Ladies and gentlemen, thank you for standing by. I am Mina, your Chorus C all operator. Welcome, and thank you for joining the Banca Transilvania conference call to present and discuss the first quarter 2024 financial results. Please note that the conference is being recorded. The presentation will be followed by a question and answer session. You may submit your written questions using the Ask a Question window. At this time, I would like to turn the conference over to Mr. Ömer Tetik, CEO, Mr. George Călinescu, Deputy CEO, CFO, Mrs. Luminița Runcan, Deputy CEO, CRO, and Mr. Aurel Bernat, Executive Director of Financial Institutions and Investor Relations. Mr. Tetik, you may now proceed.
Hello. Thank you for connecting to our video conference for the first quarter results of 2024. It indeed was, how say, quite a busy quarter. We have seen exceptional growth in our operational activity, in transactions, customer numbers, some strong pickup in retail lending activity, and some movement also in the corporate banking. We will be entering the details later on for each segment and for most of the areas of interest. On the other hand, we have just uploaded our presentation to our website to investor relations section. You will see the details. We don't want to go page by page, word by word in order to be able to leave some more time for the Q&A.
Hopefully, we will be able to answer all your questions as we do always. In case we will not be able to come back with a spontaneous answer, then, please, write us. We will either update the presentation or come back to you directly. I would like to leave it to Aurel to give us a bit of macroeconomic landscape, and we'll continue with the business performance later.
Thank you, Ömer, and thank you everybody for joining us. I won't be spending too much time on the economic activity, the macro data overall. Just in a few words, I would say that Romania had, in 2023, a higher growth rate than the EU average, having 2.1% increase in GDP. If we take a look to our outlook or expectations, we believe that the increase will also follow in the quarters later on. In terms of consumer prices, what we saw during 2023, the peak of 16%, is very much calming down.
Now, we had in March a 6.7% inflation rate, which was the third consecutive month this year, but still higher than the average in the European Union, which was 2.6%. Both in April and also today, National Bank of Romania maintain its policy, its monetary policy at 7%, which is stable for a couple of meetings now, in line with our expectations. In terms of lending dynamics, we see a good dynamic both for corporate loans and also households. On the corporate side, we have a higher increase than the European level, despite the fact that it decreased during January and February due to increases in December, late December last year.
In terms of households, household loans, what we saw is an increase of demand. We had a poorer 2022 first half, but afterwards, it started building up and now we have an increase in this regard, much higher than the European average. Going to the next slide. From the deposit perspective, both on the corporate and also on the whole household side, we are well above the EU average, higher in terms of household, where we see a gap, a remarkable gap, but in the meantime, we also see an increase on the European average as well. Last but not least, from the banking sector, the NPL ratios are at low level.
We had an NPL ratio across the Romanian banking sector of 2.39% at end of 2024. In terms of net assets, they increased to RON 800 billion at the end of last year, up with more than 6% from the previous quarter and 14.6% compared to 2022. In terms of capital, as you already saw previously, the Romanian banking sector is well above the European average, and regarding the return on assets and return on equity ratios, we had 1.8% and slightly higher than 20%. That would be the macro perspective. I'm getting back to George or Ömer.
Yes, uh-
Thank you.
I'll say, it's said by Aurel, high interest rates still taking its toll, but on the other hand, we see especially as compared to 2023, the first quarter of 2023, a strong pickup in retail lending growth. And also, as we see that with the low unemployment rate, salaries being adjusted, consumption is being supported, which helps also the companies to continue their businesses in a healthy and growing manner. Definitely, this year, elections all around Europe, all around world almost, and in Romania, we have all the four elections, one after another, starting with June. This gives a lot of, let's say, positive impulse, a lot of new programs kicking in.
That's why, we are very comfortable that, in this environment, we will be able to deliver, at least what we have, proposed as a budgets to our shareholders. I would like to ask, George to give us some insight about the financial performance.
Thank you very much, Ömer. The first quarter of the year 2024 started with very good performance on all the business lines. You've seen the published results at the level of the income statement, both at individual and consolidated level, the bank managed to exceed the results that were reported the first quarter of 2023. We are quite in line with the budgeted numbers that were presented and approved in the shareholders meeting, even slightly above those results. Starting first with the net interest income, we have an increase versus the same period of last year of 28% at the individual level and 24% at consolidated level.
