Warsaw, 10 May Financial Results for Q Page 1

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1 Warsaw, 10 May 2007 Page 1

2 Executive summary Financial results Appendices Macroeconomic situation Bank BPH business development Detailed financials Page 2

3 IFRS consolidated data in PLNm 1Q07 1Q07/ 1Q06 Pre-tax profit % Net profit % ROE pre-tax 34.0% 11.7 pp. ROE net 26.6% 9.2 pp. C/I 45.7% 2.8 pp. Total net revenue* 881 4% Net F&C 323 2% Costs (incl. depreciation) % Loans** 37,078 14% Deposits*** 40,759 7% Assets 61,227 2% Record beating profitability indicators: i.a. C/I ratio - best among largest peers Strongest quarterly results thanks to CU stake sale (178m pre-tax capital gain) * NII + Net F&C + trading result; ** Net loans and advances to customers; *** Amounts owed to customers Page 3

4 Shareholders Highest value of intellectual capital* in banking sector (Bank BPH 3.98 vs as sector avg.) Net profit per share 10 times better (from PLN 4.65 in 2002 to PLN in 2006) Generous dividend payout (up from PLN 1.4 per share in 2002 to PLN 36.2 in 2006) Benchmark-setter for profitability per 1 employee Customers High level satisfaction** (85% in Bank BPH vs. 73% as sector avg.) Tailored solutions and innovative approach (CRM fully implemented in 2005) Long-term loyalty programs Employees Consistently investing in HR development (336% increase in spending on training since 2003) Young talents recruitment (3 programs: praktykant@sukces, absolwent@sukces, doradca@sukces) MbO system (222% growth in bonuses since 2003) Permanent staff assessment (incl. feedback) Training programs (Management Development, Academy for Ambitious, Summer School of Excellence, Star Odysey Go!) Page 4 Society Educational programs with universities Sponsoring activities Charity (Patron of the Year by the Academy for the Development of Philanthropy in Poland in the category cooperation of the company with non-government organizations ) * Acc. to the Gdansk Institute for Market Economics, 2007 ** Quality index measured through ~900 mystery shopping visits per quarter by external leading agencies

5 !"#$ % & '()* ROAE, GROAE 36 ROAE* GROAE** ,7 7,2 0,8 PAS 4,9 2,7 ROAA*** 0,3 11,7 0,7 6,3 17,6 13,7 1,6 21,0 16,7 1,8 34,0 25,0 26,6 19, Q07 ROAA PAS 1Q06 ROAE 17.5 GROAE 22.3 IFRS 2,0 1Q IFRS Q07 2, C/I 63,8 C/I**** 63,1 62,6 54,5 PAS 49,5 IFRS 1Q ,7 45, Q07 Acc. to IFRS in % 1Q06 1Q07 CAR Loans/ Deposits Loans/ Assets Margin***** Net profit/ FTE ( 000) */ net profit to average equity;**/ pre-tax profit to average equity; ***/ net profit to average assets; ****/ C/I = general administrative expenses / (total net revenue + other operating result); *****/ NII / total average assets Page 5 Data for 1Q06 & 1Q07 annualized

6 +,-. PLNm PLNm Profit before tax Net profit 1294 Pre-tax +277%, Net +400% % % Profit before tax Net profit % % % % % +35% +23% +63% st quarter st quarter 2007 Consolidated data Page 6

7 Executive summary Financial results Appendices Macroeconomic situation Bank BPH business development Detailed financials Page 7

8 $ / $ Total net revenue in PLNm % 1,0% 37,4% 0,6% 36,6% Trading result Net F&C % 50% 61,6% 62,8% Net interest income 0 1Q06 Net interest income Net F&C Trading result 1Q07 0% 1Q06 1Q07 PLN 37m (or 4%) increase of net revenue owing to: 6.4% increase of net interest income on higher loan and deposit volumes Only 2.3% (or PLN 7m) higher net fees due to i.a. lower than a year ago FX fees Net F&C coverage (%) 1Q06 1Q07 - of general costs of remuneration costs Consolidated data Page 8

