According to April data released by the NBP, NPLs increased to 5.6 % in April from 5.2 % in 1Q09 and 4.3 % at the end of 2008. A deterioration in asset quality was visible in both retail loans and corporate loans. Retail NPLs increased to 4.0 % in April from 3.8 % in 1Q09 and 3.5 % at the end of 2008. Corporate NPLs increased to 8.0 % in April from 7.3 % at the end of 1Q09 and 5.5 % at the end of 2008. Our view: We believe the news should have a negative trading impact - asset quality in the Polish banking sector continues to deteriorate. As expected, the economic slowdown is having a larger impact on asset quality in the corporate sector at the present time. Deterioration in the retail segment remains moderate but is likely to worsen over time - problems are expected to emerge with a lag to the corporate sector, which faces restructuring. Rising unemployment is a key concern. We expect the cost of risk to increase for both the retail and corporate segments.