PKO Bank Polski with the highest profit in the history of Polish banking

2021.08.12

The net profit of the Capital Group of PKO Bank Polski in the first half of 2021 exceeded to over PLN 2.4 billion and was almost 85% higher than a year before, whereas its quarterly profitability measured with Return on Equity (ROE) in the second quarter of 2021 grew to 12.1%.
The Group expanded the scale of its operation and tightened the cost discipline. In the second quarter of 2021, its assets grew to PLN 392.6 billion, while the quarterly cost to income (C/I) ratio dropped to 38.1%.
PKO Bank Polski incorporated the ESG indices into its non-financial goals; among others, it became liable for eliminating exposure to the coal mining sector by 2030.
The results of European stress tests confirmed that PKO Bank Polski is one of the most resilient banks in Europe.

In the first half of 2021, the Capital Group of PKO Bank Polski generated over PLN 2.4 billion of net profit. This is the highest result in the Bank's 100-year history and the historically highest profit in the entire Polish banking sector. The excellent results translated to the increase in profitability measured by return on equity. It is supported by cost discipline and increase in the scale of operation, including development of new business lines, among others sale of insurance. Simultaneously, the Bank remains resilient to negative macro-economic scenarios, which was confirmed by the results of European stress tests. The Bank wishes to develop in a more sustainable way and that is why it incorporated the ESG indices into the non-financial goals.

In the first half-year of 2021, the Capital Group of PKO Bank Polski worked out the highest profit in over 100 years of its history. It reached PLN 2.4 billion and was much higher than before the pandemic. Recovery of the result after the difficult period of 2020 was supported by a growth in the scale of operation and development of new business lines, combined with a responsible approach to risk. In the next quarters, we would like to solidify our competitive advantages, among others continue the model of international expansion which has been pursued for a couple of years. We also would like to continue to generate the best results for our shareholders, but additionally we will be searching for opportunities to make our development even more sustainable. In this respect, we will be assisted by the meeting of the ESG commitments which we incorporated into our non-financial goals,”

said Jan Emeryk Rościszewski, Vice-resident of the Management Board of PKO Bank Polski, managing the work of the Management Board.

Highest Result in History

The net profit of the Capital Group of PKO Bank Polski in the first half of 2021 exceeded PLN 2.4 billion and was over 85% higher than a year before and 16% higher than before the pandemic. In the second quarter only, the Group generated over PLN 1.2 billion profit. Both in the quarterly and in the half-year approach, the profit accomplished by PKO Bank Polski is the highest in over 100 years of the Bank's history and is the highest profit ever reported in the Polish banking sector. These excellent results translated to the increase in profitability of the Bank's Capital Group. The quarterly return on equity (ROE) in the second quarter of 2021 was at 12.1% and was almost twice as high as a year before.

Rigid Cost Discipline and Growth in Scale of Operation

The Bank's results are supported by a rigid cost discipline and a dynamic growth in the scale of business. The quarterly cost to income (C/I) ratio in the second quarter of 2021 dropped to 38.1% (drop by 7.8 pp. q/q), which means that it reached a level much better than expected in the Strategy for 2020-2022. The Group’s assets grew to PLN 392.6 billion. In the second quarter of 2021, there was a breakthrough with respect to client financing, which reached PLN 230.3 billion and was 1% higher than a quarter earlier. Particularly strong growth took place in the area of retail loans. The dynamic of the new sale of retail loans reached 40% q/q and 121.1% y/y. Savings of clients continued to grow. Their total value at the end of the second quarter of 2021 was PLN 383 billion and was higher by 3.4% than at the end of the first quarter of 2021.

Most Resilient Bank in Europe

A responsible approach to risk management helped the company to quickly rebuild its profit after the difficult year of 2020. The quarterly cost of risk in the second quarter of 2021 amounted to 50 base points, while the result on credit write-offs and impairment was only - PLN 0.5 billion as compared to almost - PLN 1.0 billion a year before. The Bank also remains well capitalised. The total capital ratio is at 18.9% and remains far below the minimum regulatory requirements. It also holds PLN 15 billion of excess capital. The Bank’s high stability was confirmed by the results of European stress tests, announced in July this year, which showed once again that PKO Bank Polski is one of the most resilient banks in Europe as far as economic turbulence is concerned.

Development of New Business Lines

PKO Bank Polski focuses on creating integrated additional services which are the source of the non-interest income. To this aim, it wishes to develop lease and factoring services even more dynamically. Above all, it wishes to focus even more on the development of insurance products: emulating the banks in Italy, France and Spain, which became leading insurance carriers at their respective markets.

