Ladies and gentlemen, welcome to the JSC HaligBank nine months and Q3 twenty nineteen results conference call. I will now hand over to your host, Mrs. Mira Kavignolfa. Madam, please go ahead.
Thank you very much, Kai. Good evening, ladies and gentlemen. Welcome to Halic Bank conference call and presentation of financial results for the September and 2019. Participants to today's call on Halibank's side are: Mr. Muczeknev, Chief Executive Officer of Halibank Ms.
Alia Karpikova, Deputy CEO and Chief Financial Officer Mr. Murat Koshenov, Deputy CEO, Corporate Banking Mr. Almaz Makhranov, Chief Risk Officer Mr. Victor Skrill, Head of Strategic Office, International Activities and myself, Mira Koshenov, Head of Financial Institutions and International Relations. First of all, we are glad to welcome our new investors who joined our shareholder base as a result of recent secondary public offering of KALIC Bank.
Around 70 institutional investors from different parts of the world have participated in this role. As per our estimation, the bank's identified number of institutional investors has been almost doubled. Following the successful transaction, the free float level increased from 16.2% to 26.2%, and the liquidity of GDS has been improved significantly. We are proud to note that it has been the largest secondary fully marketed following offering in EMEA since 2017 and the largest financial institutions group equity capital market offering in CIS since. Now let me switch to Holly Group consolidated financial results.
During nine months of 02/2019, the bank's net income increased by 53.3% to 251,400,000,000.0 tengee compared to 164,000,000,000 tengee for nine months 02/2018, mainly due to net interest income growth in nine months 02/2019. In addition to this, as you remember, for nine months 02/2018, the bank had higher loss from impairment of financial assets of 31,500,000,000.0 ten year compared to nil for nine months 2018. And in Q2 twenty eighteen, there was a recognition of tax loss carryforward of $43300000000.0.10 k by KTP due to the merger in Polit Bank. Total assets decreased by 0.4% versus the 2018, mainly as a result of increase in loans from Kyrgyzstan Bank under repo agreement and decreased by 0.7% versus Q2 twenty nineteen, mainly because of decrease in loans and deposits from Kazakhstan banks, including loans under repo agreements. Cash and cash equivalents decreased by 17.9% compared to Q2 twenty nineteen, mainly as a result of decrease in the short term deposits with the National Bank of Kazakhstan due to repayment of the swap transaction with the NBK.
Securities increased by 9% versus q two two thousand nineteen, mainly as a result of purchase of NBK note and Astana light rail transport bonds in the amount of 400,000,000 US dollars with 3.25% coupon rate. Interest income increased by 5.7% to 531,400,000,000.0 for nine months 2019 compared to 502,600,000,000.0 tingyi for nine months 02/2018, mainly as a result of increase in average balances of interest earning assets by 10.3%. Interest expense for nine months 2018 decreased by 5.7% compared to nine months twenty eighteen, mainly due to continuous repricing of retail term deposits following the decrease of deposit interest rate cut by current insurance fund. As a result of net interest income growth, net interest margin increased to 5.2% per annum for nine months of 2019 compared to 4.9% per annum in nine months 2,018 despite the negative effect from accelerated amortization of discount on the bank's silver bond in the amount of 7,400,000,000.0 t a m due to early partial prepayment on the 03/01/2019. Compared with q two two eighteen, interest income decreased by 2.6%, mainly as a result of increase of share of lower yielding FX interest earning assets in total interest earning assets following the repayment of swap transaction with the NBK.
Despite of this, in q three two thousand eighteen, the net interest income increased by 4.6 to 102,000,000,010 yen, mainly due to one off expenses in q two two thousand nineteen related to the amortization of discount on receivables on sale of iQIYI installments. As a result, net interest margin increased to 5.4% per annum for Q3 twenty nineteen compared to 5.1% in Q2 twenty nineteen. And net interest spread is from 5% to 5.3% per annum, respectively. The fee and commission income dynamics continued its positive trend in q three two thousand nineteen, increasing by 4.6 versus q two two thousand nineteen as a result of growing volumes of transactional banking, mainly in payment card operations and bank transfer settlements. The decrease in fees derived from cash operations in q three two thousand eighteen versus q two two thousand nineteen and q three two thousand eighteen was mainly due to increased volume of noncash transactions.
