Ladies and gentlemen, thank you for standing by. I am your operator. Welcome and thank you for joining the Bank of Cyprus Conference Call to present and discuss the first half of 2025 financial results. All participants will be in a listen-only mode, and the conference is being recorded. The presentation will be followed by a question and answer session. Should anyone need assistance during the conference call, you may signal an operator by pressing star and zero on your telephone. At this time, I would like to turn the conference over to Mr. Panicos Nicolaou, Chief Executive Officer. Mr. Nicolaou, you may now proceed.
Good morning, everyone. Thank you for joining our financial results conference call for the sixth month, ended 30th of June 2025. I am joined by Eliza Livadiotou, Executive Director of Finance, and Annita Pavlou, Manager of Strategy IR and ESG. After my introductory remarks, Eliza will go into more detail on our financial performance, and then we will be very happy to take your questions, both during this conference call and afterwards. I would like to start by briefly reminding you of our powerful equity story and our core strengths on slide number four. We are the leading bank in Cyprus, which is a highly liquid and concentrated banking sector, and we are placed at the center of this economy, where the macroeconomic environment remains supportive and is well-positioned to withstand global financial instabilities.
We are managing well the headwinds arising from the normalization of interest rates, while simultaneously investing in new growth initiatives, leveraging the key strengths that are under our control. The sustainability and diversification of our business model, our robust asset quality, and strong capital acquisition all support our commitment for attractive shareholder returns by continuing to deliver sustainable high teens on a 15% CET1 ratio in a normalized 2% interest rate environment. Today, we are introducing an interim dividend at $0.20 per ordinary share, representing approximately a 40% payout ratio out of the first half earnings. Slides five and six show an overview of the macroeconomic environment. We operate in a strong, diversified, mainly service-driven economy that exhibits continuing growth.
The economy expanded by 3% in the first quarter of 2025, and the projection from the Ministry of Finance and Central Bank of Cyprus is for GDP growth to remain at that level for all of 2025, significantly outpacing the Eurozone average. This is supported by strong tourism, which is set to surpass 2024 record levels, generating the first five months of the year revenues up 27% compared to prior years. Note Cyprus stands on solid fiscal ground, underpinned by fiscal surpluses since 2022, a significantly improved public debt to GDP, which at 64% is well below the Euro area average. The strength of the Cyprus economy is reflected in its credit rating, with recent sovereign rating upgrades by the major rating agencies to three notches above investment grade. Slide seven shows the synopsis of the second quarter performance.
Our net interest income remained resilient despite further reduction in interest rates, underpinned by strong volume growth and favorable deposit behavior. Our cost-to-income ratio was 37%, slightly better than our around 40% target, and our cost of risk at 32 basis points reflects our healthy loan portfolio. All in all, our profitability remained flat on the prior quarter at EUR 118 million. Moving on to slide eight and the key drivers of shareholder value creation. We maintain a strong ROTE at over 18% on a reported basis despite rate reductions, delivering another 100 basis points of organic capital generation in the quarter on a pre-distribution level, while our tangible book value per share goes up 10% year on year.
While commenting on the strength of our capital generation and operational profitability, I am pleased to share with you that in the recent SSM selected exercise, the bank was placed within the first bucket in accordance with the maximum CET1 depletion, which is expected to lead to a lower P2G from 2026. Looking now at slide number nine, you can see how our per-share performance compared to the 2025 targets we announced in February 2025. On every metric, we are exceeding our expectations. This strong performance reinforced our confidence that our ROTE on a reported basis will be towards the upper range of our guidance range in 2025, benefiting from potential upside on NII. Likewise, our ROTE based on 15% CET1 ratio is now likely to exceed high-achieving targets for the year. Let's now turn to slide 10 and our distribution track record.
Today, we are pleased to announce the introduction of an interim dividend as part of our distribution strategy. In 2025, the interim dividend is set at EUR 0.20 per ordinary share, equivalent to around 40% payout ratio from per-share earnings. Additionally, we are targeting a 70% distribution payout ratio in respect of 2025 earnings, which is at the top end of our distribution policy of 50%- 70%. We also expect that our full-year 2025 results distribution is likely to exceed the prior year's distribution in quantum, generating an attractive yield. As a reminder, we cumulatively paid out EUR 400 million distributions over recent years, ahead of our investor day guidance, equivalent to 24% of our market cap. I will now hand over to Eliza, who will run through our first half results in more detail.
