Accelerating digital transformation

2020.05.28

In the pandemic period, PKO Bank Polski has maintained continuity of its operations, ensured safety of its employees and customers and supported the struggle against COVID-19 for the total amount of PLN 22.8 million.
The Bank has accelerated its digital transformation; according to the plans, in less than three years, the key business IT systems of the bank will operate in the computational cloud based on a hybrid architecture.
The more difficult economic conditions have translated to the results of the PKO Bank Polski Group, which in the first quarter of 2020 generated net profit of PLN 503 million - that is, 41.6 percent less than the year before.
The Group’s assets increased to almost PLN 365 billion, the bank continued a dynamic growth in the scale of operations, and thanks to the high level of cost discipline, the C/I ratio has remained stable.
The Company has maintained a strong position in terms of equity and liquidity, which makes it more resistant to difficult economic conditions.

The SARS-CoV-2 pandemic, which has became a concern in all countries of the world, has led to the biggest economic turbulences in thirty years in Poland. The Bank’s Capital Group had prepared itself for a deterioration of the economic conditions, and in the period of freezing of economy, it focused on maintaining continuity of operations, ensuring safety of its customers and employees and increasing of the pace of digital transformation. The Group's companies and the Bank also got involved in supporting those suffering from the effects of the epidemic, offering its key competences, as well as PLN 22.8 million for financial assistance. The harsher economic conditions have translated to the results of the PKO Bank Polski Group, which in the first quarter of this year generated net profit of PLN 503 million - that is, 41.6 percent less than the year before.

“In March 2020, the Polish economy experienced a negative shock on a scale unknown to the younger generations. Under these difficult conditions, PKO Bank Polski focused on three key areas: ensuring continuity of operations, safety of its customers and employees and supporting the polish economy in the struggle against COVID-19. In all of these areas, we met the expectations. Thanks to the Bank's digital transformation, we were able to redirect customer traffic from branches to remote channels, enabling access to financial services, as well as the necessary support, needed to save workplaces. The Bank, companies of the Capital Group and our employees also joined efforts aimed at struggling directly with the epidemic”,

said Zbigniew Jagiełło, the President of the Management Board of PKO Bank Polski.

Profit under pressure of write-offs and provisions

The Group's net profit in the 1st quarter of 2020 amounted to PLN 503 million and was 41.6 lower percent in comparison to the previous year. This decrease was associated mainly with deterioration of the business conditions caused by the SARS-CoV-2 epidemic, which forced the Bank to make write-offs for the amount of PLN 228 million. The Group's results were also influenced by an impairment write-off of PLN 90 million, indirectly related to the pandemic, due to loss of value of shares of Bank Pocztowy. This profit reduction was also influenced by last year’s rulings of the CJEU: the cost of legal risk of foreign currency mortgage loans (PLN 85 million), the cost of automatic commission reimbursements due to early repayment of retail loans (PLN 68 million) and the cost of provisions made for reimbursement of these commissions (PLN 70 million).

These charges were partially neutralized by the growing result on business operations. The dynamic increase in the scale of operations made the result on commissions and charges, as well as interest rates, higher in comparison with the previous year. However, PKO Bank Polski has assessed that throughout 2020, the reduction of interest rates by the MPC by one percentage point, as well as other decisions of monetary and supervisory institutions will result in a decrease in net profit in the capital group of PLN 550 to 600 million.

Well-capitalized and ready for harsher times

PKO Bank Polski has maintained a strong position in terms of equity and liquidity, which makes it more resistant to difficult economic conditions. The Tier 1 equity ratio of the Bank’s Group after the first quarter of 2020 amounted to 16.1 percent, and the total capital ratio - 17.3 percent. Both ratios are much above the regulatory minimum levels, and capital of the Group exceeds by more than PLN 11.7 billion the minimum levels authorizing it to pay up to 50% of profits in form of a dividend. The Bank’s resilience has also been supported by high quality of the loans granted - as a result, even under more difficult economic conditions, the result on write-offs and their impairment is under control.

PKO Bank Polski has been preparing for more difficult economic conditions for over two years, and high resilience of the Bank to negative macroeconomic scenarios were confirmed by European stress-tests of 2018. They showed that PKO Bank Polski was the most secure bank in the entire European Economic Area.

PKO Bank Polski is accelerating the digital transformation

The Bank is in the course of achievement of its digitalization objectives defined in the autumn of 2019 in the “PKO Banking Platform” strategy. Around mid-year, it plans to launch a Web-based platform for sale of cars. The Bank is also getting ready for migration of its IT architecture to the cloud. The process has entered a new phase after the National Cloud Operator initiated a strategic partnership with Microsoft, as a part of which the global technological company is to launch in Poland its first data processing region in Central and Eastern Europe. The Bank expects that in no more than three years, the key business IT systems of the bank will operate in the computational cloud based on a hybrid architecture. In this manner, the Bank intends to provide itself and its customers with an innovative, secure and cost-effective development environment. As a result, the Bank, as well as its customers, will have access to the same technological potential as their competitors in countries, in which cloud-based services are used on a much broader scale.

