First Investment Bank reported unconsolidated net earnings of BGN 8.5m, up 31.8% q/q but down 21.8% y/y for 3Q09. This is well above our expectations - we have forecast a net loss of BGN5.1m on a consolidated basis for 3Q09 - the report is due within the next month though no date has been set for the announcement. Cost of risk came in at 64bp of average gross loans in 3Q09, suggesting still very light net provisioning requirements, incongruous in our view with the depth of the economic slowdown in Bulgaria. Again on a consolidated basis, our forecast has been for 130bp. No data has yet been provided on NPL formation - this is expected with the consolidated results announcements. Although it seems unlikely now that the bank will report a significant worsening of loan quality for 3Q09, regardless of these results, the potential for deterioration going forward is expected to remain a worry for the market. More positively, FIB has also revealed a moderate pick up in net interest margin (over average assets) over the quarter (+40bp q/q) and a resulting 10.9% q/q growth in net interest income. Even so, at 3.4% in 3Q09, the net interest margin of FIB remains among the lowest in the sector. There was no improvement in the cost-to-income ratio, which remains very high at 71.4% in 3Q09, leaving the bank vulnerable to possibly adverse development of asset quality. Although the bottom line may have some positive trading impact, we expect continuing scepticism regarding the cost of risk at FIB to dull the market reaction.