Strong growth of results driven by rising revenues and synergies from the integration with Nordea

The profit of the PKO Bank Polski Group was PLN 815 million in Q3 2015, an increase of 16 percent quarter on quarter. The consolidated profit on business operations rose by 4 percent quarter on quarter to PLN 2.7 billion. The growing profitability of loans and the falling costs of deposits helped the net interest income to improve by 8 percent qoq to PLN 1.8 billion.

“PKO Bank Polski consistently builds shareholder value by generating solid profits. As previously announced, Q3 brought a strong improvement of the net interest income; the trend will continue in the next quarter. The results will be mainly driven by rising business volumes. Sales of consumer and mortgage loans in H2 should be higher than in H1. We will increase our share in corporate loans as well. In the long term, the results will also be enhanced by the closing of the acquisition of Visa Europe by Visa Inc.,” said Zbigniew Jagiełło, President of the Management Board of PKO Bank Polski.

The cost discipline was maintained in Q3 while cost synergies were achieved thanks to the acquisition of Nordea companies, helping to reduce the overheads. The operating expenses fell by 2.7 percent qoq in Q3 2015. According to the latest estimates, the total cost of integration will be ca. PLN 65 million lower than the original estimate of PLN 299 million.

The cost synergies generated in the three quarters of the year stood at PLN 92 million. The cost synergies will reach PLN 187 million in 2016 and ca. PLN 220 million per year in 2017 and beyond.

The consolidated profit was PLN 2.17 billion in Q1-3 2015. It remained under the pressure of adverse market drivers. The net interest income was PLN 5.17 billion and the net fee and commission income was PLN 2.16 billion. The consolidated assets increased to PLN 254.9 billion. The Bank maintained a high market share at 17.5 percent of loans and 16.8 percent of deposits. It should be noted that the Bank’s market share in consumer loans increased sharply to 16.2 percent, i.e., by 0.4 p.p. qoq.

Loan loss provisions were PLN 1.1 billion in Q1-3 2015, representing an improvement of 23.2 percent yoy. With the higher quality of housing and consumer loans, the share of impaired loans fell by 0.1 p.p. yoy to 6.9 percent. The cost of risk decreased by 0.31 p. p. to 0.78 percent, mainly driven by improvement of corporate loans. The coverage ratio also improved by 5.4 p.p. yoy to 63.5 percent.

The historically low interest rates and regulatory restrictions which curb the growth of certain business lines affected the return ratios across the sector. Despite the adverse environment, the return rates of the PKO Bank Polski Group remained strong. Its ROE improved by 1.2 p.p. qoq to 11.1 percent in Q3 2015 while ROA improved by 0.2 p.p. to 1.3 percent. The cost/income ratio (C/I) was 49.5 percent in Q3. The interest margin was 3.1 percent.

The capital adequacy ratios of PKO Bank Polski remain high and strong, and the additional requirements for a dividend pay-out are met. The total capital ratio was 14.5 percent and the Core Tier1 ratio was 13.2 percent at the end of Q3 2015. The relatively low additional capital requirement imposed by KNF at 0.76 p.p. for TCR and 0.57 p.p. for Tier1 corroborates the strong quality of the Bank’s capital position. PKO Bank Polski also boasts one of the lowest leverage ratios in the sector.

The Bank has been recognised as an innovator which sets new market standards in the Distribution & Marketing Innovation in Retail Financial Services Awards programme of EFMA, an organisation of more than 3.3 thousand financial institutions. The project which transformed PKO’s proprietary mobile application IKO into the market payment standard BLIK has been named the Best Innovation in Payments in 2015.

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PKO Bank Polski is a leader of the Polish banking sector. After three quarters of 2015, PKO Bank Polski Group posted a consolidated net profit of PLN 2 165 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.