pko bp presentation 1q 2016 · 2016-05-09 · 9 may2016 financial resultsof the pko bank polski...
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9 May 2016
Financial Results ofthe PKO Bank Polski Groupfor 1Q 2016
Highlights of Business Initiatives in Q1 2016
PKO Bank Polski Supports 500+ ProgrammePKO Bank Polski was the first Polish bank to join the governmental “Family 500+” programme. Thanks to this, since April 1, customers have been able to fill in an application for a child rearing benefit available in iPKO and Inteligo. Simultaneously with the start of the programme, we launched a PKO Account for Zero on preferential terms for the beneficiaries of the programme and is about to launch a new long-term savings plan “Capital for Child”.
Top Polish Companies Choose PKO Bank Polski’s Corporate BankingMarch 1 marked the launch of a new campaign promoting the corporate banking business of PKO Bank Polski under the slogan “Togetherwe see more”. Our offer is endorsed by the CEOs of Polish bluechips, banking with the leader of the Polish financial sector (now PKO BankPolski serves nearly 15,000 corporate and merchant banking customers). We are constantly expanding our range, responding to thedevelopment needs of Polish companies. In connection with the newly created opportunity to trade with Iran, PKO Bank Polski was the firstPolish bank to offer services for businesses interested in this direction. We have exchanged SWIFT keys with several Iranian banks, whichhas paved the way for financial settlements between Poland and Iran.
PKO Bank Polski’s Brokerage House Wins ‘Bulls and Bears’ CompetitionPKO Bank Polski’s Brokerage House won the title of the “Brokerage House of the Year” in the 22nd edition of the “Bulls and Bears”Competition organized by the “Parkiet” Stock Exchange Newspaper. Last year, our Brokerage House was among the most active ones on theequities and bonds markets. It was the leader in terms of the number and the value of transactions on the capital market. The retail rangewas expanded by a modern and convenient tool for investing on foreign markets.
Loan Guarantees for Innovative EnterprisesPKO Bank Polski has entered into an agreement with Bank Gospodarstwa Krajowego concerning loan guarantees for innovative Small andMedium-Sized Enterprises. Guarantees will be financed from the Guarantee Fund of the Innovative Economy Operating Programme (POIG).The available funding pool in PKO Bank Polski amounts to PLN 55m, which will be sufficient to provide guarantee for loans in excess of PLN90m. Guarantees will be issued commission-free. They will be available to businesses from May 2016.
HCE Contactless Payments in IKO AppIn January 2016, PKO Bank Polski enhanced its IKO mobile app by adding the HCE technology, which supports contactless payments. Thenew functionality was recognised by the Jury of the eDukat 2016 Competition. PKO Bank Polski won a prize in the category “Event of theyear in the Non-Cash World” for the implementation of HCE contactless payments in the IKO Mobile app. What was appreciated was thescale at which IKO users use this transaction method as well as the convenience and security of the solution.
PKO Bank Polski and Microsoft Work Together on Web SecurityPKO Bank Polski is the first bank in Europe to start cooperation with Microsoft within the Enterprise Customers Cyber Threat IntelligenceProgram (ECCTIP). Its aim is to enhance security in cyberspace by exchanging information on potential threats. As a result of the letter ofunderstanding signed, it will be possible to react more quickly and effectively to dangerous events in the web.
2
3
Executive summary of financial performance
� In 1Q 2016 the net profit of PKO Bank Polski Group amounted to PLN 639 mn and despite of „bank tax” was maintained at similar level as compared to previous year, while increased by 43.7% q/q
� On the level of consolidated net profit in 1Q 2016 largely influenced a tax on certain financial institutions ("bank tax") introduced in February 2016, which in this period amounted to PLN 148 mn. In comparable terms the net profit of the Group increased by 21.6% y/y and 77.1% q/q
� The 1Q 2016 consolidated result on business activity of PLN 2.7 bn (+4.1% y/y) was determined by the increase in net interest income (+10.9% y/y), mainly due to reduced interest expense of 29.3% y/y
� Administrative expenses were 3.2% lower as compared to previous year mainly thanks to decrease in overhead costs and depreciation, while personnel costs were maintained at similar level
� Strengthening a leading market position − asset base increased to PLN 267.1 bn (+4.1% y/y) with net loans growing to PLN 187.9 bn (+3.0% y/y), funded with customer deposits, which
rose to PLN 194.9 bn (+9.2% y/y)− maintenance of market share in loans (17.6%) and deposits (17.3%)
� Portfolio quality improved considerably− cost of risk declined by 18 bp y/y to reach 72 bp on annual basis− coverage ratio increased by 1.8 pp y/y to reach 64.6%− NPL ratio declined by 0.2 pp. y/y to reach 6.6%
� High operational efficiency retained − Cost to Income ratio (C/I) in 1Q 2016 at 50.7% excluding bank tax (56.2% including tax))− Return on Equity (ROE) at 9.3% excluding bank tax (8.8% including tax) − Return on Assets (ROA) at 1.1% excluding bank tax (1.0% including tax)− Net interest margin in 1Q 2016 at 3.12%
� Solid liquidity and improving of capital strength− Loans / Stable funding resources ratio at 84%− Total capital adequacy ratio at 15.4% and Tier1 Capital ratio at 14.1%; (for the Bank 16.3% and 14.9% respectively) - an increase of 2.3 pp. y/y
resulting from the growth of total own funds of 12.4% y/y and decrease in the requirements as regard total capital requirements of 4.5% y/y.
� The fulfilment of the additional capital requirements of PFSA allows to continue dividend policy in subsequent years
1Q'16 1Q'15Change
y/yQ1'16 Q4'15
Change q/q
Net interest income 1 853 1 671 +10.9% 1 853 1 856 -0.2%
Net F&C income 635 679 -6.4% 635 694 -8.4%
Result on business activity 2 685 2 581 +4.1% 2 685 2 791 -3.8%
Administrative expenses -1 360 -1 405 -3.2% -1 360 -1 924 -29.3%
Net impairment allowance -382 -374 +2.3% -382 -365 +4.7%
Bank tax -148 0 x -148 0 x
Net profit 639 647 -1.3% 639 444 +43.7%
Assets 267.1 256.6 +4.1% 267.1 266.9 +0.1%
Net loans 187.9 182.4 +3.0% 187.9 190.4 -1.3%
Deposits 194.9 178.4 +9.2% 194.9 195.8 -0.5%
Stable financial resources 222.8 212.7 +4.7% 222.8 224.1 -0.6%
Total equity 31.0 28.3 +9.8% 31.0 30.3 +2.5%
P&L itemsP&L itemsP&L itemsP&L items(PLN mn)(PLN mn)(PLN mn)(PLN mn)
Balance sheet Balance sheet Balance sheet Balance sheet (PLN bn)(PLN bn)(PLN bn)(PLN bn)
4
Financial summary
*) In Q4 2015 one-off costs incurred in the amount of PLN 479.9 mn (PLN 337.9 mn charge for BFG in connection with the bankruptcy SK Bank and PLN 142.0 mn payment to the Borrower Support Fund).Excluding the above one-offs, administrative expenses in 1Q 2016 decreased of 5.8% q/q.
*
1Q'16 1Q'15Change
y/yQ1'164) Q4'154)5) Change
q/q
ROE net (%) 8.8 11.5 -2.7 pp. 8.4 5.9 +2.5 pp.
ROE net (%) excluding bank tax 9.3 11.5 -2.2 pp. 10.3 5.9 +4.4 pp.
ROA net (%) 1.0 1.3 -0.3 pp. 1.0 0.7 +0.3 pp.
ROA net (%) excluding bank tax 1.1 1.3 -0.2 pp. 1.2 0.7 +0.5 pp.
C/I (%) 57.0 49.4 +7.6 pp. 56.2 68.9 -12.7 pp.
C/I (%) excluding bank tax 55.6 49.4 +6.2 pp. 50.7 68.9 -18.3 pp.
NIM1) (%) 3.08 3.36 -0.29 pp. 3.12 3.12 +0.01 pp.
NPL ratio2) (%) 6.60 6.79 -0.19 pp. 6.60 6.59 +0.01 pp.
Coverage ratio3) (%) 64.6 62.8 +1.8 pp. 64.6 63.3 +1.3 pp.
Cost of risk (bp.) 72 90 -18 pb. 70 72 -1 pb.
