Results of the BRE Bank Group Q1 2008

Transcription

1 Results of the BRE Bank Group Q1 28 BRE Bank SA Management Board Presentation for Investors and Analysts 6 May 28 1

2 Agenda BRE Bank Group Results Q1 28 BRE Bank Group: A Quarter in Brief Key Achievements and Financial Results of the Business Lines Analysis of the Consolidated Financial Results Appendix Detailed Results of the Business Lines, Q1 28 Additional Information: Selected Financial Data Macroeconomics 2

3 Agenda BRE Bank Group Results Q1 28 BRE Bank Group: A Quarter in Brief Key Achievements and Financial Results of the Business Lines Analysis of the Consolidated Financial Results Appendix 3

4 Summary of Q1 28 in the BRE Bank Group Major Events and Achievements 1 High profitability of the core business 2 Continued dynamic growth of business 3 Sustained safety of the capital base on NCA implementation 4 Update of the BRE Bank Group strategy in the autumn 28 4

5 Summary of Q1 28 in the BRE Bank Group High Profitability of Business Continued and discontinued operations Profit before tax PLN M ROE before tax 52.% Cost/Income (C/I) 43.6% Capital adequacy ratio (CAR) 9.5% Unless indicated otherwise, the presented financial data refer to the BRE Bank Group 5

6 Summary of Q1 28 in the BRE Bank Group Focus on Growing the Profitability of the Regular Business Regular operations* Profit before tax PLN M ROE before tax 35.3% Cost/Income (C/I) 52.7% * i.e., continued and discontinued operations net of the sale of Vectra SA 25 Recurrent net profit (PLN M) I kw. 26 II kw. 26 III kw. 26 IV kw. 26 I kw. 27 II kw. 27 III kw. 27 IV kw. 27 I kw. 28 Recurrent net profit - adjusted for one-off events Moving average for the recurrent net profit 6

7 Summary of Q1 28 in the BRE Bank Group Dynamic Growth of Loans to Clients Total lending up by 1.3% QoQ Loans to retail clients up by 9.6% QoQ and 53.6% YoY Loans to corporate clients up by 11.7% QoQ and 4.4% YoY Share of loans to retail clients in total portfolio up to 4.1% (from 37.2% at the end of March 27) * Factoring companies: Polfactor, Intermarket Bank, Transfinance, Magyar Factor Growth of Gross Loans (PLN B) % QoQ Individual clients +1.3% +11.7% QoQ 2.3 Corporate clients Structure of the Gross Loans Portfolio of the BRE Bank Group as at BRE - Indivudual clients 39.9% BRE Bank 78.1% BRE - Corporate clients 37.2% -7.% QoQ Other BRE - Budget sector.1% BRE - other.9% BBH 8.8% Factoring companies* 4.7% BRE Leasing 8.4% 7

8 Summary of Q1 28 in the BRE Bank Group Seasonal Lower Growth in Deposits Growth Rate of Deposits (PLN B) % QoQ +3.7% -3.2% QoQ -68.8% QoQ Total deposits up by 3.7% QoQ Individual clients Corporate clients Other Continued growth of deposits of retail clients (up by 17.8% QoQ and up by 44.1% YoY) Deposits of corporate clients down by 3.2% QoQ seasonal trend, and up by 14.2% YoY Structure of Amounts Due to Clients of the BRE Bank Grpup as at DI BRE 1.6% Factoring companies*.6% BBH.8% BRE - Budget sector.6% BRE - Corporate clients 52.% BRE - Individual clients 44.4% BRE Bank 97.% Total share of funds of retail clients (Bank and subsidiaries) in deposits at the end of March 28 up to 45.3% from 39.6% at the end of March 27 * Factoring companies: Polfactor, Intermarket Bank,Transfinance, Magyar Factor 8

9 Summary of Q1 28 in the BRE Bank Group Liquidity The ratio of loans to deposits at 11.8%... but analysis of the loans portfolio and its funding reveals that the actual ratio of loans to deposits is 77.4% Ratio of Loans to Deposits in the BRE Bank Group v Structure of Financing Loans of the BRE Bank Group at (PLN B) Loans from banks in CHF % 11.8% BRE: Mortgage loans in CHF 4 35 Subordinated debt in CHF Mortgage bonds % 77.4% BBH Loans 25 2 Other loans 15 1 Deposits Loans Sources of financing L/D - balance sheet L/D - actual ratio 9

10 Summary of Q1 28 in the BRE Bank Group Results of the Business Lines Profitability of the Business Lines Corporations & Financial Markets Retail Banking (+PB) Profit before Tax by Business Line Q1 28 v. Q1 27 (PLN M) +54.4% +31.9% % % Repayment of nonperforming loan % % Losses of mbank CZ & SK Corporates and Institutions Trading and Investments Q1 27 Q1 28 1

11 Summary of Q1 28 in the BRE Bank Group Results of the Strategic Subsidiaries Profit before Tax of Consolidated Subsidiaries (PLN M) Profit before tax 34.1* of the strategic subsidiaries in Q up by over 4% YoY BRE.locum BRE Bank Hipoteczny Dom Inwestycyjny BRE Banku BRE Leasing Intermarket Bank PTE Skarbiec-Emerytura Polfactor Transfinance BRE Holding Magyar Factor Q1 27 Q1 28 Pozostałe. Contribution of BRE Bank Group Subsidiaries to Profit before Tax * The company operates a property business; quarterly fluctuation in the company s profits due to the recognition of income upon the transfer of apartment title to owners ** Bank s profit before tax net of consolidation adjustments *** Other subsidiaries include: : BRE.locum, CERI, BRE Wealth Management, BRE Corporate Finance, BRE Finance France, Tele-Tech Investment, Garbary, emfinanse Bank** 79.2% Intermarket Bank 1.7% Subsidiaries 2.8% BRE.locum 8.% BRE Leasing 2.5% Intermarket Bank 1.7% Magyar Factor.3% PTE Skarbiec- Emerytura 1.2% Polfactor.7% Magyar Factor.3% BRE Holding.6% DI BRE 2.5% Subsidiaries: Corporates and Institutions Asset Management discontinued operations Other companies*** 11