Net fees and commission, again, growing very well in double-digit territory with 18% at an individual level and with 17% at consolidated level, bringing us to a very good, positive result of RON 913 million net profit for the first quarter at individual level, and RON 1.1 billion around at consolidated level. This is 35% versus the same period of last year. Now, when we talk about costs, here, we do have increases as well, and these are driven primarily by staff cost and other expenses, as we'll see in the next slides as we move along the presentation.
In terms of cost of risk, we are showing a very good result, which is better than our peers in terms of evolution in the first quarter with -0.24%. This is mainly driven by the fact that we had recoveries on individual levels of exposures that were previously provisioned, while on the level of provisions that are completed at collective level, we are almost at zero in terms of booking in the first quarter. Following a very good evolution in the first quarter, net interest margin increased to 3.5% at individual level and 4.22% at consolidated level.
Return on equity, annualized, we are exceeding 30%, both at individual and also at consolidated levels, with the very good cost-to- income ratio reported in the first quarter at 45%, for the first three months of the year. In terms of balance sheet evolution, both at consolidated and individual level, total assets increased by over 3.5%, individual 3.6%, consolidated 4%. This is driven primarily by the increase in loans. When we look at the evolution of the loans portfolio, you see 1.5% in the first quarter of the year, or at individual level, and 1.9% at consolidated level.
But if you look at the evolution in the last 12 months, we are showing much better performance than our peers, with almost 15% increase year-on-year in terms of loans at the level of the bank. Deposits from customers in the same period increased by 1.9% at the individual level, and in terms of consolidated level by 2.3%. With very good capital positions, 18% or 21.4%, total capital, Tier 1, total capital, respectively, the bank is well positioned to progress with both organic growth and also the acquisitions in the year 2024.
Going forward, in terms of trends in income, as I mentioned a little bit earlier, net interest income increased by 28% at the individual level, bringing the net interest margin to 3.5%. Net fees and commissions, again, a very good increase with 18%, and this is driven primarily by the commissions coming from the payments, where for the first three months of the year, already we're showing almost 500 million transactions processed to the bank systems, showing a very good increase in terms of the business activities that are bringing commissions to the bank.
In terms of operating expenses, as I mentioned earlier, the biggest increase in terms of absolute numbers comes from personnel expenses, and here salary increase, if you look at the three months of the year 2024 and compare them to the three months of the year 2023, you see a 20%, 20.3% increase in the first three months of the year. And this is primarily driven by the fact that we have indexed, we have increased the salaries with the inflation in the first three months of the year 2024. But also, we have slightly increased the number of employees at the level of the bank.
However, if you take a look at the graph on the right-hand side of the presentation on this page, you see that even though we do have a 20.3% increase in terms of personnel expenses, when you look at the number of people that the bank has, you see that the efficiency of the personnel increased quite significantly in the first months of the year 2024 by 0.6%, when you look at efficiency defined by total number of total assets over number of active employees. And if you look at the overall increase in efficiency over the last five years, we're talking about over 20% increase in terms of efficiency of the personnel.
As I mentioned, cost-to-income ratio is, without taking into consideration this, this turnover tax, which, I, I will mention it, had an impact on, on other operating expenses, that, 45% increase that you see there is actually driven primarily by this, turnover tax, which, amounted to, RON 65 million for the first three months of the year. Without taking into consideration this turnover tax, we get to 41.81%, cost-to-income ratio, which is a very, very good result, for a bank of our size and, a bank that is actually, growing quite rapidly, both organically and, through acquisitions.
I mean.
Yes.
Thank you, George. Indeed, despite the fact that we are also looking forward to receive our, the approvals for the closing of our acquisition, OTP Romania, our focus mainly remains on organic growth. In the first quarter of this year, all business lines have managed to outperform their results from last year as compared to first quarter of last year. We have seen almost 2.5% growth in retail lending and almost 1% growth in corporate company lending, including SME loans. I have to make a parenthesis here.