Thank you, Panicos, and good morning from me too. Let's now turn to slide 12 to provide a summary of our key highlights in the first half of 2025. This includes continued growth supported by the resilient economic backdrop, with new lending at EUR 1.6 billion, resulting in our performing loan book growing by 5% since December 2024. A strong ROTE of 18.4% ahead of our target and a continued low cost-to-income ratio of 36%. Further improvements in our asset quality, with our NP ratio remaining below 2% and cost of risk at 36 basis points. Strong capital ratios of over 20%, driven by strong capital generation, including a distribution accrual at the top end of our 50%- 70% range. Turning now to slide 15, to discuss net interest income.
Our NII for the second quarter stood at EUR 182 million, corresponding to a net interest margin of almost 3%, down 15 basis points on the prior quarter. The quarterly reduction reflects the repricing of liquid assets and variable rate loans at lower rates, whereas the cost of deposits also decreased to 29 basis points. Overall, our NII evolution suggests a controlled decline as the pressure from lower rates is mitigated by strong volume growth on both loans and deposits and favorable pricing of deposits. Despite the ECB and Euribor rates being lower compared to February's curves, which are currently expected to average at 2.2% and 2.1% respectively for the full year, we anticipate upside potential to our 2025 NII target of sub-EUR 700 million. For 2026, our NII target of over EUR 650 million remains unchanged. Moving on to the progress of our hedging program now on slide 16.
I want to remind you of our significant hedging efforts undertaken over the last couple of years that have reduced our NII sensitivity to 100 basis points parallel shift in rates by EUR 53 million since December 2022. We have added around EUR 0.6 billion of hedging in Q2, adding to a total of EUR 10.3 billion, or 42% of the group's interest earning assets. These hedging actions include the receipt of fixed interest rate swaps and further investment in fixed rate bonds. The hedging was carried out on an average yield of 2.8%, meaning that hedging is already a net revenue contributor. Simultaneously, 22% of the group's loan portfolio is linked with the bank's base rate, which provides a natural hedge against the cost of deposits. It is in part for these reasons that we remain confident in our NII guidance.
We will continue to manage our balance sheet dynamically and carry out hedging if deemed appropriate, as the interest rate and outlook evolve. On slide 17 now, you can see that our deposit base continues to increase, up 1% on the prior quarter and 6% on the prior year, to EUR 20.9 billion. The breakdown of our deposit base on the bottom left chart shows that approximately 80% of our deposits are from Cypriot residents. Also, we are encouraged by the change in our deposit mix, as the proportion of time and notice deposits stood at 30% of the total, down 3 percentage points since the prior quarter, reflecting the improved deposit pricing. We have seen deposit costs declining from the peak in 2024 and now standing at 0.29% for the second quarter of the year.
Overall, the well-managed deposit costs reflect the very liquid Cypriot banking sector, cautious depositor behavior, as well as our strong franchise and market position. Let's now turn to slide 18 and new lending. We are encouraged by the growth in our performing loan book. During the first half, we granted new loans of EUR 1.6 billion, up 31% on an annual basis, driven mainly by corporate and international demand. We are pleased to see our international loan book expanding by 16% since December 2024 to EUR 1.1 billion, on track to reach the EUR 1.5 billion target we set in the medium term. Overall, growth-performing loans have grown by 5% year to date, and we now expect to track ahead of our around 4% loan growth target in 2025.
Please note that this year's loan growth is expected to be heavily skewed to the first half, with a seasonally slower second half of the year. Of course, maintaining high credit quality is a key priority. We will continue to ensure prudent underwriting standards, and we will not sacrifice the quality of our loan book for growth. As a reminder, 99% of new exposures written since 2016 remain performing. Slide 19 shows our progress on the fixed income portfolio. As at June 30, our fixed income portfolio stood at EUR 4.65 billion, representing 17% of the group's total assets. The majority of the portfolio is measured at amortized cost and is held to maturity. Hence, no mark-to-market impact is recognized in the income statement or equity. The portfolio comprises high-quality assets with average maturity of three to four years and is highly diversified.
We aim to grow the fixed income portfolio further in the years to come so that it comes to represent around 20% of our total assets in the medium term, subject to market conditions. Slide 20 provides a summary of non-interest income. In the first half, non-interest income expanded by 10% year on year, and all components of non-NII contributed to that growth, including higher non-transactional fees, higher evaluation gains on financial instruments, and elevated revenue gains as revenue accelerated sales in the second quarter. Non-interest income was 5% up on the prior quarter, reflecting a one-off positive revenue contribution. Overall, non-interest income remains an important contributor to group profitability and covers 77% of Q2 operating expenses. I'd also like to remind you that both FX and revenue gains are volatile profit contributors. Separately, our insurance businesses remain a valuable and recurring revenue stream to the group.