Fin commission expense increased by 10.1% compared to q two two thousand nineteen, mainly due to increased number of transactions of other bank cards in terms acquiring National Bank. Operating expenses for nine months 2018 decreased by 27.5% versus nine months 02/2018, mainly due to a loss from impairment of nonfinancial assets of 28,500,000,000.0 ten year in q two two thousand eighteen and cost optimization on the back of synergy effect from merger of KTV into the bank. On the back of lower operating expenses and high operating income for nine months 2019 versus nine months 02/2018, the bank's cost to income ratio decreased to 23.2% compared to 33.8%. Operating expenses for q three two thousand eighteen increased by 3.3% versus q twenty nineteen, mainly due to increase in salaries and other employee benefits as a result of increase in premium reserves in Q3 twenty nineteen. On the balance sheet, compared with the year end, the loans to customers increased by 2.6% on a gross basis and 2.5% on a net basis.
The increase in loan portfolio was attributable to increase in corporate loans, 1.7% on a gross basis, increase in SME loans, 0.4% on a gross basis, and increase in retail loans, 5.9% on a gross basis. The stage one gross loans grew by 5.6% from the beginning of the year, while the stage two and stage three growth loans decreased by 7.3%. Polar Bank's 90% NPL ratio decreased to 8.2% from 8.7% as of the end of Q2 twenty nineteen. Provisioning rates slightly decreased to 10.6%, and the ninety day NPL coverage ratio increased to 170 131.9. Cost of risk on loans to customers for nine months 2019 was at 0.6% due to one off payments of large ticket loan loans in 02/2019, while cost of risk on loans to customers for q three two thousand nineteen was at a more normalized level of 0.8%.
Stage three ratio continued to decrease from 18.6% as of the end of q two two thousand nineteen to 17.9%, mainly as a result of repayments of previously impaired indebtedness of corporate and retail borrowers. We're additionally showing here how well the work out of problem loans collateral was done by the bank of SPV during nine months 02/2019. On liability side, the deposits of legal entities and individuals decreased by 3.56.7%, respectively, compared to year end 02/2018, mainly due to partial withdrawal of funds by the bank's customers to finance their ongoing needs, including the repayment of external debt obligation of national companies and transfer of a part of FX retail deposits into USD denominated bonds placed at the National Exchange. As of the 09/30/2019, the share of corporate KZT deposits in total corporate deposits was 49.6% compared to 55.8% as of the 06/30/2019, while the share of retail KDP deposits in total retail deposits slightly increased to 42.2%. Compared with the q two two thousand nineteen, total equity increased by 8.8% as a result of net profit earned by the bank during q three two thousand eighteen.
The bank continues to maintain very high capital ratios. On slide 19, we are showing our selected strategic initiatives in digital space, such as customer centric transformation and loyalty program, leading to increased number of clients and volume of transactions. Whole digital division was created and external consultants were hired by the bank to develop these new initiatives. We continue to improve the functionality of online banking and enhance our digital product proposition. On the following slides, you may see that the number of Internet banking users is increasing as well as growing transactional activities of our clients.
This completes our presentation. Now we would like to open the floor to a question, please.
The first question received is from Andrew Kilios from Stab. Your line is now open, sir. Please go ahead.
Hi, good afternoon. Thank you for the call. I have a few questions. I can take them one by one. First of all, just in terms of your earnings guidance, I don't see any change in terms of your outlook for this year.
But given you've done €250,000,000,000 10 ks or so, so far, do you keep your €300,000,000,000 full year earnings guidance? And if so, are you expecting a fairly kind of significant drop in earnings in the fourth quarter relative to the past few quarters? Thank you.
Yes. Hello, Andrew. Thank you for your question. Yeah. While we typically do not update our outlook during our March results.
Yeah. Apparently, we see that we are in a good position to beat the previous guidance, which was standing at the area of 300,000,000,000. So we now feel that we can say that we expect consolidated net income at the level above $320,000,000,000.
Great. Thank you. That's very helpful, Murat. Thank you. Second question is on your capital and dividends.
Clearly, you continue to accumulate capital very impressively. And just in light of that and previous comments from the CEO on potentially seeking waivers from bondholders in order to be able to pay out a higher dividend, could you just give us your kind of current position and thinking on that and the dividend outlook? Would you say that there's any chance that you could payout above 50% for 2019? Thank you.
Thank you for the questions. Yes, indeed, during our previous discussions with investment community, we were saying that this is one of the area which we potentially could study. So we are currently in the stage where we are evaluating the possible actions in in that regard, but no decision is done yet at this point of time with regards to whether we would go and apply for waivers or not. So this is currently a work in process internally.