12 Agenda BRE Bank Group Results Q1 28 BRE Bank Group: A Quarter in Brief Key Achievements and Financial Results of the Business Lines Analysis of the Consolidated Financial Results Appendix 12

13 Results and Achievements of the Business Lines Corporations and Financial Markets in Q1 28 Summary Growing profitability The Line s profit before tax at PLN 321 M in Q1 28 including: PLN M profit on the sale of Vectra Business expansion Loans to enterprises up by 4% YoY Significant growth in sales of loans and guarantees using EU funding (+55.5% YoY) 562 companies acquired in Q1 28 Active trading on financial markets BRE remains Poland s #1 Primary Market Dealer: 23% market share in interest rate derivative instruments 17% market share in Treasury bills and bonds trading 6% market share in new corporate and bank medium term issues placed Significant contribution of Line subsidiaries to profit 21% of the profit before tax (excluding Vectra transaction) of Corporations and Financial Markets contributed by subsidiaries 13

14 Results and Achievements of the Business Lines Corporates and Institutions: Summary of Q1 28 Clients Corporate Clients: Number and Structure Total New Corporate Banking Customers K K2 969 K K2 963 K1 948 K K K K3 7 3 K K K Jan-Dec 26 Jan-Mar 27 Apr-Jun 27 Jul-Sept 27 Oct-Dec 27 Jan-Dec 27 Jan-Mar 28 In Q1 28, 562 new corporate clients were acquired, of which 74% were K3 clients and 22% were K2 clients The total number of corporate clients at the end of March 28 was 12,435 companies; net growth in the number of clients by 15 companies At the end of March, 4,512 SME clients used EFFECT packages (58.5% of the SME client base) 14

15 Results and Achievements of the Business Lines Corporates and Institutions: Summary of Q1 28 Loans and Deposits Corporate Loans Volume (BRE Bank, PLN B) 56% 57% 56% 54% 55% 6.7% 5.9% 6.5% 8.6% 9.3% % % 55% % Market share in loans Corporate Deposits Volume (BRE Bank, PLN B) % % 39% % 42% % 42% % Market share in deposits 7% 4% 7% 9% 9% 8% 1% 14% 13% K1 K2 K3 enterprises K3 Higher market share in loans and deposits as a result of 4% YoY growth in the loans for enterprises Fall of volumes of deposits from enterprises but market share maintained 15

16 Results and Achievements of the Business Lines in Q1 28 Corporations and Financial Markets in Q1 28 Financial Results Financial Resultsof the Line, Q1 28 (PLN M) Net Interest Income Profit before Tax of the Line by Quarter (PLN M) 137,6 91. Net Fee & Commission Income 14.3 Net Trading Income 175, Gains less Losses from Investment Securities -6 Impairment Losses Costs and Amortisation 135,5 127,7 9.7 Net of Other Operating Income and Expenses 321. Pre-tax Profit 321, 14,8 137,7 Vectra 168,6 Q1 27 Q2 27 Q3 27 Q4 27 Q1 28 The profit before tax of the Line in Q1 28 up by 133% YoY to PLN 321 M (net of the sale of Vectra: up by 33.2% YoY, or by PLN 45.7 M) Contribution to the profit before tax of the Line: - Corporates and Institutions: 45.8% (8% net of the one-off transaction), - Trading and Investments: 54.2% The subsidiaries contributed 21% to the profit of the Line excl. Vectra transaction, the highest share traditionally contributed by DI BRE, BRE Leasing, BRE Bank Hipoteczny and Intermarket Bank Structure of the Profit before Tax of Corporations & Financial Markets Q1 28 (PLN M) Risk and Corporate Liquidity companies* Mngt.; Other; 7.8 Trading & Investments 54.2% (19,7% net of the one-off) Fiancial markets; 38.1 Proprietary investments; Investment companies*.5 * Including consolidation adjustments and BSS cost Financial institutions; 4.2 K3; 17.8 K2; 53.1 K1; 27,1 Corporates & Institutions 45.8% (8,3% net of the one-off) 16

17 Results and Achievements of the Business Lines BRE Bank Retail Banking in Q1 28 Summary Steady high contribution to the Line s profit Steady growth of the client base Acquisition in Q1 28: PLN 76 M of profit before tax of the Line in Q1 28 (up by 9.8% YoY) 18% contribution to the profit of the Group and 4.8% contribution to the net interest and commission income of the Group Expansion in the lending market Total loans portfolio up to PLN 14.9 B (+13.8% QoQ) Up to #2 by sales of mortgage loans in Poland: k clients (+6% QoQ) (incl k microenterprises; +6.6% QoQ) in Czech and Slovakia: 85.3 thou. customers total (+232% QoQ) Growing market share in deposits Retail deposits up by PLN 1.6 B in Q1 28 (up by 15.4% QoQ) 4.2% market share in household deposits at the end of March 28 ( vs. 3.9% at the end of 27 and 3.2% at the end of Q1 27) 17

18 Results and Achievements of the Business Lines BRE Bank Retail Banking in Q1 28 Clients, Deposits and Loans (M) 3 2 At the end of Q1 28 End of Q1 28 Change End of M clients +6.% +6.% 2. M 1 Customers Accounts 2.6 M accounts +6.7% +6.7% 2.4 M (PLN B) mbank MultiBank Deposits Loans Mortgage Loans 12. B 14.9 B 12.6 B deposits (PLN) +15.4% +15.4% 1.4 B loans (PLN) +13.8% +13.8% 13.1 B incl.: mortgage +13.8% loans (PLN) +13.8% 11.1 B 18

