Good morning and welcome to everyone present in the room and online. Welcome to this another conference dedicated to our performance in Q3 2024. The agenda of this event is quite typical. We will start with the key highlights, moving on to the macroeconomic environment only to discuss our financials in detail and to close with the outlook. Let's begin with the key highlights.
This was a good quarter for the bank. In this quarter our revenue increased substantially. The expenses were well under control and decreased quarter on quarter. The cost of risk was normalized which highlights the high quality of our portfolio. As a result, our net profit was PLN 636 million , 2% up quarter on quarter. The highest quarterly net profit in our history, which makes us satisfied. But we are not yet ready to celebrate. We are proud of the improvement in our NIM net interest margin.
We are also happy to see some signs of improvement in the business environment and across the economy, especially in corporate banking where our lending volumes increased as did the number of customers actively transacting with the bank. Now, concerning the strategic objectives, as you can see, we continue to improve our position in ESG factors. More on that later. We are working to implement additional AI-based solutions which we believe is an important direction. We have many use cases across the bank. We increased our sale of accounts for individual retail customers. This is important. The number of active customers holding a current account with the bank was a challenge. But in Q3 we saw a significant recovery thanks to quite creative ideas and offerings including 8% on savings accounts, a tennis card or an account for anglers.
Now we set up in Q3 additional provisions against the legal risk of the Swiss franc loan portfolio at PLN 277 million. Despite all that, our profit is record high thanks to the modification of our estimates relating to the credit holidays which returned PLN 100 million back into our P& L. Concerning the strategy and how we pursue our GO beyond strategy which spans this year and the next, this is a particularly important pillar.
Two points here we crossed the number of PLN 10 billion in sustainable financing. At the end of September we actually reached PLN 10.4 billion. Number two Morningstar Sustainalytics once again improved our ESG rating which is now 9.8, the best score. The best ESG score among Polish banks representing a low ESG risk, something we are very proud of. The 8% account is something I've already mentioned.
It's an acquisition tool which is very effective. We are also proud to say that Moje Konto Premium once again maintained its leading position as you know premium clients are very important and valuable to us. All customers are valuable, but this segment is where we see our future. One final comment concerning this slide. We contributed a significant amount as a donation for the sake of people affected by the flooding.
We have not been indifferent at the bank, the foundation, our employees and our clients responded with PLN 1.5 million contributed for the victims of the flooding. This is how we respond to crises. Let's move on. As you can see we have seen rising numbers across the board including the growing number of customers using digital channels quarter on quarter, rising number of GOmobile users and even higher increase.
The number of tokens in digital wallets went up as did the number of BLIK transactions, up 5% quarter on quarter. These numbers reflect the growing transactionality of our customers which is our important priority. We want to support our customers end to end. We want to support them not only with loans but also with the whole gamut of trust transactions.
Let's have a look at business activity, the sales and transactional volumes. You will note an important increase in the sales of personal accounts, up by 18% quarter- on- quarter, up by 11% year- on- year. Investment products. Let me stress these numbers on this slide. This is new quarterly sales which was lower in Q3 compared to Q2, but still very very strong. And this part of our business has been growing according to plan. GOmobile payments went up.
As you can see, the clients appreciate, acknowledge and accept our mobile application, which I can say as a user myself is a very good tool. However, we continue to improve and develop the mobile app. Mortgage loans went up. We have not yet reached our target, but we are getting there.
We would like to step up the process, I'm sure, but we feel increasingly comfortable with mortgage loans, especially in the context of the legal risks involved because we have no concerns when it comes to the loans themselves. One final point, growing number of active customers in corporate and SME banking, which is also reflected in the lending volumes. More on that later. Let's move on. Lending. Let's start with the good news, although the other point is not bad at all either.
The loan volumes relating to non-retail, that is, institutional clients up 1.8% quarter on quarter. Looking at our peers, we believe this is a solid growth, something we are proud of. In retail clients and their credit exposures, we've seen a decrease in the downtrend, which may sound complicated, but the marginal drop in the volumes was lower than a quarter before, which suggests a positive trend, I think.
Regarding deposits, we are managing our deposit base, our liquidity, actively trying to maximize the net interest margin, which is why these drops are well under control and of no concern at all to us. Regarding the number of customers, we are verifying our customer base, especially in retail banking, and this will continue. This is why the number of customers dropped quarter- on- quarter in these segments.