9 2 / $01 PLNm Costs (incl. depreciation) Impairment charges 0 1Q06 1Q06 1Q07 1Q stable Q06 Personnel Building maintenance & rents Depreciation Other 1Q07-80 Total costs flat With the only exception of personnel expenses (up by 6.1%), due to Pay for Performance and Key Staff Retention Programs All other types of costs reduced (building maintenance by 7.3%, depreciation - 8.8% and others - 2.4%) Impairment charges unchanged and consistent with a prudent risk policy Consolidated data Page 9

10 / $ PLNm Assets 62,721 64,757 61, % Q Q07 net loans* trading assets dues from banks other financial assets others 100% 50% 0% Loans corporate (incl. CRE) private individuals SE 48% 44% 39% 40% 13% 16% 1Q06 1Q07 60% 30% 0% 55,2% 1Q07 1Q06 27,2% 58,7% 27,7% 12,9% 12,7% 3,3% 1,4% 0,9% 0,0% PLN CHF EUR USD others * Net loans and advances to customers; Bank BPH only: +13.7% -2.4% YoY drop in assets primarily due to lower by 54.7% dues from banks, despite a 14% loan growth and other financial assets boosting by 42% Rising share of PLN denominated loans - 59% Consolidated data Page 10

11 3' / $01 PLNm Liabilities Q Q07 deposits* dues to banks evidenced by certificates shareholders' equity others 100% 50% 0% Deposits Corporate Private individuals SE 40% 43% 48% 47% 12% 11% 1Q06 1Q07 86% 43% 0% 80,7% 1Q07 1Q06 82,6% 12,4% 0,0% 11,5% 6,6% 5,7% 0,2% 0,2% PLN CHF EUR USD others * Amounts owed to customers; Bank BPH only: +6.9% 58.8% drop in liabilities evidenced by certificates following the repayment of EUR 1.5bn eurobonds 7.5% YoY upturn in deposits (i.e. PLN 2.8bn); 1.9% q/q decrease due to volumes transferred to investment funds Overwhelming share of PLN denominated deposits % Consolidated data Page 11

12 3 Consolidated loan book* 100% 7,6% 5,9% 5,7% 50% 92,4% 94,1% 94,3% Impaired loans Regular loans In Q1 2007, share of consolidated impaired loans in total portfolio continued to decrease (by 0.2 pp.), with a 4% increase in total loans 0% * Including loans eligible for discounting presented in note 9 to 1Q07 Bank BPH Group Financial Report Consolidated data Page 12

13 4$52' Pre-tax profit (PLN 591m)** Corporate 17% Other 1% INM 6% 1Q07 PLNm Retail (%) Corporate (%) INM* (%) Assets 61, Liabilities 61, Others (%) Retail 77% Total net revenue Costs (incl. depreciation) Impairment charges * International Markets (INM) excluding results on sales of treasury and custody products as generated by INM Division and presented entirely in the results of Corporate and Retail segments ** Gain from CU stake sale presented within Retail Area Consolidated data Page 13

14 Executive summary Financial results Appendices Macroeconomic situation Bank BPH business development Detailed financials Page 14

