FINANCIAL RESULTS 2013 Growth, sustainable high dividend

Transcription

1 FINANCIAL RESULTS 2013 Growth, sustainable high dividend Warsaw,

2 Disclaimer This presentation (the Presentation ) has been prepared by Bank Polska Kasa Opieki Spółka Akcyjna ( Bank ) for the clients, shareholders and financial analysts. This presentation should not be treated as an offer or invitation to purchase any securities or financial instruments or as an advice or recommendation in respect to such securities or financial instruments. The presented data are only general information and does not refer to the offered by the Bank products or services. In order to take advantage of the services and products of the Bank, one should be thoroughly familiar with the characteristics of the particular service or product, its rules, risk and legal and tax consequences of the use of particular service or product. The strategy presented in this presentation contains goals which are the ambition of the Management Board and do not constitute any financial results forecast. Rights for the Presentation as a whole are entitled to the Bank. Presentation is a subject to the protection provided by the law, in particular: the Act dated on February 4th, 1994 on Copyright and Related Rights (consolidated text in Journal. Laws of 2006, No. 90, item. 631, as amended); the Act dated on July 27th, 2001 on the Databases protection(journal of Laws No. 128, item. 1402, as amended); the Act dated on April 16, 1993 on Combating Unfair Competition (consolidated text in Journal of Laws of 2003, No. 153, item 1503, as amended) and the Act dated on June 30, 2000 on Industrial Property Law (consolidated text in Journal. Laws of 2003, No. 119, item as amended). This presentation may include forward looking statements, Bank s outlook for the future, future plans and strategies or anticipated events that are not historical facts. Since these statements are based on assumptions, expectations, projections and provisional data about future events, the content is inherently uncertain. Factors that could cause or contribute to differences in current expectations include, but are not limited to: (i) general economic conditions, among which the economic conditions of the business areas and the markets in which Bank and its subsidiaries operate, (ii) the performance of financial markets (iii) changes in laws or regulations and (iv) general competitive conditions locally, regionally, nationally and/or internationally. The Bank does not undertake to publish any updates, modifications or revisions of the information, data or statements contained herein should there be any change in the strategy or intentions of the Bank, or should facts or events occur that affect the Bank s strategy or intentions, unless such reporting obligations arises under applicable laws and regulations. Bank, nor any of its representatives shall not be responsible for any loss or damage it may arise from the use of this Presentation or of any information contained herein or otherwise arising in connection to this Presentation. This presentation is not for the distribution, in or into countries where the public dissemination of the information contained herein may be restricted or prohibited by law. 1

3 Excellent quarter +13.4% growth of the net profit min PLN Q3 13 Q4 13 QoQ Operating income Operating costs 1, , % -3.2% Net profit at 736 mln PLN, +13.4% q/q thanks to operating profit acceleration +8.4% q/q Operating profit Provisions Net profit , % -0.1% 13.4% Strong growth of volumes both loans +2.6% q/q and deposits +8.6% q/q Good cost control -3.2% q/q Lending volumes 106, , % Stable provisions with CoR at 72 bp Deposits volumes 113, , % 160 ths new customers New customers 126, ,000 34,000 2 NOTE: Results includes impact of changes in bancassurance accounting treatment

4 2013 results vs. guidelines 2013 performance Market Pekao Retail loans Corporate loans Retail savings Corporate deposits Operating profit Provisions + 4.6% + 9.9% +0.8% +3.8% % + 4.8% +9.7% +13.4% -7.4% -5.7% -20,1% -0.9% Track record of delivering confirmed Retail savings dynamic optimizing volume/margin trade-off Provisions reflecting consistent policy, confirmed by provision coverage ratio increase. CoR stable Profit before tax -0.8% -5.7% 3 NOTE: Market data based on KNF data

5 2013 key achievements Net profit 2.8 bln PLN 18 bln PLN increase in volumes, 12 bln PLN of savings and 6 bln PLN of loans 11 bln PLN of new PLN mortgages and consumer loans, supporting 15% y/y stock growth Market share gains both in loans and deposits ~450 ths new customers 4

6 Dividend 93% pay-out ratio 9.96 pln per share, +19% y/y Confirming sustainability of dividend stream 5% average dividend yield for the last 3 Y 5

7 Agenda Financial results Pekao 2020 vision Appendix 6

8 Net profit Net profit (mln PLN) -5.4% +13.4% 2,943 2, Q 12 Ukraine 4Q 12 Comparable 3Q 13 4Q 13 Double digit growth in the quarter enabling FY net profit at 2.8 bln PLN ROE at 12.0% on strong capital base of Core Tier1 18.6% 7

9 Operating profit Operating profit (mln PLN) -5.7% +8.4% 4,327 4,082 1, , , Q 12 Ukraine 4Q 12 Comparable 3Q 13 4Q 13 Strong Q4 results (+8.4% q/q) allowing operating profit to cross 4 bln PLN 8

10 Operating income Operating income (mln PLN) F&C Other income Net interest income -4.9% 7,953 7, y/y ch. +1.1% 2, , , % -1.0% 1, ,122 2, % % 548 4,989 4, % 1,267 1, % Q 12 Ukraine 4Q 12 Comparable 3Q 13 4Q 13 Strong core revenues performance in Q4 with NII +4.0% q/q and F&C +2.1% q/q Full year operating income at PLN 7.6 bln affected by record low level of interest rate 9

