3Q 2012 Earnings Strong Quarter Underlying Performance on Track 14 November 2012 14 November 2012 Strong Quarter Underlying Performance on Track 1
Disclaimer This presentation does not constitute or form any part of an offer, invitation or inducement to sell or subscribe, or any solicitation of an offer to purchase or subscribe for any securities. This presentation does not purport to contain all information that a prospective investor might require, and neither this presentation nor any part of it nor the fact of its distribution shall form the basis of, or be relied on in connection with, any contract for the purchase or subscription of any securities. The forecasts and forward-looking statements contained in this presentation are necessarily based upon a number of assumptions and estimates that, while considered reasonable by us, are inherently subject to significant business, operational, economic and competitive uncertainties and contingencies, many of which are beyond our control, and upon assumptions with respect to future business decisions that are subject to change. Actual results may differ materially from those projected. Certain items of numerical information and other amounts and percentages set forth in this presentation may not add up to the correct total due to rounding. 14 November 2012 Strong Quarter Underlying Performance on Track 2
Agenda 1 Overview 2 Financial Performance 3 Summary 14 November 2012 Strong Quarter Underlying Performance on Track 3
14 November 2012 Strong Quarter Underlying Performance on Track 4 Overview
Overview Profitability 3Q profit before tax of PLN 119 MM and net of PLN 93 MM up 61% YoY and 71% YoY respectively Performance Increased sales of all strategic products cash loans up 7% YoY SME loans up 10% YoY Corporate lending up 63% YoY Costs Base costs down 5% on prior year restructuring program executed Losses Low impairment charges of PLN 3 MM benefiting from IBNR one-off and debt sale Safe & Sound CAR at 13.5% and Tier 1 at 11.2% strong liquidity position 14 November 2012 Strong Quarter Underlying Performance on Track 5
Fair Play philosophy development > Cash Loans with involvement of Bank BPH employees (Aug 12 - Oct 12) Marketing communication Fair Play campaigns > Everyday Hero 2 nd edition launch to build wide consumer engagement around the values of fair, trust, honesty and social responsibility (Sep 12 Dec 12) Key brand metrics Unaided awareness Brand Consideration Bank, which plays fair A socially responsible bank Bank, you trust TARGETS Top 5 Top 5 No 1 Top 5 No 1 # 7 25% # 6 27% # 5 22% # 5 27% # 1 # 1 117 128 # 2 119 # 1 133 # 4 # 3 101 103 2Q'12 2Q'12 2Q'12 2Q'12 2Q'12 14 November 2012 Strong Quarter Underlying Performance on Track 6
Reasons to Believe Finger Vein Biometric identification application In use in 22 branches all branches equipped till YE 12 Next stage transaction authorization in 1Q 13 Tracking systems Providing possibility of tracking complaints, inquiries and credit applications 9 out of 10 Customers receive SMS notification about current status of the complaint/inquiry Information sent to Branch Advisors about approximate time of Bank s final decision Mobile application Providing access to customer s products, transfers and localization services Works on iphone, ipad and Android devices Providing access to all customer s products data Geo-location of Bank branches and ATMs with map and augmented reality 14 November 2012 Strong Quarter Underlying Performance on Track 7
Generating solid sales growth Cash loans new volume (PLN MM) +7% 451 482 Retail Consistently high cash loans originations PLN 1.4 B YTD New credit cards limits of PLN 23.6 MM up 9% YoY Stable Current Account sales 25 K in 3Q Commercial loans new volume (PLN MM) 759 +45% Commercial 1 100 Corporate loans originations of PLN 820MM SME loans originations of PLN 280 MM 30 new Corporate Clients in 3Q Current Account offer now complete New attractive Savings Account launched Marketing campaign with Bank BPH employees - high sales for Cash Loans 2 New SCD subscriptions 64 branches modernized Further IT integration one platform for Mortgage, Credit Cards and for on-line Customers Focus on new SME secured originations exiting risky SME unsecured overdrafts Special offer with Bank Gospodarstwa Krajowego guarantee for SME Total portfolio growth of 2.5% YoY 11% growth on continued portfolio Strong momentum into 4Q Commercial receivables (PLN MM) 5,157 5,285 1 284 972 3 873 4 313 Continued Run-off* */ Restructuring and overdrafts 14 November 2012 Strong Quarter Underlying Performance on Track 8