Okay. Thank you. And I guess a final question. Could you give us an update on the National Bank's asset quality review process? Just be good to hear you know, where things are with that.
And and and do you think that there's any chance that you would be required to write additional provisions as a result of this? Thank you.
The AQR process goes very well in terms of the the the process. It's with regards to our procedures, it's all gone all going according to to the schedule. So it's progressing well. With regards to any potential outcome, we think that it's too premature to discuss or to provide any guidance because currently, we're still in the process of providing the information and responding to the inquiries from from the parties which are engaged in the AQR. And we we are not receiving yet any feedback on the results.
So it's premature to discuss any potential outcome.
Okay. Thank you. I mean, can you give us any sense of the timeline involved in terms of when you expect this kind of process to be kind of wrapped up and kind of recommendations kind of suggested?
We expect it will be early, next year. From Okay. January to
Thank you.
We have no other questions at this time. Ladies and gentlemen, I would like to remind you if you have any further questions, please press 01 on the telephone keypad now. The next question received is from Arvind Wolf from QRG.
Congrats on the very strong results, and thank you for taking my question. Really quick question for you. Looking through your financial statements, I noticed that in the the fee and commission segment, the fees and payments on debit cards have increased a lot more than the revenues from payment cards since last year. What is the reason for this?
This is yes. Hello, Konrad. Thank you for your question. Yes. The fees and commission expenses grew somewhat higher than fees and commission income on on the on the card side.
This is due to the fact that we see because we are a large bank with with the largest post terminal network, we see increasing number of cards issued by other banks, which have been processed through our post terminal network. Saying that, we also have to mention that we have a number of initiatives also to increase our fees and commission income on the card side. The one initiative to mention is the launch of new loyalty program, which we launched at the 1. And we are planning to see on other initiatives going forward as well.
Thank you.
And the next question received is from Conrad Skilcover from App Capital. Your line is now open, Please go ahead.
Thank you, and congratulations for another set of solid results. Just on your comment on fee and commissions, it seems a little bit lackluster, and it's great to hear that you have initiatives in place. How long do you think it will take for so actually two questions for us to start to see a more promising trend in fee and commission income? And then kind of similar to that, it looks as if expectations for, GDP growth, in Kazakhstan into 2020 is, starting to look a little bit more positive. And, and I'm talking here ex ex oil.
So I wanna be clear on that. If what I see so maybe you can also tell us whether you concur with that view that we start to see a little bit more activity in the in the economy away from energy. Will we potentially see better loan growth in 2020? Do you start to see trends of that coming through the book?
Yes. Yes. Hello, Conrad. Thank you for your questions. With regards to fees and commission income, yes, you rightly pointing the dynamics which we see, the most recent dynamics.
As I mentioned in my answer to the previous question, similar question, is that we have a set of initiatives. It's it's around the client centric transformation, around the loyalty programs, around the our mobile application. So there is a set of set of initiatives on which we are working, and we expect them to announce once they would be coming on air. And we expect that this set of initiatives would improve dynamics on the fees and commission income. With regards to your second question, we also see that this year GDP growth is already quite, strong.
There are expectations that it will grow above 4%. We see that one of the main drivers is the government spending. We probably expect also strong growth in GDP next year. It's probably a bit difficult to say whether it will be purely on the ex oil side or but those or probably also including the the old part of economy because, as you know, there are three big projects running Kazakhstan. And particularly on one of them, on on TCO, there is a big project underway with a lot of capital spending, which also is one of the drivers, for example, for this year.
But otherwise, we see that there is a there is quite sufficient new loan, which has been underrate under underwriter, both on the retail part and on the corporate side, be it SME or or large corporate. The thing is that we see that the banks and I can also particularly talk about the Khalid Bank. We continue our workout process on the impaired loan side, which probably reducing the net increase, if you like. And also what we see on the large corporate segment is that the rates, being reducing, are still relatively high. That's why we also, you know, seeing that whenever the company accumulates sufficient liquidity buffers, they try to use that in order to prepay the loans.
So in order for this relatively good new loan generation to be translated in a net increase, we think that somewhat more cleanup of impaired loans should happen. And secondly, probably, the rates needs to to drop in order to, first, to stimulate further demand for the loans and also to decentralize the companies to prepay existing loans.
Okay. That's very helpful. Thank you very much. And and and maybe just to sort of round off this sort of looking a little bit into the future, If you kind of indicate we kind of well, we know we're running at TWD $250,000,000,000, you said TWD $320,000,000,000 is a reasonable number for the full year. So we will print somewhere around TWD 70,000,000,000 in Q4.