11 Total net interest income and net interest margin Total net interest income (mln PLN) -8.4% +4.0% 4,989 4,572 1, , Q 12 Ukraine 4Q 12 Comparable 3Q 13 4Q 13 Net interest margin -0.3pp -0.5pp 0.1pp 3M WIBOR avg 3.70% 3.36% 3,77% 3,25% 3,31% Q 12 3Q 13 4Q % 3.03% 4.59% 2.70% 2.66% NII increased in Q4 (+4.0% q/q) thanks to both volume and NIM improvement allowing keeping FY NIM above 3.3% 10

12 Retail and corporate loans Retail (mln PLN) Corporate (mln PLN) +9.9% +3.8% +3.0% +2.3% 40, , , ,679 29,602 63,597 30,035 65,077 30, % ` 32,000 35,227 36,851 ` 33, % 33,562 34,346 Dec 12 Sep 13 Dec 13 Dec 12 Sep 13 Dec 13 Mortgage PLN, Cash Other Strategic products MID, SME, PS Other Strategic products Quarterly acceleration of loan growth, supporting yearly stock growth in both corporate and retail Key retail loans up by above 15% 11

13 Key retail lending New loans volume (mln PLN) PLN mortgage stock market share PLN 11.2 bn +14.2% 2, , , , ,3% 17,4% +40 bp 17,5% 17,7% Q 13 2Q 13 3Q 13 4Q 13 Mar 13 Jun 13 Sep 13 Dec 13 PLN mortgage loans Consumer loans Acceleration in Q4 (+14.2% q/q), resulting in more than 11 bln PLN new loans in 2013 Market share close to 18% 12

14 Retail savings and corporate deposits Retail (mln PLN) Corporate (mln PLN) +4.8% +3.1% +13.4% +11.9% 64,723 14,965 65,810 16,490 67,828 16,412 62,993 5,639 63,829 6,971 71,444 5,821 49,758 49,320 51,416 57,354 56,858 65,624 Dec 12 Sep 13 Dec 13 Dec 12 Sep 13 Dec 13 Retail deposit MF Commercial deposits + Repo + SBB Public sector Strong quarterly performance of retail deposits up +4.3% Corporate deposits in double digit growth both q/q and y/y reaching exceptionally high level of 71 bln PLN 13

15 Net fees and commissions Net fees and commissions (mln PLN) Capital market Cards Lending Other +1.0% 2,122 2, y/y ch % % % % % % % % % Q 12 Ukraine 4Q 12 Comparable 3Q 13 4Q 13 Healthy growth in majority of categories fully offsetting interchange fee cut 14

16 Operating costs Operating costs (mln PLN) Depreciation Other administrative expenses Payroll costs -3.9% 3,626 3, y/y ch. -6.1% % +2.0% ,347 1, % % 306 1,910 1, % % Q 12 Ukraine 4Q 12 Comparable 3Q 13 4Q 13 Continuation of excellent cost management, both q/q and y/y, resulting in cost reduction by -3.9% y/y 15

17 Assets quality NPL 7.3% 7.3% 7.3% 102, , ,853 7,463 7,780 7, Cost of risk 0.72% 0.71% 0.80% 0.72% 0.72% Dec 12 NPL Performing Sep 13 Dec 13 NPL ratio (%) Provision coverage ratio 65,1% 67,8% 65,8% Q 12 3Q 13 4Q 13 Dec 12 Sep 13 Dec 13 Stabilisation of NPL and CoR in the quarter and in the year. Coverage ratio increased y/y to 65.8% NOTE: Pekao Group as reported 16

18 ~ 450 ths. Number of new customers (ths.) % Q 13 2Q 13 3Q 13 4Q 13 17

19 2014 market trends and Pekao approach Better than market Key macro assumptions GDP growth y/y % Policy rate eop 3M Wibor avg % 2.9% 2.5% 2.5% 3.02% 2.77% Acceleration of economy, still low interest rate environment Faster volume growth 2014 Retail loans Market + 4.8% Pekao Corporate loans Retail deposits Corporate deposits Core revenues Core operating profit +5.9% + 7.3% + 6.9% +2.6% +5.6% Pekao ambitions: Above the market core business growth Some improvement of NIM Lower cost of risk 18

20 Agenda Financial results Pekao 2020 vision Appendix 19

21 Overall outlook for Polish banking market will remain very attractive Total volumes: loans & deposits PLN billion CAGR CAGR Implications for Pekao 1,609 Corporate Retail 2 1,237 2, ,746 2, , % 6.8% 7.1% 7.3% Redeploy the distribution and acquisition capabilities to capture market share in emerging business opportunities Evolve the operating model to structurally reduce costs and maintain profitability Medium and Large Corporations 2 Individuals, Micro Corp. and SMEs

22 Customer evolution trends until 2020 Polish demographic structure evolves towards developed markets Polish population will be stagnant (~0% by 2020) and ageing (from 17% in 2010 to 22% of +65yrs old in 2020), with increasing number of single households (from 31% to 35%) Metropolitan areas with leading contribution to GDP growth (>65%), ongoing suburbanization but keeping population density relatively low (~125 / km2) Individual wealth expected to grow, driven by a stable increase of the middle class as well as in the middle aged group of people (31-50 years old, the salary levels increases by +5-6% vs. 3-4% average) Polish consumers are early adopters of innovative technologies, multichannel client base grows, but traditional clients will remain important Three main groups of banking customers in 2020: Multichannel, with complex banking needs and innovation driven: 16-17M from 11-12M now Traditional, preferring branch-based banking: 4-5M from 5-6M now Customer with lower banking activity (8-9M from 9-10M now), with focus on basic products and on physical channels In addition, unbanked population with relatively low income: 3-4M from 5-6M now 21