19 Results and Achievements of the Business Lines BRE Bank Retail Banking in Q1 28 Mortgage Loans Successful quarter in the mortgage loans market Mortgage loans balance-sheet portfolio up by PLN 1.5 B in 28 (+53.6% YoY) jointly in mbank and MultiBank #2 in Poland* in newly granted mortgage loans Mortgage Loans (PLN M) Housing Loans Market Share (PLN B) 28: 9.7% +53.6% 2.9% 5.1% 6.5% 9.% 9.5% Jan Jun Dec Jun Dec Jun Dec Jun Dec Jun Dec Mar mbank MultiBank BRE Bank (LHS) Market (RHS) Market share * According to available data, Jan-Feb 28 19

20 Results and Achievements of the Business Lines BRE Bank Retail Banking (+PB) in Q1 28 Financial Results Structure of the Profit before Tax of Retail Banking in Q1 28 MultiBank; (PLN M) 33.4 Profit before Tax of the Segment (by quarter**, PLN M) mbank CZ &SK mbank*; 35.4 PB; 7.4 Other; -.2 *mbank s profit before tax including mbank s loss in the Czech Rep. and Slovakia at PLN 16 M **26 data based on 27 quarterly reports -27,1 mbank CZ &SK Q1 6 Q2 6 Q3 6 Q4 6 Q1 7 Q2 7 Q3 7 Q4 7 Q1 8 Good profitability: PLN 76 M of profit before tax in Q1 28 v. PLN 69.3 M in Q1 27 and PLN 29.8 M in Q The contribution of the Line to the Group s profit before tax in Q1 28 at 18% v. 23% in Q Profitability growing thanks to a much higher net interest (+52% YoY) and commission income (+1% YoY) Costs up by 52% YoY due to the expansion of the branch network including the foreign network Net Interest Income Net Fee & Commission Income Net Trading Income Gains less Losses from Investment Securities Structure of the Profit before Tax of the Segment in Q1 28 (PLN M) Impairment Losses Costs and Amortisation Net of Other Operating Income and Expenses Pre-tax Profit 2

21 Agenda BRE Bank Group Results Q1 28 BRE Bank Group: A Quarter in Brief Key Achievements and Financial Results of the Business Lines Analysis of the Consolidated Financial Results Appendix 21

22 Analysis of the Results, Q1 28 P&L of Continued Operations (PLN M) Q1 28 QoQ change YoY change Total income* % +57.6% Total cost (344.7) -7.% Operating profit** % Net provisions (22.2) -38.5% Profit before tax % Net profit*** % +19.6% +19.2% +22.3% +15.4% % * Including net other operating income and cost ** Before provisions *** Including profit of minority interest 22

23 Analysis of the Results, Q1 28 Significant Growth of Income Income up by 3.3%, also driven by the one-off profit on the sale of Vectra and the seasonal high profit of BRE.locum Income net of the Vectra transaction up by 7.6% QoQ BRE Bank Group Income Q1 28 v. Q4 27 (PLN M) % Structure of BRE Bank Group Income by Business Line, Q1 28 Other; 41 M; 5% Retail Banking & PB; 214 M; 28% Corporates and Institutions; 324 M; 42% Trading and Investments; 192 M; 25% Q4 27 Net Interest Income Net Fee and Commission Income Net Trading Income Gains less Losses from Investment Securities Net Other Operating Income and Cost Q1 28 *Income including credit provisions, revenue split and other operating income/cost. 23

24 Analysis of the Results, Q1 28 Interest Income Net Interest Income, Q1 28 by Business Line* (PLN M) Steadily growing interest margin 139.7, Retail Banking & PB Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q Corporates & Institutions Trading and Investments Corporations & Financial Markets Net Interest Margin (NIM, %)** Asset Management Other and Eliminations Net Intetest Income in Q Q Structure of Interest Income Q1 28 (%) Loans and Advances 74% Debt Securities 7% Other 1% Cash and Short-term Funds 9% Investment Securities 9% * Continued and discontinued operations **Margin in the BRE Bank Group calculated as interest income to average income-earning assets 24

25 Analysis of the Results, Q1 28 Commission Income Net Commission Income, Q1 28 by Business Line* (PLN M) 53.5 Retail Banking & PB 97.3 Corporates & Institutions -6.2 Trading and Investments Corporations & Financial Markets 6.7 Asset Management*** 5.9 Other and Eliminations Net Fee and Commission Income in Q1 28 Structure of Net Commission Income Q1 28 (%) Brokerage fees 14% Credit related fees and commisions 31% Other 8% Investment products** 7% Guarantees and trade finance commission s and fees 4% Client's accounts and money transfers 16% Payment cards 2% Relatively low exposure to income on investment products** Share of Investment Products in Net Commission Income % 7.4% * Continued and discotinued operations ** Investment funds, portfolio management, etc. *** Discontinued operations 25

26 Analysis of the Results, Q1 28 Costs under Control Overhead Costs (+Amortisation/Depreciation) of the BRE Bank Group By Quarter Costs, PLN M % Other; 11 M; 3% 56.9 Q1 27 Q2 27 Q3 27 Q4 27 Q1 28 Payroll Maintenance Amortisation Other Cost Structure by Business Line* at % QoQ 58.1 C/I 52.7 C/I % Corporates and Institutions 177 M; 52% C/I ratio** of regular operations at 52.7% in Q1 28 Overhead costs and amortisation/depreciation in Q1 28 at PLN M, up by 19.6% YoY and down by 7% QoQ Highestgrowthreportedinpayrollcosts (up by 22.8% YoY) due to: -Business expansion driving workforce costs -Bonus provisions; Maintenance costs up by 19.2% YoY dueto theexpansion of the branch network and operations (including mbank s transborder expansion) Retail Banking & PB; 138 M; 4% *Continued and discontinued operations Trading and Investments; 18 M; 5% * *Calculated only for continued operations net of the one-off transaction; the ratio for continued and discontinued operations jointly was 49% in Q1 27, 53.4% in Q2 27, 53.7% in Q3 27, 55.5% in Q4 27, and 43.6% in Q

