The Best Results in the Financial Sector and the Highest Safety

“PKO Bank Polski generated the highest profit of all financial institutions active in Poland in H1 2016. It was driven by very strong business results, accompanied by the Visa transaction, which helped all banks. The European stress-testing results prove that an increase in profits can be combined with high safety and resilience to market turbulences,” saidZbigniew Jagiełło, President of the Management Board of PKO Bank Polski.

The consolidated assets increased by 6.6% YoY to PLN 272.4 billion in H1 2016. The growth was driven by an increase in net loans by 3.3% YoY to PLN 191.5 billion, funded with an increase in client deposits by 11.3% to PLN 199.4 billion. Thanks to an increase in the sales of new loans, in particular mortgage loans which increased to PLN 5.8 billion from PLN 4.6 billion in H1 2015, the Bank maintained a high market share at 17.6% of total loans, stable both in the retail and in the corporate segment. Likewise, the Bank remained the leader of the deposit market with a share of 17.3%.

PKO Bank Polski maintained high effectiveness in H1 2016, with ratios much stronger in Q2 than in Q1. The cost/income ratio was 51.4% (44.4% net of the bank tax) at the end of Q2, which was 4.8 percentage points less than at the end of Q1 (6.3 percentage points less net of the bank tax). The Bank continued to steadily rebuild its interest margin, which was 3.17% in Q2, i.e., 0.05 percentage points more than in Q1.

Return on assets (ROA) and return on equity (ROE) also improved in Q2. ROA at the end of Q2 (1.3%) increased by 0.3 percentage points quarter on quarter while ROE increased by 2.8 percentage points (to 11.2%). The quarter-on-quarter improvement of ROA and ROE net of the bank tax was even better at +0.4 percentage points and +3.7 percentage points, respectively.

The quality of the loan portfolio has consistently improved in the last 12 months. The cost of risk and the share of NPLs decreased while the coverage ratio rose. The cost of risk was 70 basis points at the end of H1 2016 (69 basis points for the Bank alone), representing a decrease of 11 basis points YoY (17 basis points YoY for the Bank alone). The strong improvement was largely driven by business loans, whose cost of risk decreased by 38 basis points year on year. The non-performing loan ratio stood at 6.5% at the end of H1 2016, representing a decrease of 0.3 percentage points YoY, and the NPL coverage ratio increased by 2.1 percentage points YoY to 65.0%.

PKO Bank Polski’s capital ratios remain stable and high. The total capital ratio was 15.21% and the Tier1 ratio was 13.86% (16.11% and 14.72% for the Bank alone, respectively) at the end of H1.

PKO Bank Polski was the only bank in Poland to participate in the EBA’s European stress-testing survey. The exercise based on 2015 financials proved the Bank’s robust resilience. Under the adverse macroeconomic scenario, its CET 1 would be 11.4% at the end of 2018, only 1.9 percentage points less than the end of 2015. The marginal decrease of CET 1 is the fourth best result in the EU, which demonstrates that PKO Bank Polski is very resilient in case of a potential market crisis.

In Q2, PKO Bank Polski was actively engaged in initiatives supporting the foreign expansion of Polish businesses. The Bank is working to open a corporate branch in the Czech Republic. PKO Bank Polski has signed a co-operation agreement with one of the biggest banks in China to directly clear payments in the zloty and the yuan, trade finance transactions, as well as commercial operations. The agreement adds to the Bank’s existing activity in China, where PKO Bank Polski has approximately 70 correspondent banks.

The Bank is also increasingly active on other overseas markets, including relations with 11 Japanese banks, among them the biggest corporate bank in Japan, and in the Antipodes, where direct clearing of transactions in the New Zealand dollar is available since 1 June 2016. The development of the correspondent banking network allows Polish companies to make cross-border payments faster and cheaper.

PKO Bank Polski remains committed to the integration of the banking sector around the digital economy. The mobile application IKO has been activated by 700 thousand clients, and the development of mobile channels makes PKO Bank Polski a leader in Poland’s mobile banking. No less than 1.7 million clients logged in their accounts on mobile devices in Q2 2016, including IKO users and customers logging in iPKO in its full-feature or lite version.

PKO Bank Polski is strongly committed to the transition towards a digital economy in collaboration with the public administration as well. In Q2 2016, almost one in three electronic applications under the government programme Family 500 Plus came from the services iPKO and Inteligo. Furthermore, 7.8 million clients of the Bank may use the Electronic Service Platform of the Polish Social Security Institution (ZUS) by opening a profile in the Bank’s transaction system.

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PKO Bank Polski is the unparalleled 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.