It's in SME banking, the bulk of the new business we will see starting with second quarter, because in the second quarter, the special government-led program, IMM Invest, SME Invest, with the new name, IMM Invest Plus, is kicking in as well. We also, we are also happy to see that, see the distribution of the lending in terms of currencies had been quite in favor of a prudent approach. We have seen almost 50%, I mean, 50% of each foreign currency and local currency at company lending, and mainly over 90% in local currency for retail lending.
We have, w hen we look at the deposits growth also, we see very strong growth in retail customers 2.1%, and company deposits grew by 1.4%. Here also, if you compare the slides with loans and deposits, the numbers may be inversely, but still matching each other to offer us this natural hedge position that we are always mentioning in terms of foreign currency versus local currency lending. We managed to maintain a very strong liquidity position and also very low loan-to-deposit ratio, thanks to our growth in the deposit base.
But this, the growth in deposit base is also impacting the numbers which George previously mentioned in terms of growth, strong growth in fee and commission income, where we see higher growth as compared to our peers or other banks in Romania. New production in retail banking had been around RON 2 billion. We've seen almost 4,000 customers ask for a housing loan. This shows also an appetite of and comeback of retail customers to the mortgage lending, where we have a very strong cross-sell and vertical sell opportunities. This is also good for economic growth.
Our active customers in retail banking grew to over 3.8 million, and we have well above 6 million cards, where we would say that we are the backbone of the Romanian payment systems, both in retail consumption, but also in terms of bank-to-bank payments. SME lending has grown 3.5%. As I've mentioned, the main SME loans grew 18% and corporate loans 3.5%. In SME, we will see even further growth starting with second quarter. As we speak, our teams, colleagues from network and from underwriting departments, they are processing the IMM Plus, SME Plus program loans. We are very active part of those programs.
We have already RON 6.5 billion in our balance sheet, but also with the new program, which is for RON 12.5 billion. Definitely is we are the bank of SMEs, bank of entrepreneurs in Romania, will bring a boost. Besides the general economic advance it will bring, we do a lot of also, I'll say, activities in terms of social responsibility, but also sustainability. We have the in the first quarter, we have seen the credit of the farmer, Creditul Fermierului. We have done special programs for healthcare professionals and lending to companies with female executives and entrepreneurs. I would like to switch to Luminița to see what risks we generate and how we manage.
Thank you, Ömer. From the risk side of the activity, I do not have too much novelty to present to you. Nevertheless, I would like to stress a couple of things that we consider important for the stakeholders as you are. As depicted in the graph of the left-hand, sorry, left-hand side of the slide, our cost of risk evolution in Q1 2024 reflects a very good quality of the loan portfolio and very low NPL ratio. Based on the result presented, we are confident that the bank can deliver a cost of risk below one hundred basis points by the end of this year, in line with our initial guidance for 2024.
If we look on the right-hand side of the slide, you can observe that the provision stock increased slightly in Q1 2024, proving once again our conservative and the prudent risk approach. Therefore, the negative cost of risk at the end of Q1 2024 was due to the recoveries from provision from previously written off loans, and also due to the revision of the ECL from other risk and loan commitments, as depicted in the notes of the financial statements. We can observe, if we compare March 2024 levels to the figures from 2021, that ECL of the bank increased by over 22%.
As we have mentioned in the previous video conferences, the provisioning of the bank increased in a smaller pace than the loan growth of the bank during the same period. It is important also to observe the decreasing trend of the NPL ratio over the last five years, reaching a level of nearly 2% at the end of March 2024, which is well below the local market average, 2.33%, at the end of December. It is also important to add the fact that even in this downward trend of NPL over the years, the provision remained constant, giving us and our shareholder the comfort about the way in which we are managing the assets of the bank.
Q1 2024 shows a very slight increase in NPL ratio, mainly driven by consumer loans and SMEs, but not levels that reflect significant concerns. When it comes to PAR 90, the figures are presented on the right side of the slide. We are mirroring the tendency of NPL, and this is being influenced by good recovery, but also by market trends in terms of lending. As we mentioned in our 2023 year-end video conference, we observed a slight increase in PAR 90 ratio during 2023, and which continue during the first quarter of 2024, coming from retail and SME customer.
