PRESENTATION FOR INVESTORS AND ANALYSTS. London, May 13th, 2003

Transcription

1 PRESENTATION FOR INVESTORS AND ANALYSTS London, May 13th, 2003

2 FINANCIAL RESULTS AFTER 1Q 2003* IQ 2002 IQ 2003 Change Total revenues (PLN mln) ,6% Costs (PLN mln) ,5% Operating income (PLN mln) ,0% Net income (PLN mln) ,1% ROE (%) 17,8 14,3-3,5 p.p. Cost/Income (%) 47,0 50,6 +3,6 p.p. * unaudited, PAS 1

3 Macroeconomic environment 2

4 MACROECONOMIC ENVIRONMENT Forecast of GDP growth in ,9% 2,0% 1,8% 2,8% Q 1 Q 2 Q 3 Q 4 Forecast of Bank Pekao estimates GDP growth by 2.1% in 2003 and by 1.9% in IQ Actual estimates of real GDP growth in IQ ,1-2,2% not more than 2.1% Actual dynamic of Polish economy confirms adequacy of forecast s assumptions. by Ministry of Finance by GUS 3

5 MACROECONOMIC ENVIRONMENT Loans to households and corporations PLN bln % ,6 I ,7 130,06 88,00 II III IV V VI VII VIII IX X XI XII I- 03 Loans to hauseholds Loans to corporations Annual and monthly dynamics of money supply M-3 114,6 99,5 107,8 101,8 103,2 98,3 134,89 92,03 II III Lack of acceleration in credit action for households and corporations (growth of volumes reported in March was mainly caused by weakening of the zloty - higher equivalent in zlotys of FX denominated credits). Dynamic of loans to households remains low due to high unemployment (18.7%) and weak growth of real wages (round 2%). Dynamic of loans to corporations remains low due to weak financial standing of companies (one third of them report negative financial results) and restrictive regulatory policy. In the 4Q 2002 the period of weakening money supply dynamic come to an end, but from that moment money supply remains flat and does not show signs of any acceleration. 90 I- 01 III V VII IX XI I- 02 m-o-m III V VII IX XI I- 03 y-o-y III 4

6 MACROECONOMIC ENVIRONMENT Reference rate, WIBOR 3m, and inflation I-02 11,0 10,0 3,4 II III IV V VI 8,5 VII 1,3 8,9 VIII IX 6,2 6,0 0,6 Reference rate Inflation 12-m WIBOR 3M (av. in the month) X XI XII I-03 II III 12-month inflation index remains below 1% since November Lower than expected inflation encouraged the Monetary Policy Council to continue gradual cuts of interest rates. Real market rate has been reduced to round 5% and further drop seems possible. 5

7 Financial results after first quarter 2003* * unaudited, PAS 6

8 BALANCE SHEET CHANGES PLN bil 75,0 + 1,8% ASSETS 60,0 45,0 30,0 15,0 0,0 PLN bil 75,0 LIABILITIES 60,0 45,0 30,0 15,0 0,0 32,0 29,6 29,8 21,0 21,2 22,9 7,1 7,1 6,3 6,4 6,9 6,8 1Q Q2003 6,6 7,0 7,3 51,7 50,0 49,5 4,1 4,2 3,6 4,1 4,2 4,9 Net loans* Debt securities* Amounts fuefrom banks* Other Capital Deposits and bonds issue* Amount due to banks* Other Assets growth by approximately 2% in 1Q driven mainly by growth of portfolio of securities. Stabilisation of loan portfolio. PLN 0.5 bln growth of gross loan portfolio resulted mainly from change of currency rate. Decrease of deposit base like in the whole banking system. Equity growth thanks to retained current income. * incl. interests 7