15 44$ '4" 4 " 1 9,0 6,0 3,0 GDP (%, YoY) 6,8 5,9 4,8 4,0 2,4 3,0 4,1 4,5 5,2 6,4 5,5 5,8 7,5 7,25 5 2,75 Private consumption (%, YoY) 6,3 5,2 5,5 5,1 5,1 4,9 5,2 4,4 2,7 2,6 2,2 1,3 1, Investments (%, YoY) 8,5 4,8 4,9 5,3 6,5 4,0 1,4 10,17,7 14,8 19,8 19,3 25,2 0,0 1Q04 2Q04 3Q04 4Q04 1Q05 2Q05 3Q05 4Q05 1Q06 3Q06 2Q06 4Q06 F1Q07 0,5 1Q04 2Q04 3Q04 4Q04 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 F1Q07 0 1Q04 2Q04 3Q04 4Q04 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 F1Q07 Contribution to GDP growth perc. points (contributions to GDP) Q 05 2Q 05 3Q 05 Net exports Inventories Investments Public consumption Private consumption GDP 4Q 05 1Q 06 2Q 06 3Q 06 4Q 06 1Q 07 2Q 07 3Q 07 4Q 07 A record high GDP growth dynamics is driven by fixed investments and consumption rebound In Q GDP growth reached 7.5%, the best result since 1996 GDP growth in 2007 will be at least as good as in 2006 and will reach 6% All figures reported as quarter average (unless stated otherwise) Page 15

16 2 %.# 3 9 Inflation (%, YoY, end of period) and 1M WIBOR 8 6,5 7 5,6 6 4,7 4,6 5 4,3 4,1 4,1 4,1 4, ,4 1,7 2 1,3 1,1 0,8 1 1,3 1,5 1, Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 Inflation 1M WIBOR F1Q07 F2Q07 4,3 1,7 Corporate and household loans (in PLNbn, quarterly averages) Corporate Household 156,4 162,0 183,5 198,2 203,8 144,4 139,4 126,5 129,6 148,0 150,3 116,3 141,4 128,4 131,4 136,3 123,5 125,9125,5126,1 1Q05 3Q05 1Q06 3Q06 1Q07 Corporate and household deposits (in PLNbn, quarterly averages) 250,0 200,0 150,0 100,0 50,0 0,0 217,3 227,3 207,8 212,9 199,3 200,6 200,5 201,5 204,7 79,8 83,9 88,3 96,5 118,6 125,2 96,3 101,8 108,4 Corporate Household 1Q05 3Q05 1Q06 3Q06 F1Q07 NPL in commercial banks (share %)* 22,0% 21,8% 18,6% 15,6% 15,1% 13,8% 12,7% 11,5% 10,3% 8,8% 7,2% Q05 2Q05 3Q05 4Q05 1Q06 3Q06 4Q06 */ according to NBP CPI reached the target, and the MPC started to raise rates. We expect rates to increase to 4.5% this year 2006 was record high in terms of lending dynamics. The positive trend should continue All figures reported as quarter average (unless stated otherwise) Page 16

17 3' " " 6060(, * Loan portfolio by segments Commercial Real Estate 6% Consumer Loans 7% Personal Mortgages 33% Loan portfolio by economic sectors 1 Transport & Communic. 3% Light Industry 3% Other Trade 3% Other Branches 12% Private Individuals 40% Energy 3% Corporate 41% Small Enterprises 13% Food Processing 3% Retail Construction 4% Community &Utilities 4% Real Estate 5% General Servicies 6% Financial Activities 6% Wholesale& Commiss. Trade 8% Note: Other Branches includes, inter alia, Machinery and Equipment (ca 3%), Metallurgy (2%), Chemicals (2%), Building Materials Industry (ca 2%), Oil Industry (ca 2%). 1 Industry branches presented in accordance to NACE. Loan volume portfolio = loans and guarantees granted Page 17

18 7$ $ 8!"# 369 : Impaired loans as % of total loans Provision coverage of impaired loans 6% 5% 4% 3% 2% 1% 0% 5,0% 5,3% 4,9% 4,8% Total Bank 5,1% Total Bank 4,9% Retail Corporate 70% 60% 50% 40% 30% 20% 10% 0% 62% 63% 62% 63% Total Bank 62% Retail Total Bank 63% Corporate 65% Collective Portfolio 35% Individual Portfolio Impaired loans per valuation method Individual portfolio consists of impaired loans, which are individually significant (i.e. above certain threshold); the estimation of expected cashflows is performed on a loan by loan basis Collective portfolio small-balance defaulted loans; the estimation of recoveries is based on statistical model incl. The Bank s data on credit losses in such products/ borrowers segments * Unconsolidated data Page 18

