BRE Bank Group Results Q1 2007

Transcription

1 BRE Bank Group Results Q Closer to the Customer BRE Bank SA Management Board Presentation for Investors and Analysts 27 April

2 Agenda Introduction Summary of Q New Business Line BRE Bank s Q Results Business Line Financial Results and Highlights Analysis of Q Financial Results Appendix Detailed Results of the Business Lines, Q Additional Information on Selected Financial Data Macroeconomics 2

3 Agenda Introduction Summary of Q New Business Line BRE Bank s Q Results Business Line Financial Results and Highlights Analysis of Q Financial Results Appendix Detailed Results of the Business Lines, Q Additional Information on Selected Financial Data Macroeconomics 3

4 Summary of Q High High profitability profitabilityof ofregular regularbusiness operations operations 2 Creation Creationof ofthe thecorporations Corporationsand andfinancial FinancialMarkets MarketsBusiness Line Line 3 Fast Fast growth growthininretail RetailBanking business business and andprofitability 4

5 Summary of Q High Profitability of Regular Business Operations Profit before tax (including profit on SAMH sale) PLN M Profit before tax (excluding SAMH) PLN M ROE before tax* 32.0% Cost/income (C/I)* 57.7% Capital adequacy ratio (CAR) 10.86% All presented financial data for the BRE Bank Group, unless indicated otherwise * Consolidated figures after the elimination of the profit on the sale of SAMH 5

6 Agenda Introduction Summary of Q New Business Line BRE Bank s Q Results Business Line Financial Results and Highlights Analysis of Q Financial Results Appendix Detailed Results of the Business Lines, Q Additional Information on Selected Financial Data Macroeconomics 6

7 New Business Line (1/6) Changesofthewayofmanagingandpresenting BRE Bank s activities Before Corporate Banking Investment Banking Corporate Banking Investment Banking Asset Management Corporate Banking Investment Banking Retail Banking Corporate Banking Investment Banking Corporates and Markets Asset Management Retail Banking Asset Management Retail Banking Retail Banking 7

8 New Business Line (2/6) Why the Corporates and Markets Line? Internal Rationale: 1. The creation of the new Line is a consequence of the Bank s business approach: Focuson thecorebusiness Aspiration to best meet the needs of our demanding customers for financial services 2. Need of development of an advanced management information model to present the results of customer relations regardless of the actual service provider 3. Creation of the Corporates and Markets Line is a result of the evolution in BRE Bank s investment banking over the past decade: Private equity model Restructuring the proprietary investments portfolio, focus on customer relations Even closer to the customer: integration of investment and corporate banking 8

9 New Business Line (3/6) Evolution of Investment Banking activity profile Reduction of proprietary investments portfolio -73,0% -73,0% Financial Institutions 2% Focus on business with the bank s clients Treasury 12% BRE Brokerage 7% Proprietary Investments 11% Project Finance 16% Structure of Investment Banking pre-tax profit in 2005 Origination 3% Trading 20% Sales 29% Client-driven 55% 66% business Project Finance 15% Risk, liquidity, 45% proprietary 34% investments Structure of Investment Banking pre-tax profit in 2006 BRE Brokerage 12% DFM: Origination 3% Treasury 3% Proprietary Investments 4% DFM: Trading 30% DFM: Sales 33% 9

10 New Business Line (4/6) Why the Corporates and Markets Line? External Rationale Modern corporate banking combines traditional banking products with investment products. At this stage of development of financial markets, sales of financial instruments, including instruments hedging against fx and interest rate risk, are directly related to companies core business. Financial risk management products Commercial banking and settlement products Structured products Quasi-banking products 10

11 New Business Line (5/6) Business Lines Now BRE Bank Group Business Lines Homogeneous Business Areas K1 Branches, Restructuring & Enforcement Trade Transactions Payment Cards Project Finance Financial Markets salesto corporations Corporates and Markets Corporates and Institutions K2 K3 Financial Institutions Financial Institutions Financial Markets institutional sales Custody Services Risk & Liquidity Management Trading and Investments Financial Markets (Trading & Origination) Proprietary Investments mbank Retail Banking Multibank Private Banking Private Banking, Payment Cards Financial Markets sales to PB Restruct. & Enforc. of backlog debt Asset Management Other Group Companies BRE Bank Hipoteczny BRE Leasing Intermarket Group DI BRE BRE Corporate Finance BRE Finance France Garbary Tele-Tech Investment emfinanse* BRE Ubezpieczenia* BRE Wealth Management (formerly SIM) PTE Skarbiec Emerytura CERI BRE.locum * Not consilidated subsidiaries 11

12 New Business Line (6/6) Expected Results Sales force focus on customer relations under a one-stop-shop model (integrated irrespective of products). The Corporates and Markets Line integrates sales to Corporations and Institutions with Trading and Risks which provide investment products and manage liquidity and risk. Greater transparency to investors: reporting by new Business Lines much better corresponds to the nature of the BRE Bank Group s business. 12

13 Agenda Introduction Summary of Q New Business Line BRE Bank s Q Results Business Line Financial Results and Highlights Analysis of Q Financial Results Appendix Detailed Results of the Business Lines, Q Additional Information on Selected Financial Data Macroeconomics 13

14 Summary of Q Results Business Line Results and Highlights, Q Growing Profitability of Business Lines Profit before Tax by Business Line, Q v. Q (PLN M) Corporates and Markets Retail Banking (+PB) +73.4% 95,3 55,0 +0.9% +523% 69,3 41,9 42,3 11,1 Corporates and Institutions Trading and Investments Q Q

