Record profits for PKO Bank Polski Group for 2010

Assets also reached a record level. At the end of 2010 they amounted to: 169.7 billion PLN and 167.2 billion PLN respectively for the Group and PKO Bank Polski.

There has also been a further improvement in profitability ratios. The Group's ROE increased in 2010 to 14.9 percent. Meanwhile, the ROA rose to 2.0 percent. The corresponding ratios for PKO Bank Polski amounted to 15.5 percent and 2.1 percent respectively.

The results show that both the Group and the Bank took advantage of last year's recovery of the Polish economy and return to rapid growth following the slowdown caused by the global financial crisis. The improvement in the situation of domestic households and businesses has led to a dynamic development in the bank's business activity in line with the "Leader" Strategy for 2010-2012.

“PKO Bank Polski is closely connected to the national economy. Therefore GDP growth should be and is reflected in our financial results. However, we managed to grow faster than the market and increase our share in most segments. I would like this trend to continue in the coming years. Our strategy has passed the test, so we will continue it in the next year and update its assumptions to the changing macroeconomic conditions,” said Zbigniew Jagiello, CEO of PKO Bank Polski, stressing that the best results in its history were achieved by the staff of the whole Group.

The highest net profit in the history of the leader of the Polish banking sector is on the one hand the result of high interest and commission income and secondly, the stabilization of operating costs. PKO Bank Polski's net interest income in 2010 amounted to 6.384 billion PLN (31.8 percent YOY), while net fee and commission income reached 2.938 billion PLN (24.3 percent YOY). At the same time operating costs stabilized at a level of 3.902 billion PLN (-0.1 percent YOY) with an increase in labour costs (2.9 percent  YOY), an increase in depreciation and amortization (10.0 percent YOY), and a decrease in overheads and other expenses (-7.6 percent YOY).

Thanks to the improved financial results and the sustained restructuring efforts, PKO Bank Polski achieved very high cost-effectiveness. The C/I ratio for the bank fell by 6.9 pp. YOY to 39.8 percent at the end of 2010.

Achieving the highest unconsolidated net profit and level of assets in the bank's history allowed for dynamic business activities in all the major segments of the banking market. The increase in the bank's gross loan portfolio (according to the management of the bank) in 2010 amounted to 14.4 billion PLN. The volume of mortgage loans increased most rapidly, by as much as 22 percent YOY, representing 44 percent of the entire loan portfolio. The Bank also supported the development of the dynamic SME sector. The volume of loans for customers in this market segment grew by 21 percent YOY. In total, PKO Bank Polski last year increased its market share of loans by 0.6 pp. – in the market for loans to individuals the share at the end of 2010 amounted to 20 percent, and for institutions, 14.1 percent.

At the same time customer deposits increased by 8.0 billion PLN, reaching 130 billion PLN at the end of 2010. Deposits of housing market customers (housing cooperatives, developers, residents' committees) grew the fastest – by 21 percent YOY. The bank's total market share of deposits of private persons amounted to 23.2 percent and 11.7 percent for institutional entities.

The increase in credit activity was achieved with a safe balance sheet structure. The loan-to-deposit ratio for the Group as at the end of 2010 stood at 98.3 percent, 5.1 pp. higher than the previous year. At the same time the ratio of "loans/stable source of funding" (stable funding sources include liabilities towards customers and long-term external financing in the form of: the issue of securities, including funds from the issue of Eurobonds borrowed from PKO Finance AB, subordinated debt and loans obtained from financial institutions) stood at 92.0 percent, an increase of 2.8 pp. The improvement of this last ratio was due on the one hand, to the above-mentioned dynamic growth in deposits, and on the other hand, to the  issue of Eurobonds. This allowed PKO Bank Polski to obtain 800 million euros from investors in October 2010. This success showed that the Bank is able to diversify its source of funding its activities through the effective use of the debt market.

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PKO Bank Polski is the leader of the Polish banking sector in terms of financial performance. For the 2010 net income reached PLN 3.3 billion. With over 25-percent market share the Bank also holds the leading position in sales of PLN mortgages, offering not only traditional mortgages, but also preferential mortgages with state subsidies. PKO Bank Polski has been awarded in many prestigious rankings. The Bank’s mortgage offer, in terms of adapting to untypical customer expectations, has been recognized as the best on the market by financial comparison engine Comperia.pl. The Bank is also praised for its flexibility to offer these loans, which may be granted to cover a variety of purposes, as well as for being the best savings and investment bank. As many as five products of PKO Bank Polski: mortgages, cash loans, accounts, deposits and credit cards, have been awarded by the magazine Reader's Digest with "Product of the Year 2010" certificates as the most often and most frequently chosen products by customers. The Bank has won the "Golden Banker" award as the best in the loan market and the loan market for firms, has also won the contest "Entrepreneur-Friendly Bank", holds the certificate "Customer-Friendly Company" and is the best commercial bank according to Warsaw Business Journal. According to analysis by the research firm MillwardBrown SMG/KRC, among the surveyed financial institutions PKO Bank Polski enjoys the highest confidence - three quarters of respondents trust its financial stability. PKO Bank Polski is also the strongest bank in the country in terms of image, as shown by its position as leader in the "Top Brand"  ranking compiled by Press magazine. It is also the most valuable brand on the Polish banking market. Specialists from The Banker magazine estimated the value of its brand at USD 1 billion and in Rzeczpospolita "Polish Brands 2010" ranking  its value was set at PLN 3.6 billion.