23 Individual customer population dynamic higher in Affluent and Private % CAGR Family Definition Less than 50k ths PLN assets, or less than 7.5 ths PLN monthly inflows Number of customers Thousands 19,000 ~2.0% 22,300 Affluent Between 50 ths and 1 mil PLN assets, or above 7.5 ths PLN monthly inflows 2,200 ~3.1% 2,800 Private Above 1 mil PLN assets ~3.7%

24 Wealth accumulation will still be polarized towards higher income group of customers Assets Billion PLN Customer group Distribution Percent of total Private 32% 33% Affluent 35% 37% Family 33% 30% % 100% 23

25 Corporate and SME environment evolution to 2020 Mid- and large keep the largest share of revenues pool but with increased competition Mid and large corporates contribution to the non-individuals revenue pool in 2020 willbe still the largest although decreasing (from ~80% to 65%): Industry specific approach become crucial: For large corporates, energy and infrastructure gains importance For mid-corporates, manufacturing keeps on being the key Cross regional services also for mid-corporates become a growth opportunity SME customer base grows and becomes more sophisticated SMEs grow in economic relevance, with share of non-individuals revenue pool growing from 16% to 27% in 2020 Showing more sophisticated needs, including value added services Internationalization of Polish companies going abroad requires dedicated banking products and advisory Agriculture sector consolidates with increasing number of SME (vs. micro) Players in new technologies, (e)commerce and Professional Services grow in significance Micro customer base grows in of number but still with relatively small contribution to revenue pool Share in non-individual revenue pool from 2% to 8% in 2020, but more fragmented client base and shortened lifecycle Cost efficiency, proper risk assessment and customer lifecycle approach become crucial 24

26 Companies will experience a strong increase in smaller size segments Micro corporation Definition Up to PLN 1.5 mil revenue/year Number of customers T(in ths) 1, % % CAGR 2,200 SMEs Between PLN 1.5 and 20 mil revenue/year % 78 Medium corporation Between PLN 20 and 300 mil revenue/year % 19 Large corporation Above PLN 300 mil revenue/year %

27 Pekao 2020 aspiration Market positioning A Increase profit share by sustainably gaining market share in areas with highest value creation potential, with acquisition of ~1 M customers: Grow market share in Retail lending (Mass, Affluent) Double volumes in Private segment Strengthen presence in SME segment Strengthen leadership in corporate segment building on current competitive advantage C/I, Risk and Funding B Achieve an overall cost/income <42% from current 47%, strongly leveraging new technologies C Maintain an overall risk appetite lower than the market (CoR 0,5% vs. 0,7% in 2020) leveraging risk-return driven methodologies D Keep an healthy liquidity and a selffunded capital position, both at segment and bank level Sustainable stream of dividends in the period and ROE >16% in

28 Continuous improvement of all KPIs ROE C/I CoR >15% >16% 47% 42% <42% 0.7% 0.6% 12% 0.5%

29 Defined aspiration supported by nine transformation programs A Aspiration Increase profit share by sustainably gaining market share in segments showing highest value creation potential Program Mass segment transformation Pro-active Affluent & Wealth Management Best Private Banking among commercial banks 4 New way to SME growth Initiatives Introduce active customer lifecycle management practices Design a new business model for consumer lending and mortgages Strengthen customer acquisition by evolving Klientomania Design and implement a pro-active, customer-insight-based service model for the Affluent segment to maximize customer loyalty Innovate value proposition and resulting service model; step-up Private bankers role and target skills/capabilities Lifecycle management practices for SMEs and support to internationalization 5 Corporate Champion Introduce an integrated corporate service model, with product and risk capabilities Strengthen leadership in high value added B Achieve an overall cost/income <42% from 47% 6 7 Digital and Multichannel Customer-centric lean branches Upscale digital banking and Multichannel strategy Digitalize and simplify end-to-end base processes Design branch format and size based on market potential and customer needs Automate and optimize branch activities ( no paper in branches ) C Maintain lower a risk appetite than the market 8 Next level in Risk Define advanced risk models to allow dynamic/flexible risk selection Align risk underwriting, monitoring and collection capabilities to sustain target volumes growth and mix D Keep an healthy liquidity and a selffunded capital position 9 Alternative liquidity management Activate a broader set of solutions to actively manage liquidity (e.g. covered bonds) 28

30 The PEKAO 2020 transformation is phased to secure positive results already in Strategic priority Architecting the transformation Defining vision and aspiration Designing initiatives Developing change management approach Launching all transformation initiatives and securing achievement of early results Finalizing execution and closely monitoring results obtained and scenario evolution 29

31 In conclusion Q4 results Excellent Q4 results with +13.4% Net Profit Highest Dividend Pekao market outpaced as promised, delivering 2.8 bln PLN Net Profit, leading to highest dividend in Pekao history Launched a mulit-year customer centric transformation program 2014 promises but with commitment to continue to outpace the market in core business also in

32 Agenda Financial results Pekao 2020 vision Appendix 31

33 Polish economy - outlook 2014 MACROECONOMIC SCENARIO F GDP, % y/y Consumption, % y/y Investments, % y/y Unemployment, % eop 13.4 CPI, % M WIBOR, % eop Reference rate, % eop Exchange rate EUR, eop Exchange rate USD, eop Public sector balance (% GDP) Note: Internal macroeconomic scenario 32

34 Polish banking sector - outlook 2014 BANKING SYSTEM VOLUMES F* Loans, y/y % retail, y/y % - Mortgages - Consumer loans corporate, y/y % - SME loans , Savings, y/y % Deposits, y/y % retail, y/y % corporate, y/y % Mutual funds, y/y % * Growth rates excluding effects of FX movements (changes in the zloty value of existing FX loans) Note: Internal macroeconomic scenario

