Furthermore, we are observing a deterioration of funding conditions with increasing credit spreads on market funding and TLTRO funding that needs to be repaid. This might have two effects. First, it might directly put downward pressure on banks' net interest income. Second, it might indirectly increase the competition for deposits.
This illustrates that, in the times ahead, a deep understanding of the dynamics in interest rate management, and of the underlying assumptions, will be crucial for banks, but also for us as supervisors. Next, a word about credit losses. Since the invasion of Ukraine, financial institutions have had to absorb credit losses on their exposures to Russian, Ukrainian and energy-intensive businesses.