When it comes to SME customers and corporates, we've seen a robust increase and we hope this trend will continue. Now let's look at the key numbers. I've mentioned many of these before. We can see a strong growth in our net banking income NBI both year on year and quarter on quarter net of the update of our estimates relating to the credit holidays, the growth was 5.4% quarter on quarter.
We think this is a solid and healthy number. Operating expenses are under control, as I've said, with a percentage decrease quarter on quarter, 2% down. The cost of risk, the legal risk I mentioned, the provisions and the net profit I mentioned in the very beginning of my presentation. Let's move on. As a result of this revenue mix, this P& L mix, our cost income ratio decreased.
Not to the lowest level in the industry, not one of the lowest either, but we are working hard to make it the best possible figure without however being obsessed about it. The cost of risk I've mentioned before, as you can see, 28 basis points is the cost of risk. We think this is the lowest cost of risk in the industry.
If you look at the banks that have published results thus far, we have a lot of comfort regarding the quality of our portfolio and how we manage credit risk. We believe this number is quite standard normalized. Now what happened last year was unique, of course. The cost of risk was positive. And back then we were saying this is not normal for a bank, an institution which makes its living by accepting risk. We said this number would normalize and it's happened. I've mentioned the net interest margin on our assets before with a very positive trend, something we are proud of.
Our ROE, due to increase in our risk-weighted assets, recorded a minor decline. However, the return is above 18%. So clearly above the cost of capital. This brings us to the macroeconomic environment. Michał Dybuła,
thank you very much. Good morning, ladies and gentlemen. I would like to start with stating that next week we will know a little bit more about the condition of the economy in the third quarter of this year. However, the data that we have received from the industry, be it construction, be it retail, do indicate that in the third quarter the growth dynamics, GDP growth dynamics, has slowed down from 3% in second quarter. It will probably not be achieved in the third quarter. September data, especially concerning retail, is particularly illustrative.
I believe that we need to wait for a month or two to become more certain whether the weakness of household consumption is one-off outlier, a statistical outlier, or is it a more permanent shift in the structure of consumption towards services, or maybe a permanent and a clear increase in household savings. I do believe this data is at least partially reflected in the quarterly change of the outlook among the enterprises in the main sectors of the economy. I would however point out something else. Year to year, the economic climate seems to improve pretty much across the board. As we analyze the indicators for the beginning of the fourth quarter, it would seem that the outlook improvement is clear and is going to continue. There is a number of factors contributing to that. Let me name two.
The next year is a year in which some 20 plus billion EUR worth of EU funds would be coming into Poland. So far the record years were EUR 10-EUR 11 billion . So this increase will definitely be reflected in the economic climate and economic growth, and the second thing is expectations, the increasingly firm expectations that the cost of money, cost of financing would decline next year. Inflation will certainly be important here. Yesterday's conference of the President of the National Bank of Poland, Mr. Głapiński, indicates very clearly that the coming months will still see increased inflation, but this inflation does not result from unhealthy factors, excessive demand pressure or excessive wage pressure. It would seem that these factors are gradually fading out.
However, until mid next year, most likely we will be coping with the increase of energy prices in July, which is going to maintain inflation on an elevated level. This should not, however, be an impediment to reduction of interest rates. Maybe even in the first quarter we would see a significant decrease in reference rate, the interest rates of the National Bank of Poland. This should support the economic activity as well as for financial markets. There was some increased volatility in the third quarter and probably we will have to live with it. The volatility of currency markets and interest rates, the U.S. elections this week, the result may indicate that both trade policy of the United States and the perspectives for global trade, global commerce, as well as potential geopolitical changes, may result in a certain atmosphere of concern, and last but not least, credit demand.
We have continuation of trends: slower increase in deposits, especially corporate deposits, and solid excess, a solid increase in demand for credit in all the sectors, corporate sector, plus the ongoing rebound, and with EU funds coming in, I expect that next year the credit demand will continue to increase. Thank you very much, and back over to Mr. President.
Good morning. Financial results for the nine months of this year. The results are very good. The net profit was PLN 1.8 billion. It resulted from a very strong income base. While the cost remained under control and quarter to quarter we have even recorded a decrease in costs. The income base is driven by a solid increase in income in interest income. The gradual growth of interest margin is a reason to be satisfied. After nine months it was 3.95%.
