Good afternoon, everyone. Welcome to Citi Handlowy third quarter 2026 financial results. My name is Adam Piotrak. I am the Head of Investor Relations team, and I am with Maciek Krywoniuk, Head of Strategy and Investor Relations Department. The presentation is available on our website, is also on your screen. We will walk through the key business highlights and financial results for the third quarter, and then we will have the Q&A session. With that, I would like to over to Maciek, who will take you through the presentation. Maciek, over to you.
Thank you very much, Adam, and welcome everyone. Thank you for joining the earnings call of Citi Handlowy for the third quarter 2026. Let us start with what you see on page number two in the presentation, which is a brief summary of the quarter. I would say it has been a quarter with definitely strong business volumes, which translated into top-line growth. The top line grew 10% quarter-over-quarter and 3% year-over-year, and it reached PLN 764 million in the third quarter. When you look at the net income level of PLN 288 million, this is slightly down compared both to quarter-on-quarter, as well as year-on-year.
It has been primarily impacted by three areas, investments in technology, I will cover it later on in the deck, the result from the discontinued activity, and higher income tax rate for corporates, which is the new normal we are operating in. However, the return on equity at 18.6%, it has been at a healthy level. What is important also is the total capital ratio at 24.3%, which gives us room for supporting our client needs and growing our balance sheet. Talking about balance sheet, the lending grew the loans +11% year-over-year. The deposit book recorded a 10% growth year-over-year. Moving on into more details on the volumes, which is page number three. When you look at the loan volumes at the left-hand side at the top, we almost reached PLN 11 billion, which is flattish quarter-over-quarter, very similar to the banking sector.
However, when you look at the year-on-year horizon, the growth of the book was +11% vis-à-vis the banking sector of 4% growth. This is a reflection of the business activity, especially among our top clients. When you look at the segment split, you will notice that the Global Clients grew 27% year-over-year, and the corporate client segment grew by 17%. The deposit volumes, the deposit base is growing year-over-year, with 10% growth. There is a decline of 5% quarter-over-quarter, which is linked with the consumer bank transaction. We have declined the deposits in line with transactional needs that were there in June, and they are not required anymore.
However, when you look at the growth of liabilities of our clients, we would point to corporate client segment, which noticed +30% year-over-year in the dynamics, with other segments also growing year-over-year. A few words on the products. This is where we share with you our core competencies, especially Financial Markets, where transaction volumes grew by 47% year-over-year. It is also our pleasure to share with you that our brokerage team was very active this quarter. The value of transactions that were concluded in Q3 was up 40% versus last year. Healthy transaction activity in terms of the payments area. Trade finance assets were up 32%, and our custody business, which is a market leader, grew 35% year-over-year. In the relationship banking area, we have been also active.
We granted PLN 1.5 billion in new financing, of which almost 30% were investment loans, reflecting the activity I have been referring to when commenting on the lending volumes. Talking about business activity on page four, this is a brief summary and just a representation of different products and industries that we operate in and where we support our clients. You see that XTB, where we were present in the accelerated equity offering of shares, this is the area where we were able to capitalize on the synergies with our group, and also guarantee line for client from defense sector. This is one of our core priorities in terms of our strategic plan. We want to be present and we want to support clients in the defense space.
Last but not least, syndicated loan in the pharmaceutical sector, which was a refinancing, but aimed at developing the business of our client from the pharmaceutical sector, namely Polpharma. So we want to be present in all key transactions. These are the public ones which we can share with you. There was much more this quarter, and it is in a way reflected in the top line that we have reported in Q3. The next page is something that we organize every year. I think it is the third time in a row where we bring the global content to Warsaw, and we share it with our clients. We traditionally do it in Q3 just to fit into the planning calendars of our clients.
This is a macro conference that I am referring to, held in Warsaw, where guests from all over the world, they shared their views on the government affairs.
It was before midterm elections in U.S., so very interesting insights before the election, and now we know the outcome. Some views from our chief economists from New York on the macro trends and what we see and what we expect in the macro environment. Very interesting insights on the commodities, and to keep the local flavor as well, we have discussed the defense-related opportunities and what is happening in the defense industry. Good feedback from our clients on this, and they find it really useful. Moving on to page seven, which is the revenue page. As you can see, the revenue was up both year-over-year with 3% growth and quarter-on-quarter with +10%, around PLN 70 million of delta between Q3 and Q2. When you look at the segments, Financial Markets, strong performance, +23% quarter-over-quarter. Flattish quarter-over-quarter results in the corporate banking.