35 Pekao 2020 macro scenario MACROECONOMIC SCENARIO GDP y/y % 1,6 2,9 3,2 3,4 3,1 3,6 3,4 3,0 Inflation rate (avg) % 1,0 2,0 2,5 2,5 2,5 2,5 2,5 2,5 WIBOR 3M (avg) % 3,02 2,73 3,12 3,55 4,00 4,50 4,70 4,70 WIBOR 3M (eop) % 2,65 2,84 3,26 3,75 4,20 4,70 4,70 4,70 Exchange rate EUR (eop) 4,12 4,05 3,90 3,90 3,80 3,80 3,80 3,80 Loans y/y % 3,1 5,1 6,3 7,1 7,5 6,9 6,5 6,3 Deposits y/y % 6,7 6,9 7,4 7,2 6,9 6,6 6,4 6,3 34

36 35 Polish economy trends Key parameters (1) GDP (% YoY) INVESTMENTS (% YoY) ,5 6,66,66,6 6,3 6,1 5,2 3,2 0,4 1 1,6 3,2 2,7 3,7 4,24,7 4,5 4,3 4,4 4,9 3,5 2,4 1,3 0,70,5 0,8 1,9 2,7 23, ,6 17,1 15,1 15,2 5,6 6,1-1,9-3,7-1,4 0,8-0,1 2 2,2 5,9 8,6 7,4 10 5,2 0,3-2,6-4,7-2,1-3,2 0,6 1,3-4 1Q 07 2Q 07 3Q 07 4Q 07 1Q 08 2Q 08 3Q 08 4Q 08 1Q 09 2Q 09 3Q 09 4Q 09 1Q 10 2Q 10 3Q 10 4Q10 1Q11 2Q 11 3Q 11 4Q 11 1Q 12 2Q 12 3Q 12 4Q 12 1Q13 2Q13 3Q 13 4Q 13 GDP Pr Consumption contribution Net export contribution Investment contribution -10,3 TRADE BALANCE ACCOUNT (bln EUR) CONSUMPTION (% YoY) 0,2 2,9 3 2,5 5,7 5,5 4,7 3,1 1,3 1,6 2,7 2,6 5,1 4,6 4,8 5,4 6,7 4,84,7 3, ,65,4 3 1,2 2,3 1,7 2,2 3,2 3,43,7 3,3,2 2,5 2,2 1,7 1,4 0,7 0,30 0,2 2,1 1 1Q 03 2Q 03 3Q 03 4Q 03 1Q 04 2Q 04 3Q 04 4Q 04 1Q 05 2Q 05 3Q 05 4Q 05 1Q 06 2Q 06 3Q 06 4Q 06 1Q 07 2Q 07 3Q 07 4Q 07 1Q 08 2Q 08 3Q 08 4Q 08 1Q 09 2Q 09 3Q 09 4Q 09 1Q 10 2Q 10 3Q 10 4Q 10 1Q 11 2Q 11 3Q 11 4Q 11 1Q 12 2Q 12 3Q 12 4Q 12 1Q 13 2Q 13 3Q 13 4Q 13 1Q 07 2Q 07 3Q 07 4Q 07 1Q 08 2Q 08 3Q 08 4Q 08 1Q 09 2Q 09 3Q 09 4Q 09 1Q 10 2Q 10 3Q 10 4Q 10 1Q 11 2Q 11 3Q 11 4Q 11 1Q 12 2Q 12 3Q 12 4Q 12 1Q 13 2Q 13 3Q 13 4Q 13-2,7-3,4-3,3-4,5-4 -5,4-5,7-5,9-1,5-1,1-1,2-1,6-1,6-1,4-1,9-2,1-1,6-2,5-2,4-2,6-2,1-1,6-3,3-3,2-0,1-0,4-1,1 1,2 1-0,1 1Q 07 2Q 07 3Q 07 4Q 07 1Q 08 2Q 08 3Q 08 4Q 08 1Q 09 2Q 09 3Q 09 4Q 09 1Q 10 2Q 10 3Q 10 4Q10 1Q11 2Q 11 3Q 11 4Q 11 1Q 12 2Q 12 3Q 12 4Q 12 1Q 13 2Q 13 3Q 13 4Q 13 Source: Central Statistical Office; March 2007 December 2013

37 36 Polish economy trends Key parameters (2) CORPORATE EMPLOYMENT (ths. eop) ,8 5,0 5, ,2 4,5 4,7 4, ,8 2, ,2 1,6 1, , Q 06 2Q 07 4Q 07 2Q 08 4Q 08 2Q 09 4Q 09 2Q 10 4Q10F ,7-2,3-2,1-1,0 UNEMPLOYMENT (%) 14,3 12,3 11,6 11,2 9,4 10,9 11,1 8,9 9,5 12,1 10, ,7 10,9 12,4 11,5 13,3 11,9 11,8 12,5 13,3 12,3 13,4 12,4 14,3 13,2 13,4 13,0 AVERAGE CORPORATE WAGES (% YoY) RETAIL SALES (real terms, % YoY) 1Q 07 2Q 07 3Q 07 4Q 07 1Q 08 2Q 08 3Q 08 4Q 08 1Q 09 2Q 09 3Q 09 4Q 09 1Q 10 2Q 10 3Q 10 4Q10 1Q 11 2Q 11 3Q 11 4Q 11 1Q 12 2Q 12 3Q 12 4Q 12 1Q 13 2Q 13 3Q 13 4Q 13 1Q 07 2Q 07 3Q 07 4Q 07 1Q 08 2Q 08 3Q 08 4Q 08 1Q 09 2Q 09 3Q 09 4Q 09 1Q 10 2Q 10 3Q 10 4Q10 1Q 11 2Q 11 3Q 11 4Q 11 1Q 12 2Q 12 3Q 12 4Q 12 1Q 13 2Q 13 3Q 13 4Q 13 Source: Central Statistical Office; March 2007 December ,511,7 10,7 8,9 9,810,1 7,8 7,7 6,3 3,53,43,6 3,3 2,73,8 4,34,35,25,34,65,4 3,8 2,6 2,2 3,03,0 2,0 2,2 1Q 07 3Q 07 1Q 08 3Q 08 1Q 09 3Q 09 1Q 10 3Q 10 1Q 11 3Q 11 1Q 12 3Q 12 1Q 13 3Q 13 Avg. Corporate Wages CPI 17,4 16, ,8 12,1 11,8 8,4 4,8 4,7 3, ,3 1,1 2,9 7,3 6 7,1 8,8 6,9 8,4 2,7 1, ,5 3,94,3 1Q 07 2Q 07 3Q 07 4Q 07 1Q 08 2Q 08 3Q 08 4Q 08 1Q 09 2Q 09 3Q 09 4Q 09 1Q 10 2Q 10 3Q 10 4Q10 1Q 11 2Q 11 3Q 11 4Q 11 1Q 12 2Q 12 3Q 12 4Q 12 1Q 13 2Q 13 3Q 13 4Q 13

