Hello everyone, and thank you for joining, the presentation of preliminary financial results for Q4 2022 and full year 2022. I'm Maciej Krywoniuk, responsible for strategy and investor relations in the bank. The presentation we will be sharing with you today is available on our website, so you can find it under Investor Relations section. We've got together today with us Natalia Bożek, the Chief Financial Officer of the bank. I will hand over the floor to Natalia in a second, and we are inviting you to the Q and A session following the presentation. Natalia, I hand over to you. Thank you.
Thank you very much. Good day. Good day to everyone. Thank you so much for joining us. It's a very good day for us. It's disclosure of our preliminary financial results for the fourth quarter, but at the same time it is just a mark of the overall 2022, which appears to be a great year for Bank Handlowy. When we look at the summary in a nutshell, basically the bank recorded the record high net profit of PLN 1.5 billion, which was primarily driven by the growth in revenues, 55% year-over-year, resulting from the both customer business and preliminary our value proposition, which we have our strategic segments.
Also from the high interest rate environment and the repositioning of our, of our balance sheet, which resulted in the, in a, in a very good performance of our professional markets. Together with the controlled expense environment, our operating margin increased over 100% year-over-year. Basically when I look at the return on equity, it is at a very high level of 24% above the cost of capital and clearly above the level of inflation. We were focused during 2022 in a number of actions, among which was one, it was one important topic related to the executing our green asset goal. Basically we are realized 38% of this goal set for the three years.
That was a very good indication of how we are performing against ESG strategy. Also we executed the growth in of the assets portfolio in a commercial banking segment, which is one of our strategic client segments. When we look at the client activity, clearly there was a visible progress made in consumer business. When we look at the number of Citigold Private Clients, it increased substantially year-over-year, followed by the growth in deposit volumes.
Also when we look at the customer FX, it's a great achievement because we've been actually disclosing to the market on a quarterly basis that our FX revenues are reaching some very high levels, yet every single quarter it feels like we are beating them, achieving 30% growth in FX volumes year-over-year, and at the same time, revenue of 13%. That was in a nutshell the summary of the 2022, actually let's focus on the fourth quarter and see. Let's see sone trends, whether they have been presenting the trend which we've already observed or anything special worth highlighting happened in the fourth quarter.
In a nutshell, I would say that the fourth quarter was a continuation of the strategy which the bank started executing some time ago and which proved to be very effective. There was a commitment given to the improving profitability of the consumer business and maintaining value of the business, and that was clearly visible in the space of growing the revenue in the consumer business space. That was not only executed in line of the high interest rate environment, which was reflected in the unsecured assets, but also was driven by the growth of our liabilities, especially in the wealth management proposition.
When we look at the private banking, as I've mentioned, clearly a very significant increase of the clients and some pickup already visible in terms of the domestic transaction volume on the credit card business. The second important product within the consumer business space. Institutional banking is clearly an execution of the strategy which the bank decided to implement since the beginning of 2022. That was very much in line with growing volumes on the small and medium enterprises, so so-called commercial banking segment. It was a strategy of maximizing net interest margin on the back of the best allocation of the bank's liquidity.
That obviously speaking about liquidity, the liquidity improved significantly. Currently, at the year end, loan to deposit ratio was on the level of 43%, which is very much visible by the growth of deposit of 14% year-over-year, with overall growth being loans by 1%. The financial performance of the fourth quarter was basically had some records. Clearly, the revenue for the quarter was the highest in 2022, exceeding PLN 1 billion. The net profit on the level of PLN 479 million, which is basically the function of pretty well-controlled expense, despite the high inflation and some moderate growth in the cost of credit.
When we talk about the business activity, I would say that the business basically, as mentioned, executed quite a few transactions. Some of them were very much in the area of our green assets growth. Some of them were very much related to the strategic areas of our business. It happened to us to be also awarded for the product which we basically offered to our client in the category of working capital award for the best use of supply chain finance. When we talk about the volumes, briefly, actually, that's clearly visible that institutional banking is doing very well in many fronts. The growth of the deposits is visible year-over-year, quite substantial growth. slightly below the sector.
We've basically grew our deposits in the ICG business by 4%. Actually in some areas, the year-over-year dynamics were extremely high, like, in the commercial banking, 32%, or within the space of our multinationals, 16%. The loan volumes, also in the core strategic segments, were quite substantial. 18% in the commercial banking and the same level of growth visible in our multinationals. While the corporate clients, given the postponement of some investment, saw a lower need for financing at this point in time. Transactional volumes, I would say, are looking quite promising. In terms of the FX volumes, the ICG volumes saw some decline year-on-year, but at the same time, the bank realized higher revenues on the better margins on these volumes.
Transactional banking is quite a good story in terms of the corporate corporate cards and maintaining quite a high number of transborder, cross-border money transfers. Consumer business, the volumes look, I would say, it's not a surprise. I must say when we look at the consumer business, the loan volume is being affected by the high interest rate environment. With the current interest rate level, there is a lack of appetite or at the same time, ability in terms of the customer credit worthiness to take new loans volume. Basically, the appetite for loans in both unsecured and mortgages has decreased. Basically, the year-over-year dynamics are quite visible.