9 LOAN PORTFOLIO mln zł Retail loans* ,8% mln zł 15.7% -8.5% - 3,6% 2002 Mortgage Overdraft Other 1Q2003 Corporate loans* ,9% Growth of mortgage loans. Focus on PLN loans to reduce the risk. The growth rate for corporate presents: - decrease of central investment loan (PLN 46 mil), - decrease of loan portfolio in foreign branches by PLN 11 mil, - growth of other loans by PLN 518 mil since the beginning of the year CIL Foreign branches Other 1Q2003 * capital 8

10 DEPOSIT BASE Retail deposits* PLN mil ,0% FX PLN Bonds PLN 0.4 bln growth of retail deposits since the beginning of the year. PLN 1.6 bln of financing obtained in result of bonds issue. 0 PLN mil Corporate deposits* ,3% FX PLN Further growth of investment funds - total assets under management by PPIM increased by PLN 1.3 bln during 1Q Stable market share in private households deposits %. Significant seasonal variability of corporate deposits base * capital 9

11 INVESTMENT FUNDS Investment funds under PPIM* management PLN mil Growth of assets under PPIM management y-o-y by PLN 3.4 bln. ( by PLN 1.3 bln in 1Q 2003) Q 02 2Q 02 3Q Q 03 Market share 26% 24,0% 24,4% 24,9% 25,1% 23,9% 23,2% 21% Strong distribution channel and widen product offer resulted in growth of market share to 25.1%. 16% 11% Q 02 2Q 02 3Q Q 03 * PPIM - Pioneer Pekao Investment Management 10

12 SAVINGS OF PRIVATE HOUSEHOLDS 44 1,3 0,3 42,2 [PLN mil ,5 0, Deposits PPIM Bonds 1Q ,2% Market share 18,3% Slowdown of deposits outflow accompanied by stable growth of alternative saving products. Stable share of the Bank in the savings of private households market. 11

13 REVENUE GROWTH Net interest margin (incl. SWAP) Structure of changes in total revenue 6 % mln zł - 18,4% + 7,0% + 49,5% -5,6% ,1 4,9 4,7 4, , % 22% 17% 1Q Q Q Q Q 2003 Share of fees and commissions to total revenue 23,0% 23,7% 26,1% 1Q Q Q 2002 Net interest income Net commission income Other 1Q 2003 Decrease of total revenue by 5.6%. Significant pressure on net interest margin caused: Scale of the change in deposit and loan activity do not compensate decrease of interest rates. Significant decrease of revenue from SWAP operations. Continued redemption of high-yield treasuries. Growth of revenue from fees and commission. Growth of income on other activity. 12

14 COMMISSION INCOME mln zł ,0% Other Investment funds Accounts Loans Q 02 2Q 02 3Q 02 4Q 02 1Q 03 Change of the structure of the income from commissions. Share of commission from loan activity decreased y-o-y from 21,7% to 16,5%, and commission from account service from 36.9% to 32.0%. In 1Q % of commission income come form distribution of subsidiaries products. Commission income not linked with loan activity growth by 14.1% 13

15 OTHER INCOME mln zł ,4% Q 2002 Income from shares Financial operations Foreign exchange income Other, incl. restructuring of SSPH* loans 1Q 2003 Income from shares include mainly income from Polcard shares sale. Insignificant growth of the scale of currency transactions with customers resulting from exceptionally high result in 1Q 2002 (introduction of EURO). 14

16 STRUCTURE OF COSTS CHANGES mln zł - 2,0% -1,1% + 27,6% + 19,0% + 1,5% 0,6-5,5-2,1 14, Q 2002 Personnel Non-personnel Depreciation BFG 1Q 2003 Conservative policy of cost control. Higher depreciation resulted in the growth of the costs. Lower personnel costs caused by rationalisation of employment and it s adjustment to real needs. 15

17 OPERATING EFFICIENCY Costs / income 55% 50% 47,0% + 3,6 p.p. 50,6% 45% Operating income 40% % 1Q Q 2003 Fees and commissions/ Personnel costs PLN mil ,0 % % 95% 99,2% 93,4% 101,2% 104,8% 109,7% 102,0% 0 1Q Q % 55% IVQ 01 YTD IQ 02 YTD IIQ 02 YTD IIIQ 02 YTD IVQ 02 YTD IQ 03 YTD 16