38 37 Polish economy trends Key parameters (3) EXCHANGE RATES INFLATION, INTEREST RATES 1,3 2 2,4 2 2,2 2,2 3,5 3,2 3,7 3,7 3,6 3,3 3 2,9 4,1 3,8 4,3 4,7 4,6 4,1 4,6 4,1 4 3,9 0,5 0,7 1,3 1,1 2, Source: NBP ,2 4,2 4,2 4,7 4,4 4,2 4,3 4,1 3,9 3,8 4,0 4,2 5,1 5,7 6,2 5,9 6,7 6,6 4,7 4,8 5,0 4,9 5,1 4,9 2,7 2,7 2,7 3,4 4, CPI REF. RATE 3M WIBOR 4,25 4Q 06 2Q 07 4Q 07 2Q 08 4Q 08 2Q 09 4Q 09 2Q 10 4Q10 2Q 11 4Q 11 2Q 12 4Q 12 2Q 13 4Q 13

39 38 Polish economy trends Key parameters (4) PMI - MANUFACTURING PMI - NEW ORDERS Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Jan-09 Jun-09 Nov-09 Apr-10 Sep-10 Feb-11 Jul-11 Dec-11 May-12 Oct-12 Mar-13 Aug-13 Jan-14 Change in manufacturing PMI, pts (RHS) PMI, new orders pts Manufacturing PMI, pts (LHS) PMI, new export orders pts Source: Markit

40 Polish economy trends Key parameters (5) EXPORT / GDP (%) STRUCTURE OF EXPORT CHANGE (%) 39,9 39,4 42,2 45,1 46,2 47,8 10% 10% 8% 10% 5% 10% 37% 17% 32% CEE* 23% Developing countries 77% 69% 4% 29% Other developed countries EU 37% 23% * non-eu members from the region Source: GUS

41 40 Banking sector trends Key parameters - yoy (6) HOUSEHOLDS AND CORPORATE LENDING DYNAMIC IN THE POLISH BANKING SECTOR (% YoY) HOUSEHOLDS AND CORPORATE DEPOSITS DYNAMIC IN THE POLISH BANKING SECTOR (% YoY) Households Corporate Households Corporate Q 00 2Q 00 3Q 00 4Q 00 4Q 01 4Q 02 4Q 03 4Q 04 4Q 05 4Q 06 4Q 07 4Q 08 4Q 09 4Q 10 4Q 11 1Q 12 2Q 12 3Q 12 4Q 12 1Q 13 2Q 13 3Q 13 4Q 13 TOTAL SECTOR LENDING (% YoY) TOTAL SECTOR DEPOSITS (% YoY) Q 00 3Q 00 1Q 01 3Q 01 1Q 02 3Q 02 1Q 03 3Q 03 1Q 04 3Q 04 1Q 05 3Q 05 1Q 06 3Q 06 1Q 07 3Q 07 1Q 08 3Q 08 1Q 09 3Q 09 1Q 10 3Q 10 1Q 11 3Q 11 1Q 12 3Q 12 1Q 13 3Q 13 1Q 00 3Q 00 1Q 01 3Q 01 1Q 02 3Q 02 1Q 03 3Q 03 1Q 04 3Q 04 1Q 05 3Q 05 1Q 06 3Q 06 1Q 07 3Q 07 1Q 08 3Q 08 1Q 09 3Q 09 1Q 10 3Q 10 1Q 11 3Q 11 1Q 12 3Q 12 1Q 13 3Q 13 1Q 00 2Q 00 3Q 00 4Q 00 4Q 01 4Q 02 4Q 03 4Q 04 4Q 05 4Q 06 4Q 07 4Q 08 4Q 09 4Q 10 4Q 11 1Q 12 2Q 12 3Q 12 4Q 12 1Q 13 2Q 13 3Q 13 4Q 13 Source: NBP; March 2000 December 2013

42 Banking sector trends Key parameters - YTD (7) HOUSEHOLDS LENDING DYNAMIC IN THE POLISH BANKING SECTOR (% YTD) HOUSEHOLDS DEPOSITS DYNAMIC IN THE POLISH BANKING SECTOR (% YTD) 50% 45% 40% 35% % 30% 25% % 25% 20% 15% 20% 15% 10% 10% 5% 0% 5% 0% -5% XII' I II III IV V VI VII VIII IX X XI XII -5% XII' I II III IV V VI VII VIII IX X XI XII CORPORATE LENDING DYNAMIC IN THE POLISH BANKING SECTOR (% YTD) 35% 30% 25% 20% 15% 10% 5% 0% CORPORATE DEPOSITS DYNAMIC IN THE POLISH BANKING SECTOR (% YTD) 17% 12% 7% 2% -3% -8% % I II III IV V VI VII VIII IX X XI XII -13% XII' I II III IV V VI VII VIII IX X XI XII Source: NBP; January 2007 December

