PKO Bank Polski SA Presentation. October 2017

Transcription

1 PKO Bank Polski SA Presentation October 07

2 PKO Bank Polski is the clear leader in the Polish banking sector Leader in the Polish banking sector 86,4 Total assets (PLN bn) 70,5 49,8 9,4 0, Leading domestic position supported by dynamic growth in one of the fastest developing countries in the EU Robust funding, strong liquidity profile and solid base combined with strong and consistent financial performance Well-balanced credit portfolio and risk profile Strong credit rating by Moody s (issuer rating A) Bank Bank 3 Bank 4 Bank 5 Gross loans (PLN bn) 08,6 08,7,7 00 0,3 H'6 3Q'6 06 Q'7 H'7 Deposits () (PLN bn) 05, 07, 07, 99,4 0, H'6 3Q'6 06 Q'7 H'7 Capital adequacy ratio 6.9% Loans to deposits ratio 98.7% Liquidity coverage ratio 8% Net stable funding ratio % () Amounts due to customers

3 Key Credit Highlights H 07 Operating and Financial Performance Update Appendix 3

4 Key credit highlights Dominant Market Position Strong Financial Performance Strong Asset Quality with Continued Improvement Sound Capitalisation Strong Liquidity and Funding Position PKO Bank Polski is the largest bank in Poland with assets of PLN 86bn as of H 07 and has high brand visibility and influence on competitive trends Dominant position in the retail segment, with reported market share of around.9% in private individuals loans and 0.7% in private individuals deposits as of H 07 Largest distribution network in Poland with about.k branches and 0.8k agencies as of H 07 PKO Bank Polski has the highest net profit in the Polish banking sector and is historically one of the most profitable banks in Poland Strong track record of improving cost efficiency and increasing profitability Net interest margin increased to 3.% in H 07, compared to 3.3% in H 06 Continued improvement of non-performing loans (NPL) to 5.7% as of H 07, compared to 6.5% in 05 and the 6.9% average for the Polish banking sector Continued improvement in coverage of loans with recognised impairment by impairment allowance Highly diversified structure of the corporate loan portfolio with low sector concentration Declining volume of FX loans below the average for the Polish banking sector Capitalisation continues to remain comfortably above requirements with consolidated Tier Capital Ratio at 6.0% as of H 07, compared to 3.9% in H 06 Consolidated total capital adequacy ratio at 6.9%, compared to 5.% in H 06 The capital ratios have been consistently on an increasing trend with 05 levels of 3.3% and 4.6%, respectively Solid liquidity coverage and net stable funding ratios at 8% and % as of H 07, respectively. Loan growth comfortably covered by deposits with loans to deposits ratio at 98.7% as of H 07 6 Long-term and Supportive Shareholder The bank's dominant position in the domestic banking sector and its retail franchise contribute to its critical importance to the Polish economy State-ownership with the State Treasury owning approx. 9% of the bank 4

5 PKO Bank Polski is the undisputed leader in the Polish banking sector Polish banking sector top 5 banks by total assets (PLNbn) Market share (%) ,4 70,5 49,8 9,4 0, 7,0 69,5 64,5 6,8 49,8 44,6 43, 39,7 9,9 9,8 PKO BP Pekao BZ WBK mbank ING Bank Slaski (State) (PZU/PFR) (Santander) (Commerz bank) BGZ BNPP Bank Millennium (ING) (BNPP) (BCP) (Leszek Czarnecki) Getin Noble Alior RBPL Bank Handlowy (PZU) (Raiffeisen Bank Int'l) BGK¹ DB Polska BOS CA Polska (Citibank) (State) (DB) (State) (Credit Agricole) Market share (%) ( ) Major shareholder Notes:. H7 data except for DB Polska (06YE), and CA Polska and BPS (05YE) 5

6 PKO Bank Polski is the undisputed leader in the Polish banking sector Number of current accounts of individuals ( 000) Number of corporate customers with access to e-banking ipko Biznes ( 000) k Branches 433k SME customers 6, 8,7 9,6 0,8, H mn Retail segment customers (incl. SMEs) H 07 Number of customers with access to e-banking ( 000) 8.8k Group employment The share of PKO BP SA Brokerage house in trading on the secondary stock market k ATMs 0.79k Agencies 9.3 mn 4.5k Users with access to e-banking (incl. SMEs) Corporate segment custmers 5.9% 9.% 9.% 9.4% 6, % H H 07 Number of ATMs ('000) Number of retail agencies and branches ('000) IKO Mobile banking number of active application (mn) PKO Investment Funds - value of assets under management (PLN bn),4,8 3, 3, 3, 3,,3,,0,0 0, 0, 0,4,0,5 9,7 0, 8,4 9,7, H H H H 07 6

7 PKO Bank Polski market share Improvement of the leading share in the loans market, significant increase in PKO TFI's share Loans market share (%) 5,0,8,8,8,9,9 0,0 7,6 7,6 7,8 7,7 7,8 5,0,5,5,9,7 3,0 0,0 Q'6 3Q'6 4Q'6 Q'7 Q'7 Private individuals Total Institutional entities Mutual funds market share , 7,3 7,6 7, , 73 7 Q'6 3Q'6 4Q'6 Q'7 Q'7 Total assets of mutuals funds (PLN bn) PKO Investment Funds market share (%) 9,0 8,0 7,0 6,0 5,0 4,0 3,0,0,0 0,0 Deposits market share (%) 5,0 0,0 0,6 0,6 0,7 0,8 0,7 7,3 7,3 7,3 7,3 7, As compared to the previous year increase in the loans market, decrease in deposits market 5,0 0,0,7,7,4,4,3 Q'6 3Q'6 4Q'6 Q'7 Q'7 Private individuals Total Institutional entities In the second quarter of 07, PKO TFI recorded the largest increase in assets under management (PLN.3bn q/q) and rose to the second position among the largest mutual fund companies. PKO TFI also had the highest value of assets managed by TFI with the highest share of assets of individual customers. 7