TCR (%) 15.44 13.11 +2.33 pp. 15.44 14.61 +0.84 pp.
Tier 1 capital ratio (%) 14.11 11.84 +2.27 pp. 14.11 13.27 +0.84 pp.
Quality of loan Quality of loan Quality of loan Quality of loan portfolioportfolioportfolioportfolio
Capital positionCapital positionCapital positionCapital position
KeyKeyKeyKey financial financial financial financial indicatorsindicatorsindicatorsindicators
(1) Net interest margin = net interest income of last 4 quarters / average interest bearing assets at the beginning and the end of the period of last 4 quarters (formula consistent with that applied in the PKO Bank Polski Group Directors’ Report)
(2) Share of loans with recognised impairment in total gross loans(3) Coverage of loans with recognised impairment with impairment allowances(4) Ratios on quarterly basis; ROE, ROA, NIM and cost of risk – annualised(5) The level of Q4’15 ratios affected by one-off costs in the amount of PLN 479.9 mn (PLN 337.9 mn charge for BFG in connection with the bankruptcy SK Bank
and PLN 142.0 mn payment to the Borrower Support Fund)
5
Key performance indicators
190.3 192.8 193.5 194.2 195.5
1Q'15 1H'15 3Q'15 2015 1Q'16
23.6
96.2
23.6
52.1
0%
10%
20%
30%
40%
50%
60%
-5% 0% 5% 10% 15%
Gross loans by business lines (as at 31.03.2016)
131.8
19.6
39.3
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
-5% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45%
SME
Gross loans (PLN bn) Customer deposits (PLN bn)
Corporate
Retail and private banking
Volume growth rate (y/y)
Mortgage
SME
Sh
are
in lo
an
po
rtfo
lio Retail and private banking
Corporate
Customer deposits by business lines (as at 31.03.2016)
Sh
are
in d
epo
sits
po
rtfo
lio
Volume growth rate (y/y)
6
Business volumes
174.5 174.9 174.2 191.0 190.7
1Q'15 1H'15 3Q'15 2015 1Q'16
+2.7% +0.6%+9.3% -0.1%
24.8 24.6 24.2 23.8 23.6
21.6 21.4 21.1 20.7 20.7
11.8 12.011.0
14.012.7
17.5 17.5 16.817.9 17.3
5.0
10.0
15.0
20.0
25.0
1Q'15 2Q'15 3Q'15 4Q'15 1Q'16
23.0 22.9 22.9 22.9 22.8
12.9 12.9 12.413.0 12.6
17.8 17.8 17.5 17.8 17.6
10.0
15.0
20.0
25.0
1Q'15 2Q'15 3Q'15 4Q'15 1Q'16
Loans market share (%)
220 230 232252 255
8.2 8.1 7.97.3 7.3
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
0
40
80
120
160
200
240
280
320
1Q'15 2Q'15 3Q'15 4Q'15 1Q'16
%PLN bn
Total assets of mutuals funds (PLN bn)PKO TFI market share (%)
Total
Deposits market share (%)
Mutual funds market share
Private individuals
Institutional entities
7
PKO Bank Polski market share
The market share of deposits lower by 0.6 pp. q/q due to decrease in market share of corporate deposits (-1.3 pp. q/q), while maintaining market share in retail deposits
The decrease in market share of corporate loans by 0.2 pp. q/q mainly due to lower market share in loans of non-monetary financial institutions
1
2Total
Private individuals
Institutional entities
*) Share in the retail deposits market , including assets of private individuals in PKO TFI
Financial assets of private individuals *
3
The increase in PKO TFI’s assets under management by 3.2% y/y with maintaining the third market position
3
1
2
7.111.0
4.7
4.4
6.5
6.1
6.1
16.0
11.5
7.4 6.8
5.8
5.14.4
1.1
-3.4 -3.9
2.54.6
7.0
4.54.5
16.2
5.9
3.6
7.5
6.4
7.7
2010 2011 2012 2013 2014 2015 2016F
TotalResidential MortgagesConsumerInstitutional entities
Deposits - FX adjusted growth rate (%)
Loans- FX adjusted growth rate (%)
Source: Bank’s forecasts
8
2016 macroeconomic and banking sector outlook
1) ESA20102) According to domestic methodology.
9.2
9.7
6.6 5.8
8.8
7.3 6.4
10.2
13.3
8.6
5.9
9.7 9.4
7.38.1
5.5
4.25.7
7.6
4.5
5.0
2010 2011 2012 2013 2014 2015 2016F
TotalPrivate individualsInstututional entities
2013 2014 2015 2016F
GDP % y/y 1.3 3.3 3.6 3.5
Consumption % y/y 0.2 2.6 3.1 4.0
Investments % y/y -1.1 9.8 5.8 2.9
Public sector deficit1) % GDP -4.0 -3.3 -2.6 -2.6
Public debt2) % GDP 53.3 48.1 49.0 50.0
CPI % 0.9 0.0 -0.9 -0.4
Unemployment rate % eop 13.4 11.4 9.8 8.9
WIBOR 3M % eop 2.71 2.06 1.73 1.70
Reference rate % eop 2.50 2.00 1.50 1.50
EURPLN PLN eop 4.15 4.26 4.26 4.40
USDPLN PLN eop 3.01 3.51 3.90 4.31
9
Financial results
69.0% 64.7% 69.0% 66.5%
23.7%26.3%
23.7% 24.8%
7.3% 8.9% 7.3% 8.7%
1Q'16 1Q'15 Q1'16 Q4'15
Net interest income Net F&C result Net other income
Split of result on business activity
Result on business activity
10
PLN mn 1Q'16 1Q'15Change
y/yQ1'16 Q4'15
Change
q/q
Net interest income 1 853 1 671 +10.9% 1 853 1 856 -0.2%
Net F&C result 635 679 -6.4% 635 694 -8.4%
Net other income 197 231 -14.8% 197 242 -18.5%
Result on financial operations
and didvidens42 76 -44.2% 42 42 +1.2%
Net FX result 94 72 +30.7% 94 110 -14.3%
Net other operating income 60 83 -27.5% 60 90 -32.9%
Result on business activity 2 685 2 581 +4.1% 2 685 2 791 -3.8%
1 671 1 6831 818 1 856 1 853
3.0 2.9 3.1 3.1 3.1
0
500
1 000
1 500
2 000
2 500
0.0
1.0
2.0
3.0
4.0
Q1'15 Q2'15 Q3'15 Q4'15 Q1'16Net interest income quarterly Net interest margin quarterly
5.14.8
4.6 4.4 4.3
1.5 1.3 1.2 1.1 1.0
3.4 3.2 3.1 3.0 3.1
0.0
1.0
2.0
3.0
4.0
5.0
6.0
1Q'15 1H'15 3Q'15 2015 1Q'16Average interest rate on loans 12M (1)Average interest rate on deposits 12M (1)Net interest margin 12M (2)
The net interest margin decreased by 0.3 pp. y/y to 3.1% at the end of 1Q’16 as a result of decrease in annualized net interest income (which was influenced by the decrease in market interest rates which directly caused a faster decline in interest rates on interest-earning assets based mostly on market rates than the decline in interest rates on the deposit base) accompanied by an increase in the average volume of interest-bearing assets (mainly mortgage loans, mortgage-backed loans, consumer loans and securities portfolio).