This is due to the inflationary pressure that these type of clients have been facing over the last two years, but we do not have any significant concerns when it comes to the evolution in terms of asset resilience. I think when it comes to the capital position of the bank, we can be proud of having comfortable solvency levels, as depicted in the waterfall graph. The capital adequacy ratio of the bank reached 21.47%, profit included, and is significantly above the requirements set by the Central Bank of Romania. The bank benefits, as we already mentioned previously, from a strong and stable capital base, mainly due to the profit capitalization, which is an instrument that the bank has been using over time.
Own fund structure is also presented on, on this slide, depicting the significant capacity of internal capital, generation. We are also mentioning the fact that, risk- weighted assets density reached 39% level, which is stable compared to the last two quarters, whereas our own funds stays at RON 13 billion as of end of March 2024. The bank along with the local market enjoys a very high liquidity levels. That's why what we are presenting to the stakeholders in terms of liquidity ratios are presented here. We have a loan to deposit ratio at 56.27%, immediate liquidity at 52%, sorry. The LCR ratio records very high level, around 773%, well above the regulatory limits.
This is showing the trust that the clients we have have in the name of Banca Transilvania, and also reflects the high quality assets that the bank has under management. More than that, it is worth to be mentioned the fact that the pool of assets we have under manage and under management is very well balanced. On the right side of the slide, we inform you about the structure of the security portfolio by March 2024. The bulk of our security portfolio is composed by Romanian government treasury bills as a feature of our local footprint. Also very important in this context is that 73% of the security portfolio is measured at fair values through OCI.
23.5% is held to collect at amortized cost, and the remaining part is measured at fair value through PNL. Therefore, our books account virtually for all changes in fair value, driven by the volatility in the interest rates.
Thank you, Luminița. I will just want to touch briefly the general meeting of shareholders decisions, where, thanks to our investors, shareholders, seems that they appreciated the results, so, when approved also the budget. But besides that, also, total amount of RON 1 billion from the net profit has been approved as cash dividends. It's RON 1.25 cash dividend, and also, RON 1.18 billion had been decided to allocate to increase of the share capital to support the growth of the business, support the growth of our lending portfolio.
Basically, in terms of the budget, sorry, we are targeting over 13.5% growth of total assets with 6% growth of loan book and net income on a standalone basis of RON 3 billion. Where we will be continuing our heavy, strong investments in technology, infrastructure and other digital initiatives. You have seen that we are trying to maintain, despite fiscal changes or other pressures, our cost-to- income ratio under control, but we also want to maintain the impacts on OpEx from the wage inflation and headcount also under control, using the available technology. As I said already, there was RON 1.18 billion of incorporation to capital of the bank.
Share buyback program also had been approved. We also shared brief information as regard to OTP Bank, OTP Asset Management, and OTP Leasing Romania acquisitions. Nothing much changed. We are hoping that during this quarter, we will be getting the necessary approvals so that we can focus on integration, and hopefully between 6-9 months, we will be finalizing the integration of OTP Group, OTP Bank, and OTP Bank's assets subsidiaries in Romania to BT's entities. We have been how say happy to see the appreciation, most probably the most important reflection is the stock exchange the shareholders or investors reactions. We have been receiving a lot of questions about dividends, dividend policy. Maybe that it's also in the Q&A section.
We first of all target creating value by growing our business, so as long as there are strong opportunities, we will be focusing to that. But excess capital in the last couple of years, we had been distributing to shareholders. I guess on average, just below 6% dividend yield we have offered, even in the tough times. And we hope that with strong effort from all BT team, we will be maintaining this. Although with all the, let's say, external pressures, global volatility, we don't want to commit to a number going forward. As regards to sustainability, I'm coming back to Romina again.
Yes, I just want to say a couple of words when it comes to sustainability, and we want to inform you that in the first quarter of 2024, we continued our initiative of informative roadshow organized for local entrepreneurs, during which we aim to share and discuss the opportunities and challenges of the green lending products, and also our product offer. Therefore, we have organized two events in two important Romanian cities, namely Iași and Constanța. In this period, where we encountered a big interest for this topic, we have had more than 380 participants. Because we believe in education, and we think that education is the most important asset for any successful business, we partnered with the University of Agricultural Studies from Cluj-Napoca in a program called Agro Intergeneration, dedicated to agricultural entrepreneurs.
