023. I don't see an impact in 2022.
Thank you. Let's please give access to the next question.
Next question is coming from the line of Britta Schmidt from Autonomous Research. Please go ahead.
Yeah. Hi there. Can you hear me?
Yes, Britta. Good morning.
Oh, hi. Thank you. I've got a couple of questions. Just to follow up on the last one, I think there was a question about the status of the overlay provisions. Could you indicate what is left there? I think it was EUR 650 million before and maybe whether you expect that to increase in Q4. The second one would be on the ICO loan book. Could you give us a couple of stats on the asset quality performance there? And then thirdly, on the loan book repricing, how much of your corporate portfolio has rolled given the short durations and how much of the fixed rate mortgage book is swapped and to what duration, if possible? Thanks.
Sure. On the first one. Sorry, I forgot, Borja, the previous one. The overlay that we still have from 2020, it's around EUR 550 million because the only provisions that were written back were the ones or most of the ones that were written at TSB, as most of the U.K. banks did last year. And as per Q4 top-up, we still don't know. I said, I don't expect that to be very material. That's why I guided for a total cost of risk for 2022 to be below sixty basis points in any case. The ICO, it's doing fairly well.
So basically, we haven't seen anything material or very material in the quarter after all, the end of the payment holidays and principal that happened in Q2, which as you remember, was massive, the biggest part of the remaining part of the book. NPL ratios of that book are growing but that's also given because the book is amortizing, you know. In a theoretical scenario, all banks will end up with an NPL ratio on the ICO book of 100%, you know, because we'll only retain the NPLs. No, it's very manageable. It's still, I would say the overall rate, taking into account all the amount drawn, it's below 7%, so it's pretty healthy. In any case, as you remember, this book is guaranteed. 76% of this book is guaranteed by the government, you know.
We're not seeing any deterioration. It's reasonable in my opinion, given that most of the sectors that applied for ICO loans were sectors related with, I don't know, tourism, services or hospitality. You know, these, the sectors that were really impacted by the lockdown. Those sectors right now in Spain are basically booming, you know, are doing very well. As per the appreciation of the corporate and SME books, about a third of this book reprice in about 12 months, you know. Around EUR 20 billion of the book reprice in the coming 12 months. On a running 12 months, if you wish, because that's a part of short duration.
Thank you. Let's please move on to the next question.
Next question is coming from the line of Daragh Quinn from KBW. Please go ahead.
Hi, thank you for taking my question. I was wondering if you could just give us an update maybe on how you think the new conditions in the U.K. mortgage market impact your loan book, both in terms of loan growth into next year and also asset quality in terms of provisions, potential impacts on house prices. Thanks.
Well, I think we have covered most of the content of these questions, if you want to emphasize anything else.
We're not guiding yet for 2023, as we mentioned before. Nevertheless, the books are still growing. We are growing the books in mortgages, I think north of 5.5% in a year. We'll see what happens in Q4 but I think Q4 is gonna be impacted by somehow, well, the context of October, you know, within the U.K., where some banks, including TSB, were not basically granting mortgages for about a week, because of the very steep movements of the swaps. So this will affect applications and we may see an impact in Q4, which I cannot tell you right now. But for 2023, I really don't have any visibility, you know. I think the books are gonna keep on growing, perhaps at a lesser pace, you know.
As per asset quality, as I tried to mention before, when we look at historical levels of asset quality and therefore cost of risk on the mortgage market in the U.K. and I'm talking about 30-40 years of period, the cost of risk in this product is very, very scarce, you know. I think the maximum level for the market has been 8 basis points, you know. Within that market, I think the numbers that or the risk parameters that we have within the TSB portfolio are fairly conservative, you know. I certainly do not expect to have a development which is worse than the market at all.
Yep. By the way, that was the origin of the refocus of TSB in its core business, which is mortgages, you know. That was precisely the analysis that was underpinning the strategy and that's what we have executed. The cost of risk for the U.K. and for TSB and the heights that we saw in the past were not coming from the mortgage book and that's where we are focusing now.
Thanks a lot. Let's please move on to the next question.
Next question is coming from the line of Benjie Creelan-Sandford from Jefferies. Please go ahead.
Yeah. Hi, good morning. Thanks for taking the question. Just a question on the outlook for costs. I mean, obviously the formal savings plan has been delivered already. So just thinking, looking forward, you know, are you seeing any scope for, you know, ongoing efficiency gains or measures that might help offset the pressure coming on the inflationary side? Or on the flip side, given that the revenue outlook is significantly better than it was perhaps a year ago, are you seeing an opportunity to perhaps use some of that to reinvest back into the business at this point in time? Related to that, just as, again, on costs, do you see any risk of a formal renegotiation of wages, in the near term, particularly in Spain? One quick follow-up, just on the ICO loans.
Can you just confirm what the outstanding balance of ICO loans were at the end of the third quarter? Thank you very much.