But we have to remember the adjustment effect due to loan vacations or credit vacations which was a certain distortion in the third quarter. If we look at the dynamics of the loan activity, the first and second quarter of this year should show improved dynamics at the end of the year. In the third quarter we have recorded those changes. They became apparent both in part of the institutional portfolio as well as in retail portfolio. We have seen a certain stabilization of the portfolio. We have to keep in mind that the bank returns to the mortgage loan market in a very conservative, prudent way. So it will take time to gain momentum nonetheless. So you have to keep it in mind at the back of your mind when you compare us to competition. We maintain our market share on the level of the entire loan portfolio.
As for individual segments in the corporate part or institutional part, that share is fairly stable. In retail part or individual customers, we can see the impact of the mortgage portfolio dynamics as usual. A few words about the Swiss franc loans portfolio. Let me start with what became apparent in the third quarter. The third quarter brought fewer Swiss franc cases compared to the previous quarter. We only had 634 new cases. In the previous quarter we had over 700. As a result, the bank has updated the value of provisions for Swiss franc loans and those were posted in the third quarter. This gives us the level of coverage of the balance sheet exposure at the level of 138% which is one of the highest coverage values reported in the market.
On the other hand, the bank has continued offering individual settlements with clients and as of the end of September, 5,780 such agreements were accepted and a number of them have already been affected. We continue to have provisions in the amount of PLN 3,124,000,000. As for deposits policy, we are continuing the policy we started at the beginning of this year. It can be summarized as interest, margin preference. The bank is very liquid, the market is very liquid and as a result there is no need to compete on price. In this respect, we manage those items very meticulously. Hence, the volume effects you see here. The decrease in the volume does not concern us in the least. We are focusing on improving the structure of the deposit base and prioritization of price.
The last quarter and the past year was very good in terms of investment products sale. We are very happy that working with a deposit base of our clients we can offer them an alternative and thus we give them the opportunity to allocate their funds in the way that is best for them, divided between the deposits and the accounts offered by the bank, including investment products. Hence, we have recorded very nice increase in terms of distribution our clients. And it's a continuation of the trend that we observed before. Our clients prefer the debt market products. As we look at the net interest income, we have already mentioned this. We did have a one off in the third quarter. It was the adjustment of provisions for credit vacation and it was adjusted by PLN 100 million here.
Net interest margin after factoring out this adjustment would be 3.69%. So it will still remain on a very good increase curve counting from the beginning of the year. In the remaining two categories of income, good things have been happening as well. What I have in mind is net fee and commission income. In the third quarter we had good results on fees and commissions on cards, and two factors are worth noting here. The transactionality factor, so the number of transactions serviced by the bank has increased as well as settlements with card operators, mostly Mastercard. In corporate banking area, we also had a few transactions M&A and commissions from those transactions have also had an impact on our profit and loss statement in the third quarter.
As for net trading and investment income, we have a situation in which on one hand we see a compression of client margin. This is very apparent, very clear in the third quarter results, especially the margins on derivatives and currency transactions. And on the other hand, we had the impact of the positive valuation of infrastructure companies Visa and Mastercard. As a result, the value of this position reported in the third quarter was higher than in the second quarter. And it nicely contributed to our profit and loss statement for the third quarter.
Moving on to the expenses, we've seen a continuation of the inflationary pressures we mentioned before. This is very clear if you look at our personnel expenses partly offset by an FTE reduction. In addition, the investment activity we've continued by growing our depreciation and amortization charges have added to our cost base. Still, year on year, the bank's expenses increased by roughly 10% quarter on quarter. As I said, we've seen a decrease of expenses. Concerning allowances, let me turn over to my colleague, allowances in Q3 2024 were PLN 99 million. That's 44 basis points. But on a cumulative basis, year to date, it's only 28 basis points. And I'd like to point in particular to the previously mentioned one off cost of risk, which had a significant impact about PLN 30 million net in Q4. The speaker says that was 40% of the total cost of risk.
Let's look at impaired loans in detail. The bank's numbers regarding impaired loans are still very low at the end of Q3, PLN 2.9 billion, almost PLN 3 billion up from PLN 2.6 billion in Q4 on a nominal basis. As a percentage, an increase from 3% to 3.4% due to the reclassification of one capital group from Basket 2 to Basket 3. It's a chemical company and the remainder of the portfolio has been stable. Importantly, this increase, about PLN 300 million in impaired loans, was a one-off, and previously this happened more than five, maybe seven years ago. Unfortunately, at the point in time this may, statistically speaking, happen and this has to be done. Looking at the coverage ratio of the different stages, these are stable. Let's have a look at Stage 3.
