Hello everyone. This is the Earnings clCall for the Second Quarter 2025 of Citi Handlowy. My name is Adam Piotrak. I'm the Head of Investor Relations. I'm with Maciej Kowalczyk, the Head of Strategy and Investor Relations Department. He will go through the presentation. The presentation is available on our website, investorrelations.citihandlowy.com, or you can see it on your screen. Let's start. After the presentation, there will be a Q&A session. Maciej?
Thank you very much, Adam. Welcome to all of you. Thank you for joining. Let me start with page two, which is a summary of key events in the second quarter. What happened on the consumer banking side? Maybe I'll start with the business where we announced on the 27th of May that we have signed the sale agreement, which we published to the market. Following the signing of the agreement, we have also updated the strategic directions, which our Bank for Global Business, this was also communicated to the market. We had prepared the merger plan, and we are well on track to transfer the consumer banking operations to the buyer, which, as per plan, is scheduled for mid-2026. There is a series of different approvals, including the regulatory approvals, so we will be executing to get this.
In terms of our strategy implementation, we walked the talk in a way. As you will see in the material today, there's high dynamics of lending growth among the institutional banking clients. We announced the payout of the second highest dividend in the history of the bank from 2024 profits. This was PLN 1.3 billion, which translated into 8.3% dividend yield. We informed, in fact, last Friday about the KNF approval for the payment of 2019 profits in 2025, which is additional PLN 449 million that will be paid to shareholders. Now, moving on, a brief introduction on how we changed the reporting structure of the bank. It's the first time that we use IFRS 5, which is about assets held for sale and discontinued operations.
We have classified the consumer banking as discontinued operations, and the remaining part of the business will be presented as continued operations, sticking to the accounting terms. This includes institutional banking. The institutional banking covers, as you see on the slide, three main areas of activities. The first one is markets. This is both the client business and professional markets. The second one is the services, which covers transaction trade solutions and custody activities. The third one is banking. It's both the lending portfolio and the investment banking activity of the bank. We will be presenting the revenue split following these three areas. Going forward, there will be more details around the areas of activity. Now, moving on to page four, which is a brief summary of the financial results. A snapshot of key figures at the total bank level. The revenue of PLN 1.1 billion.
The net profit impacted by one of related to the consumer bank exit is at PLN 166 million. This translates into return on equity of 17.9%, with strong balance sheet growth, strong double-digit figures here. 14% growth in lending and 19% in deposits, with a carried-out strong capital ratio of 27.1%, TLAC 3A ratio. Key highlights in terms of the Q2 and activity. I think it's worth highlighting the net profit excluding the transaction loss. This was PLN 546 million, 26% quarter-on-quarter growth. In terms of the lending, I have mentioned the balance sheet growth. The lending growth is above the banking sector average, with loan volumes growing at 7% quarter-on-quarter in institutional banking. The revenue growth of 7% quarter-on-quarter was partly due to strong performance in financial markets, which I'll be covering on the following slides. We have reaffirmed our market-leading position in Poland in the custody activities.
Just to remind you, our market share is over 40% in custody. We are exiting consumer business, but it's been the third consecutive quarter in increase of retail deposits. The Citigold private client portfolio is also growing by 5% quarter-on-quarter. All in all, good trends in the consumer banking business. Coming back to the institutional side, page five is the business volume slide. As you can see, as per our strategic directions that we are executing, that was a quarter of strong dynamics of client assets. 7% growth, which is above the banking sector of 2% quarter-on-quarter, even 19% vis-à-vis the banking sector of 6% year-on-year. It was commercial banking and corporate clients that were primarily responsible for the growth. On the deposit side, also strong volumes with deposits growing quarter-on-quarter 12% versus the banking sector of 6% and 27% year-on-year growth, with the banking sector growing at 20%.
The financial markets trends, the drivers, I would point to value of transactions concluded through the brokerage house, which was up 63% year-on-year. Strong client FX transaction volumes with 7% growth. Very healthy growth in trade finance assets with 47% growth in the portfolio year-on-year. Also the relationship banking where new financing increased by 36% year-on-year. In terms of the volumes, the representation here is the transactions. As you see on the slide, several transactions ranging from FX Solutions for Jeronimo Martins, which was tailor-made, in fact. I think talking about FX, it's worth mentioning that we have launched Citi Velocity platform, which is our new platform, completely revisited in terms of user experience design and functionalities with automation of transactions. This also includes reporting and research. There is an option to integrate with client systems. Very much state-of-the-art new implementation that is well valued by our clients.
We have been supporting Allegro in transactions around accelerated liquidity offering. As you can see on the slide, we were sole partners supporting liquidity of the Polish Polski System Kaucyjny, which is a recycling company around product packaging. We have also granted the syndicated loan. We were in the syndication of the company from the IT sector, and the amount was PLN 1 billion total. Coming back for a second to the consumer banking business volumes, this was another solid quarter there. Growth in lending in line with the sector at 2%. It was both in mortgage and unsecured loans, which grew 2% quarter-on-quarter.