On the cost side, I think that after doing a 22% reduction of headcount, it is the intention of management, the board and the whole organization to be very disciplined around costs. As Leo was mentioning, we have done a little bit more marketing and we have had a little bit more of an impact on FX but we remain guiding to a significant reduction in line with what we originally said about costs. Going forward, of course, with these levels of inflation, there will be pressures but it is our utmost commitment to contain them to the maximum and certainly not to take it for granted just because the top line is growing, we can afford the cost to grow. Of course, there will be pressures but we will be very determined and continue managing.
As I said, after the effort of having a 22% of our headcount reduced in less than a year and doing that execution in a very disciplined manner, it's not the time to be, how would I say, too frugal, despite the pressures from the environment.
On the ICO, the outstanding numbers at the end of September is EUR 7.8 billion. Therefore, we've had amortizations within the quarter, which are a little bit north of EUR 400 million.
Thanks a lot. We are already 15, almost 15 minutes over the scheduled time. If you don't mind, although we see some of you are still queuing, we're gonna give access to two more questions and we'll follow up with the team if you want. Let's please give access to the next question.
Next question is coming from the line of Jacques-Henri Gaulard from Kepler Cheuvreux. Please go ahead.
Yes. Good morning. Jacques-Henri Gaulard from Kepler Cheuvreux. I had two questions, please. The first one is on your payments business. You've detailed it quite a bit and it's been quite strong. What type of partnership, I would say, do you have in mind for the future of this business? Is it something similar to what you've done with asset management and Amundi, 100% disposal with a partnership for a long period of time? Just to have a little bit of color the type of partnership you are looking at. Second question is on the level of profitability for the group. You're operating in something which is very difficult. You have the Spanish government going, the ECB going, the TLTRO, subsidies, counter subsidies. It's very complicated. You have currently a ROTE at 8% for nine months.
Initially, your plan was at 6.6%. Assuming that all of these subsidies disappear in your normalized environment, interest rates not going that up sharply, what do you think is the potential profitability for this business? Thank you very much.
Thank you very much. I think we have very clear ideas around what we are looking forward in terms of partnership on our point of sale business. As you could see, we are not only growing in volumes, in number of machines but also we are growing in income. We are growing at a rate of year on year, fees grew by 50%. What we are looking at when we are looking at this business, we don't see any fragility short term but from an industrial perspective, we think that there is a tremendous potential of upgrading, as we go forward, the services that we provide in the market. Anything that we do in this sense, if we do it and we are analyzing alternatives, would be with an industrial mentality.
In that sense, we will not seek an increase of capital or an increase in value but generating even more and better business with our clients, no? In that sense, the partnership, which could take different shapes and forms, will not be oriented towards maximizing a one-time payment but to maximizing the ongoing quality and caliber and income of this business, no? In terms of how we look forward, I think what we have always said when we originally said that the guidance for 2023, as I remember, not for 2022, was 6% return on tangible equity and we are now at an 8% one year and a quarter before. I think we have always said all along that the aim is to cover cost of capital or beyond.
How long would that take? It will depend on many factors that you described beautifully but I think this management has a very clear target to reach that in due course.
Thank you. Let's please give access to the last call of the day.
Last question is coming from the line of Alfredo Alonso from Deutsche Bank. Please go ahead.
Alfredo, remember to press star six.
Hello. Good morning. Can you hear me?
Yes, good morning, Alfredo.
Thank you for taking my questions. You said that with the increased payout to 40%, you are giving a warning that is saying that at least that could mean that you might be thinking of additional increase in the payout if Q4 capital evolves well. I know, furthermore, right now it's just a cash payment but could you think of changing the mix of the final dividend, taking part in buybacks instead of full cash? Just lastly, on capital too, how much sensitivity do you have still in the movement to sovereign spreads? Thank you very much.
Thank you. I think the wording was very carefully chosen by the board when they say that the payment would be at least 40% and that would be EUR 0.02 in terms of cash before year-end. I think that's exactly what needs to be read, that it will be at least 40%. The board will decide with the announcement of the full year results and observing what are the general conditions of many factors. There was a healthy discussion in the board around this. I think buybacks are not excluded but there has not been any decision at this point in time about the final structure or the final amount of the dividend. I think the sentence has to be read literally. That's exactly what the board has decided up to now.
As per the sensitivity, we have a relatively small fair value portfolio of around EUR 5.6 billion, you know. It also has, because it's hedged, a short duration, less or south of one year. To give you an idea, in the nine months of 2022, we have had a cumulative impact on capital from fair value reserve adjustments of 23 basis points, negative 23 basis points, while the Spanish ten-year bond have surged over 300 basis points. It's relatively small.
Thank you all for your questions and thank you, César and Leo, for your answers. We now wrap up the Q&A session. As always, the full IR team is available for any further questions that you could have. Once again, thank you all for your participation and for joining us today. Have a good day.
Thank you all.
Thank you very much.