15 Business Line Results and Highlights, Q Results of Strategic Subsidiaries Profit before tax of strategic subsidiaries up 30% YoY (Q excluding SAMH and including BWM for comparability) 6,1 DI BRE 12,3 9,6 BBH 9,4 5,6 BRE Leasing 8,8 Profit before Tax of Consolidated Subsidiaries (PLN M) 5,2 5,8 Intermarket Bank 3,8 PTE SE 4,4 4,4 BRE.locum 4,1 2,2 Transfinance 2,6 2,1 Polfactor 2,5 1,5 Magyar Factor 1,4-0,1 0,4 Tele-Tech Investment IQ2006 IQ2007 0,3 0,2 CERI 0,5 BWM 0,2 Polfactor 0,9% Magyar Factor 0,5% DI BRE 4,2% Contribution of the BRE Bank Group Subsidiaries to the Profit before Tax Bank* 82.5% Group Companies 17.5% Transfinance 0,9% Intermarket Bank 2,0% PTE S-E 1,5% Other** 1,5% * Bank s profit before tax net of consolidation adjustments. ** Other includes: BRE.locum, CERI, BRE Wealth Management, BRE Corporate Finance, BRE Finance France, Tele-Tech Investment, Garbary BRE Leasing 3,0% BRE Bank Hipoteczny 3,2% Subsidiaries: Corporates & Institutions Asset Management discontinued operations Other 15

16 Agenda Introduction Summary of Q New Business Line BRE Bank s Q Results Business Line Financial Results and Highlights Analysis of Q Financial Results Appendix Detailed Results of the Business Lines, Q Additional Information on Selected Financial Data Macroeconomics 16

17 Business Line Results and Highlights, Q Corporates and Markets: Summary Growing profitability Profit before tax at PLN M in Q up 42% YoY, incl. -Corporates & Institutions 69,3% -Trading & Investments 30,7% Business expansion 606 new corporate customers acquired in Q (up 22% YoY). Corporate loans up 18.5% YoY. 20 business offices to be opened High market position Trading & Investments I st place (33% share) in the bank bonds market Subsidiaries high contribution to Group s profit 26% of the profit before tax of Corporations and Financial Markets contributed by subsidiaries, mainly: DI BRE, BBH and BRE Leasing 17

18 Business Line Results and Highlights, Q Corporates and Markets: Financial Results Line s profit before tax at PLN M in Q1 2007, up 42% YoY Corporates and Institutions contributed 69.3% of the Line s profit before tax, Trading and Investments contributed 30.7% Profit on transactions with K1, K2 and K3 corporate customers (PLN 53.4 M) was the main profit item of Corporates and Institutions; subsidiaries also had a significant contribution to the profit before tax (PLN 42.8 M), mainly DI BRE, BRE Leasing, BBH. Profit on trading and CP issues (PLN 28.3 M) as well as risk and liquidity management (PLN 20.1 M) were the main profit items of Trading and Investments. * Total of unconsolidated results of subsidiaries Line s Financial Results, Q (PLN M) Structure of Profit before Tax of Corporations and Markets, Q (PLN M) Net Interest Income 139,0 Net Commission Income 94,4 Trading and Investments 30,7% Trading and Origination PD; 28.3 Risk and Liquidity Management; 20.1 Others; -0.9 Trading profit 88,1 Proprietary Investments; -5.8 Net Impairment -3,1 Corporate Companies; 42.8 Cost and Amortisation -192,5 Investment Companies; -0.4 K1; 19.2 K2; 23.2 K3; 11 Pre-tax profit 137,6 Corporates and Institutions 69.3% 18

19 Business Line Results and Highlights, Q Corporates and Institutions: Customers Corporate Customers Number and Structure Total New Corporate Banking Customers K1 968 K1 969 K K K K % K K K * * After resegmentation I - XII 2005 I - III 2006 IV - VI 2006 VII - IX 2006 X-XII 2006 I- XII 2006 I- III 2007 In Q1 2007, there were 606 new corporate customers, up by almost 22% YoY, of which 76% were K3 customers and 20% were K2 customers. There were 11,658 corporate customers at the end of March 2007 (up by 215 customers net year to date). The share of K3 customers who bought service packages was 52%. 19

20 Business Line Results and Highlights, Q Corporates and Institutions: Business Growth in Loans and Deposits BRE Bank Corporate Customers Loans, PLN B BRE Bank Corporate Customers Deposits, PLN B % share in the market of loans to enterprises % 37% 56% 7% % % 9.1 K1 K2 K3 Enterprises 52% 48% 42% % % 11% % share in the market of deposits of enterprises 12' ' ' '2007 Balance-sheet corporate loans were up PLN 1.2 B in Q1 (+13.0% QoQ) to PLN 10.4 B at the end of March. Loans granted to enterprises were up PLN 0.7 B in Q (+8.3% QoQ). Corporate customers deposits were PLN 16.6 B at the end of March 2007, up PLN 0.4 B year to date (+2.5% QoQ). Deposits of enterprises were up PLN 0.2 B in Q1 (+1.9% QoQ). 20

21 Business Line Results and Highlights, Q Corporates and Institutions: Expansion of the Corporate Branch Network Goal: Optimising the Corporate Branches: Business Offices as an innovative way to expand To grow the dynamics of business To leverage the opportunities in the growing corporate banking market To better use fixed costs Biura biznesowe jako nowy sposób rozwoju sieci To better fulfil customers expectations To tap the potential of the local market Advantages of the Business Office solution Sales focus Low cost of entry to the local market Timetable 20 Business Offices to be opened by the end of Q Business Office philosophy and model advisory, educational, image functions Excellent product knowledge execution of agreements, decisionmaking competences including prices Understanding of the local market, close to the customer best use of time for direct contacts with customers and business partners Expert opinions on financing needs and creditwortiness rating fast decision-making, including risk products Educational and image functions: dedicated business workshops, downtown location Business Office locations complementary to the existing branch network 21