The program lasts for six months period, and right now we are at the fourth edition of this program. In this cohort, we have 30 students from 14 Romania's counties. Basically, this represents another important commitment of Banca Transilvania to support the development of the Romanian agriculture. More details on the initiatives and progress in 2023 is to be found in the fourth sustainability report that the bank is going to publish in a couple of days. After you read this, we will be more than happy to answer your questions if there are any. Thank you.
As mentioned already, a big portion of our investment budget is going to technology and digital initiatives. We are very happy to see that more than, actually 1 million, well, almost 1.5 million questions had been answered by Întreb BT, Ask BT, which is one of our first AI initiatives. But also we are using the questions coming from those customers, almost 100,000 questions in order to, let's say, modify, adapt our products and services flows. It gives us a better idea of also user experience, where we are trying to improve our ourselves. We have integrated our artificial intelligence to policy educational platforms.
We use Microsoft Copilot and GitHub Copilot for our employees in order to also help them, support them with the new working habits and new working environments. BT Pay is already the most successful wallet application in Romania, and we have seen a very, very strong growth in terms of the users, in terms of the payments. In our, let's say, medium-term and long-term plans, BT Pay will become our retail banking, mobile banking application, our main interaction platform. We will be decreasing the channels that we use. That's why we continue investing in BT Pay, where you will see also how say account opening, exchange, foreign exchange transactions.
But we are also happy that BT Kiddo, a relatively new initiative, has already more than 120,000 accounts, where we are trying to definitely educate, but also obtain customers from younger ages. And we see also a positive thing that the access from rural areas, smaller cities, have grown threefold in the last three years, and we think that this is a trend to stay in the next years. We will see fast adoption by the, let's say, rural areas and smaller cities in our digital incentives. One good surprise, although it is between first quarter and second quarter, the launch of Salt Bank. Salt in Romanian means leap forward, jump, so it's not salt, but it's Salt.
We are emotionally overwhelmed and positively surprised by the high number of new accounts opened. We are already close to 200,000 users and RON 150 million brought in. It's good to see that a big portion of these customers and amounts are coming from bigger cities where we targeted, especially Bucharest, but also from our peers in terms of neo banking, digital banking, out of good practices. So, Salt will become even much more popular. We are aiming to reach 1 million active customers in 3 years, and bringing that's why break even. For the moment, it's the first iteration, but it will have all banking products and services soon within its ecosystem. If you look at the BT Financial Group, George?
Thank you very much, Ömer. So Banca Transilvania, of course, is leading the financial group, with in terms of results as net profit, total assets, return on equity, return on assets, but there are also some other companies that have presented a very good, strong position in the first quarter of the year. And I would like to mention here, BT Leasing, where net profit reached RON 31.2 million in the first quarter of the year, with the total assets almost RON 4 billion , and a return on assets even higher than Banca Transilvania's with 6%. With 3%, sorry.
Six percent is for BT Mic, which was the second one I wanted to mention, with RON 15.8 million result for the first quarter of the year, and RON 1 billion in terms of assets at the end of the first quarter. We also have very strong results in BT Direct, with RON 11 million net profit for the first quarter and almost RON 1 billion in terms of total assets, and a return on assets of 4.7%, with 32% return on equity. Victoriab ank is showing a good result as well.
Here, RON 18 million on result for the year, with RON 5.6 billion in terms of total assets at the end of the first quarter, and 300,000, over 300,000 active clients. Victoriabank, for the first time, brought in an additional acquisition in terms of the composition of the group. And as you've seen in the financials, we're talking here about BCR Chișinău, a company which became part of the group at the beginning of the year 2024 , and for which the results are incorporated. We're happy to report that we're presenting a bargain gain on the transaction in the first quarter at consolidated level. Salt Bank is at the beginning, so we expect to have positive numbers for Salt Bank very soon.
But now we are investing there, and as you can see, the number of new clients, as Ömer was saying, is at 200,000 already in the first month of operation.