And that's sort of running slightly below well, a bit below what we've seen on average through most of the year. Does that mean that on the OpEx line or on the cost of risk line that there's something that we should be looking out for? Or can we assume that the status quo in looking out for those two line items in Q4 will remain?
Typically, there are somewhat higher OpEx books in the fourth quarter. It's a historic trend. And secondly, yeah, when I said three twenty, I mean I meant that it will be not less than three twenty.
Yeah. No, I got that. Yeah. Okay. That's that's helpful insofar as my question go.
Thank you very much. Good luck.
Thank you. Thank you.
The next question received is from Mikael Slammer from VLTV Capital. Your line is now open. Please go ahead.
Yes, good evening. Thank you very much for the question and for opportunity to ask a question and for presentation. I wanted to ask about the recent headlines which are actually coming from the National Bank of Kensington about the state of the unsecured consumer lending regulation in Kensington. Whatever you would be expecting an impact to come out of those initiatives and how they could impact both the pace of growth of the unsecured consumer part of the book, but also the profitability? And the second question is regarding the slide devoted to the new digital initiatives.
Specifically, it seems like that you are going to introduce a cashback option for the customer. What impact you expected to have on either your fee and commission income line, if it's going to be a fee and commission expense or on the operating expense going forward? Thank you.
Mikhail, thank you for your questions. One moment, please. Yes. With regards to your first question, yes, indeed, the Central Bank is taking the initiative to, let's say, tighten somewhat tighten regulation with regards to unsecured consumer lending. Specifically, they're looking at tightening risk weighted assets, risk weighting approach and also the definition of of income, which the which the customer is receiving.
We expect that in most cases, it will affect the customers with lower income and the customers with you know, who cannot prove fully the sources of income. Because we, as colleague bank, are typically aiming at the customers which are receiving salaries through us. So we rely on transparent and approved sources of of income, and we are relying on the customers which which has good employment. We expect that, it it would less affect Halib Bank than, than some other banks in in in the system. With regards to your second questions, second question, yes, the bonuses or cash backs, so they are typically showing in the fees and commission expenses.
We expect that since we launch that initiative, we probably first would see increase of expenses as a first result. But we expect that later on, it will attract more customers. It would stimulate the customers to make more payments. And, gradually, income parts would also grow in excess of expenses.
Thank you very much for this. If I may follow-up with two things. Just like first of all, in terms of the regulate retightening, when you expect this to take place and whatever it would happen in one go or in several stages? And the second one regarding the load expense, how you think this load expense would actually impact the overall pace of growth of fee and commission income into the next year compared versus 02/2019?
On regulation, we expect that they will introduce as of 01/01/2020, but they will be applicable for new loans. So then you have to see what is the average tenure of the loans. So there are banks which focusing on the shorter term loans. For us, the tenure for consumer loans is close to eighteen months. So that that element might also affect how quickly the new regulation would be would be would be translated to the whole portfolio of consumer or consumer loans of particular bank.
With regards to your question, we are currently in the budget process. And, typically, we are disclosing our outlook and guidance once we come in with the full year results. So we expect to do that March next year.
Okay. Thank you so much.
The next question received is from Simon Mallis from Citibank. Line is now open, sir. Please go ahead.
Hi. Thanks for the call. Just three quick questions. I see on Slide 21, you have some interesting statistics on issued cards and card transaction volumes. I was just wondering if you could give us your figures for both our market share or some kind of indicated market share for those two figures.
Second question would be just on your capital position. I mean, you're well above the minimum requirements. Just wondering what kind of buffers you think you need above your minimum requirements to continue to be able to lend effectively to your corporate clients? And then just last on lending growth, I mean, it seems that you are growing at a much slower pace on the retail than the sector. I think you kind of answered it.
It seems like it's related to your strategy and lending to salary accounts. But if you could comment on on why you're losing share. And then on the corporate side, actually, are you gaining share? Thank you.
Thank you for your questions. Just a moment, please. I think we got only your two questions, but I will respond first them and kindly would kindly ask you to remind what was your third question. On the card business, our according to our estimation, our market share is around 30%, so both in terms of card issued and in terms of the number of transactions. On the growth side, if we talk about the lending side on the consumer versus legal entities, we on the consumer side, there are two portions.