Growth of net interest income was at PLN 182.5 mn (+10.9% y/y) and still remains under pressure of the low level of market interest rates (for WIBOR 1M and 3M decline amounted to -0.30 pp. and 0.18 pp. y/y). The decline has caused the decrease in profitability of interest-bearing assets. As a result, the main driver of growth in net interest income y/y was the decrease in interest expense, both customer deposits and borrowing costs
Net interest income (PLN mn)
(1) Interest income (expense) for last 4 quarters / average net loans (deposits) at the beginning and the end of the period of last 4 quarters(2) Net Interest income for last 4 quarters / average interest bearing assets at the beginning and the end of the period of last 4 quarters (formula consistent with that applied in the PKO Bank Polski Group Directors’ Report)
2
11
Net interest income (1)
1
2
Interest income and expense (PLN mn) and WIBOR 3M average in the period
Net Interest margin and average interest rates on loans and deposits (%)
2 433 2 356 2 433 2 436 2 392
762 672 615 580 538
1.87
1.67 1.721.73
1.69
1.00
1.50
2.00
2.50
0
500
1 000
1 500
2 000
2 500
3 000
Q1'15 Q2'15 Q3'15 Q4'15 Q1'16interest income interest expense WIBOR 3M (%)
1
+10.9%
576
402
136
90
50
47
762
538
1Q'15 1Q'16Customer deposits Debt securities in issue Other
2 045 1 997
261 266
95 95 31 33
2 433 2 392
1Q'15 1Q'16Customer loans Securities Derivative hedging instruments Other
The decrease in interest expense of 29.3% y/y mainly the result of the decrease in:− the cost of liabilities to customers, resulting from a lower average interest rates
on deposits as a result of lower market interest rates and adjusting pricing of deposit products,
− expenses related to own issuance of debt securities and subordinated liabilities, associated with the decrease in the level of liabilities from the issue of bonds in the international financial markets and the decline in debt servicing costs on the domestic market as a result of lower market interest rates.
The decrease in interest income of 1.7% y/y mainly due to:− the decrease in income from loans and advances to customers (-2.3% y/y) -
primarily a result of a decrease in PLN interest rates and the Lombard rate that determines interest rates on consumer loans, partially offset by an increase in the loan portfolio
− accompanied by the increase in income from securities of PLN 5.5 mn y/y as a result of increase in the average volume of the portfolio
Structure of interest expense (PLN mn)Structure of interest income (PLN mn)
Interest rates on term deposits vs. WIBOR 3M (%)1
2
12
Net interest income (2)
0
1
2
3
4
5
6
7
Q1'
08Q
2'08
Q3'
08Q
4'08
Q1'
09Q
2'09
Q3'
09Q
4'09
Q1'
10Q
2'10
Q3'
10Q
4'10
Q1'
11Q
2'11
Q3'
11Q
4'11
Q1'
12Q
2'12
Q3'
12Q
4'12
Q1'
13Q
2'13
Q3'
13Q
4'13
Q1'
14Q
2'14
Q3'
14Q
4'14
Q1'
15Q
2'15
Q3'
15Q
4'15
Q1'
16
%
average interest rate on term depositsaverege WIBOR 3M
-1.7%
-0.5%
+2.1%
-2.3%
-29.3%
-33.7%
-30.3%
1
2
679757 721 694
635
14
14 12 2432
Q1'15 Q2'15 Q3'15 Q4'15 Q1'16
155 142
150 148
93 104
281 241
679 635
1Q'15 1Q'16Loans & insuranceMutual funds & brokerageCardsCustomer accounts & other
Net fee and commission income (PLN mn)
13
Net fee & commission income
The level of net fee and commission income in 1Q’16 was mainly affected by:− a decrease in net fee and commission income in respect of loan insurance, mainly due to the decrease in commissions from consumer loans
insurance; in 2015 there was an increase in sales of insurance products offered by the PKO Bank Polski SA Group, the results of which are presented in categories: the remaining result of the insurance business,
− a decrease in income from loans and borrowings, as a result of lower sales of loans,− income from securities transactions, among others due to the decline in commission for organizing the issue,− an increase in the result on payment cards, which was a consequence of a higher number of cards
1
y/yq/q
1-6.4%
-14.2%
+12.7%
-1.2%
-8.9%
-8.4%
-14.5%
-6.8%
+2.2%
-8.2%
Remaining result of the insurance business recognized in net other operating income
7642
72
94
69
28
14
32
231
197
1Q'15 1Q'16
Remaining result of the insurance business
Net other operating income
Net FX gains
Result on financial operations and didvidens
217
140 148
218
165
14
14 12
24
32
231
154 160
242
197
Q1'15 Q2'15 Q3'15 Q4'15 Q1'16
Net other income (PLN mn)
14
Net other income
The decrease in net other result by 14.8% y/y mainly due to:− decrease in net income from financial instruments measured at fair value of PLN 32 mn y/y, determined by situation on Polish debt market,− decrease in net other operating income of PLN 41 mn y/y (excl. change of remaining result on insurance business), mainly as the result of lower sale
and disposal of fixed assets and assets held for sale,− increase in FX result of PLN 22 mn y/y
1
y/yq/q
1
Remaining result of the insurance business
-14.8%
+127.7%
-59.2%
+30.7%
-44.2%
-18.5%
+35.4%
-57.4%
-14.3%
+1.2%
51.7 50.7
17.25.5
54.4 52.9 49.5
68.9
56.2
Q1'15 Q2'15 Q3'15 Q4'15 1Q'16
The decrease in general administrative expenses of 3.2% y/y was mainly determined by the decrease in overhead costs and depreciation of tangible fixed assets, with a stable level of employee benefits.
1405 1372
1444
1360480
1335
1924
Q1'15 Q2'15 Q3'15 Q4'15 Q1'16
Administrative expenses (PLN mn)
C/I ratio quarterly
15
Administrative expenses
1
FTEs %Bank 25 844 25 644 -200 -0.8%
Group 28 982 29 019 37 0.1%
Employment eop (FTEs) 1Q'161Q'15 Change y/y
687 689
385 354
206 191
15 17111 110
1 4051 360
1Q'15 1Q'16
Personnel expense Overheads
Depreciation Texes & fees
BGF expenditures
y/y q/q
1
-7.5%
-8.1%
+0.3%
-8.5%
-6.7%
-5.2%
The effectiveness of the PKO Bank Polski SA measured with C/I ratio in annual terms amounted to 57.0%. C/I ratio excluding tax on certain financial institutions stood at 55.6% and was influenced by one-off events of the previous quarter.On a quarterly basis C/I ratio (without tax) was 50.7% compared to 54.4% realized in the first quarter of 2015
2
-3.2%
-1.1%
-29.3%
-75.5%
2
*one-off costs incurred in Q4 2015 in the amount of PLN 479.9 mn (PLN 337.9 mn charge for BFG in connection with the bankruptcy SK Bank and PLN 142.0 mn payment to the Borrower Support Fund)
One-off costs*
One-off effect bank tax effect
-5.8% q/q excl. one-offs
-90 -80
-64 -89
-195 -172
-24 -40
-374 -382
1Q'15 1Q'16
Consumer loans 1) Mortgage loans 1) 2)Corporate loans 1) Other
Net impairment allowance and write-offs (PLN mn)
Share of loans with recognised impairment3)
(1) management accounts data (2) Housing loans to individuals (3) Calculated by dividing the gross carrying amount of impaired loans and advances to customers by the gross carrying amount of loans and advances to customers
16
Net impairment allowance
Stabilization of net impairment allowance on the yearly basis. The increase in net write-downs on the mortgage portfolio of PLN 25 mn y/y was offset by an improvement of write-downs on the corporate portfolio by PLN 23 y/y.
11Q'15 1Q'16 Change y/y
Consumer loans 7.8% 8.7% +0.8 pp.
Mortgage loans 2.7% 2.7% -0.0 pp.
PLN 2.3% 2.2% -0.1 pp.
FX 3.3% 3.6% +0.3 pp.
Corporate loans 11.6% 10.9% -0.7 pp.
Total 6.8% 6.6% -0.2 pp.
y/y q/q
+2.3%
+4.7%
-11.6% -21.8%
+38.7% +84.1%
-10.5% -0.1%
-374 -375 -362 -365 -382
9082 78
72 7270
90
110
130
150
-800
-700
-600
-500
-400
-300
-200
-100
0Q1'15 Q2'15 Q3'15 Q4'15 Q1'16
Net impairment allowance (PLN mn)Cost of risk 12M (bp.)
