Robust Beginning of the Year: PKO Bank Polski Presents Its Results for 1Q 2023

2023.05.18

· The net profit of the PKO Bank Polski Group in the first quarter of 2023 approximated PLN 1,5 billion, while profitability measured by ROE reached the level of 15,7 percent during the quarter.

· The Group systematically expands the scale of its operation. Its assets grew by 5,1 percent y/y and reached PLN 444 billion. Financing granted to clients went up by 2,9 percent to PLN 254 billion, while savings by 13,1percent, reaching the amount of PLN 471 billion

· In the first quarter of 2023, the Bank recorded a robust growth of financing in the corporate sector which reached 16,6 percent y/y. The share of PKO Bank Polski grew up to 35 percent in the market of residential loans. The share in the market of savings of natural persons spiked to over 28 percent.

· Total income grew dynamically by 23,2 percent following a growth in income from primary activity, which increased by 24,7 percent y/y. The interest income also continued to grow, both annually by 35,4 percent, as well as quarterly by 2,6 percent, also thanks to further improvement of interest margin to the level of 4,32 percent.

· The Bank demonstrated high cost efficiency. The cost to income ratio (C/I) quarterly amounted to 35,8 percent.

· The Bank continued digital transformation by developing new functions of the IKO mobile app which turned 10 in March 2023. The number of active IKO apps at the end of the 1st quarter of 2023 reached the level of 7,4 million. Since the moment of its launch, the users performed approx. 2 billion transactions.

· The Bank intensely developed the offer addressed to clients, introducing, among others, PKO Płacę później (pay later – BNPL) and a new offer for farmers. It also continued work on the ambitious project of Digital Mortgage (Hipoteka Cyfrowa).

In the first quarter of 2023, the PKO Bank Polski Capital Group earned a profit of almost PLN 1,5 billion net in effect of continued increase of income from primary activity, which allowed for full compensation of high costs of legal risk. The Group systematically expands the scale of its operation. Its assets grew by 5,1 percent y/y to the level of PLN 444 billion, while the number of clients was at 11,7 million. The Bank secured its position on the market of personal savings - its market share in the first quarter reached 28,4 percent. PKO Bank Polski also demonstrated high cost efficiency. The cost to income (C/I) ratio was 35,8 percent. The level of risk costs was at 59 base points, while the NPL after the drop by 18 base points y/y was on the level of 3,74 percent. The Bank also continued digital transformation, developing, among others, new functions of the IKO mobile app, including the PKO Płacę później (pay later) service and intensified work on the Digital Mortgage. The number of active IKO apps at the end of the 1st quarter of 2023 reached the level of 7,4million.

In the first quarter of 2023, PKO Bank Polski recorded a robust and satisfactory result, primarily on account of an increase in income from primary activity, effective cost control and adequate management of credit risk. This allowed for compensating the effects of higher legal risk related to loans in Swiss francs. The Bank is systematically improving shares in key markets are particularly exciting, namely the market of savings, sale of housing loans, along with subsequent implementations in the process of digital transformation. The results of the first quarter confirm business strength of PKO Bank Polski, allowing for continuation of systematic development and performance of our strategic goals. These results are the effect of intense work of our employees and I would like to thank them heartily for it. That is why we are entering the next months of 2023 with courage, hope and a robust profit, solidifying the position that PKO Bank Polski has been occupying in the national economy and proving the Bank’s resistance to external factors,’

stresses Dariusz Szwed, acting CEO of PKO Bank Polski

Solid Result at the Beginning of Year

The net profit of PKO Bank Polski in the first quarter of 2023 reached PLN 1,45 billion, which means a 2 percent growth y/y. The Bank recorded a further growth of the interest result up to PLN 4,19 billion, and the interest margin to the level of 4,32 percent. This was the effect of continued improvement of interest income earned from the portfolio of bonds and securities, as well as the slowing down of costs of financing, perceptible on the market.