27 Analysis of the Results, Q1 28 Credit Provisions Stabilised quality of the portfolio Net provisions driven by portfolio provisions growing with the growth of the risk portfolio Net Credit and Loans Impairment Provisions (consolidated data, PLN M) Q Q Q Q4 26 Q Q Q Q Q Net credit and loans impairment provisions of the BRE Bank Group at PLN 22.2 M in Q ,5 4 3,5 3 2,5 2 1,5 1,5 BRE Bank Portfolio Quality: Comparison (%) Q NPL acc. to National Bank of Poland (LHS)* Default acc. to IAS (RHS) Q2 26 Q3 26 Q4 26 Q Q Q Q Q ,5 3 2,5 2 1,5 1,5 The Bank s provisions set up in Q1 28 were PLN 15.4 M Further improvement of the quality of the credit portfolio The ratio of provisions to default exposures decreased in Q1 28 due to the sale of a part (PLN 21.5 M) of the Retail Banking default portfolio (1% coverage) *For comparability calculated on the balance-sheet and off-balance sheet portfolio 27

28 Analysis of the Results, Q1 28 The Bank Keeps a Safe Capital Adequacy Ratio 7 6 Relation between Capital Adequacy Ratio (CAR) and Risk Weighted Assets (RWA) 12,5% 11,5% Available growth in RWA as at (PLN B; LHS) RWA (PLN B, LHS) CAR (%; RHS) 1,5% 5 9,5% 4 8,5% ,5% 6,5% 5,5% 4,5% Dynamicgrowthinrisk-weightedassets (RWA) in Q1 28 by PLN 4.1 billion or 9.8% QoQ Q1 6 Q2 6 Q3 6 YE 6 Q1 7 Q2 7 Q3 7 YE 7 Q1 8 Basel I Basel II Change of the Capital Adequacy Ratio (CAR) under Basel II +83 bps -84 bps 3,5% Nevertheless, the consolidated capital adequacy ratio (under NCA) remains stable: 9.48% at v. 9.49% at the end of 27 thanks to retention of H2 27 profit Assuming the use of available Tier II capital (Tier II capital did not grow in Q1 28), the BRE Group may grow its RWA by another PLN 2.5 billion 9.49% 9.48% H 27 Profit Retention Q1 28 Growth of RWA

29 Summary Is the BRE Bank Group Considering a Change of Strategy? The main directions of BRE Bank Group s strategic development remain valid 28 business targets and mid-term financial goals are maintained Updated strategy of the BRE Bank Group for the years to be announced in the autumn of 28 29

30 Summary 1 ROE on the core business continues to grow; it was 35.3% before tax in Q Dynamic growth in volumes of gross loans, up by 1.3% QoQ and 42.2% YoY; with a balanced contribution of retail loans and corporate loans Deposits grew less fast due to seasonal factors (up by 3.7% QoQ): corporate deposits decreased but the year-on-year growth was high (26.%) 3 The capital adequacy ratio at a safe 9.48%, under NCA, despite dynamic growth in RWA in Q The main goals of the BRE Bank Group strategy unchanged; strategy update to be presented in the autumn of 28 3

31 Agenda Appendix 31

32 Detailed Results of the Business Lines, Q

33 BRE Bank Retail Banking v. the Market: Deposits and Investment Funds Deposits and Investment Funds (PLN B) 28: 3.5% BRE Bank Retail Banking Line 1.3% 1.7% 2.1% 2.6% 3.1% continues 15 4 to grow 12, above the market , BRE Bank (LHS) 2, Market (RHS) Market share Jan Jun Dec Jun Dec Jun Dec Jun Dec Jun Dec Mar * At the end of March 28 33

34 BRE Bank Retail Banking: Savings BRE Bank customers quickly react to changing conditions on the financial market Investment Fund Assets At Quarter End (PLN M) Structure of Investment Funds Assets Equity 61.% Debt Securitie s 5.4% Hybrid 22.2% Pieniężne 7.2% Q1 6 Q2 6 Q3 6 Q4 6 Q1 7 Q2 7 Q3 7 Q4 7 Q1 8 ebroker and Brokerage Service account for 22% of DI BRE s trading in equities Total ebroker and Brokerage ServiceTrading by Quarter (PLN M) Q1 6 Q2 6 Q3 6 Q4 6 Q1 7 Q2 7 Q3 7 Q4 7 Q DI BRE Equities Trading and Market Share by Quarter (PLN M) 5.6% 6.% 6.6% 6.4% 6.5% 7.1% 6.8% 6.3% 5.8% Q1 6 Q2 6 Q3 6 Q4 6 Q1 7 Q2 7 Q3 7 Q4 7 Q1 8 8% 7% 6% 5% 4% Equities trading directly by DI BRE Equities trading by ebroker & Brokerage Service DI BRE share in WSE equities trading 34

35 BRE Bank Retail Banking: mbank ebroker, MultiBank Brokerage Service Dynamic growth of brokerage services for Retail Banking customers In March 28 ebroker trading exceeded PLN 229 M, and Brokerage Service trading PLN 64 M There were over 13.8 thousand mbank and MultiBank investment accounts at the end of March 28 mbank and MultiBank customers opened 8.4 thousand investment accounts in 28 year to date Incremental trading of PLN 1,285.6 M for ebroker and PLN 2,112.7 M for the Brokerage Service since the launch Opened Investment Accounts (thou., incremental) Jan 26 Jan ebroker and Brokerage Service Trading by Month (PLN M) Mar Jun Sept Dec Jan Mar Jun Sept Dec Jan Mar Jun Sept Dec March 28 mbank MultiBank Mar Jun Sept Dec March 28 35

36 BRE Bank Retail Banking v. the Market: Loans BRE Retail Banking Loans (PLN B) % 15 12,5 1 7,5 5 2,5 Jan 1.2% 2.1% 3.% Jun Dec Jun Dec Jun Dec 4.5% 26 BRE Bank (LHS) Market (RHS) Market share Jun Dec 5.2% 27 Jun Dec Mar BRE Retail Banking loans portfolio up to PLN 14.9 B Market share in retail loans up to 5.5% at the end of March 28 36

