AIK Banka is expected to report its 2Q09 results soon, but no date has been set for the result announcement. There is no consensus estimate available. We expect the bank to report pre-tax earnings for the quarter of RSD 1,059.3m, down 35.0% q/q as we expect a 55.0% decline in net trading income. Revenues are expected to be negatively impacted by slowing business volumes and margin pressure, driven by still intense competition for deposits. With an above-average loans-to-deposits ratio of 133.4% at end-2008, AIK is taking an aggressive approach towards deposit pricing. Despite the bank being highly profit-oriented, concerns about deterioration of asset quality suggest that bank is unlikely to fully pass on higher funding costs to borrowers. Therefore, we forecast a margin contraction of 25bp q/q to 6.3% in 2Q09. While costs are expected largely flat q/q, risk costs are expected to remain high but we expect some moderation from the level seen in 1Q09.