Activity of our clients in the FX area, which I referred to in the previous pages, behind the growth in the top line in the financial market segments. The good news in services is that trade finance assets were up +30%. The book is at PLN 7 billion mark, and it is supporting actively the net interest income and fee line in our P&L. You can see the client revenue quite diversified and healthy mix with transactional banking responsible for almost half of it, FX and capital markets 37%, relationship banking and custody with 7% share in our revenue mix. Moving on into more details on the net interest income line, which is page eight. It was +4% QoQ and -7% year-over-year.
Both segments recorded positive dynamics on a quarterly basis, the corporate banking +5% and financial markets +3% QoQ. I would draw your attention to lower interest expenses here. I have mentioned that the deposit book was down, and this is where we gained some figures on the expense deposits, interest expense on the deposit line. On the lending side, we see some pressure on the lending margins, and it is visible on the net interest margin graph on the right-hand side of the slides. Our house view is that there will be rate hikes. We are watching inflation closely, so we will see how it will develop on the macroeconomic side. The net fee and commission income, it has been a strong quarter with PLN 116 million, so very healthy level in the fee line. We briefly touched upon the brokerage. Sometimes we refer to brokerage as one-offs.
On the other hand, here you can see that it has been a recurring performance. We shared with you the accelerated equity offering for XTB this quarter. We have reported Allegro last quarter. So, there is some recurrence recorded in the brokerage activity, which is a reflection of client activity. This is definitely good news. The custody, +16% year-over-year, that is where our market-leading position helps. 40% growth in capital markets transactions year-over-year is also the representation of our relationships with our clients. On the cumulative basis, when you look at the fees, they were up 6% year-over-year. This is also proving the track record and the activity of clients that is reflected in the fee and commission income. Now, moving on to the next page, which is the financial markets page number 10.
The PLN 336 million recorded in the treasury results this quarter, it is up +23% quarter-over-quarter, and +12% year-over-year. Definitely strong activity in FX, in client FX. You see the bottom of the page on the left-hand side with 18% QoQ growth. I would also draw your attention to high quality of our debt securities. This is where 66% of our balance sheet is located in debt securities, and basically these, to my point, are of high quality, and we continue as before. The revaluation reserve, this PLN -285 million is the reflection of the interest rate cycle.
However, good news here is that despite of the negative revaluation reserve, the total capital ratio is at above 24%, and this is a positive signal for us where we can absorb some market volatility and at the same time support our client needs and grow the lending book. Moving on to expenses, a few words of explanation here. As you can see, the expenses were up +17% QoQ, and this is primarily in the admin expenses, where I have shared with you that we are investing in technology. It is both the platforms as well as the resilience of our infrastructure and some investments in AI as well, which is a sign of times, I would say, and definitely something that is required to, A, stay competitive, and B, stay resilient as the business.
All in all, I would say that 32% in cost-to-income ratio is the healthy level below the sector average, and this is it in terms of the expenses. Moving on to our page on the cost of credit. Basically, as you can see, we have got a cost of credit of PLN 30 million this quarter, and this is down from the PLN 60 million recorded, so almost by half down compared to last quarter. When you look at the cost of risk, this is still below the average of the corporate banking sector. We are at 50 basis points mark. I would say that the normalized cost of risk level, as well the way we see that, is at around 40 basis points, and this is something our CFO shared with our Polish-speaking colleagues in the morning.
This is more in terms of where we think the normalized levels are. I would also point to our credit policy, where the credit policy does not change. We are operating in the same target market and within the same risk appetite. So no changes here. All in all, I would say a solid quarter in top line and the net income with some impact from both the cost line and the cost of risk. However, when you look at the operating margin, it remains positive with 7% + quarter-over-quarter, growing from PLN 485 million to PLN 516 million, with profitability ratios, ROE at 18.6, the total capital ratio, as shared with you, 24.3. So these are the highlights of the quarter. I would pause here, and I am happy to take questions. Okay. If there are no questions, thank you very much for joining.
Thank you, Maciek, and goodbye.
Yes, have a good rest of the day. Thank you. Bye-bye.