43 42 Banking sector trends Non-performing loans (8) 13,9% 14,1% 13,3% 12,4% 11,8% 11,2% 13,4% 14,3% 12,5% 12,6% 12,9% 13,0% 12,3% 12,2% 12,2% 13,2% 13,3% 13,1%13,0% 9,9% 9,7%9,8% 9,8% 9,4% 6,6% 7,5% 8,1% 8,7% 9,2% 9,6%9,9% 9,7% 9,5% 7,7% 7,5%7,6% 8,2% 9,6% 9,1% 9,3% Mar 09 Jun 09 Sep 09 Dec 09 Mar 10 Jun 10 Sep 10 Dec 10 Mar 11 Jun 11 Sep 11 Dec 11 Mar 12 Jun 12 Sep 12 Dec 12 Mar 13 Jun 13 Sep 13 Dec 13 HOUSEHOLDS NPL RATIO IN THE POLISH BANKING SECTOR CORPORATE NPL RATIO IN THE POLISH BANKING SECTOR Source: NBP 11,3% 9,1% 10,0% 13,1% 16,9%17,2% 15,8% 14,8% 18,0%17,8% 18,2% 17,8% 18,2% 17,8%17,9% 17,3% 17,3% 16,1% 15,6% 14,7% 1,2% 1,3% 1,4% 1,5% 1,5% 1,6% 1,8% 1,9% 2,0% 2,1% 2,2% 2,3% 2,5% 2,6% 2,7% 2,8% 2,9% 3,0% 3,0% 3,1% Mar 09 Jun 09 Sep 09 Dec 09 Mar 10 Jun 10 Sep 10 Dec 10 Mar 11 Jun 11 Sep 11 Dec 11 Mar 12 Jun 12 Sep 12 Dec 12 Mar 13 Jun 13 Sep 13 Dec 13 7,2%7,2% 7,4% 7,2%7,3%7,2% 7,5% 7,3% 7,5%7,4% 7,5% 7,2%7,1%7,1% 6,6% 6,7% 6,0% 4,5% 4,9% 5,4% 3,5% 11,8% 10,1% 9,6% 12,2%12,2% 12,4% 11,5% 11,2% 11,5% 10,9% 11,1% 11,3%11,7% 11,8% 11,5%11,5% 10,7%10,5% 10,4% 8,4% 6,3% Mortgage Cash SME Corporate Dec 08 Mar 09 Jun 09 Sep 09 Dec 09 Mar 10 Jun 10 Sep 10 Dec 10 Mar 11 Jun 11 Sep 11 Dec 11 Mar 12 Jun 12 Sep 12 Dec 12 Mar 13 Jun 13 Sep 13 Dec 13 Dec 08 Mar 09 Jun 09 Sep 09 Dec 09 Mar 10 Jun 10 Sep 10 Dec 10 Mar 11 Jun 11 Sep 11 Dec 11 Mar 12 Jun 12 Sep 12 Dec 12 Mar 13 Jun 13 Sep 13 Dec 13 Total retail Total corporate

44 43 Selected data

45 Consolidated income statement - reported mln PLN 4Q 12 3Q 13 4Q 13 Q/Q % Y/Y % Total 12 Total 13 Y/Y % Net interest income ,0% -8,9% ,4% Net fee and commission ,1% -0,2% ,0% Operating income ,9% -5,6% ,9% Operating costs ,2% -4,5% ,9% OPERATING PROFIT ,4% -6,4% ,7% Provisions ,1% -9,4% ,9% PROFIT BEFORE INCOME TAX ,6% -2,4% ,7% Income tax ,8% -6,9% ,4% GROUP NET INCOME (1) ,4% -1,4% ,4% Cost/Income Ratio (%) (4) 44,0% 47,4% 44,6% - 2,8 0,6 45,8% 46,3% 0,5 Cost of Risk (%) 0,80% 0,72% 0,72% 0,0-0,1 0,72% 0,71% - 0,0 ROE (%) 13,1% 11,6% 12,7% 1,1-0,4 13,3% 12,0% - 1,3 ROE normalised (%) (2) 20,0% 19,0% 20,4% 1,4 0,4 20,0% 19,0% - 1,0 CAR (%) (3) 18,8% 19,4% 18,8% - 0,6-0,0 18,8% 18,8% - 0,0 NIM (%) 3,8% 3,2% 3,3% 0,1-0,5 3,7% 3,4% - 0,3 (1) Net profit attributable to equity holders of the Bank 44 (2) Assuming Core Tier I 10% (3) Q3 13 CAR doesn t include impact of changes in bancassurance accounting treatment (4) Operating income including income from sale of investment portfolio and excluding share in profit of equity method consolidated entities

