PKO Bank Polski during the pandemic

2020.11.04

In the first three quarters of 2020, the PKO Bank Polski Group generated PLN 2.02 billion of net profit. The net profit in Q3 amounted to PLN 712 million.
The company maintains a strong capital and liquidity position, which increases its resistance to more difficult economic conditions.
In recent months, PKO Bank Polski has focused on accelerating digitization.

More difficult economic conditions translated into the results of the PKO Bank Polski Group, which in the first three quarters of 2020 generated a net profit of PLN 2.02 billion, by 39% less than a year ago. Only in the third quarter, the group generated PLN 712 million of net profit. The Bank has prepared in advance for the recession, thanks to which the dynamics of its profit is better than in the sector. In recent months, the bank has focused on accelerating digitization, launching new remote services, and preparing the company to operate during the second wave of the pandemic.

- The economy and society of countries in Europe are once again struggling with the large increase in the incidence of COVID-19 and the consequences of the next wave of the pandemic. The PKO Bank Polski Group is well prepared for this new wave. We accelerated digitization, facilitated remote use of bank services and implemented tools supporting remote work. PKO Bank Polski has prepared in advance for more difficult economic conditions, thanks to which the decline in the group's profit is lower than in the entire banking sector.

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

Profit under pressure of write-offs and provisions

The net profit of the bank's group in the first three quarters of 2020 amounted to PLN 2.02 billion and was 39 percent lower than last year. The profit in Q3 amounted to PLN 712 million. The decrease in the result was mainly due to the deterioration in the economic environment caused by the SARS-CoV-2 epidemic, which forced the bank to create write-offs in the amount of PLN 675 million (for credit risk and non-financial assets in total). The decrease in profits was also influenced by the burden related to last year's judgements of the CJEU: an increase in the cost of legal risk of foreign currency mortgage loans (PLN 530 million) and an increase in the cost of reimbursement of commission from early repayment of retail loans (PLN 202 million), as well as an increase in regulatory costs (PLN 190 million).

These burdens were partially offset by a higher result on business related primarily to the dynamic increase in the scale of operations. The group's assets after the third quarter of 2020 amounted to nearly PLN 377 billion, financing provided to customers increased to PLN 254 billion, and customer savings increased to PLN 345 billion. The increase in the scale of operations resulted in a higher result on commissions and fees than in the previous year, as well as net interest income.

Well capitalized and prepared for more difficult times

The decrease in the net profit of the PKO Bank Polski Group in the first three quarters of 2020 was lower than in the entire banking sector. This was due the fact that the bank is very well prepared for more difficult economic conditions. The bank ended 2019 with the lowest costs of risk on the banking market in Poland and the best C/I cost-effectiveness ratio. At the same time, the bank generated the highest profit in the Polish financial sector and the second highest return on equity (ROE) in the banking sector. The bank's good preparation for more difficult economic conditions had already been confirmed by the results of the European stress-tests in 2018, which showed that PKO Bank Polski is the safest bank in the entire European Economic Area.

The bank maintains a strong capital and liquidity position. The Common Equity Tier 1 capital ratio of the bank's group after Q3 2020 was 18.3%, and the total capital ratio was 19.6%. Both ratios are significantly above the regulatory minimums, and the group's capital exceeds the minimum levels by over PLN 13 billion, which prior to the pandemic entitled to a dividend payment of up to 50% of profit.

Prepared for action during the second wave of the pandemic

PKO Bank Polski is well prepared to operate in the conditions of the autumn increase in morbidity. Bank employees work remotely everywhere where it is possible. From the beginning of the year, the bank has allocated PLN 26.5 million to facilitate work in this form. It purchased additional laptops, telecommunications services and implemented Microsoft Teams - an application facilitating remote organization of meetings. The work of the remaining people was organized in such a way as to maximize the level of their safety. In addition to the rotational work system, it will be helped by the security of customer service stations, personal protective equipment and additional disinfection services, for which the bank has allocated PLN 29.8 million from the beginning of the year.