1
PLN bn 31.03.15 31.03.16 Change y/y
Cash and balances with the Cen.Bank 10.1 15.9 +57.2%
Amounts due from other banks 4.6 2.5 -44.8%
Derivative financial instruments 5.6 3.0 -46.6%
Securities 44.3 47.4 +6.9%
Loans and advances to customers 182.4 187.9 +3.0%
Other assets 9.5 10.4 +9.4%
Total assets 256.6 267.1 +4.1%3.9% 5.9%1.8% 0.9%2.2% 1.1%
17.3% 17.8%
71.1% 70.3%
3.7% 3.9%
31.03.15 31.03.16
Other assets
Loans and advances tocustomers
Securities
Derivative financial instruments
Amoun ts due from other banks
Cash and balances with theCen.Bank
Total assets
Total equity and liabilities
17
Consolidated statement of financial position
8.4% 7.6%2.5% 1.2%
69.5% 73.0%
1.1% 0.9%5.4% 3.5%1.0% 0.9%1.2% 1.3%11.0% 11.6%
31.03.15 31.03.16
Total eqiuty
Other liabilities
Subordinated liabil ities
Debt securities in issue
Liabilities of insuranceactivitiesAmounts due to customers
Derivative financialinstrumentsAmounts due to banks
PLN bn 31.03.15 31.03.16 Change y/y
Amounts due to banks 21.6 20.3 -6.1%
Derivative financial instruments 6.3 3.3 -47.7%
Amounts due to customers 178.4 194.9 +9.2%
Liabilities of insurance activities 2.8 2.4 -12.9%
Debt securities in issue 13.8 9.2 -33.3%
Subordinated liabilities 2.5 2.5 -0.1%
Other liabilities 3.0 3.5 +18.0%
Total eqiuty 28.3 31.0 +9.8%
Total eqiuty and liabilities 256.6 267.1 +4.1%
(1) Amounts due to customers(2) Amounts due to customers and long-term external funding in the form of: securities issues (including funds raised through issuance under an EMTN
programme executed by PKO Finance AB); subordinated debt; and amounts due to financial institutions.
Gross loans (PLN bn) Deposits(1) (PLN bn)
Currency structure of gross loans portfolio Term structure of total deposits1)
Banking sector 1Q’16
18
Loans and deposits
1Q'15 1H'15 3Q'15 2015 1Q'16
190.6 193.7 193.7 198.7 196.2
1Q'15 1H'15 3Q'15 2015 1Q'16
178.4 179.1 178.3 195.8 194.9
102.3% 103.5% 103.9%
97.3% 96.4%
85.8% 87.0% 87.7%85.0% 84.3%
1Q'15 1H'15 3Q'15 2015 1Q'16
Net loans/depositsNet loans/stable sources of funding (2)
46.8% 47.9% 48.3% 47.1% 48.7%
53.2% 52.1% 51.7% 52.9% 51.3%
1Q'15 1H'15 3Q'15 2015 1Q'16
current+O/N term+other
1
The increase in the volume of deposits on yearly basis by PLN 16.5 bn as a result of growth of volume of deposits of private individuals by PLN 7.3 bn y/y, corporate deposits by PLN 5.3 bn y/y and public entities by PLN 3.9 bn PLN y/y
1
72.2% 73.9% 74.8% 74.7% 75.1% 72.0%
27.8% 26.1% 25.2% 25.3% 24.9% 28.0%
1Q'15 1H'15 3Q'15 2015 1Q'16
FX PLN
Amounts due to corporate
entities24%
Amounts due to State budget entities
5%Amounts due
to retail clients
71%
Amounts due to banks
9%Derivative financial
instruments1%
Amounts due to customers
83%
Amounts concerning insurance
activity1%
Debt securities in issue
4%
Subordinated liab ilities
1%Other
liab ilities1%
Liabilities structureLiabilities structureLiabilities structureLiabilities structure(total as at 31 March 2016: PLN 236.1 bn)
Deposit structureDeposit structureDeposit structureDeposit structure(total as at 31 March 2016: PLN 194.9 bn)
19
Funding sources
• Retail and corporate deposits are the primary funding source.
• Financing agreements as at the end of 1Q 2016 included:
− CHF 250 mn 5Y bond issued in July 2011
− USD 1,000 mn 10Y note issued in September 2012 on the US market under Rule 144A
− EUR 500 mn 5Y bond issued in January 2014
− multi-currency (CHF 3,645.8 mn, EUR 465.4 mn and USD 3.7 mn) credit from Nordea Bank AB opened in April 2014
− CHF 224 mn 10Y subordinated loan opened by Nordea Bank Polska in April 2012
− PLN 1,600.7 mn 10Y subordinated bond issued in September 2012
Issued by State
Treasury94%
Issued by banks
1%
Eqiuty securities
0%Issued by
local government
bodies2%
Other 3%
Trading assets Financial assets designated at fair value through P&L (ALPL)
Investment securities available for sale (AFS)
Structure as at the 1Q 2016-end
20
Securities portfolio breakdown
1.8 1.5 2.5 0 .8 2.3
18.7 13.9 14.6 15.2 13.1
23.6 25.6
26.3 28.3 31.7
0.200.25
0.29 0.210.3144.3
41.3 43.7 44.5
47.4
1Q'15 1H'15 3Q'15 2015 1Q'16
Trading ALPL AFS HTM
40%59%
33%
16%
11% 10%4% 3%
12% 12%
1Q'15 1Q'16
Other
Issued by banks
Local government debtsecuruties
NBP money market bills
Issued by State Treasury
Issued by State Treasury
27%
NBP money market bills
58%
Issued by local government
bodies2%
Other 14%
Issued by State
Treasury69%
Issued by banks
5%Issued by
local government
bodies15%
Equity securities
2%
Other10%
21
Risk management
Growth of the coverage of loans with recognised impairment by impairment allowance on yearly an quarterly basis
9082 78
72 72
9686 81
75 71
6.8% 6.9% 6.9% 6.6% 6.6%
6.6% 6.6% 6.7% 6.4% 6.5%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
50
70
90
110
130
150
170
1Q'15 1H'15 3Q'15 2015 1Q'16
Cost of risk for last 12M (bp) GroupCost of risk for last 12M (bp) BankShare of impaired loans (Group)Share of impaired loans (Bank)
62.8
%
62.9
%
63.5
%
63.3
%
64
.6%
62
.2%
62.6
%
63.1
%
63
.0%
63.9
%
1Q'15 1H'15 3Q'15 2015 1Q'16
Group Bank
2.0%
4.0%
6.0%
8.0%
10.0%
1Q'15 1H'15 3Q'15 2015 1Q'16Share of impaired loans (sector)Share of impaired loans (PKO BP)Share of loans delayed past due over 90 days (sector)Share of loans delayed past due over 90 days (PKO BP)
Decrease in the share of loans with recognised impairment, both in the Bank and the Group as compared to previous year
Share of loans with recognised impairment and cost of risk
Coverage of loans with recognised impairment by impairment allowance
Quality of loan portfolio vs. banking sector1
2
22
Loan portfolio quality
1
2
Source: Own calculations based on PFSA data for the banking sector
3
Maintenance in the positive loan portfolio quality gap between the Bank and the sector.
3
4.9% 5.0% 4.9% 4.8% 4.9%
1.7% 1.6% 1.8% 1.6% 1.6%
6.6% 6.6% 6.7% 6.4% 6.5%
1Q'15 1H'15 3Q'15 2015 1Q'16
62.2
%
62.6
%
63.1
%
63
.0%
63.9
%
58.3
%
57.1
%
56
.9%
57.6
%
58.2
%
65
.5%
69
.0%
70
.0%
68.8
%
69.0
%
76
.7%
81
.1%
80
.8%
78
.0%
79
.5%
1Q'15 1H'15 3Q'15 2015 1Q'16
Total Corporate loans Mortgage loans Consumer loans
Share of loans with recognised impairment and of impairment allowance increased on y/y basis. The highest percentage increase here occurred in the mortgage loans portfolio.
9686 81 75 71
164
144129
115105
30 32 27 27 29
127138
148 147139
1Q'15 1H'15 3Q'15 2015 1Q'16
Total Corporate loans Mortgage loans Consumer loans
Loans delayed past due over 90 days
Other loans
Share of loans with recognised impairment
Cost of risk over the last 12M (bp.)
Coverage of loans with recognised impairment by impairment allowance
23
1
2
Maintenance of the declining trend in the costs of risk of corporate loans had been sustained over the past 12 months. The largest decline on y/y basis was registered in corporate loans (-59 bp).
2
1
Standalone data
Loan portfolio quality
The highly diversified structure of the loan book points to low sector exposure concentration. At the end of 1Q 2016 the biggest share in the portfolio had a section „Industrial processing" (18.0%), whose share in the portfolio increased by 1.1 pp. y/y, which was the biggest increase on a yearly basis. The largest decline of the share in the portfolio (-2.0 pp. y/y) was on the section „Construction”.The share of the section „Mining and quarrying” in the corporate loans portfolio is approx. 1.1%.