46 Consolidated income statement excluding Ukraine mln PLN 4Q 12 3Q 13 4Q 13 Q/Q % Y/Y % Total cum 12 Total cum 13 Y/Y % Net interest income ,3% -6,6% ,2% Net fee and commission ,1% 1,0% ,7% Operating income ,1% -3,7% ,8% Operating costs ,9% -2,1% ,9% OPERATING PROFIT ,5% -5,0% ,5% Provisions ,3% -5,1% ,6% PROFIT BEFORE INCOME TAX ,7% -1,6% ,2% Income tax ,7% -6,7% ,9% GROUP NET INCOME (1) ,6% -0,4% ,8% Cost/Income Ratio (%) (3) 43,7% 47,3% 44,6% - 2,7 0,9 45,6% 46,1% 0,5 Cost of Risk (%) 0,78% 0,72% 0,72% - 0,0-0,1 0,69% 0,71% 0,0 ROE (%) 12,9% 11,5% 12,7% 1,2-0,2 13,1% 11,9% - 1,2 ROE normalised (%) (2) 19,9% 19,1% 20,4% 1,3 0,5 19,8% 18,9% - 0,9 NIM (%) 3,7% 3,2% 3,3% 0,1-0,4 3,6% 3,3% - 0,3 (1) Net profit attributable to equity holders of the Bank 45 (2) Assuming Core Tier I 10% (3) Operating income including income from sale of investment portfolio and excluding share in profit of equity method consolidated entities

47 Activity by segments mln PLN Retail Banking Private Banking Corporate&Investme nt Banking Assets&Liabilities Management & Others (2) Group Total 2012 Total 2013 Y/Y % Total 2012 Total 2013 Y/Y % Total 2012 Total 2013 Y/Y % Total 2012 Total 2013 Y/Y % Total 2012 Total 2013 Y/Y % Net interest income (1) % % % % % Non-interest income % % % % % Operating income % % % % % Operating costs % % % % % OPERATING PROFIT % % % % % Net write-downs/provision % % % % % PROFIT BEFORE INCOME TAX % 17,4 33,3 91% % % ,7% (1) Total net interest income, dividends and other income from equity investments 46 NOTE: P&L in line with Consolidated Income statement presentation form of the Report on Activities

48 Net profit of the Group - bank and entities mln PLN cumulative Group's share in capital/votes % Total 2012 Total 2013 Y/Y % Bank Pekao S.A. Banking - Poland 2 925, ,0-4,3% Entities - consolidated under full method % Pekao Leasing Holding S.A. Leasing 80% 28,1 27,9-1% Pekao Leasing Sp. z o.o. Leasing 36% 41,9 40,6-3% PJSC UniCredit Bank Banking - Ukraine 100% 36,6 17,5-52% Centralny Dom Maklerski Pekao S.A. Brokerage 100% 30,5 39,3 29% Pekao Bank Hipoteczny S.A. Mortgage Bank 100% 15,7 12,7-19% Pekao Pioneer PTE S.A. Pension Fund 65% 11,4 13,8 21% Pekao Faktoring Sp. z o.o. Factoring 100% 10,2 10,1-1% Centrum Bankowości Bezpośredniej Sp. z o.o. Call Centre 100% 3,2 3,9 22% Pekao Financial Services Sp. z o.o. Servicing MF/PF 100% 3,9 6,6 69% Jana Kazimierza Development Sp. z o.o. Real estate development 100% 0, Centrum Kart S.A. Cards 100% 2,5 1,7-32% Pekao Fundusz Kapitałowy Sp. z o.o. Business consulting 100% 1,2 0,6-50% Pekao Property S.A. Real estate development 100% 1,6-0,4 --- FPB "MEDIA" Sp. z o.o. Real estate development 100% 1,4 0,0 --- Pekao Telecentrum Sp. z o. o. Services 100% 0,4 0,2-50% Metropolis Sp. z o.o. Real estate development 100% -1, Entities - valued under the equity method % Pioneer Pekao Investment Management S.A. Mutual Funds 49% 45,2 48,3 7% Krajowa Izba Rozliczeniowa S.A. Clearing Services 34% 7,4 10,0 35% Dom Inwestycyjny Xelion Sp. z o.o. Financial Advisory 50% 0,7 1,1 57% Exclusions and consolidation adjustments -224,1-249,4 11% Group Net Profit* 2 942, ,8-5,4% (*) Group net profit attributable to equity holders of the Bank (reported) 47 NOTE: Entities in liquidation or sold not presented, apart from PJSC Ukraine

49 Consolidated balance sheet mln PLN Dec 12 Sep 13 Dec 13 Q/Q % Y/Y % Cash and amounts due from Central Bank % -54% Loans and advances to banks % 86% Loans and advances to customers* % 7% Investment securities % 22% Assets held for sale % -98% Intangible assets % -6% Tangible fixed assets % -5% TOTAL ASSETS ,8% 5,2% Amounts due to the Central Bank % #DZIEL/0! Amounts due to other banks % -18% Financial liabilities held for trading % 26% Amounts due to customers % 11% Debt securities issued % -36% Amounts related with assets held for sale #DZIEL/0! -100% Other % -7% Total liabilities ,3% 5,9% Total Shareholders' equity ,2% 1,1% 48 NOTE: Main positions of consolidated balance sheet; Q3 13 data don t include impact of changes in bancassurance accounting treatment (*) Including loans and advances from customers and receivables from finance leases

50 Customers financing mln PLN Dec 12 Sep 13 Dec 13 Q/Q % Y/Y % Loans* ,2% 4,3% retail % 10% corporate % 0% Non quoted securities % 39% Reverse repo transactions % -4% Other % 4% Nominal value adjustment % -141% Impairment losses % 7% Net loans and advances % 7% Securities issues by non monetary entities** % -16% TOTAL CUSTOMERS FINANCING*** % 6% 49 NOTE: Q3 13 data don t include impact of changes in bancassurance accounting treatment (*) Including debt securities eligible for rediscounting at Central Bank, net investments in financial leases to customers (**) Securities issued by non monetary entities including local governments (***) Total customers financing includes Loans and advances at nominal value and Securities issued by non monetary entities