22 Business Line Results and Highlights, Q Retail Banking and Private Banking: Summary Record-high profitability Over 2 million accounts Profit before tax at PLN 69 M in Q up by a factor of 6 YoY Retail accounts number up 6.9% QoQ Successful launch of the Car Insurance Supermarket Promising results within the short period since launch: 2,928 insured cars, PLN 9,212 thousand of premium written Leader in mortgage loans Third largest provider of new mortgage loans in Q1 2007; 9.4% share in the market of mortgage loans 22

23 Business Line Results and Highlights, Q Retail Banking: Summary [thou.] [M] As at the end of Q Customers Current accounts mbank MultiBank End of Q M customers customers M accounts accounts PLN PLN B of of retail retail deposits deposits Change +6.3% +6.3% +6.9% +6.9% +12% +12% End of Q M customers customers M accounts accounts PLN PLN B B of of retail retail deposits deposits 6000 [M] Assets under management mbank including Deposits MultiBank PLN PLN B of of retail retail loans loans +16.4% +16.4% PLN PLN B B of of retail retail loans loans Loans mbank including Mortgage Loans MultiBank including: including: PLN PLN B of of mortgage mortgage loans loans +17% +17% including: including: PLN PLN B B of of mortgage mortgage loans loans 23

24 Business Line Results and Highlights, Q Retail Banking: Summary Mortgage Loans 3,6 Mortgage Loans: Market Leaders by sales (PLN M) at 31 March 2007 BRE Bank: a top market leader in sales of mortgage loans 1,7 1,3 0,9 PKO BP Millennium BRE Bank* GE BRE Bank was the third largest provider of new mortgage loans in Q (total loans granted by mbank and MultiBank, data according to Parkiet) After: Parkiet, *MultiBank+mBank Housing Loans (PLN B) 6.5% 9% 2007: 9.4% The share in the housing loans market up from 9% in 2006 to 9.4% at the end of February I 5.1% 2.9% VI XII VI XII VI 2006 XII VI XII BRE Bank (LHS) Market (RHS) Market share 0 24

25 Business Line Results and Highlights, Q BRE Bank Retail Banking: BRE Wealth Management Business Concept Basic model Advanced Private Banking Wealth Management Basic product range (usually closed product architecture) DedicatedAM Infrastructure (Branches) Customer and product profiles (managed product architecture) Financial planning based on smart box solutions Comprehensive wealth management including public and private assets Poland s first solution where a licensed company participates in Private Banking operations Eligibility from PLN 200 thou Private Banking Wealth Management Private Banking Eligibility from PLN 500 thou Customers with assets over PLN 2 M have special status Target: PLN 7 B of AuM in

26 Business Line Results and Highlights, Q BRE Bank Retail Banking: Car Insurance Supermarket The Car Insurance Supermarket was launched on 13 February 2007 Comparison and choice of 7 offers of liability and accident insurance, each offer in 3 variants Purchase and service integrated with the ekonto account 24/7 access to insurance policy information Electronic applications and policies minimum paper Liability insurance policy available in 6 languages (Polish, English, German, French, Italian, Spanish) 2,928 cars insured as at 31 March 2007 PLN 9,2 M of premium written (in Q1 2007) Target number of cars insured: 18 thou in 2007 Low monthly payments charged by mbank. It will be hard to beat the Car Insurance Supermarket Newsweek mbank s offer the most attractive Pentor Research International 26

27 Business Line Results and Highlights, Q Analysis: Retail Banking (+PB) Financial Results Retail Banking: Structure of Profit before Tax, Q (PLN) MultiBank; 25,9 M Segment s Profit before Tax (by quarter, PLN thou.) Others; (-6,8 M) mbank; 39,0 M PB; 11,1 M 1Q 2005* 2Q 2005* 3Q Q 2005* 1Q Q Q Q 2006 * Q data based on Q reports; Q data based on the Q report. 1Q 2007 Profitability up significantly: profit before tax at PLN 69.3 M in Q v. PLN 11.1 M in Q The Line s contribution to the BRE Bank Group s profit before tax on regular business operations* up to 33.6% The significant growth in profit was mainly driven by the dynamic growth in the loans portfolio, mainly mortgage loans (up 98.8% or PLN 5.2 B YoY) Costs up (27% YoY) due to the expansion of the branch network * After elimination of the profit on the sale of SAMH Net Inerest Income 92,2 Net Commission Income 48,8 Trading Profit 25,3 Structure of the Segment s Profit before Tax, Q (PLN M) Net Impaiment -4,5 Cost and Amortisation -91 Pre-Tax Profit 69,3 27

28 Business Line Results and Highlights, Q BRE Bank Group s Profit Structure Income * Cost 7; 1% 269; 55% 7; 2% 173; 60% 160; 32% 62; 12% Corporates and Institutions Wynik/zysk brutto % 91; 31% Corporates and Markets 19; 7% All data in PLN M Trading and Investment Retail Banking (+PB) Other** % 33.6% * The total profit on the sale of SAMH shares at PLN M was eliminated. Income shown including credit provisions, revenue split, and other operating income/cost. ** Other under profit before tax includes: (PLN 3.12 M) Asset Management (after elimination of the profit on the sale of SAMH) PLN 2.65 M Other and consolidation adjustments 28

29 Agenda Introduction Summary of Q BRE Bank s Q Results Business Line Financial Results and Highlights Analysis of Q Financial Results Appendix Detailed Results of the Business Lines, Q Additional Information on Selected Financial Data Macroeconomics 29

30 Analysis of Results, Q Q (PLN M) YoY change QoQ Change*** Total income* % +23.7% Total costs Operating profit** (290.6) +13.0% % -3.5% +69.4% Net provisions (6.9) -69.2% Profit before tax % Net profit % +20.5% +71.0% +93.3% * Incl. net other operating income and costs ** Before provisions *** Q v. Q