Accelerating digitization and further developing of the remote services

The company has also accelerated digitization, introduced a hybrid model of work for advisors and is developing remote channels. Thanks to this, customers can more easily use its services without leaving home. The bank has prepared a sales model for the elderly and people who have not used electronic channels for banking services before. As part of it, PKO Bank Polski offers customer education and the support of advisors, who can assist in concluding contracts using a smartphone application. The bank also made it possible for clients to opening an investment account using the mSzafir e-signature service.

The result of digitization of customer service was the optimization of the sales network. In the first nine months of the year, the number of bank and agency branches decreased by 115. Employees at closed branches receive vacancies in other parts of the organization. Therefore, the company has temporarily suspended recruitment processes open to candidates from outside the organization and is looking more closely at extending term contracts. As a result, employment in the Bank's Capital Group decreased by 1,351 FTEs since the beginning of the year.

The bank also continues robotization and automation. As part of the robotized and automated processes, work equal to the equivalent of 1,200 full-time jobs has been performed since the beginning of the year. Accelerating digitization and maintaining a strong cost discipline allowed the company, despite a strong increase in regulatory costs, to reduce operating costs and maintain the C / I cost efficiency ratio at a low level of 42.1

IKO already has 5 million active applications

The IKO mobile banking application continues to gain popularity. It has already been activated 5 million times. Since its launch in March 2013, users have logged in to it 2.6 billion times and made 544 million transactions through it for a total amount of PLN 152 billion. At the same time, banking using spoken commands is becoming more and more popular - within three months of launching the voice assistant, IKO users carried out 200,000 calls with it and made transfers for PLN 1.5 million. IKO is constantly gaining new functions. In recent months, it has been enriched with the possibility of setting up a "selfie" account, setting up a company account while registering a business in CEIDG, checking the account balance in another bank or access to video advisor support.

Durable Medium 2.0. for private documents

PKO Bank Polski has implemented a durable 2.0 medium, which enables the delivery of private documents to customers in digital form. The solution was developed by PKO Bank Polski, KIR, Operator Chmury Krajowej and technology partners. In the first place, it will be used to provide transaction statements for credit cards and documentation related to cash loans. The tool will reduce the amount of paper used and the carbon footprint generated by the company's operations. The new solution complements the possibilities of a durable medium implemented by PKO Bank Polski already in 2018, which was used to make digital documents available 11 million times and brought the bank savings of PLN 20 million.

Automarket - buying a car without leaving home

The bank implements the digitization goals adopted in autumn 2019 in the strategy "PKO Banking Platform". As announced, at the beginning of the quarter, it launched the first banking platform in Poland for the purchase of new and used cars - Automarket. Through it, customers can buy technically tested and guaranteed cars, and the purchase can be easily financed immediately using the products of the bank's group. Automarket transfers the entire process of purchasing cars to the digital world: from choosing the right offer, through payment or financing, to delivery of the car to the address indicated. The platform was created in less than six months thanks to the use of an agile approach to the project and the integration of resources of PKO Bank Polski, PKO Leasing and Masterlease.

***

PKO Bank Polski is the undisputed leader of the Polish banking sector. After three quarters of 2020, its consolidated net profit amounted to PLN 2.02 billion and the value of assets was PLN 377 billion. The bank is the basic provider of financial services for all customer segments, achieving the highest shares in the savings market (18.4%), loans (17.6%), the leasing market (11.2%) and the personal investment fund market. physical (22.2 percent). With over 9.55 million payment cards, the bank is the largest issuer of debit and credit cards in Poland. Thanks to the development of digital tools, including the IKO application, which at the end of the third quarter of 2020 had over 5 million active applications, PKO Bank Polski is the most mobile bank in Poland. The Bank's strong position is strengthened by the companies of the Capital Group. Dom Maklerski PKO Banku Polskiego 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

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