4 $ #" / ' ; 8 $ $ 3+0<' PLNm 600 Income 544 543 531 539 567 450 +4.

ths Harmonium for BC Loans & deposits expansion: +18% YoY average loan volumes and

19 4 $ #" / ' ; 8 $ $ 3+0<' PLNm 600 Income % 300 1Q06 2Q06 3Q06 4Q06 1Q07 Sale of new packages: +78 ths ROR for PI and +23 ths Harmonium for BC Loans & deposits expansion: +18% YoY average loan volumes and +7% interest income growth +10% YoY growth of average volumes and interest income on deposits Page 19

20 4 $ #" /- PLNbn Retail loan volumes Retail deposit volumes* Margins (%): Margins (%): ,5 19,2 19,9 19,9 20, ,6 21,9 22,7 23,8 23, % % 10 1Q06 2Q06 3Q06 4Q06 1Q07 Market shares (%): 10 1Q06 2Q06 3Q06 4Q06 1Q07 Market shares (%): Marketing campaigns of key products (Cash loans, MTG, Quick Loans for SME) A 5.4-time sales growth of PLN mortgages (PLN 0.6bn in Q vs 0.12bn in Q1 2006) Poyczka od Rki cash loan sales growth of 72% vs. Q (PLN 0.25bn) Focus on alternative investment products (mutual funds and SCD) * including SCD (in Bank BPH balance sheet) Page 20

assets 5,3 5,8 6,3 6,9 6,9 4,0 3,0 2,0 +31%

March 06) Expanding of Bank BPH offer by

21 4 $ #" /!$ " PLNbn 9,0 8,0 7,0 6,0 5,0 BPH TFI assets 5,3 5,8 6,3 6,9 6,9 4,0 3,0 2,0 +31% 1,0 0,0 1Q06 2Q06 3Q06 4Q06 1Q07 Market shares (%): BPH TFI assets growth (+ PLN 1.6bn vs. March 06) Expanding of Bank BPH offer by new Pioneer funds Large structured deposits issue in 2007: Lokata Trzy Zyski+ (PLN 320m sales) Page 21

4 $ #" /7 (+ 8 2" % $ ;* 000 1 600 ROR accounts for PI 1 500 1 400 1 345 1 372 1 396 1 419 1 423 1 300 1

22 4 $ #" /7 (+ 8 2" % $ ;* ROR accounts for PI % Q06 2Q06 3Q06 4Q06 1Q07 Ca. 8% market share +78 ths YoY ROR packages growth driven by attractive Sez@mMax offer A 49% share of colored** packages (+4pp. YoY) A Joint BPH/ Pekao campaign since Nov. 06: Free of charge ATMs for BPH & Pekao customers * Silver, Gold, Sezam Max, Private Banking Page 22

23 4 $ #" / 2 2& $ 4' Credit cards number % Q06 2Q06 3Q06 4Q06 1Q07 SME and PI ( 000) 1Q06 2Q06 3Q06 4Q06 1Q07 Internet banking Call center % +26% Page 23

160 120 4 $ #" / " " & 3 9% 000 Harmonium packages 137 145 152 157 160 80 +17% 40 0 1Q06 2Q06 3Q06 4Q06 1Q07 Every 11th active firm in Poland using

24 $ #" / " " & 3 9% 000 Harmonium packages % Q06 2Q06 3Q06 4Q06 1Q07 Every 11th active firm in Poland using Harmonium package Substantial increase in deposit volume (+28% YoY) Growth of loans for SME: 12% YoY - successful marketing campaign of Quick Loans offer Page 24