Structure of corporate1) loans by industry segment
(1) Gross loans of non-financial and state budget entities
1
24
Credit risk concentration
Receiveables due from corporateReceiveables due from corporateReceiveables due from corporateReceiveables due from corporate1)1)1)1) entities (PLN bn)entities (PLN bn)entities (PLN bn)entities (PLN bn)1
69.8 69.9 69.7 69.3 70.6
14.2 14.0 14.5 14.7 14.3
83.9 84.0 84.2 84.0 84.9
31.03.15 30.06.15 30.09.15 31.12.15 31.03.16
Gross loans Corparate and municipal bonds
16.9% 18.0%
16.4% 16.8%
15.7% 15.3%
9.0% 7.0%
9.1% 8.6%
2.2% 1.9%
30.7% 32.5%
31.03.2015 31.03.2016
Other exposure
Electricity, gas, water, hot water and air to themechanical systems production and supply
Public administration and national defenceobligatory social security
Construction
Wholesale and retail trade, repair of motor vehicles,including motorcycles
Maintenance of real estate
Industrial processing
+1.1%
+1.4%
+1.1%
• In 1Q 2016, the capital adequacy ratios remained well above the regulatory limits.
• Increase in capital ratios as a result of PFSA’s approval for inclusion of profits for 3Q 2015 in Common Equity Tier 1 in the amount of PLN 1,495 mn (after deduction of any planned charges and dividends), as well as continuation of risk weighted assets optimization (off-balance sheet commitments)
25.427.3 27.3 27.1
28.6
15.5 15.7 15.1 14.8 14.8
13.1% 13.9%14.5% 14.6% 15.4%
11.8% 12.6%13.2%
13.3%14.1%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
18.0%
20.0%
0
5
10
15
20
25
30
1Q'15 1H'15 3Q'15 2015 1Q'16
PLN
bn
Total own funds Total capital requirementTotal capital adequacy ratio Tier 1 capital ratio
Own funds (PLN bn)
Total capital requirement (PLN bn)
25
Capital adequacy (1)
1
1
22.94 24.77 24.82 24.61 26.11
2.482.51 2.47 2.48
2.48
1Q'15 1H'15 3Q'15 2015 1Q'16Tier 2 Tier 1
14.16 14.39 13.90 13.69 13.45
0.76 0.74 0.69 0.66 0.68
0.59 0.59 0.49 0.48 0.68
1Q'15 1H'15 3Q'15 2015 1Q'16
Other risks Operating risk Credit risk
Bank
16.3%
14.9%
Group
Bank
26.34
2.42
Group
Group
12.88
Bank
0.540.71
50% dividendpayment policy
100% dividend payment policy
Banking Law / CRR RegulationPFSA's letter from
2015/10/22 regarding conservation buffer
PFSA's letter from 2015/10/23 regarding
additional capital
PFSA's stand as of 2015/12/15 regarding
banks' dividend payment
PFSA's stand as of 2015/12/15 regarding
banks' divident paymend
Common Equity Tier 1 ratio (CET1) 4.50%
Tier 1 ratio (T1) 6.00% 9% + 1.25% = 10.25% 10.25% + 0.57% = 10.82% 13.25%** + 0.57% = 13.82% 13.25% + 0.57% = 13.82%
Total Capital Ratio (TCR) 8.00% 12% + 1.25% = 13.25% 13.25% + 0.76% = 14.01% 13.25% + 0.76% = 14.01% 16.25% + 0.76% = 17.01%
* PKO BP's CET1=T1
** T1 ratio leve l recommended by the PFSA has been increased by an additional 3 percentage points of conservation capital (10.25% + 3% = 13.25%)
Minimum capital ratios - PFSA's expectations
regulatory/ supervisory
26
Required capital ratios
Capital adequacy (2)
*
Capital buffers 2016 2017 2018 2019
Conservation buffer 1.25% 1.25% 1.88% 2.50%
Countercyclical buffer max 2.5% max 2.5% max 2.5% max 2.5%
Systemic risk buffer max 5% max 5% max 5% max 5%
O-SII buffer* max 2% max 2% max 2% max 2%
Common Equity Tier 1 ratio CET1 5.75% -15.25% 5.75% -15.25% 6.375% -15.875% 7.0% -16.5%
Tier1 capital ratio 7.25% -16.75% 7.25% -16.75% 7.875% -17.375% 8.5% -18.0%
Total Capital ratio TCR 9.25% -18.75% 9.25% -18.75% 9.875% -19.375% 10.5% -20.0%
* Currently PKO Bank Polski is not considered as O-SII (other systemically important institutions)
126%
116%
123% 121%
Liquidity Coverage Ratio (LCR) Net Stable Funding Ratio (NSFR)
31.03.2015 31.03.2016
According to Capital Requirements Directive IV / Capital Requirements Regulation ,implemented as at 31 March 2014, the minimum LCR levels to be maintained are:
− 60% as of 1 October 2015− 70% as of 1 January 2016 − 80% as of 1 January 2017 − 100% as of 1 January 2018
100% - level effective for LCR from
2018
1
27
Liquidity ratios
1
*
*) ratio as at 31.12.2015
28
Business activity by segments
125.5 125.7 126.0 128.3 131.8
17.2 17.9 18.9 20.1 19.6142.7 143.6 144.9 148.4 151.4
31.03.15 30.06.15 30.09.15 31.12.15 31.03.16
SME Retail and private banking
21.7 22.3 23.5 23.5 23.6
24.5 24.6 23.8 23.5 23.6
93.9 95.6 94.9 96.1 96.2
140.1 142.5 142.2 143.1 143.5
31.03.15 30.06.15 30.09.15 31.12.15 31.03.16
Mortgage banking SME Retail and private banking
-87
-1 126 -1 073
-305 -250
96 32503 476
1 477 1 581
646 680
1Q'15 1Q'16
Net interest income
Net F&C income
Other income
Net impairmentallowance
Administrativeexpenses
Bank tax
Segment resultsRetail Banking
29
Gross financial result of retail segment (PLN mn)
Gross loans (PLN bn)
Deposits (PLN bn)New sales of loans (PLN bn) - standalone data*
*) Does not include renewals of SME loans, which in 1Q’16 amounted to ca PLN 1 bn
y/y q/q 1Q’16/1Q’15
y/y q/q
q/q
+5.2%
+7.0%
-5.3%
-4.7%
-18.2%
+2.0%+6.1%
-2.8%+13.5%
+2.8%+5.0%
+0.3%+2.4%
+0.2%+2.5%
+0.5%-3.7%
+0.3%+8.8%
-9.4%+1.5%
-5.6%+13.3%
-21.1%-8.0%
-7.5%-3.4%2.8 3.1 3.1 2.9 2.7
1.11.3 1.4 1.3
1.0
2.12.5 2.3 2.5
2.4
6.0
6.9 6.8 6.76.1
Q1'15 Q2'15 Q3'15 Q4'15 Q1'16Mortgage banking SME Retail and private banking
-58
-279-288
-68-132
132 157
176 160
273 342
233180
1Q'15 1Q'16
Net interest income
Net F&C income
Other income
Net impairmentallowance
Administrativeexpenses
Banking tax
31.7 31.3 29.2
42.639.3
31.03.15 30.06.15 30.09.15 31.12.15 31.03.16
50.2 50.3 51.3 51.2 52.1
31.03.15 30.06.15 30.09.15 31.12.15 31.03.16
4.7
7.8 7.97.0
6.3
Q1'15 Q2'15 Q3'15 Q4'15 Q1'16
y/y
30
Segment resultsCorporate and Investment Banking
Gross financial result of the corporate and investment segment in PLN mn
Gross loans (PLN bn)
Deposits (PLN bn)
New loan sales (PLN bn), standalone data
q/q
*) Part of the increase in new sales in Q2'15 related to the operational merger carried out in April 2015 - framework agreements related to exNoBP accounts were registered in the IT system with the April date, which increased the total amount of new sales
y/y q/q
q/q*
-22.9%
+25.4%
-9.1%
+18.6%
+3.1%
+94.0%
+23.9% -7.7%
+3.7% +1.7%
+35.0% -10.3%
1Q’16/1Q’15
31
Additional information
3 882 5 307
7 832
2010 2012 2015
Number of customers with access to e-banking('000)
+102%
6150 6220
6621
2010 2012 2015
Number of current accounts of induviduals ('000)
+8%
SME customers
PKO Bank Polski is a clear leader of Polish banking sector
430k
Retail segment customers (incl. SMEs)
9.0 mn
Users with access to e-banking (incl. SMEs)
7.8 mn
Corporate segment custmers
14k
Agencies0.9k
Group employment
29.2k
Branches1.2k
ATMs3.2k
32
101
228
431
260
1296
3410
0
1000
2000
3000
4000
0
100
200
300
400
500
2013 2014 2015No. of active IKO apps ('000)No. of operations via IKO ('000)
IKO
2.4 2.8
3.2
2010 2012 2015
Number of ATMs ('000)
+33%
3.1
2.3 2.1
2010 2012 2015
Number of retail agencies and branches ('000.)
