Good growth and consolidation of the leader position despite difficult market conditions

High net profit generated in the IIQ is mainly the result of improved net interest income, a significant increase in net fee and commission income, and reduced overheads. Net profit generated by the PKO Bank Polski Group in the IH2015 amounted to PLN 1 350 million and remained under strong pressure of external factors: growth in BFG contributions, reduced interchange fees and the historically low market interest rates.

- The Bank achieved a satisfactory financial results in the first half of 2015 despite the negative regulatory and macroeconomic factors. We are pleased with the growth in net profit in the second quarter. The Bank has taken many initiatives to miigate the difficult market conditions. Renegotiation of contracts with international payment organisations is positively influencing current and future net fee and commission income. In turn, implementation of the capital optimization program will reduce risk-weighted assets and further improve capital adequacy ratios. Also, we are constantly developing all leading business lines - said Zbigniew Jagiello, CEO of PKO Bank Polski.

Strengthening the leading market position

The consolidated assets increased by 5.5% y/y and stood at PLN 255.5 billion in the IH 2015 as a result of the increase in net loans by 4.1% y/y to PLN 185.3 billion, financed by 4.5% growth in customer deposits to the level of PLN 179.1 billion. Thanks to the high sales of new cash loans and SME and corporate  loans, the Bank has consolidated its high share in the loan market of 17,8%, while it remained stable in both the retail and corporate loan segments. This also applies to deposits, where the Bank remains the leader with a market share of 17.5%.

Positive trend of improvement in portfolio quality was maintained within the past 12 months. The cost of risk and the share of loans with recognized impairment were declining. The coverage ratio was rising. At the end of IH 2015, the cost of risk stood at 0.82 percentage points (0.87 percentage points for the Bank), which represents a decrease by 39 bps y/y (by 28 bps y/y for the Bank). The satisfactory improvement was mainly driven by business loans, where the cost of risk on an annualized basis decreased by 59 bps. At the end of IH 2015, the ratio of impaired loans amounted to 6.9%, which represents a decrease of 0.3 percentage points y/y. The coverage ratio rose by 7.2 percentage points y/y to the level of 62.9%. Net impairment losses in the IH 2015 amounted to PLN 749 million and decreased by 22.9% on an annualized basis, mainly due to decline in write-downs on the business loan portfolio.

PKO Bank Polski capital ratios remain at a stable high level. At the end of IH 2015, the capital adequacy ratio stood at 13.9 per cent and Core Tier 1 ratio at 12.6 per cent.

In the IIQ 2015, the Bank completed a comprehensive renegotiation of contracts with international payment organisations. The new terms of cooperation positively influence the current and future results from commissions and fees and are the result of constantly increasing level of credit and debit card transactions of the Bank’s customers. PKO Bank Polski is the largest issuer of debit and credit cards in Poland with a portfolio of 7.5 million payment cards and a market share of 21%.

In the IIQ, PKO Bank Polski also carried out a comprehensive review of capital requirements in order to determine the potential for risk-weighted assets optimisation. The Bank plans to implement identified capital optimization initiatives in the second half of 2015. The effect of the program will be the reduction of RWA (risk weighted assets) by approx. PLN 10 billion and improvement of the capital adequacy ratio by approx. 0.7 percentage points till the end of 2015.

The integration of Nordea Bank Poland completed successfully in April. Currently, all customers of the Bank are provided with equal service quality. The total estimated synergies (gross) from the acquisition will amount to PLN 300 million annually, starting from 2017, i.e. upon the full completion of the integration process.

In IIQ, PKO Bank Polski won the tender to service the city budget of Katowice and its 63 organizational units. The Bank’s Contact Centre defeated 12 competitors and maintained the leading position in the eleventh edition of the banking hotline quality analysis.

Thanks to the IKO applications the Bank's customers gained access to new functionalities, such as: possibility to top up pre-paid phones, preview the details of standing orders, loans, debit and credit cards, including the ability to repay card debt.

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PKO Bank Polski is a leader of the Polish banking sector. After two quarters of 2015, PKO Bank Polski Group posted a consolidated net profit of PLN 1 350 million. PKO Bank Polski ranked #1 with six stars in the overall classification in the Forbes magazine Best Corporate Bank ranking. The Bank ranked #3 in the Banking Quality 2013 ranking of TNS Polska and Puls Biznesu. The Bank’s Contact Center, for the sixth time in a row, was a winner in a regular survey of banks’ hotlines carried out by ARC Rynek i Opinia. The Bank won for another consecutive year in the ranking of the top 50 banks in Poland published by the financial monthly Bank. PKO Bank Polski won this year’s edition of the ranking in the category of Property Financing Banks and ranked third among Consumer Finance Banks. PKO Bank Polski was awarded for the implementation of the IKO application in the Electronic Banking and E-Finance category of the 12th edition of the Financial Institutions IT Leader 2013  competition of Gazeta Bankowa. PKO Bank Polski was also awarded for its Innovation Centre in the category Back Office Systems. Around a dozen financial institutions, mainly representing the banking and insurance industry, competed for the IT Leader award. The jury of the Competition of the 8th E-Economy Congress awarded PKO Junior in the Project of the Year category. PKO Bank Polski also enjoys the strongest image among Polish banks. According to a prestigious magazine The Banker which values PKO Bank Polski’s brand name at USD 1.25 billion, the Bank remains the most valuable brand in Polish banking sector. According to the ranking of the Most Valuable Polish Brands 2013 by Rzeczpospolita daily, PKO Bank Polski remained the most valuable brand in the financial industry category, valued at PLN 3.7 billion. In 2012, the Jury of the Banking Leaders Competition, organised as a part of the Polish Economic Congress, awarded PKO Bank Polski as the Best Bank and the Most Innovative Bank for the new offer of School Saving Associations. In rankings based on students’ opinions, the Bank was ranked as one of the best employers in Poland. The Bank’s high position is also confirmed by surveys carried out by the international company Universum Global and AIESEC among students of Poland’s best universities. PKO Bank Polski is also a winner of the Golden Banker 2013 award in the Best Mortgage Loan and the Financial Innovation categories for its IKO application.