8 PKO Bank Polski gained the highest net profit in the banking sector dynamically developing its business activity (H 07) PKO Bank Polski strengthened its business activity Loans and advances to customers ,8% 4,6% 4,6%,0% 3,% 04,6 5,7 05, 86,9 83,4 Bank Bank 3 Bank 4 Bank 5 bn PLN % y/y generated the highest net profit in the banking sector Net profit (excluding the effect of change in the approach to inclusion of costs of fees for the BFG ) ,6% 04-3,7% ,0% 66-0,8% 488-9,8% Bank ² Bank 3 Bank 4 Bank 5 bn PLN % y/y,0 9,0 6,0 3,0 0,0 0,0 achieving a solid result on core business Result on business activity also thanks to improved cost efficiency C/I 3 ratio - (%) i change y/y (pp.) 48% 48% 43% 5% 48% -6,8 p.p. -5, p.p. -3,8 p.p. Two effects were excluded: one-time posting of the premium for obligatory restructuring of banks and the effect of change in the tax approach to the recognition of a premium for the guarantee fund. Bank did not provide detailed information about the premiums; the provided estimate only takes into account costs of the premium for the obligatory restructuring fund. 3 C/I: relation between operational costs and amortisation for the last 4 quarters and the result on business operation for the last 4 quarters (does not include costs of banking tax); calculations by PKO BP 00,0 80,0 60,0 40,0 0,0 0,0-0,0-40, ,6%,0 80,0 8,0 70,0 60, , ,0 40,0 63-4,0 30,0 9,3% 0,0-8,0 0,0 -,0 0,0 -,3% -8,4% -,% -0,0 Bank Bank 3 Bank 4 Bank 5 bn PLN -0,8 p.p. % y/y 8-0, p.p. Bank Bank 3 Bank 4 Bank 5

9 Key financial data High net profit Net financial result in the second quarter of 07 amounted to PLN 857 million and was 63.% higher than the result in the st quarter of 07. The profit in the nd quarter would be significantly - by 7.9 % higher in comparison to the first quarter, as well with quarterly recognition of the Banking Guarantee Fund contributions, which charged the Q earnings Significant increase in revenues Consolidated result from business activity in the nd quarter of 07 was on the level of over PLN 3. billion (+5.3% y/y) mainly on account of an increase of interest result by 3.3 % q/q and F&C income by 3. q/q, which in annual terms rose by over 0% High operational efficiency The cost-to-income ratio (C/I on a quarterly basis) in the Q 07 was on the level of 43.9% ROE on the level.9% ROA on the level.5% Reliable capital position The loan to stable funding ratio was on the level of 85.% The total capital ratio for the Group was on the level of 6.85% and the Tier capital ratio was 6.00% (for the Bank: 8.8 % and 7.9 %, respectively) Drop in cost of risk In comparison to st quarter of 07 cost of risk in quarterly terms dropped by 3 bp. to the level of 7 bp () C/I ratio, ROE, ROA excluding banking tax 9

10 Financial summary P&L items (PLN mn) H7 H6 Change y/y Q7 Q7 Change q/q Net interest income % % Net F&C income % % Result on business activity % % Administrative expenses % % Net impairment allowance % % Bank tax % % Net profit % % Assets % % Balance sheet (PLN bn) Net loans % % Deposits % % Stable financial resources % % Total equity % % Any differences in total balances, shares and growth rates result from rounding of balances to PLN million and percentage shares to one decimal place. 0

11 Key performance indicators H7 H6 Change y/y Q7 4) Q7 4) Change q/q ROE net (%) pp pp. ROE net (%) excluding bank tax pp pp. Key financial indicators Quality of loan portfolio Capital position ROA net (%) pp pp. ROA net (%) excluding bank tax pp pp. C/I (%) pp pp. C/I (%) excluding bank tax pp pp. NIM ) (%) pp pp. NPL ratio ) (%) pp pp. Coverage ratio 3) (%) pp pp. Cost of risk (bp.) bp bp. TCR (%) pp pp. Tier capital ratio (%) pp pp. () Net interest margin = net interest income of last 4 quarters / average interest bearing assets at the beginning and the end of the period of last 4 quarters (formula consistent with that applied in the PKO Bank Polski Group Directors Report) () Share of loans with recognised impairment in total gross loans (3) Coverage of loans with recognised impairment with impairment allowances (4) Ratios on quarterly basis; ROE, ROA, NIM and cost of risk annualised Any differences in total balances, shares and growth rates result from rounding of balances to PLN million and percentage shares to one decimal place.

12 3 Loan portfolio quality Stable cost of risk level accompanied with further decrease in share of loans with recognised impairment Standalone data Share of loans with recognised impairment Coverage of loans with recognised impairment by impairment allowance 6,5% 6,%,7%,5% 5,8% 5,8% 5,7%,5%,4%,3% Other loans 64,0% 58,% 69,4% 80,3% 64,4% 59,0% 70,% 79,4% 64,0% 58,4% 69,3% 78,6% 65,% 59,3% 70,% 80,3% 65,7% 6,% 70,% 74,9% 4,8% 4,7% 4,3% 4,4% 4,4% Loans delayed past due over 90 days H'6 9M6 06 Q'7 H'7 H'6 9M6 06 Q'7 H'7 Total Corporate loans Mortgage loans* Consumer loans Cost of risk over the last M (bp.) H'6 9M6 06 Q'7 H'7 Total Corporate loans Mortgage loans* Consumer loans * Includes data of PKO Bank Polski and PKO Mortgage Bank Average cost of risk at 74bps. Improvement in corporate loans cost of risk by 7 bp y/y and increase in consumer loans cost of risk due to one-off event and increase in sales of loans. Overall coverage ratio at 65.7% for the bank and 67.% for the group. Growth of coverage ratio in comparison to the previous year. In the case of corporate loans the level of coverage ratio increased by 300 bp in comparison to the previous year, and it was the biggest growth among others.