-29%
9.7 10.1
18.2
2010 2012 2015
PKO TFI - value of assets under management(PLN bn)
+88%
5.9%
9.1% 9.2%
2010 2012 2015
The share of DM PKO BP SA in trading on the secondary stock market
+3,3p.p.
6.1
8.7 9.6
2010 2012 2015
Number of corporate customers using iPKO Biznes ('000)
+58%
854 877
650 669 640
2012 2013 2014 2015 1Q 2016
115 119 118152
37
-37
-138
-46
22 10
2012 2013 2014 2015 1Q 2016
Result on business activity Net financial result
16.1% 19.8% 14.5% 19.1% 15.4%
77.7% 84.2% 79.5% 73.3% 73.6%
2012 2013 2014 2015 1Q'16Capital adequacy N2 by UAS (min 10%)Net loans/deposits
Net loans (PLN mn)
Deposits (PLN mn)
Financial results (PLN mn)
33
Activity in Ukraine – Kredobank
Adequacy and liquidity
Loan portfolio quality1 100 1 041
817913 869
2012 2013 2014 2015 1Q 2016
362
254 257224 224
109 108 13284 81
2012 2013 2014 2015 1Q 2016Capital exposure Subordinated loan
PKO BP’s exposure (PLN mn)
36.5%
31.8% 32.5% 25.4% 24.2%24.3%
38.7% 49.7%61.0%
62.3%
2012 2013 2014 2015 1Q'16Share of loans with recognized impairment
Coverage of loans with recognized impairment byimpairment allowance
152 160 160 161 159
127 136 137 138 138
216229
220 222 219
31.03.15 30.06.15 30.09.15 31.12.15 31.03.16
Total PLN FX
Standalone data
34
Retail segment – mortgage loans
Average carrying value of mortgage loan (PLN’000)
Average LTV
Average value of mortgage loan in new sales (PLN’000)
74% 74% 73% 74% 73%
70% 68% 69% 71% 71%
Q1'15 Q2'15 Q3'15 Q4'15 Q1'16
Current average LTV of loans portfolio (eop)
Average LTV of new sales
206 213 213 208196
Q1'15 Q2'15 Q3'15 Q4'15 Q1'16
Market share of FX mortgage loans
25.7% 25.6% 25.6% 25.6% 25.6%
29.4% 29.1% 28.8% 28.8% 28.7%
21.6% 21.6% 21.5% 21.5% 21.5%
18.0%
20.0%
22.0%
24.0%
26.0%
28.0%
30.0%
31.03.15 30.06.15 30.09.15 31.12.15 31.03.16
Total PLN FX
33.0 33.531.6 31.6 30.8
4.2 4.24.2 4.2 4.1
37.2 37.835.8 35.7 34.8
31.03.15 30.06.15 30.09.15 31.12.15 31.03.16
CHF pozostałe waluty
CHF denominated mortgage loans portfolio
Volume of FX mortgage loans (PLN bn eop) Structure of mortgage loans by currrency
35
Relief measures vis-a-vis the Bank’s customers with mortgage loans in CHF:
1) Inclusion of negative CHF LIBOR rate values in setting of the mortgage banking product rates;
2) Interim relief measures effective until the end of 2015 and extended until end-1H’16:
− Reduction of the currency spread rate to 1% for the mortgage banking products denominated in CHF;
− Enabling extension of lending tenors without any additional fee or charge;
− Refraining from actions aimed at seeking additional loan collateral;
− Enabling loan currency conversion at average NBP rate as at the date of the loan agreement annex signature (at no additional charge);
− An additional relief for CHF borrowers, including reimbursement to them of a part of their principal repayments whenever the negative reference rate exceeds the Bank’s margin.
60.6% 60.8% 62.5% 62.8% 63.4% 56.7%
34.9% 34.8% 33.1% 32.9% 32.3%35.1%
4.5% 4.4% 4.4% 4.3% 4.3% 8.2%
31.03.15 30.06.15 30.09.15 31.12.15 31.03.16 Bankingsector
31.03.16PLN CHF Other FX
* *
Real GDP growth and its drivers (% y/y) Labour market trends (%)
Wages growth in enterprises (% y/y)
(1) Percentage share of the number of unemployed population in the number of economically active population (i.e. employed and unemployed persons); consistent with EU methodology.
36
1
2
3
Macroeconomic trendsSolid GDP growth with positive trend in the labour market
The Bank estimates that GDP growth moderated in 1Q2016 to 3.3% y/y (vs 4.3% y/y in 4Q2015) as the positive effects related to the end of the “old” wave of EU funds unwound (EU-funded projects cumulation at the end of 2015). Bank forecasts GDP growth of 3.5% in 2016 as a whole (vs. 3.6% in 2015). Structure of the economic growth is changing towards larger contribution of private consumption (supported with 500 PLN per child program) amid falling contribution of investments (esp. drop in public investments by 0.6% of GDP in the whole year).
Stable economic growth translates into continuation of positive trends in the labour market (acceleration in employment growth). The unemployment rate in March 2016 dropped to the lowest level for March since 1991.
Wages have been growing at solid and stable pace of ca. 3.5% y/y in nominal terms and over 4.5% y/y in real terms. There are signs of stronger wage pressure. Solid incomes growth supports consumption.
3
2
1
4.3
-12
-8
-4
0
4
8
12
-5
-4
-3
-2
-1
0
1
2
3
4
5
GDPhousehold consumption expendituresexternal trade contribution (pp)gross fixed investments (RA)
10.0
7.1
2.7
-2
-1
0
1
2
3
4
5
6
8
10
12
14
16
Registered unemployment rateEmployment growth (y/y) RHS
LFS unemployment rate, sa1)
3.7
4.6
-2
-1
0
1
2
3
4
5
6
7
Nominal wages
Real wages
PLN/CHF
PLN/USD
PLN/EUR
WIBOR 3M
2
CPI and core inflation (% y/y)
Interest rates (% eop)
PLN exchange rates
5-year yield
Reference rate
37
Macroeconomic trendsLonger deflation, stable NBP interest rates
1
3
EURPLN at end of 1Q2016 was similar as at the end of 2015, but there were waves of PLN weakening during the quarter, especially in January when S&P cut Poland’s sovereign rating. Despite further monetary policy easing by the ECB, weakening expectations of rate hikes in the US drove EURUSD higher, which lowered USDPLN rate. CHFPLN was broadly unchanged.
The new MPC members continue the policy line of their predecessors hinting that the interest rate level should remain flat in 2016. Despite deflation is prolonging, it is mostly imported and does not have a negative impact on the economy. The resumption of interest rate cuts could be detrimental to stability of the financial system and would add to depreciation pressure on the PLN.
CPI inflation fell in 1Q2016 (on average to -0.9% y/y from -0.6% in 4Q2015) due to lower core inflation (resulting from falling medicines’ and TV prices), as well as energy prices. Food prices growth accelerated in 1Q. We expect deflation to last untill 4Q 2015. Inflation will rise to ca. 0.6% y/y at the year-end (low base effects, as well as stronger consumer demand). We expect fiscal and regulatory policy to play a significant role in stimulating inflation in 2016.