IKO with voice assistant service

PKO Bank Polski has continued to increase the number of users of mobile banking and has recorded an increase in the number of transactions in these channels; at the same time, it has developed its IKO app, which has just been equipped with a new function - a voice assistant. The service has been launched in a pilot program for some of the customers using the Android system, and within a few weeks, it will be made available to everyone. For a start, it enables customers to perform such activities as making transfers, checking history and balance of their account and make a BLIK payment.

In March, 7 years passed since launching of the IKO mobile app. During this time, the users logged into the app more than 2 billion times and executed 396 million transactions. The number of active IKO applications has exceeded 4.5 million. High popularity and the best user scores made IKO the winner in the ranking of the British Retail Banker International two times in a row. IKO has outstripped apps of the biggest global banks, such as JP Morgan Chase, Barclays or Bank of America.

The key challenge in the first quarter: maintaining of continuity of operations and warranting safety

Under crisis conditions, the Bank’s Capital Group focused on maintaining continuity of operations and ensuring safety of its clients and employees. The Bank promptly provided thousands of its employees with the possibility of working remotely and organized customer services for branches to minimize the risks associated with spreading of the SARS-CoV-2 virus.

The high level of digitalization of the company allowed for provision of remote customer services and quick migration of new processes to digital channels. In this form, apart from basic services, the Bank enabled, among other things, applications for suspension of loan payments. The Bank also launched a new service - a video-consultant for institutional clients. The Bank actively encouraged customers to use remote services; at the same time, even in the most difficult period, it maintained accessibility of more than 1400 local branches.

Distribution of funds from assistance programs saving workplaces

The Bank has been actively involved in saving Polish companies and workplaces created by them. Together with the National Clearing House, it has developed a system for submission of applications for subsidies from the financial shield program of the Polish Development Fund, which was then made available to other market players. PKO Bank Polski has also organized issue of bonds of the Polish Development Fund, which made it possible to finance the program. The Company has also supported development of the information service on the anti-crisis shield and a hotline, which allows entrepreneurs to obtain information on the available forms of assistance.

Through the electronic banking systems of PKO Bank Polski, almost 36 thousand companies have received the Polish Development Fund subsidies in the total amount exceeding PLN 6 billion. The Bank has also distributed assistance for companies provided by BGK. In total, PLN 18 billion of warranties from the BGK Liquidity Warranty Fund have been made available through PKO Bank Polski. It is more than provided by any other bank

We support Poland and the Poles, also in the struggle against the pandemic

PKO Bank Polski has also got involved in assistance aimed at eliminating the consequences of the epidemic. For this purpose, it has employed its know-how, as well as PLN 22.8 million for financial assistance. As a part of this activity, the Bank has purchased personal protection equipment, medical equipment, tests and other necessary items for places with special needs, such as institutions, hospitals, hospices, health care facilities or social welfare homes. The Bank's employees got involved in the action, identifying institutions requiring assistance.

The Bank also participated in organization of purchase of personal protection equipment and medical equipment needed to take care of patients with COVID-19. The capital group companies also got involved - for instance, PKO Leasing provided 141 passenger cars for medical and sanitary services. The National Cloud Operator developed and launched a video medical consultation system, managed remotely by medical employees.

***

PKO Bank Polski is the undisputable leader of the Polish banking sector. In first half of 2020, its consolidated net profit amounted to PLN 1,3 bilion (the largest in the Polish banking sector) and the value of assets reached over PLN 377 billion. The Bank is the basic provider of financial services for all customer segments, achieving the highest shares in the deposit market (18.4 percent), loans (17.6 percent), leasing market (11.2 percent) and in the market of investment funds not dedicated (22.2 percent). With over 9.46 million payment cards, the bank is the largest debit and credit card issuer in Poland with a market share of over 21%. Thanks to the development of digital tools, including the IKO application, which has in the end of third quater of 2019 - 4,7 million active applications, PKO Bank Polski has become the most mobile bank in Poland. The Capital Group's companies strengthen the Bank's strong position. The Brokerage House of PKO Bank Polski is a leader in terms of the number and value of IPO and SPO transactions on the capital market.

Szymon Pinderak

Press Center

prasa@pkobp.pl

+48 22 521 53 85

About Bank

PKO Bank Polski is stepping up the pace. ‘Number one and fullstop’ is the motto of the Group's new strategy for 2025-2027, which aims to strengthen its position as the undisputed leader in banking.

2024.10.24

PKO Bank Polski - number one and full stop. This is the motto of the new strategy of Poland's largest bank for the years 2025-2027. Over the next three years, the main strategic objective will be to strengthen the Bank Group's position as the financial group number one i...

About Bank

New members of the Management Board of PKO Bank Polski

2024.04.15

The Supervisory Board of PKO Bank Polski has supplemented the composition of the Management Board of the Bank for a new three – year term. Marek Radzikowski and Mariusz Zarzycki were appointed as Vice presidents of the Management Board as of 22 April 2024. This is a res...

About Bank

PKO Bank Polski with a new Management Board for a new term

2024.03.27

The Supervisory Board of PKO Bank Polski has appointed a new Management Board. Szymon Midera will be appointed as the President of the Management Board of PKO Bank Polski, subject to the approval of the Financial Supervision Authority. Until then, he will act as Vice-Pre...