31 Analysis of Results, Q Loans and Deposits Loans and deposits growing well above the market +33.5% +37.0% 19,3 21,7 22,7 23,0 25,8 19,5 21,8 22,7 24,7 26,7 +12% +4% +2% +12% +12% +4% +8% +8% Loans: Loans portfolio up YoY much more sharply than the market (+33.5%, market up 26.8% YoY), mainly due to expansion of mortgage loans and upturn in corporate loans Loans portfolio up 12% in Q1 year to date Deposits: Deposits up YoY twice as fast as the market (BRE Bank: up 37.0% v. sector up 17.5%), achieved on incrise in corporate deposits as well as in retail deposits. Deposits up QoQ more sharply than the market (BRE Bank up 8.1% v. sector up 3.4%) 31

32 Analysis of Results, Q Income Remains on the Upward Track Dynamic growth in total income, higher net interest income, lower net commission income after the sale of SAMH BRE Bank Group Income Q v. Q PLN M +23.7% Net interest income remained the largest P&L item: PLN M in Q v. PLN M in Q (up 14.0% QoQ) 96,5 6,4 Net commission income remained the second largest P&L item, down 5.7% QoQ 0 113,4 Trading profit remained the third largest P&L item, up 0.04% QoQ 148,8 593,4 479,8 228,3 High profit on investment securities: PLN 96.5 M in Q v. PLN 10.9 M in Q4 2006, as a result of the sale of SAMH Q Net interest income Net commission income Dividend income Trading profit Profit on investment securities Net other operating income and cost Q

33 Analysis of Results, Q Costs under Control Lower overhead costs, stable amortisation/depreciation Overhead Costs (+Amortisation/Depreciation) of the BRE Bank Group by Quarter C/I at 57.7%* in Q v. 63.7% in Q Cost PLN M , % -3.5% QoQ 66,1 64,7 64,0 63,7 Q Q Q Q Q Payroll Maintenance Depreciation Other C/I C/I % 57,7 80 Overheads at PLN M in Q1 2007, down 3.9% QoQ Amortisation/Depreciation stable, down 1.4% QoQ YoYgrowthincostsinQ dueto: - Increased of the employment rate - Expansion of retail banking and the branch network -Growing lending, leasing, and brokerage business * Before the elimination of the consolidated result on the sale of SAMH, C/I was 49% 33

34 Analysis of Results, Q Credit Provisions Sustained high quality of the risk portfolio, resulting in relatively low costs of loan impairment charged to the Group s P&L Net Credit and Loans Impairment Provisions (consolidated figures, PLN M) Net impairment of credits and loans at PLN 6.9 M in Q Q Q Q Q Q Q Q Q Q Major factors keeping the growth in impairment provisions relatively low (compared to growth in the portfolio) include growth of the credit risk portfolio combined with ongoing improvement of its quality as measured by the rating structure, and a lower probability of default (PD) for inividual rates 34

35 Analysis of Results, Q Structure of BRE Bank s Risk Portfolio Sustained high ratio of specific provisions to the default portfolio, falling share of default loans in the total loans portfolio 11.8% 10.8% 9.2% 8.5% 7.2% 5.9% 5.6% 5.5% 4.8% 100% 80% 60% 4,4 4,4 3,9 3,9 3, ,8 2,5 95,7 95,6 96,1 96,1 96,5 97,0 97,0 97,2 97,5 NPLs under NBP rating (NPLs to total loans) 40% 20% 63% 60% 65% 65% 67% 77% 75% 73% 73% Specific provisions to the default portfolio 0% Non-default Default PLN M % share % share % share Default Non-default Total

36 Summary of Q High High profitability: profitability: ROE ROE on on regular regularbusiness operations operationsat at32% 2 Creation Creationof ofthe thecorporates Corporatesand andmarkets MarketsLine Lineinin response responseto to growing growingneeds needsof ofbre Bank Bank corporate corporatecustomers customers 3 The The Retail Retail Banking Banking Line Line operates operates 2 million million accounts accounts and and contributes contributes 33.6% 33.6% of ofthe theprofit before beforetax taxon on regular regularbusiness operations operations 36

37 Agenda Introduction Summary of Q BRE Bank s Q Results Business Line Financial Results and Highlights Analysis of Q Financial Results Appendix Detailed Results of the Business Lines, Q Additional Information on Selected Financial Data Macroeconomics 37

38 Appendix Detailed Business Lines Results and Highlights: Retail Banking and Private Banking Corporates and Markets Corporates and Institutions Trading and Investments 38

39 Appendix BRE Bank s Retail Banking: Acquired Microenterprise Customers 197 thousand microenterprises served by BRE Bank s Retail Banking Line 200 BRE Bank Retail Banking Line s Microenterprise Customers (thou.) thousand microenterprise customers acquired in Q PLN M in balance-sheet loans of microenterprises at the end of March 2007, of which 48% were mortgage loans ,9 74,7 39,0 42,5 46,0 48,0 50,8 53,2 103,7 113,9 121,1 127,9 134,8 143, mbank MultiBank 39

40 Appendix BRE Bank s Retail Banking v. the Market: Deposits and Investment Funds (IF) Deposits and IF * (PLN B) , % 1.7% 2.1% 2.5% BRE Bank s Retail Banking Line continues to grow above 2, the market 0 I VI XII VI XII VI XII VI XII 0 * As at the end of February 2007 BRE Bank (LHS) 2007*: 2.7% Market (RHS) Market share 40