1
2
3
-0.9
-0.2
-2
-1
0
1
2
3
4
5
Core inflation
CPI inflation
2.20
1.50
1.67
1
2
3
4
5
6
7
4.27
3.76
3.90
2
3
4
5
Deposit growth rates (% y/y)
Loan growth rates (% y/y) Mutual funds market (PLN bn)
38
Banking sector and mutual fundsSlower loans dynamics and faster deposits growth
1
2
3
Loans growth slowed down in 1Q2016 (to 4.6% y/y; FX adj. 4.9% y/y) with stable rise in corporate loans (8.3%; FX adj. 6.9%), slower mortgage loan growth (2.7%; FX adj. 4.7%) and stronger consumer loans’ growth (7.8%; FX adj. 8.2%).
Deposits growth increased in 1Q2016 (9.1% y/y), amid faster rise in households deposits (10.1% y/y) and significantly slower rise in corporate deposits (7.2%). The Loan-to-Deposit ratio decreased to 100.1% from 103.0% in 4Q2015.
A moderate increase in the assets of mutual funds in 1Q2016, with the improvement of the situation on the stock market and an increase in the WIG by 5.5% q/q.
3
2
1
7.8
2.7
8.3
4.6
-10
-5
0
5
10
15
20
25
30
Housing
Total
Corporate
Consumer
9.1
10.1
7.2
-7
-5
-3
-1
1
3
5
7
9
11
13
15
17
Total
Corporate
Private individuals
254.9
90
120
150
180
210
240
270
-5
0
5
10
15
20
net inflow
net mutual fund assets
39
Summary operational data
y/y q/q
Current accounts ('000) 6 661 6 583 6 600 6 621 6 643 -0.3% +0.3%
Banking cards ('000) 7 452 7 450 7 489 7 523 7 558 +1.4% +0.5%
of which: credit cards 821 838 845 838 835 +1.7% -0.4%
Branches: 1 323 1 311 1 290 1 277 1 274 -3.7% -0.2%
- retail 1 284 1 272 1 251 1 238 1 235 -3.8% -0.2%
- corporate 39 39 39 39 39 0.0% 0.0%
Agencies 965 926 887 881 870 -9.8% -1.2%
ATMs 3 210 3 217 3 214 3 196 3 191 -0.6% -0.2%
Active IKO applications ('000) 270 308 354 431 554 +105.2% +28.7%
ChangePKO Bank Polski operating data (eop) Q3'15Q1'15 Q2'15 Q4'15 Q1'16
40
Consolidated income statement of the PKO BP Group -quarterly
Profit and loss account (PLN '000) Profit and loss account (PLN '000) Profit and loss account (PLN '000) Profit and loss account (PLN '000) Q1'15Q1'15Q1'15Q1'15 Q2'15Q2'15Q2'15Q2'15 Q3'15Q3'15Q3'15Q3'15 Q4'15Q4'15Q4'15Q4'15 Q1'16Q1'16Q1'16Q1'16Q1'16/Q1'16/Q1'16/Q1'16/
Q1'15Q1'15Q1'15Q1'15
Q1'16/Q1'16/Q1'16/Q1'16/
Q4'15Q4'15Q4'15Q4'15
Net interest income 1 670 738 1 683 362 1 818 099 1 856 396 1 853 195 +10.9% -0.2%
Net fee and commission income 679 150 757 382 720 548 693 548 635 445 -6.4% -8.4%
Other income 230 859 153 632 159 599 241 510 196 794 -14.8% -18.5%
Dividend income - 9 676 982 - - x x
Net income from financial instruments designated at fair value 23 118 (14 247) 2 004 29 702 (8 439) x x
Gains less losses from investment securities 52 541 16 812 6 385 12 009 50 631 -3.6% +321.6%
Net foreign exchange gains 72 239 94 449 92 247 110 159 94 420 +30.7% -14.3%
Net other operating income and expense 82 961 46 942 57 981 89 640 60 182 -27.5% -32.9%
Total income itemsTotal income itemsTotal income itemsTotal income items 2 580 747 2 580 747 2 580 747 2 580 747 2 594 376 2 594 376 2 594 376 2 594 376 2 698 246 2 698 246 2 698 246 2 698 246 2 791 454 2 791 454 2 791 454 2 791 454 2 685 434 2 685 434 2 685 434 2 685 434 +4.1%+4.1%+4.1%+4.1% -3.8%-3.8%-3.8%-3.8%
Net impairment allowance and write-offs (373 579) (375 070) (362 316) (364 953) (382 166) +2.3% +4.7%
Administrative expenses (1 404 770) (1 372 317) (1 335 476) (1 923 707) (1 360 493) -3.2% -29.3%
Tax on certain financial institutions - - - - (148 365) x x
Share in net profit (losses) of associates and jointly controlled entities 8 515 7 308 8 279 14 013 3 318 -61.0% -76.3%
Profit before income tax Profit before income tax Profit before income tax Profit before income tax 810 913 810 913 810 913 810 913 854 297 854 297 854 297 854 297 1 008 733 1 008 733 1 008 733 1 008 733 516 807 516 807 516 807 516 807 797 728 797 728 797 728 797 728 -1.6%-1.6%-1.6%-1.6% +54.4%+54.4%+54.4%+54.4%
Income tax expense (175 151) (152 676) (193 031) (68 639) (159 760) -8.8% +132.8%
Net profit attributable to non-controlling shareholders (11 419) (1 257) 454 3 911 (622) -94.6% x
Net profit attributable to the parent companyNet profit attributable to the parent companyNet profit attributable to the parent companyNet profit attributable to the parent company 647 181 647 181 647 181 647 181 702 878 702 878 702 878 702 878 815 248 815 248 815 248 815 248 444 257 444 257 444 257 444 257 638 590 638 590 638 590 638 590 -1.3%-1.3%-1.3%-1.3% +43.7%+43.7%+43.7%+43.7%
41
Consolidated statement of financial position of the PKO BP Group
AssetsAssetsAssetsAssets (PLN '000) (PLN '000) (PLN '000) (PLN '000) 31.03.1531.03.1531.03.1531.03.15 30.06.1530.06.1530.06.1530.06.15 30.09.1530.09.1530.09.1530.09.15 31.12.1531.12.1531.12.1531.12.15 31.03.1631.03.1631.03.1631.03.16ChangeChangeChangeChange
y/y y/y y/y y/y
ChangeChangeChangeChange
q/qq/qq/qq/q
Cash and balances with the Central Bank 10 090 058 11 934 626 8 181 397 13 743 864 15 857 607 +57.2% +15.4%
Amounts due from other banks 4 567 158 3 673 220 4 113 135 4 552 972 2 522 459 -44.8% -44.6%
Trading assets 1 813 910 1 532 183 2 526 087 783 199 2 308 701 +27.3% +194.8%
Derivative financial instruments 5 598 132 3 976 774 4 376 549 4 347 269 2 991 644 -46.6% -31.2%
Financial assets designated at fair value through P&L 18 730 144 13 871 079 14 592 585 15 154 100 13 100 195 -30.1% -13.6%
Loans and advances to customers 182 440 406 185 336 089 185 193 115 190 413 708 187 869 107 +3.0% -1.3%
Investment securities available for sale and securities held to maturity 23 805 722 25 867 501 26 560 447 28 519 845 32 003 671 +34.4% +12.2%
Tangible fixed assets 2 480 800 2 493 423 2 519 689 2 782 186 2 808 010 +13.2% +0.9%
Other assets 7 057 596 6 838 732 6 857 426 6 642 776 7 629 374 +8.1% +14.9%
TOTAL ASSETSTOTAL ASSETSTOTAL ASSETSTOTAL ASSETS 256 583 926 256 583 926 256 583 926 256 583 926 255 523 627 255 523 627 255 523 627 255 523 627 254 920 430 254 920 430 254 920 430 254 920 430 266 939 919 266 939 919 266 939 919 266 939 919 267 090 768 267 090 768 267 090 768 267 090 768 +4.1%+4.1%+4.1%+4.1% +0.1%+0.1%+0.1%+0.1%
Liabilities and eqiutyLiabilities and eqiutyLiabilities and eqiutyLiabilities and eqiuty (PLN '000) (PLN '000) (PLN '000) (PLN '000) 31.03.1531.03.1531.03.1531.03.15 30.06.1530.06.1530.06.1530.06.15 30.09.1530.09.1530.09.1530.09.15 31.12.1531.12.1531.12.1531.12.15 31.03.1631.03.1631.03.1631.03.16ChangeChangeChangeChange
y/y y/y y/y y/y
ChangeChangeChangeChange
q/qq/qq/qq/q
Amounts due to the central bank 4 143 4 158 4 541 4 219 3 989 -3.7% -5.5%
Amounts due to banks 21 570 055 20 101 550 20 332 686 18 288 797 20 246 622 -6.1% +10.7%
Derivative financial instruments 6 300 141 5 096 870 4 855 943 4 624 767 3 292 087 -47.7% -28.8%
Amounts due to customers 178 367 476 179 137 778 178 256 829 195 758 461 194 856 153 +9.2% -0.5%
Liabilities of insurance activities 2 790 195 2 587 180 2 386 315 2 400 493 2 428 876 -12.9% +1.2%
Debt securities in issue 13 815 938 14 139 104 14 114 895 9 432 973 9 218 641 -33.3% -2.3%
Subordinated liabilities 2 478 949 2 521 227 2 471 649 2 499 163 2 477 481 -0.1% -0.9%
Other liabilities 2 992 193 3 204 909 2 920 069 3 666 133 3 532 060 +18.0% -3.7%
Total equity 28 264 836 28 730 851 29 577 503 30 264 913 31 034 859 +9.8% +2.5%
TOTAL EQUITY AND LIABILITIESTOTAL EQUITY AND LIABILITIESTOTAL EQUITY AND LIABILITIESTOTAL EQUITY AND LIABILITIES 256 583 926 256 583 926 256 583 926 256 583 926 255 523 627 255 523 627 255 523 627 255 523 627 254 920 430 254 920 430 254 920 430 254 920 430 266 939 919 266 939 919 266 939 919 266 939 919 267 090 768 267 090 768 267 090 768 267 090 768 +4.1%+4.1%+4.1%+4.1% +0.1%+0.1%+0.1%+0.1%
