With a record-breaking profit into the new century of PKO Bank Polski

PKO Bank Polski SA ended 2019 as the most valuable company listed on the Warsaw Stock Exchange. The PKO Bank Polski Capital Group made net profit of PLN 4.03 billion, by over 7.8 percent more in comparison with the previous year. This has been possible, among other things, thanks to increase in the business scale and improvement of the result from business operations. PKO Bank Polski is growing fast, at the same time maintaining its high profitability, measured by return on equity. The Group’s assets have increased to PLN 348 billion, and the ROE at the end of the year was 10 percent. In November 2019, the company updated its strategy, specifying the new, ambitious financial objectives and providing a plan for continuation of its digital transformation.

The net profit of the Bank’s Group in 2019 amounted to PLN 4.03 billion, being 7.8 percent higher in comparison with the previous year. It is the highest profit in 100 years of the Bank's history It was achieved despite the high regulatory costs and materialization of a material risk. Like in the previous years, profits were accompanied by a very good result on business operations, which in the entire year amounted to PLN 14.7 billion and increased mainly thanks to further improvement of the interest rate result (increase by 10 percent a/a to the level of PLN 10.3 billion). High cost-effectiveness allowed the bank to reduce the cost to income ration (C/I) to 41.9 percent, while prudent risk management and ability to take use the advantages of the good condition of the business environment allowed the bank to reduce the risk cost to 0.47 percent. In 2019, certain legal risks materialized, which reduced the profit by PLN 682 million. Despite these, the bank once again achieved profitability measured by return on equity at the level of 10 percent.

PKO Bank Polski is growing fast, now serving 10.9 million customers. The Group also systematically breaks records in terms of the size of its assets, which are now worth almost PLN 348 billion. Financing for the Group's customers has increased to almost PLN 253 billion, and the amount of customer savings managed by the Group has exceeded PLN 313 billion. PKO Bank Polski has remained the unquestionable leader of the Polish banking sector with the highest shares in the market of loans, as well as savings. The Bank has recorded the highest value among companies listed on Warsaw Stock Exchange, and during the last session of 2019, investors assessed its value to be PLN 43.1 billion. The company was also a leader on the WSE in terms of turnover generated by its shares, and is the only Polish company in the group of large companies of the index of developed markets FTSE Russel. In 2019, PKO Bank Polski paid to its shareholders PLN 1.66 billion of dividends from profits for 2018. A part of profit for 2018 in the amount of PLN 1.67 billion remained undivided and can potentially be paid in 2020. The Management Board of PKO Bank Polski will consider recommending to the General Meeting of Shareholders payment in 2020 of this part of profit along with half of the profit for 2019.

This year, which marked the 100th anniversary of establishment of the Bank, was also special thanks to announcement of a new strategy. Two years in advance, the Bank achieved the financial objectives of the 2016-2020 Strategy and updated them. The Strategy now includes new, ambitious financial objectives and continuation of the digital transformation process. The Bank will now make even more use of modern technologies, transforming itself effectively into PKO Banking Platform. It will also strengthen its customer relations through further development of remote channels, taking advantage of advanced data analytics and personalization of range of products and services offered. In the perspective of 2022, the Group intends to achieve profitability of 12 percent, reduce the C/I ratio to 41 percent, maintain the risk costs within the range of 0.60-0.75 percent and achieve the annual net profit exceeding PLN 5 billion. Another objective is to ensure effective management of capital adequacy so that the equity ratios enable payment of the dividend.

IKO, the mobile app of PKO Bank Polski, is the most popular and the most transaction-oriented application on the Polish market. At the end of year 2019, IKO had 4.2 million active applications, and in 2020, this number may increase to 5 million. High popularity and the best user scores in 2019 made IKO the winner in the ranking of the British Retail Banker International for the second time in a row, confirming the app’s status as the best in the world. Once again, IKO has outstripped apps of the biggest global banks, such as JP Morgan Chase, Barclays or Bank of America. The mobile app of PKO Bank Polski is constantly under development, and in 2019, it was enhanced with new functions, such as the option of purchasing tickets for public transportation, paying parking fees or making purchases without a BLIK code. In the first half of 2020, the Bank will launch the voice management of the app –  Talk to IKO.