If you look at Q2 and Q3, there was a decrease in coverage in Stage 3 for all gross loans, down from 57.8%- 54.5% only due to the reclassification of the group of Companies to Stage 3 where the coverage is adequate but lower than for the other impaired loans. Net of this single exposure, the coverage for Stage 3 was 58.5% so it increased for the remainder of the portfolio compared to Q2. Thank you.
Now, regarding capital management and the capital position of the bank, a few points, a few developments that have taken place. On the one hand, we've seen an increase in lending which obviously impacted the capital adequacy ratios. On the other hand, the bank was actively re-engineering its capital mix by repaying category two capital which was largely capitalized that took place in Q3.
In addition, as we communicated to you, the bank decided to mobilize and work on the issuance of category two capital .AT1 s pecifically, we were approved to arrange that issue and we are working on it. Other developments that have impacted the reported capital adequacy numbers. As we communicated before, we saw a change in the buffers, especially the O-SII buffer, from 0.25% - 0.5%. To summarize the capital position of the bank, we meet all the requirements for our capital adequacy and as I said, we are actively managing our capital position to ensure that we are adequately equipped with capital necessary to support our growth objectives in our core business as a bank. And this takes us to the final part of the presentation. Briefly on our focus looking forward and how we see the reality. The reality is changing.
It's uncertain as we've seen over the past few days, especially due to the developments in politics in the U.S. and Germany, especially the impact on the economy is hard to predict. However, these far-reaching changes definitely add to uncertainty, fundamentally speaking. And I'm looking at Michał. We expect that growth will continue to strengthen and that next year we'll see even more recovery and more demand for funding. We believe that EU funding will drive additional investments. We believe that the energy transition will be a fact, not just a slogan. I think it is imperative and we want to play a key role. We are ready for it with our liquidity and capital position and our intellectual mindset. So we are very optimistic, myself included. But we also know that the reality is changing and it is in many ways unpredictable.
In the short term, our priorities definitely continue to include getting new, important, valuable clients in all segments. We will continue to grow our loan portfolio given the expected interest rate cuts next year. This is absolutely crucial. We will continue to improve the quality of our customer service and I know we have some work to do. We are improving our internal processes, trying to make them more efficient. We continue to transform our bank. But looking at this year's results and the record high, Q3 included, I can safely say that this transition is very positive when it comes to our bank. I think this concludes our presentation. We are now ready to take your questions from the people in the room and anyone watching us online. Thank you.
As usual, let's start with questions from the room.
Good morning. [Foreign Language] Morawiecka, Puls Biznesu, so I have a simple question. I think the verification of your customer base, I understand it's an ongoing process in a way, but has it peaked already? Is it over now? That's my first question. And the second question is about cash loans.
This portfolio dropped. Your sales dropped. Is it because of your approach to financing these kinds of needs or has anything extraordinary happened? And speaking of loans, my third question. What's your take on corporate loans next year? Leases and factoring are growing, but loans as such, are they going to grow? Because your portfolio has not grown much, you're not different from other banks, but how do you expect the situation to develop next year?
Thank you. Thank you. Very much. Let's take these questions one by one. Verification of the customer base. In corporate and SME banking, this process has been completed, which doesn't mean we will not be closing some of our relationships now and then. In retail banking, it's ongoing and will continue for a while due to the simple logics that customers who are not active, not willing to be active in our relationships take up space in our systems to be crude about it, and they still require KYC verification.
Know Your Customer. So it makes no sense for us to keep these relationships going. It's more important for us to attract new customers. But to be blunt, I expect that the number of customers in retail will continue to drop for a while despite the uptrend in customer acquisition. Regarding retail loans, I think Michał said that before demand for this kind of financing has dropped.
We have paid and remain conservative about it, hence our low cost of risk. But we haven't seen any one-offs or shocks, and your third question? Well, of course without getting into the nitty gritty, we expect the next year will be more active than this year when it comes to loans, especially investment loans. If I may be more personal about it, I think this is about how corporates see geopolitical risks, especially in the conflict in the context of the outcome of the U.S. Presidential election.