18 ASSETS QUALITY Irregular loans 20% 15% 10% 5% 0% 15,5% 19,7% 19,7% 19,9% 21,0% 5,3% 4,7% 4,4% 5,2% 4,2% 3,8% 3,9% 3,40% 3,2% 3,6% 10,6% 11,1% 12,1% 12,6% 7,7% 1Q 02 2Q 02 3Q Q 03 Lost Doubtful Sub standards Growth of irregular loans in total loans ratio in 1Q 2003 resulted from deterioration of retail and corporate customers situation as result of macroeconomic environment. Provision coverage ratio Decrease of provision 57% 47% 50,3% 49,5% 53,5% 56,9% 55,2% coverage ratio in 1Q 2003 resulted from change of structure 37% of irregular loans. 27% 17% 7% 1Q 02 2Q 02 3Q Q 03 17

19 ASSETS QUALITY Migration of corporate loans in 1Q SUBST From To/payoff From To From To From To From To Standard Watch Substandard Doubtful Lost DOUBT From Payoff From To From To From To From To Standard Watch Substandard Doubtful Lost LOST From Payoff From To From To From To From To Standard Watch Substandard Doubtful Lost

20 ASSETS QUALITY Provision coverage ratio Share of loans which are normaly serviced clasified as irrregular loans 70% 60% 57,0% 80% 70% 68,1% 73,6% 72,9% 50% 60% 50% 40% 30% 32,1% 27,9% 26,7% 40% 30% 20% 28,0% 20% 10% 0% 9,5% 8,5% 8,1% IQ 02 IVQ 02 IQ 03 10% 0% 1,0% Sub-standard Doubtful Lost Sub standard Doubtful Lost 19

21 PROVISIONS STRUCTURE COST OF PROVISIONS(PLN mil) 1Q 02 1Q 03 Corporate loans Retail loans Foreign branches ,4 General and other provisions TOTAL Cost of net provisions amounted PLN 160 mil. Biggest part of provisions represents provisions for corporate loans. 20

22 VALUATION OF SHARES USING EQUITY METHOD PLN mil 7,9 4,0 2,0 3,7-3,3-3,2-20,9-4,7-14,5-30 CDM Pekao PPIM KIR Other PTE NFI Jupiter * Pekao Leasing Other Total */ Bank s share in subsidiaries results together with depreciation the goodwill and negative goodwill Net loss of Pekao Leasing in 1Q 2003 resulted by revaluation of PLN provisions for leasing agreements denominated in FX. The loss of Jupiter NFI (37,44% Bank s share in net loss of the subsidiary). Negative result of PTE resulted from continued depreciation by the Bank of the purchase costs of OFE Epoka, Pioneer and Rodzina in

23 GROSS AND NET INCOME Influence of provisions costs PLN mil Q Q 2003 Net income and ROE Net income for 1Q 2003 amounted PLN 256 mil and return on equity 14.3%. PLN milł ,8% Net income ROE 14,3% 21% 14% Q Q % 0% 22

24 RESULTS OF THE BANK AND GROUP PLN mil Q ,8-1,3-12, Bank's results (excl. subsidiaries) Full method PLN mil 1Q ,0 Equity value method Adjustments on consolidation Group results Results of the Bank lower with regard to the loss sustained by Pekao Leasing ,6 0, Bank's results (excl. subsidiaries) Full method Equity value method Adjustments on consolidation Group results 23

25 COMPARISON OF BANK S AND GROUP S RESULTS BANK GROUP NIM % 4,2 4,3 Cost/Income % 50,6 51,8 ROE % 14,3 14,3 NPL % 21,0 22,4 Net income PLN mil Equity PLN mil Bank s and Group s net income and equity are almost the same. Insignificant differences in some ratios value. 24