51 Selected data Bank Dec 12 Sep 13 Dec 13 Q/Q % Y/Y % Outlets ,1% 0,0% ATM's ,1% 0,1% Employees ,1% -2,0% No of PLN current accounts (ths)* ,2% -3,7% No of mortgage loan accounts (ths)** ,5% 8,7% No of clients holding a consumer loan accounts (ths)*** ,8% -6,1% Number of individuals with an access to electronic banking Pekao24 (ths) ,0% 11,0% Number of individuals with an access to mobile banking (ths) ,5% 85,9% Number of business clients (SME) with an access to electronic banking PekaoFirma24 (ths) ,0% 12,0% Group Dec 12 Sep 13 Dec 13 Q/Q % Y/Y % Employees**** ,5% -4,5% Outlets**** ,1% -3,8% ATM's**** ,1% -3,8% Number of MF accounts (ths)***** ,5% -0,7% Number of Brokerage accounts (ths)****** ,6% -1,7% (*) Number of accounts including pre-paid card accounts 50 (**) Retail clients accounts (***) Pożyczka Ekspresowa (Express Loan) (****) PJSC UniCredit Bank excluded since Sep 2013 (****) Pioneer Pekao Investment Management S.A. (*****) Including: Dom Maklerski Pekao (Dom Maklerski), subsidiarycentralny Dom Maklerski Pekao S.A. (CDM), and associated entity Dom Inwestycyjny Xelion Sp. z o.o. (Xelion)

52 Loans exposure - sectors SECTOR DESCRIPTION* Services 14,5% 15,1% Public administration 13,0% 13,7% Real estate 13,4% 12,7% Energy 13,8% 13,5% Construction and timber industry 7,2% 6,5% Manufacture of basic metals and fabricated metal products 4,8% 5,4% Financial intermediation 6,7% 5,9% Manufacture of chemical and pharmaceutical products 5,9% 5,2% Transport 5,0% 6,1% Manufacture of food products and beverages 3,6% 3,5% Manufacture of pulp, paper and paper products, publishing and printing 2,5% 2,5% Manufacture of vehicles 2,5% 2,2% Telecommunication and IT 2,6% 2,8% Other sectors 4,5% 4,8% Total 100% 100% Note: Based on the annual Group data including current exposure and commitment 51

53 Mutual funds MUTUAL FUNDS VOLUMES (mln PLN ) MUTUAL FUNDS - ASSETS STRUCTURE (PPIM SA) +16.2% +1.0% 17,229 19,829 20,020 23% 3,463 4,284 4,410 20% 57% 13,766 15,545 15,610 Dec 12 Sep 13 Dec 13 PPIM SA Third party funds distributed by the Group MARKET SHARE (%) Eguity funds Balance funds Money and bondsfunds 20,90% 20,40% 19,50% Increase of mutual funds stock by 16.2% y/y Dec 12 Sep 13 Dec 13 Note: Market share funds distributed by Pekao Group, compared with the market of retail investment funds available for individuals 52

54 Key lending products Stock PLN MORTGAGE LOANS VOLUMES (mln PLN) CONSUMER LOANS VOLUMES (mln PLN) +18.2% +5,4% +4,5% +1,7% 24,868 27,895 29,396 7,131 7,331 7,455 Dec 12 Sep 13 Dec 13 Dec 12 Sep 13 Dec 13 53

55 Balance sheet management commercial activity LOANS/ADVANCES AND AMOUNTS DUE TO CUSTOMERS - BREAKDOWN BY CURRENCY LOANS/ADVANCES AND AMOUNTS DUE TO CUSTOMERS - BREAKDOWN BY MATURITY 18% 15% 41% 2,3% 1,5% 82% 85% 33% 96% 26% Assets Liabilities Assets Liabilities PLN FX up to 1 year 1-5 years above 5 years 54

56 Ratings of bank Pekao s.a. FITCH RATINGS BANK PEKAO S.A. POLAND Long-term rating (IDR) A- A- Short-term rating F2 F2 Viability rating a- Support rating 2 Outlook Stable Stable STANDARD AND POOR'S BANK PEKAO S.A. POLAND Long-term rating BBB+ A- Short-term rating A-2 A-2 Stand-alone bbb+ Outlook Stable Stable MOODY'S INVESTORS SERVICE LTD BANK PEKAO S.A. (unsolicited rating) POLAND Long-term foreign-currency deposit rating A2 A2 Short-term deposit rating Prime-1 Prime-1 Financial strength C- - Outlook Negative Stable 55 Notes: (1) Bank Pekao S.A. s Viability rating at a- from Fitch Ratings, Stand-alone one at bbb+ from Standard and Poor s and Financial Strength h at C- from Moody s are the highest ratings assigned by these rating agencies to banks rated in Poland; (2) On 21 February 2013 Fitch Ratings has changed the Outlook on Poland's ratings: Long-Term foreign and local currency Issuer Default Ratings (Issuer Default Rating - IDR) to Positive from Stable

57 Investor relations team s contact details Q&A related to the presentation: Dariusz Choryło Executive Director Wioletta Reimer Director of IR Office ph.: dariusz.chorylo@pekao.com.pl ph.: wioletta.reimer@pekao.com.pl Dorota Faszczewska-Ward IR Officer Aneta Maciak IR Officer Iwona Milewska IR Officer Krzysztof Szlichciński IR Officer ph.: dorota.faszczewska-ward@pekao.com.pl ph.: aneta.maciak@pekao.com.pl ph.: iwona.milewska@pekao.com.pl ph.: krzysztof.szlichcinski@pekao.com.pl 56 Visit us at: