Solid Financial Results of PKO Bank Polski in Q1 2016

“PKO Bank Polski has proved on many occasions that it knows how to face many market and regulatory challenges. Our capability is best demonstrated by the performance of the last quarter: a solid net profit, high return ratios compared to the sector, and a strong quality of the loan portfolio,” said Zbigniew Jagiełło, President of PKO Bank Polski.

The consolidated net profit of the PKO Group in Q1 was strongly influenced by the additional charge of the tax on certain financial institutions effective as of February 2016. The total bank tax paid in February and March was PLN 148 million. On a comparable basis, net of the bank tax, the net profit of the Group increased by 21.6 percent YoY and 77.1 percent QoQ.

The net interest income generated in Q1 2016 was PLN 1.85 billion, representing an increase of close to 11 percent year on year. The sharp increase in the net interest income was the main driver of the improved profit on banking operations, which increased by 4.1 percent YoY to nearly PLN 2.7 billion.

The net fee and commission income decreased by 6.4 percent YoY to PLN 635.4 million; the net fee and commission income decreased across the banking sector.

The Group’s total capital ratio increased to 15.4 percent at the end of Q1 and its Tier 1 capital ratio increased to 14.1 percent, i.e., by 2.3 percentage points year on year. This was possible as the Bank’s equity increased by 12.4 percent YoY. The total capital requirement decreased by 4.5 percent YoY. The Bank’s stand-alone capital ratios are even stronger at 16.3 percent and 14.9 percent, respectively.

The Group has maintained a strict cost regime and strong efficiency ratios. The overheads decreased by 3.2 percent YoY to PLN 1.36 billion. Operating efficiency as measured by the 12-month C/I ratio was 57 percent. The C/I net of the tax on certain financial institutions was 55.6 percent.

Net of the bank tax, the C/I ratio in Q1 alone was 50.7 percent, compared to 54.4 percent in Q1 2015.

ROE was 8.8 percent, or 9.3 percent net of the bank tax. ROA was 1.0 percent, or 1.1 percent net of the bank tax. Net of the bank tax, ROE in Q1 alone was 10.3 percent and ROA was 1.2 percent. The interest margin remained stable at 3.12 percent.

PKO Bank Polski has continued to focus on strong quality of the loan portfolio. The share of impaired loans decreased by 0.2 percentage point YoY to 6.6 percent at the end of Q1 2016. The cost of risk decreased by 18 bps YoY to 72 bps and the coverage ratio increased by 1.8 percentage points YoY to 64.6 percent.

The Bank’s engagement in the development of a digital economy includes the facility offered to clients who can file applications in the Family 500 Plus Programme using the transactional banking system. The Bank has actively worked with the Ministry of Family, Labour and Social Policy and the Ministry of Digitalisation to develop the solution. More than 142 thousand applications were filed within the first month after the launch of the Programme via iPKO and Inteligo, which gives PKO Bank Polski an approximately 30 percent share in all applications filed electronically.

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PKO Bank Polski is a leader of the Polish banking sector. In 2015, the PKO Bank Polski Group posted a consolidated net profit of PLN 2.61 billion and reported a balance sheet total of PLN 266.9 billion. In the last 5 years, the assets of the PKO Bank Polski Group have increased by PLN 100 billion, both through organic growth and the merger with Nordea Bank Polska considered to be one of the best executed mergers on the market. With the effective implementation of its growth strategy, PKO Bank Polski is the highest ranking domestic company in the most recent Forbes Global 2000 ranking of the world’s biggest public companies. It is the most valuable brand on the domestic financial market, priced at PLN 3.6 billion by the daily Rzeczpospolita. The Bank has the market’s biggest award-winning offer of services. It is the main provider of financial services for all customer segments with the biggest market share in loans (17.5%) and deposits (16.8%). It is a leader of services for local governments with a market share in loans at 20% and a market share in municipal bonds at over 40%. With its continuously improved quality of customer service, the Bank regularly ranks #1 in banking call centre rankings of ARC Rynek i Opinia. PKO Bank Polski was named the Bank of the Year in Poland in 2014 by The Banker magazine owned by the Financial Times. The Bank was also awarded in the Efma Distribution&Marketing Innovation in Retail Financial Services ranking for the transformation of the mobile application IKO into the mobile payment standard BLIK as the best innovation in payments.