Increase in Share in the Market of Savings of Natural Persons and Volume of Corporate Loans

The Bank's results are supported by a rigid cost discipline and a growth in the scale of business. The quarterly cost to income (C/I) ratio in the first quarter of 2023 was at 35,8 percent. The Group’s assets reached the value of PLN 444 billion, the number of clients was 11,7 million and the growth of income from primary activity approximated 25 percent. Clients’ savings grew at a rate of 13 percent y/y to PLN 471 billion, while the financing granted to clients reached PLN 254 billion. In the first quarter, the bank’s share in the market of personal savings grew to 28,4 percent, and the growth of the value of financing given to corporate clients was at 16,6 percent y/y.

Cost of Risk under Control and Maintenance of Strong Capital Position

The NPL ratio describing the quality of the credit portfolio was on the level of 3,74 percent at the end of the first quarter of 2023. The cost of risk was 0,59 percent. The Bank has also retained a safe capital position. The Tier 1 index reached the value of 17,42 percent, clearly above the regularly requirements. In the first quarter of 2023, the Bank increased the cost of legal risk related to mortgage loans denominated and indexed in CHF by PLN 967 million. The decision resulted from an up-date in the parameters of the legal risk assessment model for such loans.

Development of Mobile Services: 10 Years of IKO and PKO Płacę później (pay later)

For years PKO Bank Polski has been a leader in offering modern solutions for its clients. It has been developing its mobile banking app IKO for ten years now. At present, the app has over 100 functions and offers a broad range of services, also non-banking ones. At the end of March 2023, the number of active IKO apps exceeded 7,4 million. Since the moment of its launch, the users logged-in over 6,9 billion times and made 2 billion transactions for the total amount of PLN 526 billion. Seven mobile on-line payments are made in IKO every second; there are 326 transfers made per minute, 237,000 log-ins per hour and 22.5 million screen touches per day. In the first quarter of 2023, PKO Bank Polski was also developing the deferred payment service - “PKO Płacę później” (pay later). Thanks to it, the clients can shop within the limit granted and repay the funds within 30 days, without interest.

New Offer for Farmers

In the first quarter of the year, PKO Bank Polski introduced a loan offer for farmers for any purpose up to PLN 300,000 without any collateral and with a repayment schedule adjusted to the specific nature of agricultural production. The loan can be easily procured without formalities and the funds can be assigned for any purpose, e.g. purchase of fertilisers, pesticides, seeds or fuel - presentation of invoices is not required. The Bank supplemented the offer for this group of clients with an account offered for free for two years. In this way, PKO Bank Polski supports farmers in financing current needs, developing their farms and managing their finances.

CHF Credit Portfolio: Number of Positively Resolved Mediation Proceedings on the Rise

In the first quarter of 2023, PKO Bank Polski continued to offer settlements for individual clients who have active mortgage loans in Swiss francs. By the end of the first quarter of 2023, almost 29 thousand mediation proceedings ended positively. The total number of settlements concluded by 31 March 2023 exceeded 27 thousand. To limit the risk of interest rate incurred by clients, the Bank has been providing the borrowers with an interest rate option with a fixed interest rate for 5 years since the beginning of the programme. The loans with a fixed interest rate enjoy growing popularity - in the settlement process, this option was chosen by as much as 87 percent of clients in the first quarter of 2023, who continue to repay their loans after signing the settlement. On June 15, the CJEU judgment is expected regarding the legitimacy of banks' claims for the so-called remuneration for the use of capital. As a result, PKO Bank Polski takes into account the possibility of pressure on the financial result.

***

PKO Bank Polski is the undisputed leader of the Polish banking sector, with the value of its assets amounting to PLN 444 billion. In first quater of 2023, the bank generated PLN 1.5 billion in net profit. The company serves 11.7 million customers. It is the basic supplier of financial services for all customer segments, achieving the highest shares in the market of deposits, loans and in the market of private investment funds. Thanks to the development of digital tools, including the IKO application, which is actively used by 7.4 million customers, PKO Bank Polski is the most mobile bank in Poland.

Michał Zwoliński

Press Center

prasa@pkobp.pl

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