Thank you, George. Indeed, Salt Bank, at least at the beginning, much, let's say, over past our initial plans. Definitely, it's up to us now to bring in some new features as soon as possible to maintain those customers loyal and active to Salt Bank. BT Asset Management grew its assets under management 7% year to date. We have seen BT Capital Partners very active in local administrations, bond issuances, and also we just completed fifteenth arrangement of our Ministry of Finance special borrowing program for retail customers, targeting retail customers. We are also happy to see in BT Leasing to more than 30% of the portfolio comprises of electric or hybrid cars.
BT Mic, which is already a small bank in itself, has reached more than 20,000 customers having an outstanding loan. It's the size of a small bank, comparably, in Romania. And we are growing further our pension business, having also ambitious plans there. But so far, we are happy also to see the year-to-date growth of numbers there. Thank you very much. I would like to, although it took a bit longer than even we aimed to, we would like to allocate some time for the Q&A. We already started gathering questions.
Ladies and gentlemen, at this time, we will begin the question and answer session. You may submit your written questions using the Ask a Question window on the webcast. One moment for the first question, please.
First question is coming from WOOD & Company. Miguel Diaz is asking us if we can provide some more color on the quarter-on-quarter drop in corporate loans. What dynamics can we expect in the next quarters?
There is some seasonality. Actually, there's, I guess, one more question about seasonality, but there is seasonality here, because in the last quarter, the activity is much higher, and in the first quarter, traditionally, the activity is lower. But a lot of SME lending activity on the company side had been postponed. Last year, beginning of the year, there were a couple of big projects supported by government-led or European Union programs. So, we are much more positive about the dynamics of the growth in the second quarter or starting with the second quarter. That's why we don't see it as a structural thing or as a risk. But also there had been, I guess, in the presentation, you will see, there had been also resegmentation between business lines.
So part of the growth had been seen only in the other business line, from micro to small, from small to mid-co, and from mid-co to large corporate. That's why we are comfortable with the numbers you have seen, but it will be much better in the starting with the second quarter.
The second question is actually related to the next net interest margin coming from Daniela Mândru from Swiss Capital. Daniela is asking us, "What evolution of net interest margin should we expect for the upcoming quarters, given that the current levels are relatively high compared to historical levels on one side, and on the other side, that the total deposits grew at a slower pace, as compared to the net loans?
Hi, Daniela, thank you for the question. Actually, indeed, lending grew faster, but we were not very aggressive because we have seen our, let's say, flexibility and attractiveness in deposits. We are not the highest payer of deposits. We have seen also in the company side, a lot of deposits, especially state-owned enterprises, have been gathered at special, at certain institutions or by the state treasury. We do not see it as a trend itself. Usually in the last quarter of each year towards the end of the year, liquidity is being accumulated and distributed within the, let's say, private sector, economic stakeholders. And then first quarter, we used to see a decrease, slight decrease.
This is more or less, kind of back to normality. And is, in terms of net interest margin, we think that, we don't see an upside from here, but at around, 330-340 basis points, we will be flat throughout the year.
Third question coming from Franklin Templeton, Can Ozguzel, is asking about if there is any one-off for the Moldova operation, and if we can elaborate on the strong performance of insurance intermediation incomes from Visa, Mastercard. Is there any seasonality in this income?
As a connection, I will start by saying, Can Ozguzel, thank you for the question, Mr. Ozguzel. You answered yourself, I guess, the question later. Yes, the, I would say, minority interest, exceptional profit is mainly related with BCR Chișinău's closing of, I mean, Victoriabank's closing transaction with BCR Chișinău. As regard to how to say, insurance or bank insurance income, this is always our, I would say, focus. We had been growing constantly, double digit, those income year-on-year, and it will continue. There is no seasonality.
In terms of Visa and Mastercard, yes, there is seasonality because they are coming from, I would say we are getting from their dividend distributions or from their revaluations on a quarterly or semester basis.
Next question is coming from Karoll Capital Management, asking us if we plan to issue new MREL eligible bonds in the second quarter or even third quarter.