13 3 Credit risk concentration Highly diversified loan portfolio Structure of corporate () loans by industry segment Receiveables due from corporate () entities (PLN bn) 9,5 9,8 95, y/y 33,8%,8% 43,7% 85, 85,9 4,3 4,5 4,9 5, 4,4 +.8% +0.% 8,% 6,8%,7% 6,% 5,4% 5,7% 6,5% 4,5% 3,0% 70,8 7,4 77,6 76,7 80,8 +4.% 7,% 5,6% Industrial processing Wholesale and retail trade, repair of motor vehicles, including motorcycles Public administration and national defence obligatory social security Other industries & services Maintenance of real estate Construction Electricity, gas, water, hot water and air to the mechanical systems production and supply Gross loans Corporate and municipal bonds The highly diversified structure of the loan portfolio indicates low sector concentration. In Q 07 the biggest share in the portfolio had a section Industrial processing" (5.6%), whose share in the portfolio decreased by.6 pp. y/y. The largest decline of the share in the portfolio (-3.5 pp. y/y) was on the section Maintenance of real estate. The share of the section Mining and quarrying in the corporate loans portfolio is approx. 0.8%. () Gross loans of non-financial and state budget entities 3

14 4 Capital adequacy () Solid capital position Own funds (PLN bn) Group Bank,60,60,53,5,49,5 5,8 7,03 8,35 8,67 30,8 30,50 PLN bn Group Bank 9,5 30,9 3,9 3,0 8,3 30,3 6,0 6,9 8,8 5, 5,8 5,6 6,0 7,9 3,9 4,7 4,5 4,8 4,9 4,8 5,6 5,5 5, 3, (%) H'6 9M6 06 Q'7 H'7 H'7 Tier Tier Total capital requirement (PLN bn) Group 0,65 0,63 0,6 0,65 0,49 0,65 0,66 0,64 0,68 0,6 3,6 3,5 4,3 4,0 4,03 Bank 0,5 0,4,69 H'6 9M6 06 Q'7 H'7 H'7 Credit risk Operating risk Market risk 0 H'6 9M6 06 Q'7 H'7 H'7 Total own funds Total capital adequacy ratio 0 Total capital requirement Tier capital ratio The level of capital adequacy ratios of the Group remained at a safe level, above regulatory requirements. The level of adequacy ratios in H 07 was mainly determined by: the increase in the adequacy ratios in the first half of 07 was mainly determined by an increase in own funds of approx. PLN billion as a result of retaining all profit of 06, (part of which was already transferred to own funds in the previous year upon being granted the consent of the PFSA) the decrease in the own funds requirement in the first half of 07 of approx. PLN (-)0.5 billion compared with 3 December 06 had an impact among other things strengthening of the zloty 4

15 4 Capital adequacy () Common Equity Tier ratio (CET) Tier ratio (T) Total Capital Ratio (TCR) Common Equity Tier ratio (CET) Tier ratio (T) Total Capital Ratio (TCR) Minimum regulatory capital ratios for Group Minimum regulatory capital ratios for Bank Banking Law / CRR 4.50% 6.00% 8.00% 4.50% 6.00% 8.00% Conservation buffer (PFSA s decision from 05/0/) O-SII buffer (PFSA s decision from 06/0/0) Additional capital (PFSA s decision from 06//9) Minimum regulatory capital ratios.5%.5%.5%.5%.5%.5% 0.75% 0.75% 0.75% 0.75% 0.75% 0.75% 0.44% 0.59% 0.79% 0.46% 0.6% 0.83% 6.94% 8.59% 0.79% 6.96% 8.6% 0.83% PFSA s statement as of 06//6 regarding banks dividend payment Minimum capital ratios for Group - dividend payment policy Minimum capital ratios for Bank - dividend payment policy 50% 4.59% 4.79% 50% 4.6% 4.83% 00% 4.59% 7.79% 00% 4.6% 7.83% 5

16 4 Capital adequacy (3) - EU-wide stress test results PKO Bank Polski on the 4 th place among 5 of the European banks that took part in the exercise PKO Bank Polski was the only Polish bank subject to the EU-wide stress test conducted by the EBA. The aim of the exercise was to provide the supervisory authorities and market participants with consistent data on UE-banks resistance to adverse market scenarios, under a common methodology prepared by the EBA. Under the adverse scenario, the Bank noted a slight drop by.9 pp of the CET ratio in comparison to its value for 05, placing the Bank on the fourth place among 5 of the European banks that took part in the exercise. Poland, represented by the PKO Bank Polski, achieved the best leverage ratio amongst tested countries. 0 banks with the lowest change in CET ratio in comparison to its 05 values Leverage ratio by countries No. Bank 05 Adv. dec 08 Delta 08/05 (in bps) DNB Bank Group 4.3% 4.30% - Danske Bank 5.48% 4.0% Criteria Caixa, S.A.U. 9.65% 7.8% PKO Bank Polski SA 3.4%.44% Banco Santander S.A. 0.9% 8.0% Jyske Bank 6.00% 3.99% -0 7 Swedbank group 5.08% 3.05% Banco Bilbao Vizcaya Argentaria S.A. 0.7% 8.9% Volkswagen Financial Services AG.67% 9.55% - 0 Groupe Crédit Mutuel 5.55% 3.38% -6 6