More details about our insurance results can be found in the next slides, numbers 21 and 22. In summary, Eurolife recorded a net insurance result of EUR 14 million in the first half, with regular income improving by 14% year on year, driven by increased new business. In non-life, net insurance result was EUR 10 million, up 22% year on year. Together, net insurance result contributed 17% of total non-interest income. Lastly, I would like to comment on the recent wildfires which took place in the Limassol district and caused damages to various residential structures. Although too early to determine the full impact, the full financial impact, our current estimates show that the pre-tax cost will not exceed EUR 5 million, but the actual impact will be determined once the assessment of damages and claims is completed. Turning now to slide 23.
As part of our strategy to expand our insurance operations and further improve our diversified business model, in July 2025, we completed the acquisition of 100% of Ethniki Insurance Cyprus Limited for a cash consideration of EUR 29.3 million. The acquisition further strengthens our leading position in the insurance market in Cyprus and will bolster the contribution of our non-NII to the group's revenues. Slide 28 provides an overview of operating expenses. Our cost-to-income ratio of 36% in the first half was higher than last year, reflecting the impact of falling net interest income. Staff costs were up 4% on a yearly basis due to the step-up adjustments, which typically take place in the first quarter of the year, including salary increments, cost of living adjustments, and higher employer contributions. On a quarterly basis, staff costs remain broadly flat.
Other operating expenses rose by 8% year on year, driven by higher IT spending and other professional expenses. This growth rate will slow, and we anticipate that for the full year, other operating expenses increase will be contained to low single-digit levels versus 2024. On a quarterly basis, other OpEx was up 4% due to higher marketing spend. Turning now to slide 29 and cost of risk. Our underlying credit quality remains strong, with NPs remaining low. Cost of risk in the second quarter remained low at 32 basis points, tracking better than the normalized level of 40 basis points- 50 basis points, demonstrating the continued strong underlying performance of the loan portfolio. Additionally, we incurred impairments of EUR 4 million in Q2, which relate to the revenue properties as a result of the aging of the stock.
These impairments were down by EUR 6 million on the prior quarter, following the significant reduction in the revenue stock achieved in Q2. Let's now move to slide 31 and capital. The bank's capital position remains strong. We continue to build organic capital at over 100 basis points this quarter, totaling 215 basis points for the first half. As of 30 June, our CET1 and total capital ratios were at 20.6% and 25.8% respectively. Let me remind you that the capital ratios are after a distribution accrual at a 70% payout ratio, which is at the top end of our distribution policy, and hence the interim dividend at around 40% will only affect our equity and not our capital ratios. As mentioned by Panicos, we participated in the 2025 SSM stress test exercise as one of the other SSM significant institutions.
Following the results of the stress test announced last Friday, the group significantly improved on the 2023 previous exercise and was placed within the first bucket in accordance with the maximum CET1 depletion in the supervisory stress test exercise. This led to a revision downwards of the P2G effective from January 2026, pursuant to the draft SREP decision. Additionally, let me update you on our changes in our capital requirements following the draft SREP decision received in August. We are pleased with the lower Pillar 2 Requirement, reduced by a further 25 basis points to 2.5% effective from January 26. Finally, the acquisition of Ethniki Insurance Cyprus Limited will have a small negative impact on the capital of 15 basis points and will be recognized in the third quarter. Moving now to slide 32 and asset quality.
As of June 30, the group's asset quality remains healthy, with an NP ratio at 1.7% and a coverage ratio above 100%. NP inflows remain very limited. Moving to revenue now on slide 33, revenue is our engine to manage the stock of properties acquired from defaulted borrowers. The revenue stock decreased to EUR 442 million as of June 30, achieving early our 2025 target of circa half a billion euros following the sale of our largest property in June 2025. Overall, we continue to manage our revenue property prudently as it is carried on the balance sheet at 72% of the current open market value. It is important to note that we continue to sell on average close to independently assessed open market value and above book value. I will now like to hand back to Panicos for his closing remarks.
