PKO Bank Polski was highly successful in achieving objectives of the strategy for the years 2010-2012

On a year-over-year basis (YOY), its consolidated net profit for the year 2011 grew by 18.4% and represented nearly 25 per cent. of profits the Polish banking sector generated. In the 4th quarter of the year 2011 alone PKO Bank Polski Group earnings amounted to PLN952 million, a 9.7% growth compared to equivalent period in the year 2010. The Bank’s earnings for the year 2011 totalled PLN4 billion (YOY growth of 19.4%), of which over PLN1 billion were earnings generated in the 4th quarter of the year (YOY growth of 25.6%).

“PKO Bank Polski Group achieved its financial results through a sustained effort of all the Group company employees. This joint endeavour has prepared the Capital Group well for the new ambitious targets it intends to achieve in the next business year,” President of the Management Board of PKO Bank Polski Zbigniew Jagiełło stated.

Very strong operational effectiveness of the Capital Group was one of the key contributors to its all-time high net profit. Its cost to income ratio at the end of the year 2011 declined by 2.1 percentage points YOY to 39.6%. Operating costs increased by mere 3.8% in YOY terms, or below Poland’s average annual inflation of 4.3% in that year. At the same time annual growth of result from business operations (EBITDA) reached 9.3%, with net interest income increasing by 16.8% on a YOY basis.

High net profit and superlative operational efficiency of PKO Bank Polski Group were reflected in its profitability ratios. Its ROE, as at the 2011 year-end, stood at 17.5% (YOY improvement of 2.6 percentage points) while ROA stood at 2.1% (YOY improvement of 0.1 percentage point).

Balance sheet total of PKO Bank Polski Group, as at the 2011 year-end, amounted to PLN190.7 billion, which represents a PLN21.1 billion annual growth, and results from dynamic increment in net lending position (YOY increase by PLN11 billion) funded through growth in customer deposits (YOY increase by PLN13.5 billion) and a bond issue. Ratio of loans to stable funding sources improved in the year by 3.6 percentage points to reach 88.5 per cent. while capital adequacy ratio remained at a prudent 12.4%.

The European sensitivity tests confirmed PKO Bank Polski Group’s financial stability. Even under conditions of the most extreme of the market development scenarios the Bank Capital Group preserved its ability to generate profit and to maintain its key financial indicators at safe levels.

Financial results of PKO Bank Polski Group confirm its position of leadership in the Central and East Europe region. In terms of profit earnings, assets and equity, this leader of the domestic financial sector stands out positively among European banks, also those operating in Poland through their subsidiaries.

Achievement of its strategic objectives for the years 2010-2012 expressed itself not only in attainment of set financial targets, but also in accomplishment of actions aimed at improving competitive position of PKO Bank Polski and increasing satisfaction of its customers and clients.

As it reinforced processes of collaboration between the Bank and its daughter companies and centralised certain functions, the Capital Group was able to optimise operating costs and shore up synergies arising from group operation.

In the past year PKO Bank Polski also introduced new customer service standards, based on results of a cyclical customer satisfaction study, and commenced a process of modernising the equipment and the visual identity of its branch network. Achievement of the strategic objectives was supported by a corporate culture shift underpinned by a modern human resource management policy. In addition to projects seeking to facilitate career development of the staff at all levels of the organisation, PKO Bank Polski, among others, implemented a pay system based on analysis of value of respective job positions and on adjustment of pay levels to those prevailing in the labour market.

The excellent financial results and the comprehensive modernisation effort met with recognition of The Banker, a Financial Times Group monthly, which named PKO Bank Polski the Bank of the Year 2011.

***

PKO Bank Polski is a Polish banking sector leader. Its consolidated net profit for the year 2011 totalled PLN3.8 billion. The Bank has been regularly recognised in prestigious industry rankings. It received the Bank of the Year in Poland honour award of The Banker international monthly. Its financial results and its comprehensive modernisation effort also met with recognition. The Polish Accountancy and Tax Institute honoured the PKO Bank Polski Annual Report for the Year 2010 with the Grand Prize in The Best Annual Report competition, in the Banks and Financial Institutions category. PKO Bank Polski’s two products, namely its cash loan and bank deposit, received the Reader's Digest Product of the Year 2011 honour certificates as those most frequently chosen and most preferred by the customers. Also, the Bank is the winner and holder of such honour awards as: the Golden Banker for the market’s best mortgage product; the Entrepreneur Friendly Bank competition award; the Customer Friendly Firm certificate; and was pronounced the Best Commercial Bank by Warsaw Business Journal. PKO Bank Polski’s innovative corporate banking solutions came out as winners in the Europrodukt competition. In the most recent edition of the contest, the Bank received three statuettes in the product categories of: the payroll account, the consolidated account and the escrow account. Moreover, the iPKO Biznes electronic banking system was granted the European Medal for the second time. PKO Bank Polski is also the country’s strongest image bank as testified by its leadership in the Top Brand ranking run by the Press magazine and the Most Trusted Brand title awarded by the Reader’s Digest monthly. PKO Bank Polski is also the highest worth brand in the Polish banking market. Experts of The Banker magazine assessed its value at USD1.5 billion, while the Polish Brands 2011 ranking of the Rzeczpospolita daily valued it at PLN3.75 billion. Philanthropic activities of PKO Bank Polski met with recognition of the Academy for the Development of Philanthropy in Poland, which granted the Bank and its Inteligo Financial Services the Benefactor of the Year 2010 statuette, and of the Polish Donors Forum, which granted the Bank the Special Award for its longstanding and consistent support of public interest causes.