Immune to Crisis

The Bank has prepared for the economic downturn in advance and thanks to this, the dynamic of profit is better than in the entire sector. In the second quarter only, the Group had PLN 803 million of net profit. In the first half of 2020, Bank focused on acceleration of digitization: it launched the Automarket platform, started to offer “selfie accounts” and made the IKO voice assistant available. The Bank has also actively joined efforts in saving polish companies and work places created by them. It is a leader in distribution of subsidies from the Financial Shield of the Polish Development Fund for micro, small and medium-sized enterprises.

“Polish economy is slowly shaking off the crisis that it experienced as a result of the SARS-CoV-2 pandemic, even though the economic environment, on account of the persisting insecurity, remains difficult. In such conditions, in the first half of 2020, PKO Bank Polski Group generated PLN 1.3 billion of net profit. This result is clearly lower than the last year's result, yet simultaneously its dynamic is better than in the entire banking sector. This results from thorough preparation of the Bank’s Capital Group for more difficult economic conditions, and entering this period with very good financial parameters. Thanks to this, in the most severe stage of the crisis, it was able to focus on acceleration of digitization. These activities bore fruit in the launch of the Automarket platform at the beginning of July, start of the offer of selected personal “selfie accounts” and voice assistant for the IKO app offered on a full scale basis,” said Zbigniew Jagiełło, President of the Management Board of PKO Bank Polski.

The net profit of the Bank's Group in the first half of 2020 reached PLN 1.3 billion and was by 37.2% lower than a year ago. Profit in the 2nd quarter was PLN 803 million. The drop in the result was primarily caused by the aggravating situation in the economic environment caused by the SARS-CoV-2 epidemic, which forced the Bank to create write-offs in the amount of PLN 581 million. The decrease in profit was also affected by charges related to the last-year’s verdicts of the Court of Justice of the European Union: increased cost of legal risk of foreign currency mortgage loans (PLN 186 million), cost of automatic return of commission for early repayment of retail loans and costs of provision established for returns of such commission (PLN 175 million), as well as other regulatory charges (PLN 140 million).

These charges were partially off-set by higher result on business activity primarily related to dynamic increase in the scale of operation. The Group’s assets in the first half of 2020 grew to over PLN 377 billion, financing granted to clients increased up to PLN 256 billion, whereas clients’ savings reached the value of PLN 342 billion. Expansion in the scale of operation also affected higher than last year’s result on commission and fees and interest result.

The drop in the net profit of PKO Bank Polski in the first half of 2020 was lower than in the entire banking sector. The Bank’s very good preparation for more difficult conditions has contributed to this. The Bank ended 2019 with lowest costs of risk on the banking market in Poland and best cost efficiency indicator, C/I. At the same time, the Bank worked out the highest profit in the Polish banking sector and second highest return on equity (ROE). The Bank's thorough preparation for more difficult economic conditions was already confirmed by results of the European stress tests of 2018, which showed that PKO Bank Polski is the safest bank in the entire European Economic Area.

After the first half of 2020, the Bank is retaining a strong capital and liquidity position. Tier 1 core equity ratio of the Bank’s Group after the first half-year of 2020 approximated 17%, whereas the total capital ratio was at 18.2%. Both ratios are far above the regulatory minimum, whereas the Group’s capitals exceed the minimum levels by over PLN 13 billion, which before the pandemic allowed for disbursing up to 50% of profit in the form of divided.

PKO Bank Polski has actively joined efforts in saving Polish companies and work places created by them. It is a leader in distribution of subsidies from the Financial Shield of the Polish Development Fund for micro, small and medium-sized enterprises. During the call for applications which lasted until the end of July, subsidies from the Financial Shield of the Polish Development Fund were distributed among 66,500 enterprises which have almost 503,000 employees. Subsidies with a value of PLN 10.5 billion, out of PLN 60.5 billion disbursed by the Polish Development Fund, were credited at their accounts. In April, together with the KIR, the Bank designed a system to apply for subsidies from the Financial Shield of the Polish Development Fund, which was subsequently made available to other market participants. PKO Bank Polski also organised issue of bonds of the Polish Development Fund which allowed for financing the programme.

The Bank pursues goals related to digitization adopted in the autumn of 2019 in the “PKO Bank Polski – the banking platform” strategy. In line with the announcements, the first banking platform for purchasing new and used cars, Automarket, was launched at the end of the quarter. Via the platform, clients can purchase technically verified cars that are covered by a guarantee, whereas the purchase may be immediately finalised with the use of the Bank’s Group financial products. Automarket moves the entire car purchase process to the virtual world: from selection of a proper offer, through payment processing or selection of the mode of financing, up to delivery of the car to the designated address. The platform was created within just half a year thanks to the use of agile approach to the project and pooling of resources of PKO Bank Polski, PKO Leasing and Masterlease.

PKO Bank Polski has also moved another important process to the digital world, namely opening of individual accounts by clients. As part of the “Selfie Account”, clients can open PKO Konto dla Młodych, PKO Konto za Zero and PKO Konto bez Granic, as well as use the majority of functions of these accounts, such as, e.g., payments and BLIK withdrawals, domestic and foreign transfers and contactless telephone payments. The process of opening the account lasts several minutes and is fully remote, whereas the IKO app and the telephone camera are used for the verification of identity. PKO Bank Polski is also systematically increasing the possibilities of remote servicing of other accounts, along with cards and credit facilities. Recently, the Bank has also launched a remote counsellor service with respect to credit products.

In the middle of 2020, PKO Bank Polski increased the number of mobile banking users and the number of transactions in these channels, whereas the IKO app received a new function - a voice assistant which allows for managing the application with one's voice. The assistant makes use of advanced data analytics and artificial intelligence algorithms. Approx. 90 phrases were used for its education with the use of artificial intelligence algorithms. The service, after a successful pilot project, was launched for all clients who use smart phones with the Android operating system, whereas it will be available for clients with the iOS system soon. It offers a possibility of ordering a transfer, checking the account history and balance, as well as making payment with the use of BLIK.

PKO Bank Polski is preparing to migrate its IT architecture to cloud computing. The process entered a subsequent stage after conclusion, in May this year, of a strategic partnership between the National Cloud Operator and Microsoft, as part of which the global technological company will launch in Poland its first data processing region in Central and Eastern Europe. The Bank expects that at the latest in three years’ time, key IT business systems of the Bank will operate in cloud computing based on hybrid architecture. In this mode, the Bank wishes to provide itself and its clients with innovative, safe and cost-effective environment for development. Thanks to this, both the Bank and its clients will have the same technological potential as their competitors from countries where cloud computing are used on a much broader scale.

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