So the coming months starting in January will show what we can expect and how much this kind of risk is under control or how much the concerns of our corporate customers grow. But fundamentally speaking, we expect bigger growth next year in demand for corporate loans. Thank you.
Good morning. Hubert Biskupski , WNP. Two questions. O ne about your reticence when it comes to mortgage lending. How much is it due to your approach and when are you going to change it? How much is it due to demand and the interest rates being cut or a kind of stimulant program imposed by the government? And the second question is about the WIBOR. How many court actions have been initiated against the bank compared to the previous quarter and how much of a problem is it for you?
Now, let me take this one by one. We are reticent or conservative when it comes to mortgage lending. We are. I like this word so I will be over using it. I guess so once that we've made a more active comeback to the market. We are still conservative with our parameters. We are reviewing the parameters.
Some of them have been relaxed, others are still under consideration. So it's more about our concerns with legal risks than credit risks. But let me quote the Minister of Finance who said at some point in time that instruments such as credit holidays could, quote unquote, will not be used in the future. So I hope this promise will be kept. I'm expecting that our activity in this segment will regularly grow without being revolutionary about it.
As for WIBOR related lawsuits, I don't have the numbers off the top of my head, but this is not something of concern to the bank when it comes to the scale of the problem or the court judgments. Well, a lot depends on what the Court of Justice of the European Union will decide. What makes us optimistic, however, is the clear position of the Polish government participating.
This process involves a number of European governments. Actually, the action in the European Court, if the court decides in a negative way for us regarding WIBOR, this would also challenge other benchmarks. So it's a European issue at this point. We have heard from many institutions and the Financial Stability Network representatives.
So if you compare it to the Swiss franc loan story, we heard opposite opinions from the Polish government addressing the Court of Justice of the European Union. Now the opinions are quite consistent and I hope this will take us to a sound judgment. Let's move on to the questions. Oh yes, there's one more from the room.
Good morning, Bank Handlowy Investment Office. I have a question to what extent the material costs of the third quarter. So the costs from the third quarter can be considered perennial or regular. And to what extent the higher costs on the second quarter were regular. Were the factors which last year in the fourth quarter resulted in the increase in quarterly cost? Are they going to repeat this year?
Let me start with the second question because it will be easier to answer. Historically, fourth quarter always has certain dynamics in terms of costs. So I think we can accept an assumption that this dynamic may repeat in the fourth quarter. So that's usually how the quarters work from year to year. And the distribution curve in the fourth quarter will probably be similar.
As for the third quarter and the impact of material costs, those were mostly costs related to services that the banks, the bank purchases. I do believe this answer is not simple or easy. In the coming quarters we may be dealing with offsetting, mutually offsetting situations. So the elements, the situations that happened in the third quarter are not immediately transferable to potential future quarters.
Nonetheless, to a certain extent they will certainly be recognized. Thank you. And my second question is about provisions and the cost of risk. Were there the lower provisions for this single exposure in Basket 3? Is it the matter of security or hedging or other things? No, it is the matter of the scenario that includes both hedging and flows in the NO Project. Both things really.
Thank you. I think we have another question from the room.
Good morning. Jacek Ramentowski, I would like to ask what kind of dynamics of provisions do you expect for Swiss franc loans? Is it really drying up or is it going to continue to increase and at what pace?
Well, it is difficult to provide a precise answer here. All I can say that it's not the end of the Swiss franc story. However, there is a reason for optimism because the provisions growth rate is slowing down.
Last question. Some of the banks have informed that you had some provisions for very unusual issues of your corporate clients. You moved it from second to third basket. I understand it's about the capital group, but are there any signals that those clients might get in trouble? I understand that these provisions are made post fact, but how do you see that portfolio?
But are you asking about this specific capital group?
No, no, no. I'm asking about other clients. Maybe not as large as the capital group, but no, at this stage we do not see any problems with portfolio quality or potential of shifting retail clients or corporate clients from the first Basket to second and further third Baskets. No, we do not think it's going to be an issue.
So I understand. We can move to questions from online. Kamil Stolarski from Santander. What will be the impact of CRR3 on solvency ratio?
Let me put it that way. Of course, the bank is conducting activities that are intended to prepare us for calculating the implementation of these standards. That's one thing. The second is that the legal basis is not as yet finalized in the third quarter.