14% drop in unsecured lending and the mortgage loans, which were always our driving product, growing product, at this point in time also sees challenges in terms of the volumes. When we look at deposits, deposit volumes are doing just great. Overall, on year-on-year level, it is 6% growth, which is above the sector. It is very much driven by our value proposition to the wealth management, wealth management proposition to our Citigold CPC clients. What is visible as switch between time deposits and current account balances, which is also a significant sign of the current sentiment of our wealthy clients.
Given the equity market and sentiment towards investment and insurance products, the deposit, time deposits with this level of interest rate environment are more favorable from the client's perspective. Transactional volumes, they look quite promising. When I look at FX volumes in consumer business, significant increase year-over-year. What is really worth highlighting is that actually the technology solution which Bank Handlowy implemented some time ago is basically extremely successful. 73% of our transactions are being processed via electronic or online via Citi Kantor. In terms of the credit cards, basically, we see both actually. Value of the cards transaction increasing in terms of the foreign transaction as well as domestic ones.
There is a sort of a pickup in the trend which we currently see in the consumer business. The page, just a reflection on the page of number nine. It's a reflection of our commitment to corporate social responsibility, and this is just to highlight that throughout the year, which appeared to be extremely difficult one, given the market developments, Bank focused on maintaining its promise to society, helping Ukrainian, providing a lot of educational activities and boosting online safety, and also supporting professional women from both Poland and Ukraine in developing their professional career. When we look at the numbers, page number 11, talking about revenues. Clearly, the fourth quarter was a great quarter.
over PLN 1 billion in revenues and a significant growth which we see in both legs of our business, not only quarter-on-quarter, but also year-on-year. When we look at the institutional banking, 34% growth compared to the prior quarter is a result of the repositioning which the Bank started doing at the beginning of last year. Investing liquidity into debt securities and placing them in the financial instruments which are delivering the best outcome of two. Maximizing net interest income and at the same time protecting the value of our capital. Consumer business is reflecting the growth of quarter-on-quarter, even excluding the impact of credit holidays, which were recorded in the third quarter.
The fourth quarter is growing 12%. This is on the back of the liquidity and on the back of the increased margins on the unsecured lending. The story about the institutional banking and the client revenue is very promising. It's still high, very high double-digit growth, despite the fact that this is slightly lower compared to the second and third quarter, which we saw this year. The reason of that is very much driven by the fees and commissions, which we saw higher in the space of episodic deals, which were still with us in the beginning of last year.
The primary driver of our year-on-year success in terms of the growth of the client revenue is very much interest income on the back of the assets growth, high transactional volumes in terms of the FX increasing our revenue 13% year-over-year, and at the same time, the challenge which we see in terms of the net fees and commission income on the back of lack of episodic deals. Net interest income, the biggest contributor to the growth in revenues is a good story in both legs of the business. Consumer business is growing despite the...
is growing more than we, so unsecured lending and the liquidity which we generated in the consumer business is giving a higher revenues, offsetting the increase of the cost of interest which Bank Handlowy is paying on the back of the deposits and the product mix. Currently, as we've mentioned a couple of slides ago, there is a switch between from current accounts to time deposits in the consumer business space, and that is actually a value proposition which also Bank Handlowy maintains towards the wealthy clients in the lack of sentiment or appetite for investing into investment and insurance products.
The net interest margin is increased substantially, reaching 584 basis points in the fourth quarter, and that is very much driven by the debt securities, which is clearly visible on the bottom right side of the slide. We're representing the change in the liquidity over quarters and the change in the debt securities for the last five quarters. Net fees and commissions, I would say feels like they are under pressure. When we look at the absolute numbers year-over-year, the fees and commissions declined 17%. We see some pickup in the fees and commissions quarter-on-quarter. That is, however, not necessarily visible in equally in the both leg of the business.
While the ICG business is delivering very well on fees and commissions despite challenges on the brokerage side, the loans, custody, and transactional banking is doing great quarter-on-quarter. Some of our products are doing very well, like transactional annuity business is doing well also year-over-year. For the consumer business, the story is more like mixed. On the one hand, we have lower fees and commissions as a result of investment and insurance product, which basically are accounting for a significant portion in the total fees and commission share. On the other hand side, we see the decline in fees and commissions on the banking accounts and credit cards, which is a sort of a sign of the specific interest rate environment we are living in at this point in time.
For the consumer business especially, the high interest rate environment is basically an unfavorable factor for the clients to pay more on the fees and commission front, as there is a certain appetite for the consumers to pay for the relationship with the bank, with the banking. Naturally, in the high interest rate environment, fees and commissions are basically under pressure. Treasury. I've just mentioned that we've successfully executed the strategy which we had over the last couple of quarters of repositioning our balance sheet structure, making sure that we can optimize net interest income and at the same time improve revaluation reserve from the IFRS portfolio, protecting the capital.