25 4 $ #" / 9 3 2"# $ 9 8.' +" Mortgage loans PLN share 10,3 11,6 Market shares (%): Total: PLN: PLNm +20% 16,3% 15,4% 16,6% 12,1 12,1 12,4 21,9% 25,5% IQ06 IIQ06 IIIQ06 IVQ06 IQ % 50% 0% As at 31 March Total PLN FX Av. maturity* 22 years 19 years 24 years Av. amount** TPLN 118 TPLN 118 TPLN 157 *** Av. LTV 64% 61% 65% NPL 1.71% 3.03% 1.27% Portfolio growth dynamics (March 07/ March 06) 20% 87% 7% *loans granted in 2006; contractual maturity, the actual is 3-5 years shorter **loans granted in Q1 2007; ***generally granted only for clients with revenues in the same foreign currencies, 438% PLN sales growth in Q vs. Q accompanied by a 32% total sales decline PLN motgage growth by 16pp. faster than market (Bank BPH: +87% vs. market: +71% ) 4.4pp. market share decline of Bank BPH YoY after giving up FX loans sales PLN: pp. FCY: pp. Page 25

26 2# 4 $ #"!" & 2=! PLNm % Fee & Interest Income C/I based on fully-loaded costs % ,0% 52,0% ,0% interest income fee income 44,0% 40,0% 1Q2006 1Q2007 Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec Page 26

27 2# 4 $ #" 4 #3 PLNm Corporate Deposit Volumes PLNm Corporate Loan Volumes Average Average Average Average 1Q2006 1Q2007 1Q2006 1Q2007 % % 15,00 10, % avg. Corporate Deposits market share* 11, pp. 11,82 12, Corporate Loans market share* 15, , % avg. -37,8% avg. 12, pp ,08 living portfolio workout portfolio 9,84 0,00 1Q04 1Q05 1Q06 1Q07 0,00 1Q04 1Q05 1Q06 1Q07 */ Period end; Note: Data accordingly to NBP segmentation, which is different from Bank BPH s - NBP segment includes i.a. SME Source: NBP Page 27

28 2# 4 $ #" - Bank BPH awarded The Best Trade Finance Bank in Poland by Global Finance Magazine European Medal granted to Bank BPH for electronic trade finance solutions Main achievements: BusinessNet 22% YoY increase in number of corporates using the system Cross-border outgoing payments transaction number quarterly growth close to 20% TransKasa number of Agents tripled at end-march 2007 vs. March 2006; Network of terminals accepting payments for the benefit of 76 Mass Billers (50% YoY increase) TransDebit over 100% YoY increase in number of transactions - up to app. 120 ths (March 2007) TransCollect over 4.9m transactions monthly, i.e. over 10% growth vs. March 2006 TransDebit (quarterly total transfers) POS (quarterly total transactions) % 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q % 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07 Page 28

29 2# 4 $ #" / Key developments Q1 2007: Successful closing of 4 transactions with a nominal value totaling ca. PLN 3.5bn; Bank BPH commitment of PLN 670m Leading position in M&A and leverage finance transactions Rich pipeline for 2007 with transactions budgeted up to Q4 Bank BPH holding first position in terms of volume and number of transactions closed in !"!#$!"#$ %& '( )*+,"$- %. Source: Rzeczpospolita daily Page 29

2# 4 $ #" / 2"" % Bank BPH as one of market leaders in Commercial Real Estate 7 closed transactions till March 2007 Assisted in restructuring of distressed properties Newly acquired large

30 2# 4 $ #" / 2"" % Bank BPH as one of market leaders in Commercial Real Estate 7 closed transactions till March 2007 Assisted in restructuring of distressed properties Newly acquired large transactions in pipeline allowing for further income growth expectation POLSKIE PROJEKTY INWESTYCYJNE Oakland Park Savleigh PLN Construction loan Arranger PLN Arranger PLN PLN Land Loan Arranger Page 30