One is unsecured consumer lending, and secondly is the mortgages. On the mortgages, the market is growing start growing this year, but around 80% of that growth is attributed only for one institution. It's a state owned housing construction bank. So the rest of the banking sector is growing at much less pace than it is showing by the overall sector statistics. On the unsecured consumer lending, yes, we typically focusing on the people who are receiving salaries through through us.
That is probably translated in somewhat slower growth than some of other banks, which which particularly focusing on the unsecured consumer lending. But we're also doing that in more secured way, which is translated in much lower cost of cost of risk. And, also, we have to be aware how the upcoming regulations starting from next year would would affect the the growth rate sector wise as well as on on the on on on on on the particular players. Saying that, we also mentioned before that we're looking at other opportunities in the consumer lending. We have a number of areas where we also currently looking at.
And as as I mentioned before, we once would be ready to to to to announce them, we will do that in in due course. On the corporate lending side, which would include large corporates as well as SME lending, we, as SolidBank, traditionally has a very strong position, which on particular on the SME side, strengthened by acquisition of Kikidd. And this is the the area where we see high growth. I'm talking about the particular SME sector. And we see that particular segment is performing in terms of the growth very well this year.
So that probably would be the highest growing segment in solid bank in 02/2019. And could you please remind what was The your
question was on your your capital requirements. I mean, your current capital position is much higher. Just wondering what kind of buffer above the minimum requirements you really think you need to have to be able to kind of meet large single party exposure limits, etcetera.
Mhmm. Yes. There is no hard target or hard minimum, and I will explain you why. This is because, the calculations which we are doing, it is based on the Basel as well as the regulatory requirements. But for us, it is also important how, for example, rating agencies is calculating capital and capital adequacy ratio.
They're looking at the risk adjusted capital, which are looking at completely different set of risk weights on a different, segments of the portfolio. So they're looking at particular sector exposures, for example, consume, for example, construction, lending to the construction sector as as as as a matter of example. And, that's why for us, it's difficult to give any hard figure. But still, we think that with return on equity above 20 or 24%, with the growth in risk weighted assets at the level of five to 10%, we're still in position to improve our dividend payout ratio. That's why starting from this year, we amended the dividend policy as as you know.
So starting from this year, we said that, the minimum payout ratio would be 50%. And, yeah, you can refer to the first question which we discussed during the call
as well. But is there a level of capital at which, you know, you wouldn't wanna go below because it would impact your your rating? I'm just trying to get a sense of how far above the minimum requirements you you might be willing to go. I can
get you help. Again, please do not yep. Please do not take it as a kind of the hard guidance.
Sure. Sure. No. No. Of course.
But we feel that, yeah, the level of somewhat 15 and above is the level which we believe that we should be comfortable with our ratings.
Excellent. And then just maybe one follow on question. You're talking about potentially higher risk weights on consumer lending, I think. Do you have has there been any indication of what level or would it be somehow tied to the APR as it is in Russia for consumer lending?
It's, let's say, table which, has a different, let's say, references to different aspects and which are translated at different level of risk weight risk weighting, but the maximum is going up to 300%.
Okay. Thanks very much.
But but it's kind of odd. You look at the different risk parameters, and then it says that it's it's a 100, a 150, 200, and the maximum for the most risky type of loans. It's it's a it's a matrix which incorporates the the loan parameters as well as the borrow parameters. So the highest risk weighting can go up to 300 on the particular on particular loans to particular customers.
But but I guess given your the the nature of your book, you you would probably have a lower risk weight than the 300 maximum. Right? That's fair to assume.
Yeah. Yeah. Sure. And and even for for even for other banks, you might have different tenants for the loan. You might have different different debt service ratio for the for the customers.
You might have different situation with his proof of salary. So there are different components which are taken into account. So in in the typical portfolio, you you have different sub portfolios to which you would apply different risk weighting. But for our bank, we expect that majority of of loans should have lower risk weighting than average for the sector.
Okay. Thank you.
The next question we received is from Andrew Mikhail from SADAC Capital. I
have two sets of questions. The first one is on this one off effect on your NIM in Q2. What would be the magnitude of such effect in Q3, if any? And what's the outstanding value of that receivable that gives the effect? And the second set of questions on consumer lending.
You mentioned a number of new initiatives. Could these include the purchases of existing loan books from other banks or maybe stakes in other banks which are doing consumer finance mostly? Thank you.
Yes. Hello, Andre. Thank you for your question. With regards to your question on the second quarter impact on the net interest margin, yes, there are few assets which have been sold by our SPVs in the second quarter. As far as remember, the total value of those assets was at the level of close to 15,000,000,000.