41 Appendix BRE Bank s Retail Banking: Investment Funds (IF) Structure of Assets: MultiBank Investment Funds MultiBank IF Assets by Quarter (PLN M) MultiBank Investment fund assets changed by PLN M in Q MultiBank customers interest in equity funds rose in Q (61.2% of assets) Equity 61% Debt Securities 3% Monetary 8% Hybrid 28% Q1 05 Q2 05 Q3 05 Q4 05 Q1 06 Q2 06 Q3 06 Q4 06 Q1 07 mbank Investment fund assets changed by PLN M in Q mbank customers interest in equity funds rose sharply in Q (64.6% of assets) Bonds 5% Monetary 9% Structure of Assets: mbank Investment Funds Hybrid 21% mbank IF Supermarket Assets by Quarter (PLN M) Equity 65% Q1 05 Q2 05 Q3 05 Q4 05 Q1 06 Q2 06 Q3 06 Q4 06 Q

42 Appendix BRE Bank s Retail Banking: mbank ebroker, MultiBank Brokerage Service Dynamic growth of brokerage services for retail customers ebroker trading exceeded PLN 556 M in March 2007, and Brokerage Service trading was PLN 150 M Incremental trading of PLN 4,805.9 M for ebroker and PLN M for the Brokerage Service since the launch There were 52.8 thousand mbank and MultiBank investment accounts at the end of March 2007 mbank and MultiBank customers opened 13.9 thousand investment accounts in Q Opened Investment Accounts (thou.) 30,1 32,2 28,1 26,4 23,5 24,9 21,4 18,8 17,3 14,1 15,5 I 2006 ebroker and Brokerage Service Sales by Month (PLN M) 232 0,7 1,2 1,6 1,9 2,3 2,7 3,2 3,9 40,2 37,3 34,2 II III IV V VI VII VIII IX X XI XII I mbank 46,1 4,4 5,3 6 6, II III MultiBank I 2006 II III IV V VI VII VIII IX X XI XII I 2007 II III 42

43 Appendix BRE Bank s Retail Banking v. the Market: Loans BRE Bank s Retail Banking is steadily growing its share in the loans sector (especially for housing loans) 10 Loans (PLN B) 2007: 4.8% Housing Loans (PLN B) 2007: 9.4% 100 7, % 9% ,5 3% 2.1% 1.2% % % 2.9% I VI XII VI XII VI XII VI XII 0 0 I VI XII VI XII VI XII VI XII 0 BRE Bank (LHS) Market (RHS) Market share 43

44 Appendix BRE Bank s Retail Banking: Mortgage Loans: Portfolio Structure and Quality BRE Bank s Mortgage Loans Portfolio (Retail Loans) Structure of the Retail Loans Portfolio (Household Loans) as at ,9% 2,3% 6,0% Retail Mortgage Loans Total PLN FX Balance-sheet value (PLN B) Average maturity (years) Average value (PLN thou.) Average LTV (%) % 56.84% 67.29% Mortgage loans Credit lines 14,1% 85,8% Credit cards Other Currency Structure of the Retail Loans Portfolio (Household Loans ) as at NPL (%) As at % 1.6% 0.2% FX PLN 85,9% 44

45 Appendix BRE Bank s Retail Banking: Dynamics of Sales, Q Customers (thou.) Deposits (PLN M) Loans (PLN M) mbank +6.6% +11.6% +20% Q Q Q Q Q Q Q Q Q Q Q Q Customers (thou.) +5.2% Deposits (PLN M) +13% Loans (PLN M) MultiBank +14.3% Q Q Q Q Q Q Q Q Q Q Q Q Volume Increment 45

46 Appendix BRE Bank s Retail Banking: Growth of the Distribution Network mbank Distribution Network MultiBank Branches Total: Total: Q Q Q Q Q 2007 target Financial Centres mkiosks 2 mkiosks opened in Q mbank s distribution network had 67 outlets at 31 March Q Q 2006 Financial Service Centres 3Q Q Q 2007 Partner outlets 9 outlets opened in Q1 2007: 6 Financial Services Centres and 3 Partner Outlets MultiBank had 93 outlets at the end of March target 46

47 Appendix Detailed Business Lines Results and Highlights: Retail Banking and Private Banking Corporates and Markets Trading and Investments Corporates and Institutions 47

48 Appendix Trading and Investments Market Share & Position BRE Bank s Market Share* in Investment Banking Services (BRE in navy blue) BRE Bank in the Market of Non-Treasury Debt** As at (PLN M) 12,7% 18,5% 38,0% 17.6% # % #3 33.5% #1 BRE Bank s Market Share T-bills and bonds 8,3% IRS/FRA 18,0% OIS , ,5 Market BRE Bank 6 313,3 FX Spot & Forward WIG20 index options 2 050, , ,8 Short-term debt Corporate bonds Bank bonds * As at ; own calculations based on NBP and WSE figures ** After Fitch Polska S.A., Rating & Rynek, and own calculations 48

49 Appendix Trading and Investments Risk Management (Treasury) & Origination & Trading Gross revenues 1Q2006 vs 1Q ,4 20,2 53,6 (mln PLN) +20% 27,3 37,1 64,4 20% YoY Increase due to: Strong pickup in underwriting activity Excellent performance in Fx Flow trading and Equity trading 1Q2006 1Q2007 Risk Management Origination & Trading Total 49

50 Appendix Trading and Investments: Proprietary Investments Major Proprietary Investments at Share in equity At the end of Q1 2007, the Bank s proprietary investments portfolio was unchanged at PLN 264 M The value of portfolio at cost has increased by PLN 16.1 M, or 5.8%, compared to the 2007 opening balance, because of the register of increase of nominal equity of the company RES Sp. z o.o (the previous name BREL-RES Sp. z o.o.). Vectra SA* 19.95% PZU SA 0.76% Garbary Sp. z o.o % Novitus SA 4.59% Proprietary Investments (PLN M) *Share in votes: 11.20% unchanged The transaction was a technical debt to equity swap without any influence on the book value of the company, which is zero Value at cost Book value 50