PKO Bank Polski has focused on digital workflow of documents and has introduced new solutions in this regard. In 2019, workstations of consultants in selected branches in Poland have been equipped with touch screens, making it possible to submit signatures for the most popular transaction services. Until the end of the first half of 2020, the solution will be available in 500 branches of the Bank. Activities related to digitalization include the shared investment of PKO Bank Polski, Alior Bank and BNP Paribas in the polish fin-tech Autenti, offering a platform for electronic signing of contracts and digital document workflow. It was the first joint transactions of this type, executed by banks in Central-Eastern Europe. PKO Bank Polski was represented for this investment by a venture capital fund dedicated to undertakings of this kind - PKO VC. The Autenti platform, in synergy with other tools available to the bank, will be used in its business operations.

The National Cloud Operator (NCO), a company of PKO Bank Polski and the Polish Development Fund, launched its operational activity in April 2019. The NCO wants to  offer services of global technology leaders, as well as its own services, which are now being developed using the infrastructure built and managed by the company. As a part of this strategy, in September, the NCO entered into a strategic partnership with Google. The cooperation is aimed at supporting Polish companies in using the potential offered by advanced computational cloud technologies. PKO Bank Polski is gradually increasing the scope of services outsourced from the company. The NCO has launched a platform for PKO to support the transformation processes, which is used to operate test and development environments. The Bank is also in the course of virtualization and migration to the cloud of workstations for almost 11 thousand consultants. PKO Bank Polski is also planning to migrate the bank’s IT systems to the cloud in order to take full advantage of the modern and innovative solutions, which are now very difficult to implement in the traditional model.

Digital transformation of PKO Bank Polski has been recognized by international experts. In 2019, the Bank earned the title “Bank of the Year in Poland” for the fifth time, awarded by “The Banker”, a british monthly magazine, belonging to the Financial Times Group. The justification for this award included activity of the bank associated with the ongoing digital transformation, such as development of the IKO mobile platform, use of the blockchain technology, as well as development of the National Cloud. Emphasis was also put on innovative technological solutions implemented as a part of cooperation with start-ups, as well as a change in the working model of the organization towards use of agile project management methodologies.

PKO Rotunda, located in the very heart of Warsaw, has been one of the capital city's most recognized symbols and a popular meeting place for more than fifty years. After a complex revitalization, as a part of celebration of 100th anniversary of PKO Bank Polski, the new, three-level PKO Rotunda building has been opened for customers. Institutional and private customers can now use the most modern branch of PKO Bank Polski. A new solution is the Meeting Zone at level +1, open for everyone, where customers can enjoy beverages and snacks offered by the café, take some rest, work or participate in interesting events. The project has been recognized in the Property Design Awards 2020 contest, in which PKO Rotunda won in the public facilities category.

PKO Bank Polski follows the principles of sustainable development and attaches increasing importance to the mode of use of natural resources. In response to climate changes, it has commenced analytical works on assessment of the impact of its activity on the environment. The Bank has introduced environmental factors as one of the criteria taken into account in its sector policies, including the high-emission trades. PKO Bank Polski has also estimated emission of greenhouse gases due to operating activity of the bank and has launched mapping of its product portfolio. The Bank has also launched the ESG project, which is to coordinate works on the social and environmental challenges, as well as corporate governance. The activities conducted so far have resulted in improvement of the bank's ESG ratings. The bank’s score in the rating of FTSE Russel has increased from 1.6 to 3.3, and in the MSCI rating - from BB to BBB. The Bank has also improved its position in the Sustainalytics rating, in which the ESG risk assessment has dropped from 32.9 to 24.0.