Thank you, Eliza. Turning to slide 34, our priorities remain unchanged, being centered on prudent capital management, driving new growth initiatives focused on loan book growth, non-interest income diversification, maintaining cost discipline while reinventing the business, and protecting the fundamentals of our asset quality. This ensures we maintain a strongly capitalized and highly profitable organization, generating high teens ROTE rather than 15% CET1 ratio under a normalized 2% interest rate environment, with an unparalleled focus on delivering attractive returns to shareholders. This concludes our presentation and we will now open the floor for your questions.
Ladies and gentlemen, at this time, we will begin the question and answer session. Anyone who wishes to ask a question may press star followed by one on their telephone. If you wish to remove yourself from the question queue, then you may press star and two. Please use your handset when asking your question for better quality. Anyone who has a question may press star and one at this time. One moment for the first question, please. The first question comes from the line of Boulougouris Alexandros with Euroxx Securities. Please go ahead.
Hello, many thanks for the presentation and the results. A question on my end regarding NII. I understand that the better performance in 2025 is mainly due to high loan growth and better deposit cost. Wouldn't that also trickle down to 2026? I saw you kept the guidance for 2026 unchanged. Also regarding that, I assume you still assume like the assumptions you have on page 60 that ECB rates will go down to 1.7%. That's my first question. A second question regarding deposit costs, which declined quite nicely in the second quarter. When should we, how should we model this going forward? Should we expect further declines going forward? How do we see the rates on new time deposits, for example? Thank you.
Okay, thank you, Alex. On NII for 2026, we do not guide on 2026 NII and generally on 2026. We'll do this with the full year results. The assumptions remain the same. We expect a 25 basis points rate cut in September, and every 25 basis points sensitivity, there is roughly EUR 19 million impact on static balance sheet. Having said that, you are right that the trend is better than initially anticipated in terms of loan growth, deposit volume, deposit costs, hedging activity. We can safely say that we have navigated successfully the path to normalization of interest rates from the extraordinary high point of profitability that we have been in the last couple of years to a result that will still be attractive in terms of profitability. That's on NII. On deposit costs, we are running better in terms of volume and cost versus what we initially anticipated and assumed.
It is hard to predict deposit behavior under lower rates. Our basic assumption is to stay at the current levels. Having said that, I may look conservative, seem conservative, and it does not mean that we will not pursue further deposit cost reduction. We should not forget that volume is also important because deposits are a profitable instrument for us at risk 2%.
Thank you . Just as a follow-up regarding deposits, you see this big inflow and a higher than expected increase. Have you seen any change in competitive trends in the market? I guess not because the market is very liquid, but given the changes in competition with Hellenic Bank and Alpha Bank, have you seen any change or appetite to attract deposits or not?
I have not seen any change in our ability to attract deposits and manage costs. It's a game of volume and cost. I have not seen any change in our ability to manage both. What we see is a successful strategy of increasing volumes and managing costs.
Great, thank you.
The next question comes from the line of Alonso Alfredo with Deutsche Bank. Please go ahead.
Hello, good morning. Congrats for the results and thanks for taking my questions. I had two and a follow-up, if I may. On the follow-up on Alexandros' questions on NII, considering that quite resilient performance so far, how do you expect the NII to be sequentially Q on Q during the rest of the second half of the year? Moreover, would you expect a significant recovery on 2027 onwards? Another two questions. One, in the strong capital accumulation that you have and actually lower requirements ahead, do you see any potential acceleration of your capital distribution apart from having fixed the 70% dividend payout? Lastly, on the fee line, it looks, I wouldn't say it's a bit muted. Do you see any potential for increase in the second half, considering that the overall activity of the group remains pretty high? Thank you very much.
Thank you, Alfredo. I'll take the first one on the quarterly evolution of NII. As you see on the curves in the appendix of the presentation, our hypothesis for this guidance is that there's another rate cut in September of 25 basis points. Given this, the evolution or the lowest point is expected to be in Q4 on a quarterly basis and then stabilize and then recover from there. What you should not forget is that we have, as Panicos also mentioned, we've been navigating successfully the rate cut cycle. We are entering into this last phase of it with some positive elements, let's say, in our NII trajectory, being both loan and deposit volumes, better depositor behavior, and also better hedging. These are very important elements on how our NII will evolve.
Of course, the exact real-life timing of the quarterly evolution will depend on whether the rates are indeed cut in September or not, or how that decision-making evolves.