And because they were sold with some with some repayments, it it it sold in installments. Repayment should be coming in the next few quarters. We have to discount to the present value of these receivables. And the amount of of that discount was equal roughly to 7,000,000,000. But with every quarter, we expect that discount should be amortized back to the face value of of the of the transaction.
So it's a temporary effect on the net interest income.
Alright. Just to make sure, I meant third quarter, not the second quarter, and I think you meant it too. And did understand you correctly that the effect in nominal terms should be similar in q four to that in q three.
So there was a we didn't have any special in the third quarter. There was some somewhat decrease in net interest margin in the second quarter, and that was, as explained, due to due to discount on receivables. But this is a timing difference, so we expect that discount would be amortized in coming quarters. Yeah. If you your question is whether the impact of amortizing discount would be similar would be same in the fourth quarter compared to third quarter, yes.
It should be more or less the same.
Alright. Yeah. Thank you very much. Everything is clear on this one. And the the question on consumer finance?
Do I understand correctly that your question was whether we're looking at at acquisition potential for
Yeah. Maybe some especially? Yes. Exactly. But not maybe other banks, but maybe portions of their books.
No. We are not looking into such opportunities.
I'm sorry for another clarification. So you aren't looking either at buying stakes in other banks or buying existing books of such banks. Is that correct?
Yes. We are not looking either in acquiring any bank, be it retail or nonretail. And, also, we are not looking into acquiring any great portfolio, be it retail or nonretail.
Okay. Thank you very much for this. Thank you.
And we received a follow-up question of Andrew Kilios from Spec. Your line is now open, sir. Please go ahead.
Hi. I just have another quick question on the margin. Mean, your the third quarter margin was obviously pretty strong relative to generally how you've been guiding kind of margin over the last few quarters and you've generally been of the view that kind of 5% or so is a kind of sustainable level. I mean, do you think that the this kind of quite elevated third quarter level can be sustained perhaps over the next few quarters? And it seems like one of the reasons for the higher NIM in third quarter is quite a strong drop in the cost of deposits.
And if you could just shed any lights on what's happened there, that would be helpful. Thank you.
Andrew, thank you for your question. Just a moment, please. Yes. We do not see any big changes to NIM, which during recent quarters was between 5.1% to 5.4%. So expect that largely NIM should remain in this range.
Thanks. And is there any particular reason why the cost of deposits fell quite strongly in the third quarter?
Yes. According to our calculation, there was there was decrease in cost of funding, but it was kind of 0.1, 0.2, probably, percentage points. We think that that was basically due to repricing of retail deposits, which have higher higher than us typically compared to the corporate deposits. And there was still some retail deposits which was maturing and being repriced, But that was, I think, for not material portion. There might be impact of changes in the currencies because there are some fluctuations between dollar and Tingue deposits.
And they're fluctuating around certain split between these two portions. And in some quarters, there might be higher portion of dollar deposits, whereby during certain momentum, it might impact the overall cost of funds. But, generally, we didn't see some big shifts in the cost cost of funding, recently.
Okay. Thank you.
And the next question received is from Sam De Ojo from Haagen Laval. Your line is now open sir. Go ahead. Thank you very much. Sorry, my questions have all been answered.
Thank you. And we received a follow-up question of Konrad Skilka from Ether Capital. Your line is now open, sir. Please go ahead.
Thank you. Yes, I just wanted to follow-up on all the questions on the NIM margin. Could you perhaps explain or give us an indication? You mentioned that the SME side loans is growing pretty well. Is that a contributor to the NIM margin, the mix effect that's coming through from faster than well, not faster than expected because you did tell us several quarters ago that this is an area that you focus on.
But can you provide us with some insight on how much that contributes to number expansion, the mix effect?
We probably for us, it's difficult to point any particular area which, let's say, contributed to higher net interest margin. I think it's a combination because our consumer lending has been growing. Our SME portfolio has been growing. But we also saw probably a higher drop in the interest expenses. And I would also add because those similar to the to the previous question, I should also add probably that in the interest expense, we saw that our general trend in the interest expense is was was better, so due to previous partial repayments on on bonds.
So there's no, I would say, particular area where we should say that was the main contributor to the net interest margin dynamics. So it's a combination of factors.
Thank you very much.
We have no further questions. Dear speakers, back to you for the confusion.
Dear, ladies and gentlemen, thank you very much for participating our call today. As usual, our IR team remains open for any further questions. Thank you very much. Bye.
This concludes today's conference call. Thank you for your participation. You may now