51 Appendix Detailed Business Lines Results and Highlights: Retail Banking and Private Banking Corporates and Markets Trading and Investments Corporates and Institutions 51

52 Appendix Corporates and Institutions: Dom Inwestycyjny BRE Banku (DI BRE) DI BRE pre-tax profit at PLN 12.3 M in Q (up 101.2% YoY) DI BRE equities trading at PLN 7.8 B in Q DI BRE position in equities trading up from 6.1% in 2006 to 6.5% in Q DI BRE customer base continued to grow: 74.9 thou. accounts DI BRE Accounts (thou.) DI BRE accounts 21.4 ebroker (mbank) 46.7 Brokerage Service (MultiBank) 6.8 TOTAL 74.9 DI BRE Market Share Q1 2007, in trading* Equities 6.5 % # 7 Bonds 2.5 % # 8 Futures 13.7 % # 2 Options 32.5 % # 1 * Calculations based on data from WSE, DI and RBL DI BRE Equities Trading in Q PLN M ebroker and Brokerage Service trading DI BRE Share in WSE Equities Trading by quarter 6.6% 6.4% 6,5% 6.0% 5.6% 5.0% 4.1% 3.5% 3.5% Direct trading via DI BRE Q Q Q Q Q Q Q Q Q Q Q Q Q Q

53 Appendix Corporates and Institutions: New Acquired Customers 606 new corporate customers acquired in Q1 2007, oup by almost 22% YoY; of those, 76% were K3 customers and 20% were K2 customers. Total New Corporate Customers % 606 I kw I kw There were 11,658 corporate customers at the end of March 2007 (up by 215 customers net year to date). K3 customers who bought service packages accounted for 52% of the total. New SME Package Customers (EFFECT Line) I kw I kw SME Package No SME Package 53

54 Appendix Corporates and Institutions : Loans and Deposits Corporate Loans (BRE Bank, PLN B) % % % 9.1 Corporate Deposits 8% (BRE Bank, PLN B) K1 53% K % % 57% 56% 58% K3 39% 42% 37% 4% 7% 8% Enterprises 8% 10% 11% 12' ' ' ' ' '2007 Loans (including the public sector, syndicated loans and project finance) were up PLN 1.2 B year to date Loans to enterprises were up 8.3% (QoQ) at BRE Bank; the market grew 5.7% QoQ 12' ' ' ' ' '2007 Deposits (including the public sector) grew PLN 0.4 B year to date Deposits of enterprises grew 1.9% in Q1 (QoQ) at BRE Bank; the market grew 0.5% QoQ 54

55 Appendix Corporates and Institutions: Loans and Deposits Market Share BRE Bank s Market Share in Corporate Loans and Deposits* 10,0% 8,0% 6,0% 4,0% Jan-05 Mar-05 May-05 Jul-05 Sep-05 Nov-05 Jan-06 Mar-06 May-06 Jul-06 Sep-06 Nov-06 Source: NBP reports Jan-07 Mar-07 *receivables/amounts due to enterprises and State companies, private companies and co-operatives Corporate Deposits Corporate Loans 55

56 Appendix Corporates and Institutions: Cash Management Supporting Long-term Customer Relationships Cash Management Strategic Product Line Supporting Long-term Customer Relationships Direct Debits (thou. transactions) Identification of Mass Payments (M transactions) Identification of Trade Payments (thou. transactions) +42% +2.5% +77% ,2 23, I - III 2006 I - III 2007 I - III 2006 I - III 2007 I - III 2006 I - III 2007 The number of customers using the Identification of Trade Payments service was up by 22 in Q1 2007, or up by nearly 41% compared to the number of customers (using the service) acquired in * Q4 monthly average 56

57 Appendix Corporates and Institutions: Foreign Trade Service and Risk Management Products Structure of Profit on Trade Finance Products Profit on Financial Instruments (PLN M) 1,1% 11,5% +8.9% 1,3% 12,3% PLN 31.2 M +17.9% PLN 36.8 M 35,3% 34,2% ,1% 52,2% Q Q Guarantees Discounting products Letters of credit Collections Q Q Branches Head Office The leading market position in foreign trade service and the launch of many innovative product solutions helped to grow the revenue from trade finance services by 8.9% in Q year on year. BRE Bank was the first in Poland to issue a recycling guarantee under the Waste Electric and Electronic Equipment Law of 29 July 2005 (Journal of Laws No. 180, item 1495) which requires companies marketing such equipment to provide a financial security for the calendar year. The profit on sales of financial instruments to corporate customers was PLN 36.8 M in Q The profit was up by nearly 18% year on year. 57

58 Appendix Corporates and Institutions: Good Market for Leasing and Factoring BRE Leasing The Intermarket Group Value of leasing contracts executed in Q1 2007: PLN M, up 83% YoY Pre-tax profit in Q1 2007: PLN 8.8 M, up 59% YoY The pre-tax profit of Intermarket Group companies was PLN 12.3 M in Q1 2007, up by nearly 13% YoY. The pre-tax profit of Polfactor S.A. was PLN 2.5 M (up 18% YoY). The sales of Intermarket Group companies were EUR 1.2 B, up 20% YoY. The sales of Polfactor (up 35%) and Intermarket Bank (up 28%) grew the fastest. BRE Leasing Contracts (PLN M) Sales of Intermarket Group Companies (EUR B) +83% +20% ,0 1,2 I-III 2006 I-III 2007 I - III 2006 I - III