However, seeing as the deadline is approaching and looking at our internal estimates, and I would like to emphasize here that since the legal basis has not yet been fully adopted, our estimates carry a lot of uncertainty. But we can assume that the increase in risk-weighted assets should be around 10%.
Continuing. Kamil Stolarski, to what extent does the bank use AI today?
Well, I would rather not get into details of specific solutions for obvious reasons. But I would like to share the areas in which we are using AI. First, internal matters. So making work easier for our employees. We have a tool that is called Genius that allows searching for any and all documents and regulations in the banking area. The second area is KYC and AML.
Here we plan to use AI more intensively in order to improve detection rate of potential threats and efficiency. Finally, business areas. We apply AI models to identify cross selling potential pricing issues and building behavioral profiles of clients in terms of their interest. In particular retail banking products.
Continuing with Kamil Stolarski Swiss franc question what are the total costs related to legal risk of the CHF portfolio that the bank carried from 2019?
Here the answer is simple. Approximately PLN 4.5 billion . And when I utter this number I get horribly sad.
One more question about that. What part of 6.5 thousand cold cases about Swiss franc pertains to repaid portfolio?
A pproximately 1,200.
Which legal and economic risks do you currently see as the most significant for the bank?
Well, here the.
I would not be naming them in a very precise order, but I would start with the geopolitical situation, which is unpredictable. There are risks of escalation of international tensions that may have an impact on the economic situation globally. They could also have an impact on our clients' appetite for investing.
What is interesting, and I will look at Michał Dybuła here. Despite the war at our eastern border, the level of foreign direct investments in Poland is exceptionally high. So international business seems to say, okay, Poland is such an attractive place to invest that even the fact that there is a war right next door, the result of which is not predictable when it's going to end and how, even that is not an impediment. This risk, however, carries with it the risk of lack or low level of investment.
This is a risk factor that could have a negative impact on our growth and our income. On the other hand, the needs in that area are huge, and I believe there are three main areas, starting with energy transition, and here investment needs are gigantic, secondly defense, and thirdly further digitization. So, a certain level of optimism, despite the fact that the risk exists, there is still reason for optimism.
Then, we have the legal risks categories. I often say that we should approach the legal risks by taking care of those that we have already identified and continuing to think of the ones that we have not thought about, that have not occurred to us yet, and to look for ways to identify them. I mean legal risks. We talked a lot about the elections, the sanctions for free loans.
There is a risk that I hope is going to be marginal of new initiative of the government with regard to instruments such as the infamous credit vacation. And of course we are in the world of risk related to loans in foreign currencies, mostly Swiss franc.
Adam Soful ISBnews, do you consider Swiss franc's risk an important risk factor?
As of today t he sum of disputes, the value of disputes is really marginal and court resolutions of such cases are 90% favorable for the banks. So nothing seems to indicate that this risk would gain scale and momentum to become a greater threat. However, of course this kind of risks are always an unknown and there is no way to tell what's going to happen, especially since European Court of Justice is to deal with it.
Adam Sofuł. Another question. Do you expect an increase in cost of risk over the next few quarters? And a question from Konrad Krasuski. What was the result for growth in NPLs in third quarter?
As for cost of risk, I understand that we are at a normalized level and we do not expect a shock increase in cost of risk. We believe anything between 30 and 40 basis points is a correct level. As for increase in NPLs, I already mentioned that it's simply the result of reclassifying one capital group from Basket 2 to Basket 3. I would be careful however in stating that it is a significant increase because we always have to look not only at the nominal growth but at the credit base because the smaller the base, the greater the potential one-off growth.
We're talking about growth from 3.4%- 3.5%, and if we look at the corporation itself, it's on the level of 1.7%. Any increase is very visible. If we think about the level of impaired loans, it's on the level of PLN 600 million. PLN 300 million would be a 50% growth, but it's still a very very low level.
Another question from Maciej Samcik of Subiektywnie o Finansach: When will the interest margin stop growing? How much could it be next year given the decrease in interest rates?
Well, our ambition is to maintain the interest margin. However, if the interest rates start dropping, it is going to become a challenge. The key element here will be the demand for financing and our role in the loan market. Only this way we will be able to maintain the interest margin on an attractive level.
Sebastian Garbarczyk, PAP, in the fourth quarter shall we see an increase in individual loans portfolio quarter to quarter? And the next question, Kamil, what are the bank's ambition with regard to market share in loans and deposits in coming quarter? Will this market share decrease?