37 BRE Bank Retail Banking v. the Market: Mortgage Loans In Q1 28 we sold PLN M of new mortgage loans, remaining one of the top market leaders Mortgage Loans: Market Leaders by Value of Sales January-February 28 (PLN B) Housing Loans (PLN B) 28: 9.7% % 5.1% 6.5% 9.% 9.5% PKO BP.9 BRE Bank*.7 Millennium.5 Kredyt Bank GE.5 Mieszkaniowy.4 Pekao.4 Dom Bank Jan Jun Dec Jun Dec Jun BRE Bank (LHS) Market (RHS) Market share Dec Jun Dec Jun Dec At the end of March * MultiBank + mbank 37

38 BRE Bank Retail Banking: Mortgage Loans: Portfolio Structure and Quality BRE Bank s Mortgage Loans Portfolio (Retail Banking loans to individuals) Structure of the Retail Banking Loans Portfolio (Household Loans) at Total PLN FX 3% 3% 5% Balance-sheet value (PLN B) Average maturity (years) Average value (PLN thou.) Average LTV (%) NPL (%) At % 89% Mortgage Loans Credit Cards Credit Lines Other Currency Structure of the Retail Banking Loans Portfolio (Household Loans) at FX 73% PLN 38

39 BRE Bank Retail Banking: Acquisition of Microenterprises thousand microenterprises served by BRE Bank Retail Banking Number of served enterprises up by 15.5 thousand in Q1 28 PLN 1,324.7 M of loans granted to microenterprises at the end of Q1 28, of which 33.5% were mortgage loans mbank MultiBank Number of Microenterprises Served by BRE Bank Retail Banking (thou.) In this case, microenterprises imply self-employed individual customers 39

40 BRE Bank Retail Banking: Growth of Sales, Q1 28 mbank Clients (thou.) +26% Deposits (PLN M) Loans (PLN M) +48.9% +7.7% Q1 7 Q2 7 Q3 7 Q Q Q1 7 Q2 7 Q3 7 Q Q Q1 7 Q2 7 Q3 7 Q Q MultiBank Clients (thou.) Deposits (PLN M) Loans (PLN M) +2.7% +57.9% +47% Q1 7 Q2 7 Q3 7 Q Q Q1 7 Q2 7 Q3 7 Q Q Q1 7 Q2 7 Q3 7 Q Q Balance Increment 4

41 BRE Bank Retail Banking: Internet Platform SUS and Insurance Centre It s hard to top the Car Insurance Supermarket Newsweek mbank s offer is the most attractive Pentor Research International The Car Insurance Supermarket (mbank) was launched on 13 February 27 and the Insurance Centre (MultiBank) on 3 September 27 Comparison and choice of 7 offers of liability and accident insurance, each offer in 3 variants 32,167 insurance contracts (Q1 28) Purchase and service integrated with the ekonto and MultiKonto account 24/7 access to insurance policy information Electronic applications and policies minimum paper PLN 8.6 M of premiums written Liability insurance policy available in 6 languages (Polish, English, German, French, Italian, Spanish) Low monthly payments charged by mbank and MultiBank 41

42 BRE Bank Retail Banking: Growth of the Distribution Network mbank Distribution Network (in Poland) MultiBank Branches (in Poland) Total: Total: Q1 27 Q2 27 Q3 27 Q4 27 Q Target Q Q2 27 Q Q Q Target Financial Centres mkiosks mkiosks - partner outlets Financial Services Centres Parter outlets mbank s distribution network in Poland had 117 locations at MultiBank had a network of 113 branches at the end of March 28 42

43 BRE Bank Retail Banking: mbank in Czech and Slovakia At the end of Q1 28 End of Q1 28 Change End of 27 (thou.) thou. clients x3 x thou. 3 Customers Accounts thou. accounts x4 x thou. (EUR M) (EUR M) M deposits (EUR) x25 x M 1 5 Deposits 2 1 Loans 5.4 M loans (EUR) 1. M x5 x5 Czech R. Slovakia 43

44 Corporates and Institutions: Loans and Deposits Corporate Loans Volume (BRE Bank, PLN B) % 34% 36% 39% % % % % Corporate Deposits Volume (BRE Bank, PLN B) % % 48% % 53% 44% % % 56% 58% 58% 57% 55% 54% 39% 42% 37% 41% 36% 42% 42% 4% 7% 8% 8% 9% 9% 8% 9% 1% 11% 1% 11% 14% 13% 12'25 12'25 12 '26 12 '26 3'27 3'27 6'27 6'27 9'27 9'27 12 '27 12 '27 3'28 3'28 12'25 12'25 12 '26 12 '26 3'27 3'27 6'27 6'27 9'27 9'27 12 '27 12 '27 3'28 3'28 Loans (including the public sector, syndicated loans and project finance) were up by PLN 1.7 B QoQ Loans to enterprises were up by 11.2% QoQ at BRE Bank in Q1 28; the market grew by 6.8% Deposits (including the public sector) were down by PLN 2.1 B QoQ and up by 6.% YoY Deposits of enterprises were down by 6.2% at BRE Bank; the market fell by 7.% K1 K2 K3 Enterprises 44

45 Corporates and Institutions: Loans and Deposits Market Share BRE Bank s Market Share in Corporate Loans and Deposits* 12% 1% 8% 6% 4% Jan-5 Mar-5 May-5 Jul-5 Sep-5 Nov-5 Coprorate deposits Jan-6 Mar-6 May-6 Corporate loans Source: NBP reports Jul-6 Sep-6 Nov-6 Jan-7 Mar-7 May-7 Jul-7 Sep-7 Nov-7 Jan-8 Mar-8 *receivables/amounts due to enterprises and State companies, private companies and partnerships, and co-operatives 45