Shareholders structure(number of shares: 1 250 mn)
Basic information on shares• Listed: Warsaw Stock Exchange since 10.11.2004 r.• Indices: WIG, WIG20, WIG30, WIG Banki• ISIN: PLPKO0000016• Bloomberg: PKO PW• Reuters: PKOB WA
Rating
DividendPayment from the net profit
of the yearDPS (PLN)
Dividend yield (Div. Day)
Payout ratio
2014 0.00 x 0.00%
2013 0.75 1.9% 31.65%
2012 1.80 4.9% 61.12%
2011 1.27 3.9% 40.15%
2010 1.98 5.5% 74.75%
2009 1,90 4.2% 97.65%
2008 1.00 2.9% 34.71%
2007 1.09 2.2% 40.07%
2006 0,98 1.7% 47.87%
2005 0.80 2.1% 47.71%
2004 1.00 3.6% 66,18%
*) Share reported by ING OFE after exceeding the threshold 5% of total number of votes at GM of PKO Bank Polski by Nationale-Nederlanden OFE, former ING OFE (as at 24.07.12) and Aviva OFE (as at 29.01.13)**) Of which 1.96% BGK (State owned bank) as at 28.08.15
42
Shares, rating and dividend policy
Principles of the dividend policy adopted on 22 March 2016 • The general assumption of the Bank’s dividend policy is to maintain a stable level of dividend payments in the long term, in compliance with the principle of
prudent management of the Bank’s and the Bank’s Capital Group and with consideration of the financial capacity of the Bank and the Bank’s Capital Group as determined on the basis of the adopted criteria.
• The aim of the dividend policy is an optimization of the own funds of the Bank and the Bank’s Capital Group, taking into account the return on capital and its cost, capital needs for development, while ensuring an appropriate level of capital adequacy ratios.
• The dividend policy assumes the possibility of the Bank’s net profit distribution to shareholders in the long-term perspective in the amount of the surplus of capital above minimal capital adequacy ratios considering the additional capital buffer.
• The dividend policy takes into account factors related to the operations of the Bank and the Bank’s Capital Group companies, in particular, the requirements and supervisory recommendations concerning capital adequacy.
• The principles have been changed in connection with the issuance by the Polish Financial Supervision Authority on 15 December 2015 of the position on the dividend policy of banks in 2016 for the year 2015, recommending higher minimum levels of capital adequacy measures enabling the dividend payment and introducing a new condition for the dividend payment – the level of leverage.
• Therefore, in accordance with the Principles, the capital adequacy ratios specifying the dividend criteria are as follows: total capital ratio above 14.01% and common equity Tier 1 ratio above 13.82%, leverage ratio above 5%.
Rating:Agency:
Long-term
Short-term
Outlook
Moody’s A2/A3 P-1/P-2 Stable
State Treasury 29.43%
Aviva OFE*6.72%
Nationale-Nederalnden
OFE*5.17%
Others**58.68%
This presentation (the ”Presentation”) has been prepared by Powszechna Kasa Oszczędności Bank Polski S.A. (”PKO BP S.A.”, ”Bank”) solely for use by itsclients and shareholders or analysts and should not be treated as a part of any an invitation or offer to sell any securities, invest or deal in or a solicitationof an offer to purchase any securities or recommendation to conclude any transaction, in particular with respect to securities of PKO BP S.A. Theinformation contained in this Presentation is derived from publicly available sources which Bank believes are reliable, but PKO BP SA does not make anyrepresentation as to its accuracy or completeness. PKO BP SA shall not be liable for the consequences of any decision made based on informationincluded in this Presentation.
The information contained in this Presentation has not been independently verified and is, in any case, subject to changes and modifications. PKO BP SA’sdisclosure of the data included in this Presentation is not a breach of law for listed companies, in particular for companies listed on the Warsaw StockExchange. The information provided herein was included in current or periodic reports published by PKO BP SA or is additional information that is notrequired to be reported by Bank as a public company.
In no event may the content of this Presentation be construed as any type of explicit or implicit representation or warranty made by PKO BP SA or, itsrepresentatives. Likewise, neither PKO BP SA nor any of its representatives shall be liable in any respect whatsoever (whether in negligence or otherwise)for any loss or damage that may arise from the use of this Presentation or of any information contained herein or otherwise arising in connection with thisPresentation.
PKO BP SA does not undertake to publish any updates, modifications or revisions of the information, data or statements contained herein should there beany change in the strategy or intentions of PKO BP SA, or should facts or events occur that affect PKO BP SA’s strategy or intentions, unless suchreporting obligations arises under the applicable laws and regulations.
This Presentation contains certain market information relating to the banking sector in Poland, including information on the market share of certain banksand PKO BP SA. Unless attributed exclusively to another source, such market information has been calculated based on data provided by third partysources identified herein and includes estimates, assessments, adjustments and judgments that are based on PKO BP SA’s experience and familiarity withthe sector in which PKO BP SA operates. Because such market information has been prepared in part based upon estimates, assessments, adjustmentsand judgments and not verified by an independent third party, such market information is, unless otherwise attributed to a third party source, to a certaindegree subjective. While it is believed that such estimates, assessments, adjustments and judgments are reasonable and that the market informationprepared is appropriately reflective of the sector and the markets in which PKO BP SA operates, there is no assurance that such estimates, assessmentsand judgments are the most appropriate for making determinations relating to market information or that market information prepared by other sourceswill not differ materially from the market information included herein.
PKO BP SA hereby informs persons viewing this Presentation that the only source of reliable data describing PKO BP SA’s financial results, forecasts,events or indexes are current or periodic reports submitted by PKO BP SA in satisfaction of its disclosure obligation under Polish law.
This Presentation is not for release, directly or indirectly, in or into the United States of America, Australia, Canada or Japan.
43
Disclaimer
Contact:Contact:Contact:Contact:PKO Bank Polski SA Investor Relations Office PKO Bank Polski SA Investor Relations Office PKO Bank Polski SA Investor Relations Office PKO Bank Polski SA Investor Relations Office Lidia Wilk – DirectorPulawska 1502-515 WarsawPoland
Tel: +48 22 521 91 82Fax: +48 22 521 91 83E-mail: lidia.wilk@pkobp.plE-mail: ir@pkobp.pl
PKO Bank Polski websitePKO Bank Polski websitePKO Bank Polski websitePKO Bank Polski website: www.pkobp.pl
Investor’sInvestor’sInvestor’sInvestor’s calendarcalendarcalendarcalendar::::
8 August 2016 Publication of the 1H 2016 Report
7 November 2016 Publication of the Quarterly 3Q 2016 Report
6 March 2017 Publication of the 2016 Annual Report
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