31 !+9 4 $ #" - & 7 Total outstanding medium-& long-term debt issued 2 450,59 +34% 3 292,35 34% YoY increase in total outstanding medium & long-term debt issued excl. BPH own issues (PLN 3,292.35m at end- March) ensuring market leader position 1Q06 1Q07 Sales margin from treasury products* 100% 1Q06-7% 93% 1Q07 * results from sales of treasury products and custody services generated by INM Division presented entirely in the results of Corporate and Retail segments Slight drop of sales margin on treasury products due to lower margin on FX spot transactions in Q vs. Q related to lack of significant one-off projects conducted in 2006 and lower market volatility Page 31

32 !+9 4 $ #" 2 Number of Custody Clients transactions settled % annual growth in number of customer transactions settled in Q1 2007, driven mainly by successful acquisition of remote brokers admitted by Warsaw Stock Exchange in % YoY increase in assets under custody due to: Q % 1Q07 new clients acquisition i.e. foreign financial institutions organic growth of clients portfolios fuelled by stock market increase Page 32

33 !+9 4 $ #" - PLNm Average monthly volume of inter-bank transactions % Active market making in all segments ensuring high market share and stable volumes in spite of lower market volatility Growing net economic income contribution of Trading/ Investment activities (62%) vis-à-vis Structural Bank Book positions (37%) 1Q06 1Q07 Pro-active structural liquidity and cost of taxes management resulted in redemption of three series of own BPH Eurobonds issued under the EMTN Program (of EUR 1.5bn) Page 33

34 !+9 4 $ #" $ " The Best Bank on the Polish Foreign Exchange Market according to Global Finance ranking of January 2007 Top Player in origination and sales of structured investment products Fitch: 1 st place in terms of medium and long-term debt outstanding arranged, with 16.27% market share Fitch: 1 st place in terms of short-term debt outstanding arranged, with 19.1% market share YtD Direct Cost/ Total Income Ratio (incl. Treasury Sales and Custody income) of 10.2% In macroeconomic ranking of Parkiet, Bank BPH classified again among leading economists group (2 nd place) in Q The best bank on the Polish foreign exchange market January st Place short term outstanding debt issues arranged March 2007 PLN 400.7m of Capital Protected Structured Products Originated in 6 issuances Jan-Mar st Place medium & long term outstanding debt issues arranged March 2007 Page 34

35 2 Personnel Buildings maintenance & rents Depreciation Other 97,0 94,3 88,5 101,8 107,9 76,8 60,9 50,8 55,0 39,5 51,3 51,0 66,6 57,9 49,6 35,5 49,9 45,2 83,8 91,1 99,3 50,2 55,3 46,8 54,2 48,5 46,2 179,1 178,2 191, ,7 198, ,4 216,1 Total 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q (PLNm) Page 35

36 + & ,2% 1,3% 1,4% 8,1% 5,4% 4,7% 7,8% 6,3% 6,2% 8,0% 11,9% 13,4% 9,4% 15,1% 17,8% 16,6% 12,5% 18,5% 5,8% 12,9% 11,3% 12,7% 11,4% 10,6% 10,3% 10,9% 41,0% 36,4% 40,1% 37,9% 44,1% 28,5% 37,5% 35,0% 41,4% Other Securities and custodian business Loans and advances Domestic payments International payments 36,5% 39,1% 36,2% 38,2% 30,5% 36,4% 33,5% 28,0% 28,9% Total 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07 (PLNm) Page 36

+"' 57 %"# : Outlets*** 427 375 398 Partner outlets 90 Employees** 12 742 571 511 471 465 480 485 484 11 003 10 067 9 654 9 905 9 671 9 515-34% 2001 2002 2003 2004 2005 2006 1Q07

37 +"' 57 %"# : Outlets*** Partner outlets 90 Employees** % Q Q06 1Q07 * Bank BPH only; ** without unpaid, maternity and child-care leaves, in FTEs; *** including branches, sub-branches, without Corporate Centers Page 37

Financial Results for IQ 2005

Financial Results for IQ 2005 Meeting Expectations Warsaw, 4 May 25 Page 1 Executive summary Macroeconomic situation Financial results for Appendices Business development Detailed financial data Page 2 Highlights Starting from I Q