59 Appendix Corporates and Institutions: BRE Bank Hipoteczny (BBH) Loans Portfolio (PLN M) Balance-sheet Exposure Profit before Tax (PLN M) Housing loans* -2% Local government loans 9,6 9,4 Commercial loans I-III 2006 I-III 2007 BBH s total balance-sheet and off-balance-sheet loans portfolio was PLN 3.3 B at the end of March 2007, up 15.6% YoY BBH s pre-tax profit was PLN 9.4 M at the end of March 2007, in line with the target *As of July Bank Hipoteczny stopped granting loans to retail customers. The volume of housing loans represents the existing portfolio still managed by the Bank 59

60 Appendix Additional Information: Selected Financial Data Consolidated Profit and Loss Account under IFRS Interest Income Structure, Interest Margin Fee and Commission Income Structure Cost Structure Balance Sheet Analysis Structure of Assets and Liabilities Non-performing Loans 60

61 Appendix Additional Information: Selected Financial Data Consolidated Profit and Loss Account under IFRS PLN 000 By quarter * Q Q Q Q Q Net interest income Net commission income Dividend income Trading profit Income from investment securities Other operating income Net impairment of credit and loans Overhead costs (22 576) ( ) (10 216) ( ) (7 408) ( ) (5 761) ( ) (6 944) ( ) Depreciation/Amortisation (40 710) (40 577) (41 684) (43 632) (43 019) Other operating cost (43 812) (76 851) (37 390) (43 084) (34 793) Operating profit Share in profits (losses) of associated companies (87) (25) Pre-tax profit Net profit * Q and Q data based on Q quarterly report adjusted for discontinued operations Q data based on respective 2006 quarterly reports 61

62 Appendix Additional Information: Selected Financial Data Net Interest Income, Net Commission Income Q1 06 Q2 06 Q3 06 Q4 06 Q1 07 Net Interest Income Structure of Net Interest Income (consolidated figures, PLN Mł) Other Trading Debt Securities PDO Credits and Loans Investments Securities Cash and shortterm deposits Net interest income in Q up 14.0% QoQ and up 33.4% YoY Positive impact of the growing loans portfolio (nterest income on loans up 35.1% YoY) and of the growing portfolio of debt securities (interest income on the portfolio up 202.1% YoY) Interest margin up from 2.1% at the end of 2006 to 2.3% in Q Structure of Net Commission Income (consolidated figures, PLN M) Q1 06 Q2 06 Q3 06 Q4 06 Q1 07 Net Commission Income Other Payment Cards Garantees and Documentary Transactions Portfolio Management Fee Lending Net commission income up 33.9% YoY and down 5.7% QoQ Broker s fees up sharply (25.0% QoQ and 61% YoY) Portfolio management fees down (69.5% QoQ and 42.8% YoY) due to the sale of SAMH Lending fees with the highest share in net commission income (20%) remained stable QoQ and were up 47.2% YoY BRE Bank Group margin as net interest income to average interest-earning assets 62

63 Appendix Additional Information: Selected Financial Data Interest Income Structure Structure of Net Interest Income Q (consolidated figures, %) Net Interest Income, Q by Business Line (consolidated figures, PLN M) Credits and Loans 72% Trading Debt Securities PDO 7% Other 2% Investment Securities 8% Monetary Funds and Short-term Deposits 11% 92,2 Retail Banking 117,9 Corporates & Institutions 21,1, Trading & Investments Corporates and Markets -2,9 Asset Management 228,3 Net Interest Income in Q Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q NIM* * Change in the methodology of calculation of the interest margin: In , NIM was calculated as net interest income to net assets As of Q1 2006, NIM is calculated as net interest income to interest-earning assets Q data based on 2006 quarterly reports 63

64 Appendix Additional Information: Selected Financial Data Commission Income Structure Structure of Net Commission Income Q (consolidated figures, %) Net Commission Income, Q by Business Line (consolidated figures, PLN M) Other 20% Guarantees and Documentary Transactions 5% -4,9 5,7-0,1 Brokerage 15% Accounts and Transfer Fees 15% 48,8 99,3 148,8 Portfolio Management Fees 8% Lending 20% Payment Cards 17% Retail Banking Corporates & Institutions Trading & Investments Corporates and Markets Asset Management* Other and eliminations Net Commission Income in Q *Disontinued operations 64

65 Appendix Additional Information: Selected Financial Data Overhead Cost Structure Structure of Overhead Costs (+Amortisation/Depreciation) by quarter, PLN M, consolidated figures BRE Bank Group s C/I (based on average balances) ,1 4,6 7,1 9,6 2,5 7,4 43,6 43,0 40,7 40,6 41,7 110,9 102,7 91,0 98,0 97,2 64,7 64,0 63,7 57, ,8 119,5 125, ,8 1Q Q Q Q Q 2007 Payroll Maintenance Depreciation Other * *Before elimination of the consolidated profit on the sale of SAMH, C/I was 49% 65

66 Appendix Additional Information: Selected Financial Data Balance Sheet Analysis: Assets PLN B Structure of Assets PLN B Credits and Loans to Customers* and Portfolio by Customer Category ,3 1,3 5 4,7 15,4 19% 4% 15% 14% 47% 14% 11,6 8,5 8,8 4,8 8% 5% 3% 2,8 6% 1,8 8% 1,3 10% 1,4 2,2 3,2 3,7 3,5 18% 9% 7% 6,4 3,6 2,8 2,8 19,3 21,8 22,7 23,0 56% 58% 54% 22% 22% 27% 3% 8% 7% 55% 10,0 1,5 1,5 6,7 25,8 22% 3% 3% 15% 57% ,2 4,3 9,6 8% 28% 64% 2 5,2 11% 27% 1,9 6,5 1,3 0,5 6% 7,7 8,8 1,0 10,2 11,6 12,9 13,2 13,1 14,1 59% 62% 9% 30% 61% 35% 59% 2% 39% 4% 40% 56% * ** Other Derivative financial instruments Trading securities Amounts due from banks Amounts due from customers Public sector Retail Corporate *Data based on the Q report **Data based on the Q report *Gross credits and loans 66