17 5 Liquidity ratios LCR level significantly above the regulatory standards Liquidity ratios Loans to deposits ratio 37% 8% 4% % ,0 96,0 97,8 83,4 83,7 83,7 96,8 8,6 98,7 85, 80 00% - level effective for LCR from H'6 3Q'6 06 Q'7 H'7 Net loans/deposits Net loans/stable sources of funding () According to Capital Requirements Directive IV / Capital Requirements Regulation, implemented as at 3 March 04, the minimum LCR levels to be maintained are: 80% as of January 07 00% as of January 08 Liquidity Coverage Ratio (LCR) Net Stable Funding Ratio (NSFR) () Amounts due to customers and long-term external funding in the form of: securities issues (including funds raised through issuance under an EMTN programme executed by PKO Finance AB); subordinated debt; and amounts due to financial institutions. 7

18 5 Funding sources Well-diversified sources of funding Liabilities structure (total as at 30 June 07: PLN 5.0 bn) Amounts due to customers 8% Derivative financial instruments % Amounts concerning insurance activity % Debt securities in issue 6% Subordinated liabilities % Other liabilities % Amounts due to banks 7% Amounts due to retail clients 7% Deposit structure (total as at 30 June 07: PLN 07. bn) Amounts due to corporate entities 3% Amounts due to State budget entities 5% Retail and corporate deposits are the primary funding source. Financing agreements as at the end Q 07 included: USD,000 mn 0Y note issued in September 0 on the US market under Rule 44A EUR 500 mn 5Y bond issued in January 04 EUR 750 mn 4Y bond issued in July 07 multi-currency (CHF 3,365.4 mn, EUR 49.6 mn and USD 3.4 mn) credit from Nordea Bank AB opened in April 04 PLN 700 mn 0Y subordinated bond issued in August 07 Covered bonds and bonds issued by PKO Bank Hipoteczny as at the end of Q 07 included: PLN,030 mn 5Y covered bonds, issued in December 05, April 06, June 06 EUR 500 mn 5.8Y covered bonds issued in October 06 EUR 5 mn 7Y covered bonds issued in February 07 EUR 500 mn 5.0Y covered bonds issued in March 07 PLN 500 mn 5.Y covered bonds issued in April 07 PLN 65 mn 5.3Y covered bonds issued in June 07 PLN,90.7 mn bond issued in September 05 under Programme of unsecured bond issuance EUR 500 mn long 6Y covered bonds issued in September 07 8

19 5 Refinancing schedule Overview of upcoming maturities for PKO BP and PKO Bank Hipoteczny EURm equivalent PLN, USD,000 PLN 500 PLN, PLN EUR SR bonds EUR covered bonds PLN covered bonds PLN T bonds USD bonds Denotes the nominal value in the original currency of issuance Source: Company information, based on exchange rates: EUR/PLN FX: 4.3; EUR/USD:. 9

20 6 Long-term and supportive Shareholder Basic information on shares Listed: Warsaw Stock Exchange since r. Indices: WIG, WIG0, WIG30, WIG Banki ISIN: PLPKO Bloomberg: PKO PW Reuters: PKOB WA Shareholders structure (number of shares: 50 mn) State Treasury 9.43% Others** 58.68% Aviva OFE* 6.7% Nationale- Nederalnden OFE* 5.7% *) Share reported by ING OFE after exceeding the threshold 5% of total number of votes at GM of PKO Bank Polski by Nationale-Nederlanden OFE, former ING OFE (as at 4.07.) and Aviva OFE (as at 9.0.3) **) Of which.96% BGK (State owned bank) Rating Agency: Rating: Long-term Short-term Deposits Liabilities Deposits Liabilities Moody s A with stable outlook * A3 with stable outlook P- (P)P- 0

21 PKO Bank Polski is the clear leader in the Polish banking sector Leader in the Polish banking sector 86,4 Total assets (PLN bn) 70,5 49,8 9,4 0, Leading domestic position supported by dynamic growth in one of the fastest developing countries in the EU Robust funding, strong liquidity profile and solid base combined with strong and consistent financial performance Well-balanced credit portfolio and risk profile Strong credit rating by Moody s (issuer rating A) Bank Bank 3 Bank 4 Bank 5 Gross loans (PLN bn) 08,6 08,7,7 00 0,3 H'6 3Q'6 06 Q'7 H'7 Deposits () (PLN bn) 05, 07, 07, 99,4 0, H'6 3Q'6 06 Q'7 H'7 Capital adequacy ratio 6.9% Loans to deposits ratio 98.7% Liquidity coverage ratio 8% Net stable funding ratio % () Amounts due to customers

22 Key Credit Highlights H 07 Operating and Financial Performance Update Appendix

23 Business volumes trends by business lines Dynamic growth of volumes of deposits and gross loans Gross loans sum of business lines (PLN bn) Customer deposits - sum of business lines (PLN bn) +6.9% 08,6 07,7 +.4%,7 +4.3% 00,4 +0.3% 0,7 03,3 98,9 00,0 94,9 96,3 H'6 9M'6 06 Q'7 H'7 H'6 9M'6 06 Q'7 H'7 Gross loans by business line as at 30/06/07 Customer deposits by business line as at 30/06/07 60% 00% Share in loan portfolio 50% 40% 30% 0% 0% 0,4 5,6 Mortgage banking 57,3 Corporate Retail and private banking 8,5 0% -5% 5% 5% 5% Volume growth rate (y/y) SME Share in deposits portfolio 80% 60% 40% 0% 38,7 4,3 Corporate,3 SME Retail and private banking 0% -0% 0% 0% 0% 30% 40% Volume growth rate (y/y) 3