46 Corporates and Institutions: Cash Management Cash Management Strategic Product Line Supporting Long-term Customer Relations Direct Debit (thou. of transactions) Identification of Trade Payments (thou. of transactions) Number of Clients Using Cash Consolidation Services +23.6% +44.5% +39.3% Q1 27 Q1 28 Q1 27 Q1 28 Q1 27 Q1 28 The extensive cash management service including the identification of payments (Identification of Mass Payments, Identification of Trade Payments, Payment Identification System, added value services for mass suppliers) helped to grow the number of clients using the Identification of Trade Payments service by 43.1% The number of clients using bank account cash consolidation services grew by close to 4% 46

47 Corporates and Institutions: Foreign Trade Service and Risk Management Products Foreign Trade Service Sales of Financial Instruments The market position in foreign trade service and the launch of innovative product solutions helped to grow the revenue from trade finance services by 17.9% year on year to PLN 16.3 M in Q1 28 The profit on sales of financial instruments to corporate customers was PLN 51.5 M in Q1 28 The profit was up by 4% YoY Structure of Profit on Trade Finance Products Profit on Sales of Financial Instruments (PLN M) 1% 12% +17.9% 1% 11% Collections % % 39% Letters of Credit 17 51% 49% Discounting Products Guarantees 2 23 Head Office Branches Q1 27 Q1 28 Q1 27 Q

48 Corporates and Institutions: Good Market for Leasing and Factoring BRE Leasing Intermarket Group Value of leasing contracts signed in Q1 28 was PLN.8 B, up by 23% YoY Profit before tax in Q1 28 was PLN 1.5 M, up by over 19% YoY The profit before tax of Intermarket Group companies in Q1 28 was PLN 14.4 M (up by 17.% YoY); the profit before tax of Polfactor was PLN 3.1 M (up by 21.3% YoY) Intermarket Group companies sales totalled EUR 1.4 B, up by 8.% YoY Value of BRE Leasing Contracts (PLN M) +23.% Sales of Intermarket Group Companies (EUR B) +8.% Q1 27 Q1 28 Q1 27 Q1 28 Sales calculated acc. to average NBP exchange rate as of

49 Corporates and Institutions BRE Bank Hipoteczny (BBH) Loans Portfolio (PLN M) Balance-sheet Exposure Housing Loans** Local Government Loans Profit before Tax (PLN M) % Commercial Loans Q1 27 Q1 28 BBH s total balance-sheet and off-balance-sheet loans portfolio was PLN 4.3 B at the end of Q1 28, up by 3.7% YoY BBH s profit before tax was PLN 11.4 M at the end of Q1 28, compared to PLN 9.4 M in Q1 27 In Q1 28, BBH issued mortgage bonds at PLN 2 M (interest at WIBOR +8 bp, maturing in mid 21) *As of July 24. Bank Hipoteczny stopped granting loans to retail customers. Thevolumeofhousingloansrepresentstheexisting portfolio still managed by the Bank 49

50 Corporates and Institutions Dom Inwestycyjny BRE Banku (DI BRE) Profit before tax at PLN 1.5 M in Q1 28 compared to PLN 12.3 M in Q1 27 and PLN 53.9 M in 27 DI BRE equities trading at PLN 5.9 B in Q1 28 Falling share in equities trading on the WSE due to less active trading by retail clients and gradually increasing trading by WSE remote members (foreign brokers) Further growth in the number of DI BRE clients: thou. accounts at the end of Q1 28 compared to thou. in 27 Two primary market transactions in Q1 28 (Optopol SA and Unibep S.A.) totalling PLN 137 M DI BRE Equities Trading PLN M DI BRE Accounts End of Q1 28 (thou.) DI BRE accounts 24. ebroker (mbank) 91. Brokerage Service (MultiBank) 14.3 TOTAL DI BRE Market Share Q1 28, by trading volume* Equities 5.8 % #7 Bonds 3.33 % #6 Futures 1.86 % #3 Options % #1 * Calculations based on WSE, DI data DI BRE Share in WSE Equities Trading By Quarter ebroker and Brokerage Service trading 5.6% 6.% 6.6% 6.4% 6.5% 7.1% 6.8% 6.3% 5.8% Direct trading via DI BRE Q1 27 Q2 27 Q3 27 Q4 27 Q1 28 Q1 6 Q2 6 Q3 6 Q4 6 Q1 7 Q2 7 Q3 7 Q4 7 Q1 8 5

51 Trading and Investments Market Share BRE Bank s Maret Share* in Investment Banking Services (BRE in navy blue) BRE Bank in the Market of Non-Treasury Debt** at (PLN M) 16.8% 22.7% 38.% Market BRE Bank Treasury Bills and Bonds IRS/FRA OIS Short-term Debt Corporate Bonds Bank Bonds 5.2% 15.2% 19.54% # % #2 29.4% #1 FX Spot & Forward WIG2 Index Options * As at ; own calculations based on NBP and WSE figures ** After Fitch Polska S.A., Rating & Rynek, and own calculations 51

52 Trading and Investments Proprietary Investments Portfolio At the end of Q1 28, the portfolio under management was PLN 312 M at cost Compared to the end of 27, the portfolio under management was down by PLN 122 M, due to the sale of Vectra SA and registered share capital increase of Garbary Sp. z o.o. The profit on the sale of Vectra, including additional cost, was PLN M Major Equity Investments at Equity Stake PZU SA.76% Garbary Sp. z o.o. Portfolio Value (PLN M) 1.% Incl. PLN M Bonds* Value at cost Book value *Bonds issued due to mezzanine finance transactions 52