Okay, let me say a few words about capital. Okay, going back, we indicated the last two years that our priority was returning capital to shareholders. Within a very short period of time, we went from zero to today, where we target 70% plus the interim dividend of $0.20, which is equivalent around to 3% dividend yield. However, going forward, we acknowledge that we have reached the top end of our dividend policy faster than initially anticipated, and our current generation remains strong, even with higher loan volumes and even with more bolt-on acquisition likelihood in the insurance. Capital buffers will remain high. That's why we intend to provide more information on our excess capital utilization roadmap with our full-year results.
For the time being, you have the interim dividend and the 70% payout ratio for the year, plus a more detailed analysis on our plans for further capital utilization with the full-year results sometime during February or March next year. On non-NII, I will say that, yes, we value non-NII significantly. That's why we have one of the highest fees per asset in, I would say, in Europe and covering most of our OpEx from non-NII. Having said that, we believe that non-NII is an area we can grow further organically and inorganically. Organically, we have a number of initiatives such as Jinius, Affluent Banking, FX. Inorganically, the completion of Ethniki Insurance will also support this effort. Of course, any right inorganic opportunity, additional in insurance, in asset management, and in fintech space interests us.
All in all, though, the basic assumption is a 4% growth on a yearly basis. We don't change our basic assumption, but you need to know that non-NII is an area of interest. We have organic initiatives that will probably start materializing in the middle term, but also inorganic that can plug in and accelerate this growth is something that is highly on our radar.
Very clear. Thank you very much.
The next question is from Kantarovitz Alexander with Roemer Capital. Please go ahead.
Yes, thank you. Congratulations also on the results. Quite pleasing because we see such a resilient margin. I have two questions. One is on fees. Specifically, it seems like the dynamic is flexible, even though Q2 should be more advantageous in terms of calendar days and the growth of effort. How should we measure fees in the second half versus the first half? My first question. My second question is, given that last year, for example, your wages expense was significantly high in Q2, shall we expect the same half-and-half proportion of wages to be much higher in the second half?
C an you repeat the second question? We didn't hear you very well.
Yes, yes. Basically, my question was if the last year pattern for wages would be repeated this year in terms of second half being much heavier than the first half.
Let me take the wages, the staff cost question first, and then we go back to fees. Our pattern for wage evolution or staff cost evolution is that every January, there is a step-up that takes place and is a function of inflation, cost of living allowances, and some increments. That's the January increase, which is usually or traditionally a low single-digit percentage that runs through the year. Every January, when you look back, there is this step-up, which is low single-digit. What we are doing and intend to continue doing is mitigate that through staff exit programs, which go towards reducing that impact through the year. That's our strategy going forward on staff costs.
On fees, the basic assumption, as I mentioned earlier, is for net clean commission income to grow by approximately 4% per annum. This is the current assumption. As I said earlier, we have a number of initiatives organically that can support that. We have inorganically completed the acquisition of Ethniki Insurance , and we are also looking at other inorganic opportunities that can accelerate this pace of growth on non-NII generally, which is a significant part of our total revenue and covers more than 70% of our total operating expenses.
Thank you. Can I just have a follow-up on staff costs? All clear. Thank you very much.
Thank you. The next question is from Cruz Hugo with KBW. Please go ahead.
Hi. Thank you for the time. I have a few questions. First, I'll start with if you have guidance for their provisions. You've reduced your real estate exposure quite a bit, so I wonder if things can be better than expected going forward. A second question is around your international corporate lending. Is there a limit to how big it can be as a percentage of your loan book? I have a couple of questions on capital. First of all, why did RWA density decrease versus Q1? The lower P2R and P2G, can they lead to better capital return in 2026? Thank you.
Okay. On international corporate asset in general rule, there is no limit. There is an internal target. Initially, it was EUR 1 billion. We managed to exceed the EUR 1 billion earlier than what initially was planned. Currently, we have the target to grow to EUR 1.5 billion over a horizon of three years, but it seems that we are running better than initially anticipated as well. In terms of RWA density, I think the simple answer is revenue, disposal of revenue properties faster in Q2 than previous quarters. This, as you know and as you expect, reduces density of RWAs. In terms of P2R and P2G , yes, having lower regulatory requirements makes room and provides more optionalities on capital returns.
On the other impairments, which I think was your first question, Hugo, we've always been commenting on this as expected to come down in line with our de-risking strategy and the rundown of our real estate book. Q2 was a very good quarter in that respect. By way of expectation of where you should assume that on a run-rate basis, impairments will continue coming down in line with the stock and that half one P&L hit will be broadly replicated, or a good reference point for half two for this year. For the future, these are expected to continue coming down in line with the stock of revenue.