Financial Performance 14 November 2012 Strong Quarter Underlying Performance on Track 9
Financial performance PLN MM 3Q 12 VPQ VPY Net interest income Net F&C Total net revenue* Impairment charges Net revenue after losses** 315-1.8% -7.8% 120-6.7% -20.7% 437-4.1% -12.5% -3-91.1% -96.4% 433 +4.0% +7.5% Costs Ex-restructuring & one-offs -312-320 -16.1% -3.0% -7.5% -5.1% Pre-tax profit Net income 119 +135.1% +61.2% 93 +160.8% +71.0% Revenue to start growing in 2013 */ Total net revenue = NII + Net F&C + Net trading income **/ Net Revenue After Losses = Total net revenue + Impairment charges VPQ (%) = 3Q 12 vs. 2Q 12 VPY (%) = 3Q 12 vs. 3Q 11 14 November 2012 Strong Quarter Underlying Performance on Track 10
Retail key metrics (excl. Mortgages) PLN MM Receivables & deposits (AVG QTD) 7 159 9 169 6 194 7 956 NII flat 183 180 Fees & Commissions down 25% 13% 13% 78 59 Receivables Deposits Revenue down 8% 261 239 Losses improvement Total income up 13% 261 230 31-22 High quality originations focusing on core product pricing 14 November 2012 Strong Quarter Underlying Performance on Track 11
Mortgage portfolio key metrics PLN MM Receivables (AVG QTD) 18 489 16 951 3% w/o FX effect NII down 30% 30 21 Fees & Commissions down 25% 8% 16 12 46 Revenue down 28% Losses improvement Total income up 88% 33 29 32 17 1 Liquidating FX portfolio 14 November 2012 Strong Quarter Underlying Performance on Track 12
Corporate key metrics PLN MM Receivables & deposits (AVG QTD) 2 000 2 628 2 358 2 449 NII up 38% Fees & Commissions flat 31% 4% 13 18 19 18 Receivables Deposits Revenue Losses Total income up 13% up 100% up 7% 32 36 30 32 2 4 Balanced development of loan and deposit portfolios 14 November 2012 Strong Quarter Underlying Performance on Track 13
SME key metrics PLN MM Receivables & deposits (AVG QTD) 3 233 2 593 2 601 2 166 NII down 15% Fees & Commissions down 18% 20% 16% 53 45 39 32 Receivables Deposits Revenue down 16% 92 77 Losses 38% improvement Total income flat 58 56 34 21 Collateralized originations up from 60% in 3Q 11 to 95% in 3Q 12 14 November 2012 Strong Quarter Underlying Performance on Track 14
Business cost performance PLN MM Base costs 5% improvement C/I ratio* (%) up 6 pp. C/NRAL** (%) 10 pp. improvement 338 320 68 74 84 74 Total costs 338 312 Solid trend on cost reduction */ Base costs / Income **/ Base costs / Net Revenue After Losses 14 November 2012 Strong Quarter Underlying Performance on Track 15
Asset quality 140 120 100 80 60 40 20 0-20 -40 Total cost of risk* 1,7% 1,2% 1,3% 5 0,5% 0,6% 1,00% 35 1 0,1% 0 35 0,00% 38 76 46 60 3 21-1,00% 4 30-3 18 21 0-2,00% -21-3,00% 1Q'11 2Q'11 1Q'12 2Q'12 Retail SME Corporate Cost of risk 3,2 3,2 3,2 NPL ratio 10,9% 10,8% 10,4% 10,9% 10,6% 10,6% 3,1 3,1 3,0 26,2 26,6 27,7 25,9 25,9 25,0 1Q'11 2Q'11 1Q'12 2Q'12 Performing loans (PLN B) Impaired loans (PLN B) NPL 90+ delinquency (%) cash & CHF mortgages loans Average PD (%) commercial portfolio 3,5% 3,1% 2,8% 2,2% 2,0% 2,0% 7,4% 6,9% 6,8% 6,5% 6,0% 5,5% 0,4% 0,3% 0,4% 0,3% 0,4% 0,3% 1,4% 1,3% 1,3% 1,7% 1,7% 1,6% 1Q'11 2Q'11 1Q'12 2Q'12 Cash loans CHF Mortgage loans 1Q'11 2Q'11 1Q'12 2Q'12 Small Enterprises Corporate */ Cost of risk to avg. loan volumes Quality portfolio delivering stable performance 14 November 2012 Strong Quarter Underlying Performance on Track 16
Capital and liquidity positions Capital ratios (%) New methodology 15,1 14,0 12,7 13,2 13,4 13,5 12,6 10,5 10,9 11,6 11,2 11,2 2009 2010 2011 Mar'12 Jun'12 Sep'12 CAR Tier 1 CAR at 13.5 and Tier 1 ratio at 11.2 well above the regulatory minimums Stand by funding facility remains in place and fully available CHF 2.6 B facility in place Liquidity surplus of PLN 0.8 B PLN 675 MM subordinated bonds maturing in 2020 issued on Oct 12 replacing sub-loan due on 2016 CHF 2.6 B due on Sep 12/Oct 12 rolled over for the next 2 years no CHF lines expiring in 2013 Strong capital and liquidity positions 14 November 2012 Strong Quarter Underlying Performance on Track 17
14 November 2012 Strong Quarter Underlying Performance on Track 18 Summary
Summary 1 Continued commitment to long term brand promise 2 Strong growth in Retail and Commercial sales 3 Core net income benefiting from prior risk decisions 4 Continued focus on costs delivering results 5 Maintaining quality portfolio & strong liquidity 14 November 2012 Strong Quarter Underlying Performance on Track 19