24 Result on business activity A dynamic increase in the result on business activity, by 4.6 % y/y mainly due to the significant increase in net interest income and net F&C result, while net other income decreased due to high reference base (caused by one-off event) Split of result on business activity 8.% 3.% 9.0% 7.3% PLN mn H7 H6 Change y/y Q7 Q7 Change q/q Net interest income % % 3.7%.3% 3.4% 3.9% Net F&C result % % Net other income % % 68.% 64.5% 67.6% 68.8% Result on financial operations and didvidens % % Net FX result % % Net other operating income % % H7 H6 Q7 Q7 Net interest income Net F&C result Net other income Result on business activity % % ) in June 06 the acquisition of Visa Europe Limited by Visa Inc. was settled, which affected the profit in the amount of PLN 48 million 4

25 Net interest income () Consequent recovery of net interest income mainly thanks to an increase in interest income Net interest income (PLN mn) Interest income and expense (PLN mn) and WIBOR 3M average in the period % 0 Q6 3Q6 4Q6 Q7 Q7 Net interest income quarterly Net interest margin quarterly Net Interest margin and average interest rates on loans and deposits (%) In the first half of 07 net interest income amounted to PLN 4 60 million and was PLN 398 million higher than in the first half of 06. The improvement in the net interest income resulted from an increase in income connected with an increase in the loan portfolio and securities portfolio accompanied by a slight increase in interest expense. The interest margin increased by approx. 0. pp. y/y to 3.% at the end of June 07. H6 9M6 06 Q7 H7 Average interest rate on loans M () Average interest rate on deposits M () Net interest margin M () () Interest income (expense) for last 4 quarters / average net loans (deposits) at the beginning and the end of the period of last 4 quarters () Net Interest income for last 4 quarters / average interest bearing assets at the beginning and the end of the period of last 4 quarters (formula consistent with that applied in the PKO Bank Polski Group Directors Report) Q6 3Q6 4Q6 Q7 Q7 interest income interest expense WIBOR 3M (%)

26 Net interest income () A significant increase in interest income as a result of the increase in loans portfolio and income from securities Structure of interest income (PLN mn) +9.5% % % Structure of interest expense (PLN mn) +5.8% % % % H6 H7 Customer loans Securities Derivative hedging instruments Other Interest rates on term deposits vs. WIBOR 3M (%) % H6 H7 Customer deposits Debt securities in issue Other In the first half of 07 interest income increased by 9.5 y/y, i.e. was higher by PLN 46 million, which is mainly the result of growth: income on loans and advances to customers by PLN 378 million y/y due to a 6.4% increase in the gross loan portfolio of corporate, housing and consumer loans, as well as in lease receivables portfolio, income on securities of PLN 6 million y/y determined by an increase in the average volume of securities (mainly Treasury bonds). 3 0 Q08 Q08 3Q08 4Q08 Q09 Q09 3Q09 4Q09 Q0 Q0 3Q0 4Q0 Q Q 3Q 4Q Q Q' 3Q 4Q Q3 Q3 3Q3 4Q3 Q4 Q4 3Q4 4Q4 Q5 Q5 3Q5 4Q5 Q6 Q6 3Q6 4Q6 Q7 Q7 average interest rate on term deposits averege WIBOR 3M Interest costs in the first half of 07 by 5.8% y/y is mainly the result: costs of amounts due to banks of PLN 40 million y/y in respect of handling loans received from financial institutions, costs of amounts due to customers of PLN 5 million y/y, resulting from an increase in the deposits volume, costs of own issues due to an increase in the volume of covered bonds and own bonds issued by Bank Hipoteczny. 6

27 Net fee & commission income Continuing q/q increase in net fee and commission income, y/y significant increase in F&C income for the first half of 07 Net fee and commission income (PLN mn) y/y q/q +0.9% % % % % % % % +.8% +0.% +.5% Q6 3Q6 4Q6 Q7 Q7 H6 H7 Loans & insurance Mutual funds & brokerage Cards Customer accounts & other Net fee and commission income generated in the first half of 07 was PLN 4 million higher than in the comparable period of the prior year, which resulted from PLN 35 million higher commission income and PLN 6 million lower commission expense. The level of the net commission income was driven mainly by the increase in: income for servicing investment funds and OFEs, income on brokerage activity and arrangement of issues, net income on payment cards, generated mainly due to a higher number of cards and the higher value of cashless transactions, income in respect of offering insurance products, mainly as a result of sale of insurance products, also offered in connection with leasing. 7

28 Net other income An increase in net other income, supported by increase in net FX gains and net other operating income Net other income (PLN mn) 570 Visa impact Qualia impact y/y -35.% q/q +30.6% % % +9.9% % 70 5 Q6 3Q6 4Q6 Q7 Q7 47 H6-94.7% 3 5 H7-7.8% -95.8% Net other operating income Net FX gains Result on financial operations and didvidens Net other income was mainly determined by the following: a decrease in gain less losses from investment securities, which resulted from the reference base in June 06 the acquisition of Visa Europe Limited by Visa Inc. was settled, which affected the profit in the amount of PLN 48 million, improved result on the remaining operating activities, mainly due to the completion of a development project and start of handing over premises to customers in one of the companies in the Group ( which affected the profit in the amount of approx. PLN 70 milion), development of insurance companies activities (PKO Życie Towarzystwo Ubezpieczeń SA and PKO Towarzystwo Ubezpieczeń SA), and the higher contribution of lease activities. In net other operating income result from insurance activity in second quarter of 07 amounted to PLN 4. milion, PLN 0. higher in comparison to previous quarter. 8