Thank you for the, for the question. As we have previously discussed at this kind of video conferences, depending on the increase of the risk-weighted assets of the bank, we have in plan to issue a new, a new MREL bond issuance by the end of this, by the end of this year, in an amount that is going to be informative for the market at the point where we, we are going to issue it.
Next question is coming from Andreea Playoust, asking us if we can comment on the evolution of the stock stage two loans in the first quarter of 2024.
So when it comes to the percentage of the stage two loans in the overall context, what is to be seen is that there is a steady evolution, a very small increase in the percentage of this part of the stock loans. And this is to be complemented with the information that we have already mentioned at this conference, that even though our provisioning is slightly increasing, this is a reflection of the good quality of the assets that we are putting on the balance sheet of the bank.
Next question is coming from Robert Brzoza, from PKO Securities, asking us: what is, what will be the first time consolidation of OTP Romania? Any estimates on when this could happen?
Thank you for the question. We would, as Ömer indicated a little bit earlier, should the approval come before the end of the second quarter, the first time consolidation will be in the results presented for the end of June 2024. If the approval comes after the second quarter, it will be in the third quarter of the year, but we don't estimate to go beyond the third quarter of the year.
Related to that, we have a follow-up question from Miguel Diaz from WOOD & Co, asking us if the budgeted figures for 2024 include the OTP acquisition or not.
At this point in time, the budget does not include the OTP acquisition in terms of loans or deposits or the incorporation of the business. When the closing happens, and as we'll have more visibility in terms of the evolution and the planned integration of the OTP business with BT, we will come to the shareholders with more details and approval for the integration of the OTP business, and there we will be presented results including the OTP business.
Thank you, Mr. Brzoza. Another question from PKO Securities is regarding the drivers behind the quarter-over-quarter deposit costs. Is this sustainable? And, are they coming mostly from the cuts to term deposit rate?
I mean, our deposit base, both on the current accounts and also term deposits, have been growing, but indeed, with the, well, say, growth in consumption, and lower interest rates, we see that, I'll say, more or it destabilize the savings accounts, current accounts type of accounts. So we think that this is for our business model, sustainable. We also have the, let's say, the comfort that even with the if we will see any trend reversal with a very slight change in our pricing, we can attract more without impacting very aggressively our net interest margin or baseline.
We have a question in respect of the first quarter numbers versus the budgeted levels.
So, in terms of evolution versus the budgeted amounts, as I mentioned, amounts presented for the first quarter are in line with the budget, even slightly better than budgeted. I will not go into details because here we talk about seasonality, and there is a lot of seasonality in the first quarter, affecting almost all the elements that are important in the construction of the budget. What I can tell you is that we're exceeding slightly almost all areas of the budget that was approved in the shareholders' meeting.
We have a question from IPOPEMA. Mrs. Marta Czajkowska-Bałdyga is asking Banca Transilvania about the level of market interest rates in 2024 assumed, a flattish guidance of net interest margin.
I mean, as we were mentioning in our previous call as well, we don't expect the National Bank of Romania to move faster than ECB and also not at the same size, because not at the same pace. Because we have seen that National Bank of Romania adjusted its monetary policy with a small delay, and it will be, I guess, on the other direction, more or less the same. That's why, I mean, we were mentioning that we were realistically seeing a 25-50 basis points decrease in the reference rate this year, until all the elections, election cycles will be finalized.
Okay, at this point, we finalize the questions from investor, and I will give the floor to Mina, our assistant.
Ladies and gentlemen, in the interest of time, please be informed that the conference call is coming to an end. For any questions that might have not been answered, please contact the Banca Transilvania Investor Relations team. I will now turn the conference over to management for any closing comments. Thank you.
Thank you very much. Thank you very much for joining us. I hope we managed to clarify most of your questions or observations, but please do not hesitate to contact us. Our investor relations team is willing to answer your questions and listen to your observations. On the other end, looking forward also meeting you once we hopefully close OTP transaction and then also close the first semester with the consolidated numbers. Thank you very much. All the best.
Ladies and gentlemen, following the conference call, we would like to announce to you that the investor relations team in Banca Transilvania will send you a short survey about the content and format of the conference call. Thank you for your input. The conference is now concluded, and you may disconnect. Thank you for joining, and have a good afternoon.