Solid Financial Results and Strong Growth of the Financing Scale

“In the third quarter of 2016, PKO Bank Polski accomplished very good financial results and the result on business activity grew at a two-digit ratio once again. There was also further reinforcement of the Bank’s capital position. Thanks to its solid foundations, the Bank may offer even more support for Polish companies by dynamic increase of credit activity, as well as via take-over of Reiffeisen Leasing Polska. After completion of the transaction, the scale of financing of small and medium-sized enterprises by PKO Bank Polski Capital Group will significantly grow, whereas PKO Leasing will become an indisputable leader in its segment,” says Zbigniew Jagiełło, President of the Management Board of PKO Bank Polski.

Consolidated assets after three quarters of 2016 grew by 8.1% y-to-y to the level of PLN 275.6 billion. The growth of net credit by 4.3% y-to-y up to PLN 193.2 billion contributed to it, financed with an increase in client deposits by 12.9% up to the level of PLN 201.2 billion. On account of new high sale of credit facilities, and in particular mortgage credit facilities, the Bank has solidified a high share in the credit market on the level of 17.6%, which remained stable both on the retail and corporate market. This also refers to deposits, where the Bank is a leader with a market share on the level of 17.3%.

In the course of the last 12 months, a positive trend related to the improvement of the credit portfolio quality has been sustained. The risk cost and the share of impaired credit dropped; at the same time, the coverage ratio grew. The risk cost at the end of the 3^rd quarter of 2016 was on the level of 73 base points (72 base points for the Bank), which entails a drop by 5 base points y-to-y (by 9 base points y-to-y for the Bank). In a significant degree, improvement took place thanks to commercial credit, in the case of which the costs of risk in the annual terms dropped by 21 base points. The share of impaired credit at the end of the 1^st half-year of 2016 amounted to 6.2 percent, which means a drop by 0.7 percentage point y-to-y and the coverage ratio with write-offs grew by 1.8 percentage points y-to-y to the level of 65.3 percent.

Further improvement of capital ratios took place in the third quarter. At the end of the quarter, the total capital ratio was on the level of 16.0%, whereas Tier 1 capital ratio on the level of 14.65% (for the Bank: 17.03% and 15.63%, respectively). Therefore, the total capital ratio grew in the course of the year by 1.52 percentage points, whereas Tier 1 capital ratio by 1.48 percentage points. This took place primarily thanks to the increase of own funds on account of accumulation of profit generated in 2015 and inclusion in Tier 1 capital of a part of the Bank’s net profit generated in the 1^st half of 2016, upon the approval of the Polish Financial Supervision Authority.

After the three quarters of 2016, PKO Bank Polski has retained high efficiency of operation. The cost/ income ratio in the third quarter amounted to 52.7% and, after excluding the banking tax, the ratio was 45.3%. Return on equity was 9.6% (12.4% before the banking tax), whereas return on assets was on the level of 1.1% (1.4% before the banking tax). Efficiency indices in the third quarter were on a lower level than in the previous quarter, but this was mainly the effect of the high base from the 2^nd quarter caused by a single event – settlement of the take-over transaction of Visa Europe Limited by Visa Inc. The interest margin in the third quarter amounted to 3.17% and remained on the same level as in the previous quarter.

PKO Bank Polski, as technological leader in the sector, has been cooperating with governmental units for a number of months on implementation in the area of state digitisation – in its transaction systems, the Bank offers a possibility for filing applications for under the 500+ programme and logging in to the PUE ZUS. In October, another functionality related to the development of digital administration was launched – establishment of the Trusted Profile from the transaction system level. This is a breakthrough in promoting the e-administration services and a significant improvement for millions of citizens and companies. The Trusted Profile allows for online use of office services. Within 9 days from the launch, already 25,000 clients made use of this functionality.  

On 2 November 2016, PKO Bank Polski, Reiffeisen Bank International AG and PKO Leasing S.A. signed a sale agreement of 100% shares in Reiffeisen-Leasing Polska S.A., along with three subsidiaries to PKO Leasing by RBI for the amount of PLN 850 million. Thanks to this transaction, PKO Bank Polski Group wishes to reinforce its presence primarily in the segment of small and medium-sized enterprises and significantly increase the scale of financing for Polish companies. After the merger, PKO Leasing will be an indisputable leader in its segment, with a market share exceeding 13%.

PKO Bank Polski is also intensifying its activities aimed at supporting Polish exporters. As a strategic partner, the Bank will cooperate in this respect with Polski Fundusz Rozwoju, which creates a modern support system for export. The system is going to rely on three pillars: making knowledge available to companies, supplying expansion financing instruments and offering assistance of foreign trade units. The support of PKO Bank Polski will consist in making financing tools supplied by Polski Fundusz Rozwoju available to entrepreneurs. Simultaneously, the Bank supports Polish companies outside of the state’s borders. In the 1^st half of 2017, plans are made to open the second foreign corporate division of PKO Bank Polski – this time in Czech Republic. A notification application was already sent by the Polish Financial Supervision Authority to relevant supervisory authorities in Czech Republic.

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PKO Bank Polski is the indisputable leader in the Polish banking sector. In 2015, according to the consolidated data, its net profit amounted to PLN 2.61 billion, whereas the balance sheet total was PLN 266.9 billion. In total, in the course of the last five years, the assets of PKO Capital Group increased by PLN 100 billion – both as a result of organic growth and merger with Nordea Bank Polska, evaluated as one of the best managed mergers at the market. Efficient implementation of the growth strategy made PKO Bank Polski one of the highest positioned domestic companies in the recent edition of the Forbes Global 2000 ranking, encompassing largest stock-listed companies in the world. It is also the most valuable brand on the domestic financial market, estimated by the Rzeczpospolita daily at PLN 3.6 billion. The Bank has the broadest offer of services on the market which was awarded a number of times and it is the basic supplier of financial services for all segments of customers, having greatest share on the credit market (17.5%) and deposit market (16.8%). It is a leader with respect to the servicing of the self-government sector – its share in the financing of local governments with credit facilities amounts to 20%, whereas the share in the segment of municipal bonds exceeds 40%. Thanks to ongoing improvement of service quality, PKO Bank Polski is a cyclical winner in the bank hotline survey conducted by ARC Rynek i Opinia. In 2014, PKO Bank Polski was distinguished with the “Bank of the Year in Poland” award of the “The Banker” monthly magazine which belongs to the Financial Times. The Bank also won the prestigious competition “Distribution & Marketing Innovation in Retail Financial Services” organised by Efma, where the project of transforming the mobile IKO app into a market payment standard BLIK was determined the best international innovation in payment.