29 Administrative expenses Maintaining high efficiency despite significant regulatory burden Administrative expenses (PLN mn) Impact of annual settlement of the Banking Guarantee Fund contribution Level of costs with quarterly recognition of the Banking Guarantee Fund contributions y/y +6.6% +39.3% +6.6% q/q -.0% -80.9% % % % -.% % % Q6 3Q6 4Q6 Q7 Q7 C/I ratio quarterly bank tax effect H6 Personnel expense Depreciation BGF expenditures H7 Overheads Taxes & fees Q6 3Q6 4Q6 Q7 Q7 In the first half of 07, the level of administrative expense resulted mainly from: Employment eop (FTEs) H6 H7 Change y/y FTEs % Bank % Group % an increase in contributions and payments to the BGF of PLN 86 million y/y, i.e. of 39.3%, due to the fact that the existing fees (mandatory and prudential) have been replaced with contributions for financing the deposit guarantee fund and for financing mandatory restructuring, calculated in accordance with new methodologies, and due to the recognition of the annual fee for financing mandatory restructuring in full amount in the first quarter of 07, an increase in the costs of employee benefits of PLN 8 million, i.e. of 5.9%. The effectiveness of the PKO Group measured with C/I ratio on a quarterly basis was 43.9%, compared to 5.6% realized in Q 07. C/I ratio in annual terms amounted to 47.9% and improved by 5. p.p. y/y, both due to the improved result of business activities (+6.5% y/y), and due to a decrease in the level of administrative expenses (-4.0% y/y). 9 9

30 Net impairment allowance On a year-to-year basis - improvement in share of loans with recognised impairment Net impairment allowance and write-offs (PLN mn) Q6 3Q6 4Q6 Q7 Q Share of loans with recognised impairment 3) Net impairment allowance (PLN mn) Cost of risk M (bp.) H6 H7 Change y/y Consumer loans 8.6% 8.4% -0. pp. Mortgage loans.6%.5% -0. pp. PLN.0%.9% -0. pp. FX 3.7% 4.0% +0.3 pp. Corporate loans 0.9% 8.6% -.3 pp. Total 6.5% 5.7% -0.8 pp H y/y H % +5.8% % -6.4% % Consumer loans ) Mortgage loans ) ) Corporate loans ) Other q/q -4.5% +3.7% +0.3% The share of impaired loans at the end of June 07 was 5.7%, which represents a decrease of 0.8 p.p. y/y resulting from improvement in corporate loans quality. Improvement of the loan portfolio quality ratios accompanied by an increase in the gross loan portfolio of 6.4% y/y results from the continuation of the existing risk management policy of the Group and strict monitoring of the receivables portfolio. As at the end of June 07, the cost of risk was at a level of 0.74% and slightly deteriorated by 0.04 p.p. compared with the first half of 06. () management accounts data () Housing loans to individuals (3) Calculated by dividing the gross carrying amount of impaired loans and advances to customers by the gross carrying amount of loans and advances to customers Any differences in total balances, shares and growth rates result from rounding of balances to PLN million and percentage shares to one decimal place. 30

31 Consolidated statement of financial position Safe structure of the balance sheet has been maintained Total assets 3.9% 4.% 70.3% 7.4% 8.6% 7.7%.6%.%.% 0.7% 4.5% 4.8% Total equity and liabilities.6%.0%.4% 4.0% 0.9%.5% 0.6% 0.9% 5.7%.% 73.% 7.4%.3%.% 6.8% 5.8% Other assets Loans and advances to customers Securities Derivative financial instruments Amounts due from other banks Cash and balances with the Cen.Bank Total eqiuty Other liabilities Subordinated liabilities Debt securities in issue Liabilities of insurance activities Amounts due to customers Derivative financial instruments Amounts due to banks PLN bn Change y/y Cash and balances with the Cen.Bank % Amounts due from other banks % Derivative financial instruments % Securities % Loans and advances to customers % Other assets % Total assets % PLN bn Change y/y Amounts due to banks % Derivative financial instruments % Amounts due to customers % Liabilities of insurance activities % Debt securities in issue % Subordinated liabilities % Other liabilities % Total eqiuty % Total eqiuty and liabilities % 3

32 Loans and deposits Stable growth of volumes Gross loans (PLN bn) Deposits() (PLN bn) H6 9M6 06 Q7 H7 H6 9M6 06 Q7 H Currency structure of gross loans portfolio Term structure of total deposits ) 4.9% 4.% 4.%.8%.6% 4.8% 50.0% 49.7% 45.6% 44.9% 43.0% 75.% 75.9% 75.8% 77.% 78.4% 75.% 50.0% 50.3% 54.4% 55.% 57.0% H6 9M6 06 Q7 H7 FX PLN Banking sector H7 H6 9M6 06 Q7 H'7 current+o/n term+other The increase in the volume of loans by 6.4% y/y mainly as a result of growth in consumer loans. Growth in deposits by PLN 7.9bn (+ 3.9% y/y) mainly due to an increase in deposits of individual customers and local government units. () Amounts due to customers () Amounts due to customers and long-term external funding in the form of: securities issues (including funds raised through issuance under an EMTN programme executed by PKO Finance AB); subordinated debt; and amounts due to financial institutions. 3