67 Appendix Additional Information: Selected Financial Data Balance Sheet Analysis: Liabilities PLN B * 4,7 3,3 2,110% 2,2 2,76% 4,1 4,38% 5,1 13% Structure of Liabilities 3,8 3,1 2,2 2,5 6% 4,4 4,2 6,6 6,8 3,6 2,6 3,4 8,0 3,6 2,8 3,6 8,7 20,3 19,5 21,9 22,7 24,7 26,8 62% ** 13% 6% 11% 14% 55% Other Equity (total) Debt securities in issue Liabilities to banks Liabilities to customers 10% 8% 6% 11% 17% 56% 11% 17% 58% % 6% 8% 19% 58% % 6% 8% 19% 59% PLN B 0,2 1% 0,2 12,7 11,2 62% 57% Structure of Deposits 0,2 13,2 13,5 15,1 15,8 7,6 8,1 8,5 9,0 9,4 10,7 37% 42% 39% 38% 40% 40% 0,2 0,2 0, Public sector Corporate Retail 1% 1% 60% 1% 61% 1% 59% 1% 59,% *Data based on the Q report ** Data based on the Q report 67

68 Appendix Additional Information: Selected Financial Data Non-performing Loans: Portfolio Structure* Downward Trend in the Share of NPLs in the Portfolio Exposure PLN B % Provisions % coverage Exposure PLN B % Provisions % coverage Regular including: Standard Watch Irregular including: Exposure PLN B % Provisions % coverage Substandard Doubtful Loss Steady improvement of portfolio quality: NPLs down from 5.5% to 4.8% in Q (NBP rating) thanks to the significantly growing loans portfolio and ongoing restructuring and repayment of some of the Bank s exposures TOTAL Provisions shown under IFRS the impairment provision shown under watch * BRE Bank s balance-sheet loans portfolio balance-sheet credit debt (excluding credits not drawn) 68

69 Appendix Improving Quality of BRE Bank s Risk Portfolio 2,00% Change of average PD of the Corporate Portfolio vs. Non-Retail Impairment Provisions 160,00 PD, % 1,80% 1,60% 1,40% 1,20% 1,00% 0,80% 1,71% 1,79% 1,80% 1,71% 1,65% 1,41% 1,34% 1,24% 1,12% 1,04% Impairement provisions 1,02% 1,01% 0,98% 0,97% 140,00 120,00 100,00 0,95% 80,00 60,00 0,60% 0,40% 0,20% 0,00% Jan-06 Feb-06 Mar-06 Apr-06 May-06 Jun-06 Jul-06 Aug-06 Sep-06 Oct-06 Nov-06 Dec-06 Jan-07 Feb-07 Mar-07 average, weighted Risk Volume PD Provisions, PLN M 40,00 20,00 0,00 69

70 Appendix Macroeconomics 70

71 Appendix Macroeconomics GDP and Labour Market Continued high GDP growth, further improvement on the labour market Contribution to GDP growth 0 GDP growth was 6,1% in 2006 and an estimated 7% in Q Q1 03 Q3 03 Q1 04 Q3 04 Q1 05 Q3 05 Q1 06 Q3 06 GDP growth mainly driven by domestic demand; investments were growing fast and private consumption stepped up 21% Individual consumption Others GDP Investment Net exports 9% Official unemployment down to less than 15% in March; growing demand for labour and problems with recruiting qualified employees boosted growth in wages; wages in the corporate sector up 7.8% in Q % 19% 18% 17% 16% 15% 7% 5% 3% 14% 1% Jan-04 Apr-04 Jul-04 Oct-04 Jan-05 Apr-05 Jul-05 Unemployment rate Corporate wages y/y Oct-05 Jan-06 Apr-06 Jul-06 Oct-06 Jan-07 71

72 Appendix Macroeconomics Inflation and NBP Interest Rates Signs of growing inflation pressure, announced tightening of the monetary policy 7% 6% 5% 4% 3% 2% 1% 0% CPI at the NBP target (2.5%) in March; core inflation growing gradually due to rising prices of services and fast growing wages indicate a threat to price stability. Jan-04 May-04 Sep-04 Jan-05 CPI y/y Inflation target May-05 Sep-05 Jan-06 May-06 Sep-06 Jan-07 NBP intervention rate NBP interest rates unchanged in Q % Official and market interest rates MPC in March decided that the monetary policy may need to be tightened in near future in order to stabilise inflation; market expectations of probable three interest rate hikes by a total of 75 bps in % 5% 4% 3% NBP Reference Rate 2Y bonds 10Y bonds 72

73 Appendix Macroeconomics Loans and Deposits in the Banking Sector Further growth in housing loans and corporate loans Households bank debt was PLN B at the end of March 2007 (up 37.7% YoY); housing loans continued to grow very fast; interest in consumer loans also grew Further growth in corporate loans (up 17.5% YoY at the end of Q1 2007) indicates that investment activity remains high. 70% 60% 50% 40% 30% 20% 10% 0% Jan-05 40% 30% 20% 10% 0% -10% -20% Jan-05 Apr-05 Jul-05 Oct-05 Household deposits (Mortgages) Jul-05 Corporate deposits (Investment loans) Households Jan-06 Corporates Jan-06 Apr-06 Jul-06 Oct-06 Household loans Jul-06 Jan-07 Jan-07 Corporate loans 73

74 Contact Jakub Korczak Director, Investor Relations BRE Bank s Investor Relations Officers at your service : Direct dial: Secretariat: Fax: jakub.korczak@brebank.pl or Joanna Filipkowska Analyst, Investor Relations Tel Fax: joanna.filipkowska@brebank.pl Visit our Investor Relations website: 74