Starting from the first question, our ambition is to grow in terms of volume in every segment in which we are active. I will, however, not respond whether or not we are going to see an increase in the retail segment. We will see at the next results conference. And could you repeat the second question please?
It was the question about the increase in individual loans portfolio.
Well, I've already responded to that.
And the increase of market share in individual loans and deposits.
Ladies and gentlemen, we have mentioned that as for our market share in loans, we have nothing against being on the growth curve, but as for deposits, effective liquidity management will be important here in order to maintain the interest margin. Here we have not pursued market share. As you know, the entire sector is over liquid. Our bank is over liquid as well. So even with a dropping market share the over liquidity will remain significant.
The next question. Konrad Krasuski, Bloomberg News what is the bank's appetite for further. Sorry. What is the bank's view on other banks appetite for purchase of government bonds? Given the budget, will the banks be able to provide for a large part of demand or is the exposure too high?
Well, I don't know if it's a question to me or to Michał Dybuła. Will you try to answer?
I believe that. The maximum, both in terms of nominal value on banks' balance sheets and the asset structure, we have not seen it as yet, but of course there are certain limits. These, however, stem from conscious management of public debt and minimization of fiscal risk that may translate into the entirety of the economy. I do believe that the loan needs and deficit plan for this and next year will be significantly higher than in previous years and for a good reason. As a country, we have to improve our defense potential. We have to improve the quality of public services, and I believe it is a good step to include some of the debt that was taken out of the budget in the previous years back into the budget.
So this gives us hope that the increase in public debt in comparison to the strength of the economy would be curtailed. As for the plans and ideas of the government with regard to the excessive deficit procedure and quick minimization of this fiscal risk and mitigating this risk should be clear within a perspective of two or three years in terms of bonds, portfolio and the bank finance.
Another question from Maciej. Does the bank feel well prepared for the potential credit boom related to income from E.U.? Now the bank has a gap between loans and deposits. Should we expect that this gap would be reduced? And are regulatory requirements in terms of capital sufficient?
Let me start and Piotr, I hope you will want to add something. This is a nice question because Maciej is bringing in the vision of a loan boom while other questions seemed to be based on a concern whether the demand would be significant, would even exist in the next years. I would prefer a boom, of course, so our over liquidity would allow us to participate in that boom in an adequate way.
If I may add in the same tone, if you remember the previous conferences, we could build a following picture. The bank has a very healthy balance sheet, well-functioning business model, sufficient liquidity, even over liquidity that we are using to improve our interest margin. I believe that we have a very well-developed mechanism of capital management which is exemplified by very varied sources of capital. The only element we were lacking was the boom, so if the boom comes, it will be fantastic.
Kamil Stolarski: What are the experiences of BNP Group's with ecosystems as the source of prospective clients? Do you have any plans?
Well, there is a number of interesting solutions. Telepass in Italy, MAIF in France and a number of others. But we have one ecosystem, we will start another soon. It will be the mamGO platform. We always usually start with Go, but this is mamGO like I have Go. That's for purchasing various means of transport. It is gaining momentum. It is a new thing in terms of innovation. And soon we will bring also something more related to ESG, environmental aspects and other platform solutions. Of course, not the CIB platform.
Kamil Stolarski: What are the bank's expectations with respect to BFG costs in the next year?
Well, it will be an increase because the deposit fee will be reinstated.
Konrad Krasuski: When Mr. President mentions including the governments of other countries into the opinion about WIBOR by Court of Justice of the European Union, is it wishful thinking or does Europe see a problem as well? If so, what is the percentage of loans of EURIBOR based loans granted in France to foreign clients?
Well, French market is special in that the majority of mortgage loans are fixed interest rate for the entire period. Variable rate loans are marginal in the French market. Of course, I'm not going to comment on the structure of the portfolio of BNP Paribas, but it is not so that the French government that is most active. There is a number of countries which believe that this Court of Justice ruling may have a fundamental impact on stability of financial markets in Europe.
That was the last question from online. Are there any more questions in the room? I see none. Thank you very much. Thank you for all the participants who are here with us in person and those of you who have joined us online. And we would like to welcome you to the next performance conference where we will be presenting the fourth quarter, so the entire 2024. Thank you and have a good day.