33 Securities portfolio breakdown Debt securities issued by the Treasury are predominant part of the portfolio % % 3% 3% 9% 9% 6% 7% Other Corporate bonds Local government debt securuties 60% 70% NBP money market bills Structure as at 30/06/07 Issued by State Treasury 9% H6 9M6 06 Q7 H7 Trading assets Trading ALPL AFS HTM Corporate bonds 5% Eqiuty securities % Issued by local government bodies % Other 0%.5 Financial assets designated at fair value through P&L (ALPL) NBP money market bills 39% Corporate bonds 8% H06 Issued by local government bodies % Issued by State Treasury 4% H07 Investment securities available for sale (AFS) Issued by State Treasury 75% Issued by State Treasury Corporate bonds % Issued by local government bodies % Equity securities % 33

34 Key Credit Highlights H 07 Operating and Financial Performance Update Appendix 34

35 7,8 7,8 7, 7,0 6,3 5,6 5,4 5,4 5,3 5, 5,0 4,8 4,4 Polish banking sector in European context Strong capital position underscoring the stability of the Polish banking sector Tier Ratio (06FY) (%),9,9,8 9,7 8,7 8,0 7, 6,9 6,9 6,8 6,6 6,4 6, 5,6 4,9 4,6 3,3 3,,0,9 Finland Ireland Sweden Norway Denmark Switzerland Czech Republic Total Capital Ratio (06YE) (%) Netherlands Greece Romania United Kingdom Belgium Poland Hungary Germany France Austria Spain Italy Portugal 6,3 4,9 4,,8,5 0,9 0,7 0,3 9,0 8,4 7,9 7,7 7,7 7,3 7,0 6,4 5,0 4, 3,4,6 Sweden Ireland Finland Norway Netherlands Denmark United Kingdom IFRS Leverage Ratio (%) Switzerland Romania Belgium Hungary Poland Czech Republic France Greece Austria Spain Italy Germany Portugal,8, 0, 9,5 9,5 9, n/a Ireland Greece Austria Hungary Poland Romania Czech Republic Source: S&P Global Intelligence - SNL Norway Finland Portugal Spain Belgium Switzerland United Netherlands Italy Denmark Sweden France Germany Kingdom 35

36 Macroeconomic trends Economic recovery amid booming labour market Real GDP growth and its drivers (% y/y) Labour market trends (%) GDP household consumption expenditures external trade contribution (pp) gross fixed investments (RA) Registered unemployment rate Employment growth (y/y) RHS LFS unemployment rate, sa ) Shortage of labour ) vs wage growth rates (% y/y) Shortage of qualified employees (std. dev. pts.) ICT Transport Construction Wholesale Trade Industry Tourism Real estate services BPO Retail Trade Wages (%, y/y, 3mma) 3 GDP growth was 3.9% y/y in Q07 (vs. 4.0% y/y in Q07) with increased contribution of fixed investments and weaker positive impact of private consumption. In 07 as a whole GDP growth should reach 4.% with even stronger revival in fixed investments later in the year. Employment growth has remained in upward trend, despite increasing labour force shortages. Strong labour demand has led to further reduction in the unemployment rate (to the 6th lowest level in the EU). Growing number of vacancies becomes an increasingly important growth barrier for enterprises and leads to stronger wage pressure. Wages growth in retail trade (where labour force shortages are the most pronounced), is the highest since 008. () Percentage share of the number of unemployed population in the number of economically active population (i.e. employed and unemployed persons); consistent with EU methodology. () GUS business sentiment survey. 36

37 Macroeconomic trends Inflationary pressures mounting gradually CPI and core inflation (% y/y) 3 Core inflation 0 - CPI inflation PKO forecast - Central bank interest rates in the CE region (% eop) 6 Consensus 5 Romania 4 3 Poland Czechia Hungary 0.6.0, PLN exchange rates PLN/CHF PLN/USD PLN/EUR Despite tight competition, enterprises more often pass higher costs on consumer prices, especially in case of services. Goods prices are more dependent on global trends (agricultural and energy commodities) and regulatory factors. CPI inflation should reach the NBP target in H 8 while earlier it will fluctuate along with volatile food and energy prices. Accelerating core inflation and concerns about impact of negative real interest rates on households savings should incline the MPC to begin rate hikes (in our view in November 08). Policy actions of other central banks in the region (including the first rate hike by the CNB) are unlikely to affect the Polish MPC Strengthening expectations for QE tapering by the ECB resulted in significant EUR appreciation vs. other currencies. PLN remained relatively stable vs. EUR while it appreciated vs. USD and CHF

38 Banking sector and mutual funds Impact of low interest rates and regulations Deposit and loan growth rates (% y/y) Loan growth rates (% y/y) 0 Housing Corporate 0 8 Deposits Total Loans Households deposits (LHS) Mutual funds assets (households RHS) -5 Jan-06 Jan-09 Jan- Jan-5 reversed Consumer Declining deposits growth rates reflect weaker money creation (a result of weaker increase in net lending of the central government). Total loans keep growing weaker than total deposits, which leads to further decline in loans-to-deposits ratio. Households deposits growth decelerated due to declining interest rates. As a result, households moved their assets to mutual funds. Reviving investment translates into stronger lending in corporate segment, whereas stronger zloty reduces mortgage growth (unadjusted for FX changes). 38