53 Additional Information: Selected Financial Data 53

54 Additional Information: Selected Financial Data Consolidated Profit and Loss Account under IFRS PLN By quarter * Net interest income Net commission income Dividend income Q1 27 Q2 27 Q3 27 Q4 27 Q Trading profit Income from investment securities (3 249) (78) Other operating income Net credit and loans impairment provisions (6 944) 1 78 (34 792) (36 153) (22 242) Overhead costs ( ) (276 58) (252 22) ( ) ( ) Depreciation/Amortisation (42 942) (45 42) (46 55) (41 43) (45 415) Other operating cost (31 25) (19 28) (15 77) (66 362) (77 839) Operating profit Share in profits (losses) of associated companies Profit before tax ** Net profit * Quarterly data for continued operations; data for Q1 27 based on the quarterly report for Q1 28 ** Profit on continued operations. 54

55 Additional Information: Selected Financial Data Net Interest Income The net interest income up quarter by quarter: PLN M in Q1 28 v. PLN M in Q4 27, PLN M in Q1 27 Consolidated net interest income up by 8.3% QoQ in Q1 28; income up by 38.6% YoY in Q1 28 The largest item, interest income on loans, up by 9.4% QoQ due to growth of the loans portfolio; interest on debt securities held for trading up by 38.9% QoQ Interest Income Structure (by quarter, consolidated data, PLN M) Q1 27 Q2 27 Q3 27 Q4 27 Q1 28 Other Debt securities held for trading Loans and advances Investment securities Cash and shortterm deposits Interest margin up to 2.4% at the end of Q1 28 v. 2.3% in Q1 27 BRE Bank Group margin as net interest income to average interest-earning assets 55

56 Additional Information: Selected Financial Data Net Commission Income Net commission income in Q1 28 up by 1.9% QoQ and up by 5.3% YoY The largest item, lending commissions, up by 3.% QoQ and up by 58.5% YoY Broker s fees up by 11.8% QoQ Payment card fees down by 5.5% QoQ Commission costs in Q1 28 down by 15.7% QoQ Commission Income Structure (consolidated data, PLN M) Q1 27 Q2 27 Q3 27 Q4 27 Q1 28 Other Money transfer fees Broker's fees Payment card service Guarantees and documentary transactions Portfolio management fees Lending fees 56

57 Additional Information: Selected Financial Data Trading Income Trading Income Structure (%) 16 Trading Income Structure (by quarter, consolidated data, PLN M) Q1 28 Trading & Origination 31,6% Risk & liqidity 5,7% Customerdriven 62,7% Q Trading & Origination 3,% Q1 27 Q2 27 Q327 Q4 27 Q1 28 K1 K2 K3 Others Risk & liquidity Trading &Origination Retail Risk & liqidity 9,8% Customerdriven 6,1% 57

58 Additional Information: Selected Financial Data Overhead Cost Structure Structure of Overhead Costs (+Amortisation/Depreciation) by quarter, PLN M, consolidated data C/I of the BRE Bank Group (based on average balances) ,1 42,9 1,9 8,7 45,4 122, 8,9 46,6 91,3 7,7 41,4 135,2 1,3 45,4 12, ,3 145,9 152, 186,3 168,7 Q1 27 Q2 27 Q3 27 Q4 27 Q1 28 Payroll Maintenance Amortisation Other * 3.6.7** 3.9.7** ** ** * Before elimination of the consolidated profit on the sale of SAMH, C/I was 49% ** For continued & discontinued operations C/I was 53.4% in Q2 27, 53.7 % in Q3 27, 55,5% in Q4 27, 43.6% in Q1 28. For continued operations net of the sale of Vectra SA in Q1 28: 52.7%. 58

59 Additional Information: Selected Financial Data Loans and Deposits Loans (PLN B, net) Deposits (PLN B) +44.3% +26.% 25,8 29, 31,6 33,7 +12% +9% +7% 37,2 26,7 29,3 29, 32,4 33,6 +11% +1% -1% +12% +4% The loans portfolio grew well above the sector YoY (up by 44.3% v. sector up by 29.5%) mainly driven by mortgage loans expansion and an upturn in corporate loans The loans portfolio grew above the sector QoQ (up by 1.6% v. sector up by 6.5%) mainly driven by corporate loans (up by 11.7% QoQ) Deposits up YoY much above the sector (BRE Bank up by 26.% v. sector up by 15.1%) driven by growing corporate and retail deposits Deposits up below the sector (BRE Bank: +3.7% v. the sector: +4.1% QoQ) in Q1, due to seasonal decline in corporate deposits (-3.2% QoQ) 59

60 Additional Information: Selected Financial Data Balance Sheet Analysis: Assets Structure of Assets (PLN B) ,4 4,1 8% 3,7 1% 7% 4,8 3,7 7% 3,3 2,7 3,3 7% 6,4 4,3 8% 6% 8% 4, 4 1,6 2,3 1,8 3,4 1,5 1,6 3% 1,5 3% 9% 3,8 3% 4% 4,7 2,1 6,7 3% 8% 9% 15% 2,4 5% 25,8 57% 29, 59% 31,6 61% 33,7 3,2 3,9 4,9 2,2 3, 6,2 37, Other Assets under pledge Investment securities Derivative financial instruments Trading securities Amounts due from banks Loans and advances to customers 8% 7% 11% 4% 6% 4% 6% 5% 7% 8% 4% 5% 1% 61% Loans and Advances to Customers* - Portfolio by Customer Category (PLN B) , 9,9 15,5 4% 37% 59%,9 11,4,8 12,7,6 13,9 17,2 18,6 19,5,6 15,2 21, Public sector Retail Corporate *Gross loans and advances 3% 39% 58% 3% 39% 58% 2% 41% 57% 2% 4% 58% 6