The effect of these actions was an increase in revenues from sale of insurance. The Bank’s commission income on insurance in the second quarter of 2021 was marked by higher dynamics than the overall commission income, while sole sale of insurance grew by 8% q/q and over 70% y/y. The dynamic of the written premium in the second quarter of 2021 was at 30% q/q.

The Bank is also consistently launching additional services, such as the Automarket website launched in July 2020. Through this website customers can purchase technically verified and guaranteed cars. By the end of the first half of 2021, the website was visited by 3.1 million users. The Bank has already sold 2,000 cars via the website. In the first half of 2021, 78% of the purchase transactions of cars via the website were financed with products from the PKO Group.

Sustainable Business Development

PKO Bank Polski wants to generate the best results for its shareholders and additionally to search for possibilities that allow for even more sustainable growth. Therefore, it incorporated the ESG indices into its non-financial goals. In observance of the previously adopted policy assuming tightening of the financing for the carbon intensive technologies and no new engagement in the coal mining sector, the Bank became liable for complete elimination of exposure to the coal mining sector by 2030. The Company also declared that it would increase the scale of green financing by at least by 5% y/y. The indices also include the Bank’s liability for curbing the emission of greenhouse gases to 40,000 tons in 2025, i.e. by 60% as compared to 2019.

Another Step in International Expansion: Romania

PKO Bank Polski is consistently implementing the international expansion strategy and building a strong position in the CEE region. Its main assumption is reinforcement of the position of the financial partner for businesses operating internationally in the region of Central and Eastern Europe. PKO Bank Polski is already present in Germany, where its corporate branch is systematically increasing the result on operation (+5.3% q/q), in Czech Republic and also in Slovakia (since 2021). The number of clients of the Bank's foreign branches at the end of the second quarter of 2021 was higher by 51.3% than a year before, while the trade finance volume amounted to PLN 3.1 billion, which means a growth of almost 140% y/y. In the first half of 2021, the Bank started to work on launching a new branch, this time in Romania, which should start operating in 2022.

The Capital Group of PKO Bank Polski is also resent in Ukraine where it holds 100% shares in KredoBank. At the end of 2020, it was in the top ten of the largest retail lenders in Ukraine. In the second quarter of 2021, KredoBank recorded a 3.1% growth of result on business activity and is planning to set up its own lease company soon. PKO Bank Polski is also pursuing its foreign development via a network of foreign correspondent banks (best developed in Poland) which allows it to process foreign payments efficiently. The quality of settlements in American dollars was rewarded in the 1st half of 2021 by JP Morgan, which distinguished PKO Bank Polski with three prestigious prizes.

Record Transactions in Corporate and Local Government Segment

PKO Bank Polski supports the development of local governments and Polish companies. In August 2021, together with a consortium of banks, it entered into a credit agreement with Nexera, an ICT operator, with a value exceeding PLN 1 billion. The share of PKO Bank Polski in the financing is approx. PLN 230 million. The credit facility will allow for the development of broad-band infrastructure in the areas of the so-called white spots. These are places, primarily rural areas and small towns in Poland, which do not yet have access to the broad-band Internet. This is one of the highest credit agreements entered in the Polish ICT sector.

In July, the Bank entered into an agreement with the City of Kraków pertaining to the organisation of issue of bonds in the amount of PLN 620 million. This is the greatest issue of bonds in the Bank’s history. Financing organised on such scale will significantly affect the development of the city and the region. PKO BP has already organised issues of municipal bonds in the amount of almost PLN 21.5 billion and retains the leading position at this market. PKO Bank Polski’s share in the market of municipal bonds amounts to almost 40%.

***

PKO Bank Polski is the undisputed leader of the Polish banking sector, and the value of its assets is nearly PLN 393 billion. In the first half of 2021, it generated PLN 2.4 billion of net profit. The company serves 11 million retail customers. It is the primary provider of financial services for all customer segments, achieving the highest market shares in savings (18.1%), loans (17.4%), in the mortgage market (around 20%) and in the market of private individuals' mutual funds ( 19.4 percent). Thanks to the development of digital tools, including the IKO application, which already has over 5.7 million active applications, PKO Bank Polski is the most mobile bank in Poland. The company strengthens its foreign presence through corporate branches operating in Germany, the Czech Republic and Slovakia, and through KredoBank operating in Ukraine.

Szymon Pinderak

Press Center

prasa@pkobp.pl

+48 22 521 53 85

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