39 Retail segment mortgage loans Standalone data Market share of FX mortgage loans * Average LTV * 30.0% 8.0% 6.0% 4.0%.0% 8.5% 8.6% 8.6% 8.6% 8.6% 5.5% 5.6% 5.7% 5.8% 5.9%.5%.4%.4%.4%.3% 7% 73% 73% 7% 7% 73% 70% 7% 68% 66% 0.0% 8.0% Total PLN FX Q6 3Q6 4Q6 Q7 Q7 Current average LTV of loans portfolio (eop) Average LTV of new sales Average carrying value of mortgage loan (PLN 000) * Average value of mortgage loan in new sales (PLN 000) * Total PLN FX Q6 3Q6 4Q6 Q7 Q7 * Includes data of PKO Bank Polski and PKO Mortgage Bank 39

40 CHF denominated mortgage loans portfolio * Volume of FX mortgage loans (PLN bn eop) % % % % 7.7 0% CHF Other FX Share in total assets % % % % 0% 0% 9% 9% * Structure of mortgage loans by currrency 4.% 4.0% 3.9% 3.7% 3.6% 7.4% 3.6% 30.% 30.0% 8.4% 7.% 64.% 65.8% 66.% 68.0% 69.3% 30.5% 6.% Banking sector PLN CHF Other FX Processes and actions in support of borrowers with housing CHF loans: - % spread in handling mortgage loans in this currency, - taking into account the negative rate of LIBOR CHF in the cost of a mortgage loan, - extending the repayment date within the maximum term of the loan without charging a fee for extension of the term of the loan. In addition, the Bank provided customers with the opportunity to apply for change of collateral of the loans in CHF in order to allow the sale of real estate secured with mortgage, associated with the granting of a new loan in PLN and the establishment of a mortgage on a newly purchased property. * Includes data of PKO Bank Polski and PKO Mortgage Bank 40

41 Loan portfolio quality Continued improvement in the loan portfolio quality Share of loans with recognised impairment and cost of risk ,5% 6,% 5,9% 5,9% 5,7% 6,5% 6,% 5,8% 5,8% 5,7% Coverage of loans with recognised impairment by impairment allowance (%) 65,0 64,0 65,3 64,4 65,5 64,0 66,5 65, 67, 65,7 0 H'6 9M6 06 Q'7 H'7 Cost of risk for last M (bp) Group Cost of risk for last M (bp) Bank Share of impaired loans (Group) Share of impaired loans (Bank) 0 H'6 9M6 06 Q'7 H'7 Group Bank Quality of loan portfolio vs. banking sector (%) 0,0 8,0 6,0 As compared to previous year decrease of the share of loans with recognised impairment, both for the Bank and the Group, mainly due to improvement in corporate loans. 4,0,0 H'6 9M6 06 Q'7 H'7 Share of impaired loans (sector) Share of impaired loans (PKO BP) Share of loans delayed past due over 90 days (sector) Share of loans delayed past due over 90 days (PKO BP) Continued improvement in coverage of loans with recognised impairment by impairment allowance, both on a yearly basis as well as in relation to the previous quarter. Source: Own calculations based on PFSA data for the banking sector 4

42 Disclaimer This presentation (the Presentation ) has been prepared by Powszechna Kasa Oszczędności Bank Polski S.A. ( PKO BP S.A., Bank ) solely for use by its clients and shareholders or analysts and should not be treated as a part of any an invitation or offer to sell any securities, invest or deal in or a solicitation of an offer to purchase any securities or recommendation to conclude any transaction, in particular with respect to securities of PKO BP S.A. The information contained in this Presentation is derived from publicly available sources which Bank believes are reliable, but PKO BP SA does not make any representation as to its accuracy or completeness. PKO BP SA shall not be liable for the consequences of any decision made based on information included in this Presentation. The information contained in this Presentation has not been independently verified and is, in any case, subject to changes and modifications. PKO BP SA s disclosure of the data included in this Presentation is not a breach of law for listed companies, in particular for companies listed on the Warsaw Stock Exchange. The information provided herein was included in current or periodic reports published by PKO BP SA or is additional information that is not required to be reported by Bank as a public company. In no event may the content of this Presentation be construed as any type of explicit or implicit representation or warranty made by PKO BP SA or, its representatives. Likewise, neither PKO BP SA nor any of its representatives shall be liable in any respect whatsoever (whether in negligence or otherwise) for any loss or damage that may arise from the use of this Presentation or of any information contained herein or otherwise arising in connection with this Presentation. PKO BP SA 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 PKO BP SA, or should facts or events occur that affect PKO BP SA s strategy or intentions, unless such reporting obligations arises under the applicable laws and regulations. This Presentation contains certain market information relating to the banking sector in Poland, including information on the market share of certain banks and PKO BP SA. Unless attributed exclusively to another source, such market information has been calculated based on data provided by third party sources identified herein and includes estimates, assessments, adjustments and judgments that are based on PKO BP SA s experience and familiarity with the sector in which PKO BP SA operates. Because such market information has been prepared in part based upon estimates, assessments, adjustments and judgments and not verified by an independent third party, such market information is, unless otherwise attributed to a third party source, to a certain degree subjective. While it is believed that such estimates, assessments, adjustments and judgments are reasonable and that the market information prepared is appropriately reflective of the sector and the markets in which PKO BP SA operates, there is no assurance that such estimates, assessments and judgments are the most appropriate for making determinations relating to market information or that market information prepared by other sources will not differ materially from the market information included herein. PKO BP SA hereby informs persons viewing this Presentation that the only source of reliable data describing PKO BP SA s financial results, forecasts, events or indexes are current or periodic reports submitted by PKO BP SA in satisfaction of its disclosure obligation under Polish law. This Presentation is not for release, directly or indirectly, in or into the United States of America, Australia, Canada or Japan. Any differences in total balances, percentages and growth rates result from rounding the amounts to PLN million and rounding percentages to one decimal Place. 4