PKO Bank Polski successfully passed the stress test, coordinated by the Committee of European Banking Supervisors

The stress test exercise was conducted under the mandate from the EU Council of Ministers of Finance (ECOFIN) and coordinated by the Committee of European Banking Supervisors (CEBS) in cooperation with the European Central Bank (ECB), national supervisory authorities (for Poland - the Polish Financial Supervision Authority) and the EU Commission. The objective of the exercise was to assess the overall resilience of the EU banking sector and the banks’ ability to absorb further possible shocks on credit and market risks, including sovereign risks. Commonly agreed macro-economic scenarios (benchmark and adverse) for 2010 and 2011 were used in this exercise for all banks participating in the stress test.

As a result of the assumed shock under the adverse scenario, the estimated consolidated Tier 1 capital ratio for PKO Bank Polski would change to 15.7% in 2011 compared to 13.3% as of end of 2009. An additional sovereign risk scenario would have a further impact of 0.3 percentage point on the estimated Tier 1 capital ratio, bringing it to 15.4% at the end of 2011, compared with the regulatory minimum of 4%.

The results of the stress indicate a buffer of 2 825 m EUR of the Tier 1 capital against the threshold of 6% of Tier 1 capital adequacy ratio for PKO Bank Polski, agreed exclusively for the purposes of this exercise.

PKO Bank Polski acknowledges the outcomes of the EU-wide stress tests. The Polish Financial Supervision Authority has held rigorous discussions of the results of the stress test with PKO Bank Polski.

This stress test complements the risk management procedures and regular stress testing programmes set up in PKO Bank Polski according to the Basel Committee on Banking Supervision (under the Pillar 2 framework of the Basel II) and the Capital Requirements Directive (CRD) requirements as well as Polish legislation.

Given that the stress test was carried out under a number of key common simplifying assumptions (e.g. constant balance sheet) the information on benchmark scenarios is provided only for comparison purposes and should in no way be construed as a forecast. The results of the adverse scenario should not be considered as representative of the current situation or possible present capital needs. A stress testing exercise does not provide forecasts of expected outcomes since it includes plausible but extreme assumptions, which are therefore not very likely to materialise.

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PKO Bank Polski is the leader of the Polish banking sector as regards financial results. After the 1st half-year 2010 it achieved a net (after tax) profit of PLN 1.6 billion, the highest in the sector. With its 28-percent market share, the Bank holds the leading position in the sale of loans, offering also preferential home loans with the government’s subsidies in addition to traditional commercial mortgages. PKO Bank Polski has been repeatedly honored in many prestigious rankings. According to Open Finance independent financial advisers, it was ranked 1st in the quality assessment of PLN and euro loans. The mortgage offer was rated the best on the market by financial comparison engine Comperia.pl as regards its adjustment to non-standard customers’ expectations. The Bank was also appreciated for the flexibility of its offer of loans that can be granted for financing different purposes. The Bank was also the prize winner of “Złoty Bankier” [Gold Banker] for the best mortgage loan on the market and the winner in the competition “Bank Przyjazny dla Przedsiębiorców” [Entrepreneur-friendly Bank], and it has the certificate of a Customer-friendly company. According to the most recent analyses by the research company SMG/KRC, among the analyzed financial institutions PKO Bank Polski enjoys the highest confidence – 3/4 of respondents to the poll trust its financial stability. PKO Bank Polski is also the most valuable brand on the Polish banking market: “The Banker” magazine’s specialists estimated its value at one billion dollars.