Thank you very much.
The next question comes from the line of David Daniel with Autonomous Research. Please go ahead.
Good morning, everyone. Congratulations on the results. I've got three questions. The first one is just on loan growth. I think you mentioned the 5% assumption, but where do you think that will land now? Maybe after a bit more information on your comments with regard to H1 being strong and maybe loan growth tailing off in H2, is there anything you can give us on that? It'd be interesting. Thanks. On capital, the Pillar 2R coming down is clearly a positive. Can I ask, is this like the usual process or is this kind of out of cycle? I don't know many other banks talking about their draft Pillar 2Rs. We usually hear about it happening as it's announced. Is there a reason why it hasn't been cut yet? Any information there would be great.
In credit markets, you don't really have any short-term calls, but you've got a Tier 2 in April 2026. How early would you think about refinancing that deal? Thanks.
Okay, I'll take the last two questions and then turn to Panicos. SREP, it's been our practice that when we receive our SREP letter, we disclose the P2R. This is why it's in the results. It came a couple of days ago. It was only right and in line with our practice to do it. Historically, we don't expect changes between the draft and the final SREP, which is why we treat the two as almost neutral to us. On the Tier 2, we do have a call date coming up in April next year. We will look to refinance that, replace that. It's a EUR 300 million 10 non-qualified issuance. You should expect us to be in the market replacing that between now and April, maybe earlier rather than later, but it depends on market conditions.
Okay, and on loan growth, 5% growth for the first six months is clearly better than our basic assumption, which was 4% for the full year. It seems that our basic assumption strategy starts to materialize earlier than we thought and reminds us that our strategy is around financing the growth of the Cypriot economy, which runs with 3%. You can see that the growth in our Cypriot book is around 4%, 2% in retail, 5% in corporate. This comes with a top-up from the international, which is 15% growth versus the end of the year. All in all, we are having a good year. We'll probably exceed the full year target. H2, the second half, is usually coming with higher seasonal repayments. We do not expect the same pace of growth in the second half of the year.
Clearly, the yearly result will be better than the initial target of 4%. This, as you know, is a better starting point for 2026 for NII calculation.
Thank you. Very helpful.
As a reminder, if you would like to ask a question, please press star and one on your telephone. We have a question from the line of Memisoglu Osman with AMBROSIA CAPITAL. Please go ahead.
Hello, many thanks for your time. Just to follow up on the staff cost, apologies if I missed it. Should we expect more VES termination costs in the second half? Should we expect a typical accrual increase for Q4 seasonality wise? Thank you.
My favorite assumption would be a similar in terms of one of costs, similar to first half. We try to manage our staff cost evolution through these schemes, and we aim to continue having this available through the rest of the year.
Okay, thank you.
As a final reminder, to register for a question, please press star and one on your telephone. Ladies and gentlemen, there are no further questions. Apologies, we have a question from the line of Demir Can with WOOD and Co. Please go ahead.
Hi, good afternoon. Can you hear me?
Yes, yes.
Hi, thank you for this presentation. Just a question on NII. You mentioned that you would expect to see the trough in the fourth quarter, but it looks like even in the second quarter, it came down by, I don't know, 1.5% or so Q on Q. When we say it will trough in the fourth quarter, we probably mean that, you know, it will come down only marginally in the rest of the quarters, or is it going to be the trajectory? Is it going to be a bit more wonky than that?
Okay, look, the evolution of NII is a function of rate and volume. We give rate sensitivity in the slide anyway on a static balance sheet basis. As I mentioned before, we have been faring better this year, and actually, our starting point was also better on both loan and deposit volumes and on deposit costs as well as hedging rates. That's why you saw what you said, in your words, a better than expected drop earlier in the year. We've been managing this very actively on our side. We will continue doing that. From then on, I will leave it to you to do the math, but we don't expect cliff effects in NII generally.
Thank you, Eliza. Thank you.
Ladies and gentlemen, there are no further questions at this time. I will now turn the conference over to Mr. Nicolaou for any closing comments. Thank you.
Thank you all for your participation in the call. It is a holiday season, and we appreciate you being here. Despite being a holiday season, we are always, myself and the team, available for any offline discussion, questions, and any clarifications you may have after this call and after you have time to look into the results in more detail. Thank you very much.
Ladies and gentlemen, the conference is now concluded, and you may disconnect your telephone. Thank you for calling and have a good day.