61 Additional Information: Selected Financial Data Balance Sheet Analysis: Liabilities Structure of Liabilities (PLN B) Structure of Deposits (PLN B) ,6 2,8 3,6 8,7 8% 6% 8% 19% 4,1 4 8% 3,3 3,1 6% 3,4 3,5 7% 9, 18% 11,9 26,8 29, % 6% 8% 6% 7% 23% 56% 4,9 3,4 2,9 12,3 22% 5,7 3,7 2,7 14,9 32,4 33, Other Equity (total) Liabilities under issued debt securities Liabilities to other banks Liabilities to customers 9% 6% 5% 58% 9% 6% 4% 25% 56% ,2 15,8 1% 59%,1 %,2 18,5 6% 17,3 59%,7 18,8,2 18,2 15, Retail Corporate Public sector 1% 2% 58% 1,7 1,7 11,5 12,9 4% 4% 4% 4% 1% 54% 45% 61

62 Additional Information: Selected Financial Data Capital Adequacy Ratio Capital Adequacy Ratio under NCA Capital Requirement (PLN M) Basel I Basel II Q1 28 Basel II Credit risk Market risk Operational risk Other risks Total capital requirement CAR (%)

63 Additional Information: Selected Financial Data Structure of BRE Bank s Risk Portfolio Continued decrease of default loans as a percentage of the loans portfolio, falling ratio of provisions to default exposures 1% 8% 6% 4% 9.2% % 8.5% % 7.2% % 5.9% % 5.6% % 5.5% 4.8% % % 4.4% % % % Quality of the Loans and Default Portfolios NPLs under NBP rating (balance-sheet NPLs to total loans) Specific provisions to 76% 81% 73% 7% the default portfolio 2% Non-default % Default PLN M % share % share % share Default Non-default Total Structure of the Default Portfolio 63

64 Additional Information: Selected Financial Data NPLs: Portfolio Structure* The share of NPLs in the portfolio (balance-sheet) remained stable Exposure PLN B % Provisions % coverage Exposure PLN B % Provisions % coverage Exposure PLN B % Provisions % coverage Regular Standard Watch Irregular Substandard Doubtful Loss As BRE Bank applies the IFRS provisions and methodologies, the structure of the credit risk portfolio under PAS (Finance Ministry Regulation) can be used mainly to compare BRE with banks which do not apply IFRS. TOTAL Provisions shown under IFRS the portfolio provision shown under watch * BRE Bank s balance-sheet loans portfolio balance-sheet credit debt (excluding credits not drawn) 64

65 Macroeconomics 65

66 Macroeconomics: GDP and Labour Market Relatively high GDP growth, very dynamic growth of wages and employment GDP growth at 6.1% YoY in Q4 27 and 6.6% YoY in 27 However, gradual decrease in GDP rate since Q1 27 suggests that the Polish economy is past the peak of the economic cycle GDP mainly driven by domestic demand, especially investments which were up by 16.4% YoY in Q4 27 and 19.3% YoY in 27 Private consumption growth in 27 greater than in 26 (5.2% v. 4.9%); relatively low growth in consumption in Q4 27 (3.7% YoY) surprising in view of fast growing household incomes Official unemployment rate down to 11.1% in March 27; according to Eurostat, unemployment was down to 8%. Employment in the corporate sector up by 6% YoY in Q1 28, wages up by 11.4% YoY Growth in wages exceeding growth in productivity caused sharp increase in unit labour costs GDP growth factors (%) Mar-5 Jun-5 Sep-5 Dec-5 Mar-6 Official unemployment rate (%, RHS) andgrowthinwagesinthecorporatesector(% YoY, LHS) Consumption Investment Net exports Others GDP Jun-6 Sep-6 Dec-6 Average w ages (%; YoY; LHS) Unemployment rate (% ;RHS) Mar-7 Jun-7 Sep Dec-7 Source: GUS Source: GUS 66

67 Macroeconomics: Inflation and NPB Interest Rates Growing inflation: A monetary policy challenge CPI since November 27 above the ceiling of the band of deviation from the inflation target; CPI at 4.1% YoY in March 28 Most projections expect continued growth of inflation due to high food and oil prices, raised regulated prices, and growing prices of services Net core inflation gradually growing to 2.7% in March The Monetary Policy Council (RPP) hiked the interest rates three times in Q1 28, raising the NBP reference rate to 5.75% High and growing inflation should prompt RPP to continue tightening the monetary policy; concerns with the outlook of economic growth and negative effects of continued strengthening of the zloty could have the opposite effect Rising short-term interest rates and slower growth of the yield of long-term bonds flattened the yield curve. WIBOR 3M was above the yield of 2Y and 5Y Treasury bonds for the first time in 3 years. CPI (% YoY), RPP inflation target NBP intervention rate (%) 7% 6% 5% 4% 3% 2% 1% % Yield of 2Y, 5Y and 1Y bonds (%, LHS) and spread of 2Y and 5Y bonds (bp, RHS) 6,3% 6,% 5,7% 5,4% 5,1% 4,8% 4,5% spread 2 vs 5 1Y 5Y 2Y CPI NBP

68 Macroeconomics: Loans and Deposits in the Banking Sector Sharp fall in corporate deposit growth, gradually slowing growth of household loans Deposits Loans Corporations 15 Growth of corporate deposits down from ca. 3% to only 6.1% YoY This means that the free cash available to companies for deposits is shrinking. Corporate deposits down by ca. PLN 1 B year to date Companies strong need for cash to finance current business and investment projects demonstrated by the high growth in loans at close to 25% YoY since August 27 Withdrawal of cash from investment funds and fast growth in wages and other income caused high growth in household deposits, up by 16.8% YoY in March 28, the highest rate in more than 6 years Growth of household loans falling steadily since August 27 (from over 41% to 37.9% in March 28), mainly due to less demand for mortgage loans Deposits Loans (total) Housing loans Households Source: NBP Source: NBP 68

69 Contact BRE Bank s Investor Relations Officers at your service: Jakub Korczak Director, Investor Relations Direct dial: Secretariat: Fax: jakub.korczak@brebank.pl or Joanna Filipkowska Analyst, Investor Relations Tel.: Fax: joanna.filipkowska@brebank.pl Agnieszka Solarz Investor Relations Tel.: Fax: agnieszka.solarzjedrych@brebank.pl Visit our Investor Relations website: 69