As a result of the change which we've managed to implement in terms of the e-debt securities as well as taking some losses in the third quarter of the last year, while repositioning our portfolio. Basically, we improved our capital, our valuation, mark-to-market valuation on IFRS portfolio by 27%, and at the same time, we substantially increased interest income coming from that business line. The other part of the treasury activity related to the FX is a great story, as I already mentioned, that despite the fact that we reached very high levels of transactional volumes and revenues coming from FX, we continue to beat every single quarter the revenue generated from that business line.
Last quarter, we saw a little bit of the slowdown in terms of this growth, but this growth was still visible by 1% compared to the third quarter of 2022. Treasury results, overall, including the professional market and customer lag, is very much a success story, increasing by 63% year-over-year. Expenses, what I would say is, it's a very good story. Although we see some growth in the areas which are basically associated with the inflation or revenue generation. PLN 316 million for the fourth quarter and a very efficient level of expenses, reaching the cost-to-income level of 30% is a story of the growth in staff expenses quarter-on-quarter.
Year-over-year is quite a justified solution driven by TIR. It might feel like a surprise that quarter-on-quarter expenses in staff expense area are growing by 20%. The growth is very much correlated with one-offs, positive one-offs taken in third quarter related to the holiday accrual release, which was the case in the third quarter, and therefore, it's a driver for the increase in the fourth quarter. Also is a driver of the incentive higher accruals for incentive compensation driven by the growth of revenues. Administrative expenses, they are growing quarter-on-quarter, primarily reflecting the cost of Senatorska branch modeling. We have just started the renovation of our headquarter.
Some expenses which were not attributed to depreciation have been already taken in the fourth quarter. When we look at the year-over-year comparison, administrative expenses do reflect investment in our IT costs. They do reflect higher marketing expenses driven by the higher inflation, and therefore, distribution expenses are higher. They also year-over-year, in terms of the full year, reflect the growth in the regulatory expenses. Although in the fourth quarter, we released some of the costs to our Bank Guarantee Fund on the back of the adjusted expectation coming from the regulator in terms of the funds to be contribution to be paid.
When we look at the cost of risk, this is an area which could trigger potential concerns when we look at the cost of risk in terms of nominal value, but more importantly in terms of the basis points. When I recall the conversation which we have had over the last quarters. The bank's commitment, presented by me was the declaration of the cost of risk in the range of up to 50 basis points. When we look at the last two quarters, it feels like we have exceeded that bank's commitment or expectation.
What I wanted to say is that actually the last two quarters were clearly the quarters of reflecting changes in the macroeconomic environment and assumptions, primarily driven by the change of the GDP, which in 2022 was close to 5%, now is estimated to be less than 1%. It was driven by the lower expected investment as well as high inflation. That macroeconomic assumptions have been reflected in the models to reflect the statistical provision or macroeconomic provisions for the future. Basically the growth of the cost of risk is more like the one-off or episodic reflecting the potential changes in the portfolio given the macroeconomic scenario rather than worsening of the portfolio.
That story is basically visible in both legs of our business, institutional banking and consumer business. The consumer business also saw the macroeconomic statistical provision for the portfolio driven by primarily by very high inflation and inability of the customers to pay their debts. As mentioned, this is more like a statistical with no clear signs of worsening of the client portfolio at this stage. With that, basically, we are coming to a summary of the financial results. Maybe just to reflect on couple of items. The revenue growth is a great story. Clearly it's visible that the key driver of the growth is net interest income.
When we look at the expenses, 11% on the year, on the full year basis, given the inflation, given some strategic investments which we have assumed for both institutional clients and some especially in the cyber space, but also in the space of the transactional volumes in the consumer business we decided to invest in, are also gets reflected here. Higher regulatory expenses, it is, it is basically a very good story. If we think about that additional charges which were in post on the bank, 11% growth, I would consider as quite a justifiable growth given the current market environment and pretty good management in terms of the cost-to-income ratio.
When we look at the impairment losses, clearly for the full year, they are higher than we saw them in the last year. Clearly the last year was a level of cost of risk impacted by the release of COVID or pandemic provisions. When we look at net profit, over PLN 1.5 billion for the full year, driving a very good return on equity, improvement on assets and very stable and safe TCR ratio above the regulatory minimum for 2022. With that, actually, I would pause here. Thanking you for being with me for the last 30 minutes.
Thank you, Natalia. Now it's time to open up for questions. Any questions you have following the presentation, it's the time to unmute yourself and come up with a question. I hear no questions, I guess if there are no questions, you can always reach out to us, either by phone or via email. From my side, thank you very much for joining today. Natalia, do you want to say a few words in the end?
What I wanted to say is actually, thank you very much. It was a great year for us, hopefully the next year will not be worse. With that, actually, thank you so much and have a good day.
Thank you very much and have a good day.