With deposit, flattish 1%, but as you can see on the trends, high volumes of deposits and also FX volumes were growing with 2% year-on-year growth in terms of number of transactions in Citi Kantor, our FX tool available online, and 1% growth in FX volumes on the consumer side. I have mentioned in the beginning the private banking segment, strong double-digit growth rates in terms of the total relationship balance, as well as the number of private clients. Slightly flattish or down trends in terms of the card volumes. The card transaction value was flattish, in fact, 1% down domestic, and cross-border was down 7% year- over- year. Not going into details on the next slide in terms of the Global Community Day, I think it's just worth mentioning. We've been doing the volunteering projects for 20 years now.
It's an important year for us where we are present in the different volunteering programs. We are supporting different disadvantaged groups, and we carry on work for the environment. 2,300 volunteers with more than 13,000 hours and 20,000 beneficiaries in the whole program this year. Something to be proud of, definitely, and something we do for the community we operate in. Just briefly on page number 10, which is the implementation of IFRS 5, this is linked to the carve-out of the consumer bank and presentation of the discontinued operations. As you can see on the walk, that's the walk on the bank's net profits and how we arrived at the PLN 546 million of net profit, excluding the loss on transaction. The loss was PLN 381 million, and the reported net profit, as you can see, is PLN 166 million.
Happy to give you more details in case there are questions. Just one point to note, the PLN 381 million number, this is the conservative view. This doesn't include the PLN 100 million earnout. If we recognize the earnout, this would be recognized as revenue in the next year. The revenue page, which is page 11, this is the institutional banking revenue, so the continued operations. The revenue is growing both quarter-on-quarter and year-on-year with 7% quarterly growth and 3% yearly growth. I think strong Q2 with strong markets business and realized gains there. As shared with you, definitely a set of solid business volumes in this quarter with growth of assets around 19%. Strong custody, strong foreign exchange activity, and strong trade. These are the businesses I would point to.
If you look at the revenues in terms of the management view on the three areas I have shared with you in the beginning, markets represent 43% of the mix. Services are 51%, and banking is 6%. The consumer banking revenues amounted to PLN 276 million. This is a decrease of 7% year-on-year, and this is a function of falling interest rates in the second quarter. The net interest income, following the 50 basis points decline in rates, is slightly down 3% quarter-on-quarter and 5% year-over-year. The PLN 530 million net interest income in the second quarter, the decline in rates is slightly compensated by the growth of the lending portfolio. If you look at the right-hand side and the dynamics of interest income from the non-financial clients, they are up 22% quarter-on-quarter and 24% year-on-year. The consumer banking net interest income amounted to PLN 232 million.
This is again the function of the rate sensitivity on the consumer banking side. In terms of the fees, which are on the next page, they are 4% down quarter-on-quarter. There was a one-off transaction in the first quarter, the IPO-related revenue that we booked. There were no significant one-offs this quarter, so more on a comparable basis in terms of the fee. Year-over-year, it's ex-one-offs and it's 3% growth. In terms of the consumer bank, PLN 40 million of fees in the second quarter, slightly lower fees. This is a decrease of 9% year- on- year. Slightly lower fees in the installment products, which on the other hand, we have reported an increased fee in the investment product sale. All in all, the quarter-on-quarter fee revenue is kind of stable. The treasury activity, 15% growth quarter-on-quarter, strong performance here.
Realized gains, as I have shared with you, that you can see on the treasury results graph, 10% growth year- over- year. We have reversed the trend of the revaluation reserve, which is positive news on the page. Now, moving on to expenses. We carry on the cost discipline. If you look at the graph of the operating expenses, you see that the costs were down this quarter. They amounted to PLN 171 million. The first quarter was impacted by one-offs, primarily due to the regulatory expenses. The first and the second quarter are hardly comparable. However, I think what stands out is the cost-income ratio of 20% on the quarterly approach. When you look at the types of expenses, we have recorded growth, but it's primarily staff expenses and regulatory expenses that have been growing in the first half of 2025.
All in all, the cost base was flattish with 1% dynamics. In the consumer business, the operating expenses amounted to PLN 223 million, which is an increase by 23% year- over- year. I would point to three components of the growth: the regulatory costs, so the BFG charge, the transaction-related expenses. As you know, we are in the process of exiting, and there are some specifically transaction-related costs that we have booked. There is also an increase in the staff cost line on the consumer banking side. Cost of risks. Cost of risks, only PLN 1 million of provisions booked in the first quarter, which is again the reflection of the high quality of the lending book that we carry on the books, better than market coverage ratios and NPL ratios. The cost of risk on the consumer banking side is at PLN 1 million.
The positive result of write-offs and the positive impact was driven by the NPL portfolio side and also positively contributing to the PLN by PLN 10 million. You see also the coverage and share of stage three, where we are significantly better than the banking sector. In brief, this is the set of figures that we wanted to share with you for the second quarter. Some new reporting cuts, as you have seen, and this is something that will be continuing following the implementation of IFRS 5 this quarter. I might expect some questions around the numbers, so we are opening the Q&A session just now. I believe it was clear for everyone. There are no questions. Thank you very much for joining. We are available, you know, both by email and on the mobile phone. If you need anything, just reach out.
Again, thank you for your time and have a good rest of the day.