PLN 2 billion in profit at high cost of legal risk - PKO Bank Polski presented its results for the first half of 2023
PKO Bank Polski Group's net profit in the first half of 2023 exceeded PLN 2 billion, despite a significant burden on the result from the cost of legal risk of mortgages denominated in the Swiss franc. Profitability in the first half of the year, as measured by return on equity (ROE), amounted to 10,6 percent. The Group systematically increased the scale of its operations. Its assets have increased by 7,3 percent y/y to reach PLN 461 billion. Financing provided to customers increased by 3,7 percent to PLN 255 billion, and savings raised by 15,4 percent, reaching PLN 491 billion. In H1 2023, the bank recorded strong double-digit financing growth in the corporate sector, which reached 14,6 percent y/y. Total sales of housing and consumer loans increased by more than 29 percent. Income from the core operations increased by 20,6 percent. Net interest income continued to grow by 29,3 percent y/y, thanks in part to a further improvement of interest margin during the first half of the year to 4,31 percent, while net fee and commission income remained stable y/y, thanks to growth in income from banking activities offsetting lower income from funds and brokerage activities. Bank had very good cost efficiency. The cost-to-income (C/I) ratio amounted to 32,9 percent in H1 2023. The Bank has continued its digital transformation, developing new features in IKO mobile app and offer of value-added service through VAS HUB technology. The number of active IKO applications at the end of H1 2023 exceeded 7,6 million. The bank also introduced new facilities in the children's application PKO Junior. PKO Bank Polski has actively joined in the implementation of the programme supporting the purchase of the first apartment. The bank's customers can take advantage of both the Bezpieczny Kredyt 2% (subsides mortgage) and set up special housing accounts under the programme.
PKO Bank Polski Group's profit in H1 2023 amounted to PLN 2,04 billion . The bank increased income from its core business by more than 20 percent and steadily increased the scale of its operations. As a result, the group's assets rose to PLN 461 billion at the end of the first half of the year, and the number of customers reached 11,8 million. The bank also showed high cost efficiency. The cost-to-income (C/I) ratio amounted to 32,9 percent. The cost of risk ratio reached 53 bps, and NPL, after declining by 20 bps y/y, ranked at 3,64 percent. The bank continued its digital transformation, developing new features of IKO mobile app and offer of value-added service through VAS HUB technology. The number of active IKO applications at the end of H1 2023 reached 7,6 million in July 2023. PKO Bank Polski actively joined the implementation of the programme supporting the purchase of the first apartment. The bank's customers can take advantage of both the Bezpieczny Kredyt 2% (subsides mortgage) and set up special housing accounts under the programme.
- In the first half of 2023, PKO Bank Polski achieved very good and satisfactory results. Thanks to a historic level of income, high operating efficiency and excellent risk management, we offset a significant increase in the cost of provisions for the legal risk of mortgages denominated in the Swiss franc. The last months were also time in which we systematically and successfully implemented the assumptions of the bank's strategy for 2023-2025. PKO Bank Polski once again demonstrated its organizational efficiency and ability to respond to the needs of Poles and participated in the First Apartment programme. I would like to express my sincere thanks for the commitment and solid daily work of all PKO Bank Polski employees,"
pointed out Dariusz Szwed, acting CEO of PKO Bank Polski.
Good results despite the legal risk provisions of PLN 3,4 billion
PKO Bank Polski's net profit in the first half of 2023 amounted to PLN 2,04 billion. This represents an increase of 10,6 percent y/y, despite the significant burden on the result from the cost of legal risks associated with franking mortgage loans. Reported return on equity (ROE) in H1 2023 was 10,6 percent, and after excluding extraordinary items 22,3 percent. In the first half of the year, PKO Bank Polski also recorded a significant increase in income from core operations exceeding 20 percent and an almost 30 percent increase in net interest income. The interest margin rose to 4,31 percent.
Dynamic business scale growth - loans and deposits
The bank's performance was supported by high cost efficiency and dynamic business scale growth. The cost-to-income (C/I) ratio in H1 2023 was 32,9 percent, despite apparent pricing pressure. The Group's assets reached PLN 461 billion, and the number of customers amounted to 11,8 million. Customer savings increased by more than 15 percent y/y to PLN 491 billion, and financing provided to customers reached PLN 255 billion. Sales of residential and consumer loans increased by more than 29 percent y/y, and the growth in financing provided to corporate clients was 14,6 percent y/y. Population deposits also grew dynamically, exceeding PLN 265 billion, an increase of more than 24 percent y/y.
Effective risk management and maintaining a strong capital position
The NPL ratio, which describes the quality of the loan portfolio, ranked at a record low 3,64 percent at the end of H1 2023. The cost of risk was 0,53 percent. This reflects further improvement in asset quality and an increase in reserve coverage. The bank also maintained a secure capital position. The Tier 1 ratio reached 18,75 percent, clearly above regulatory requirements. The Bank developed the use of artificial intelligence in credit risk assessment both in the area of credit decisions and in support of recovery and monitoring of credit portfolios. The goal for Q1 2024 is to achieve 70 percent support by artificial intelligence and Machine Learning (ML) tools of credit decisions in the corporate and enterprise segment.
Mobile transaction leader, attractive to young customers
For years, PKO Bank Polski was among the leading banks offering modern solutions for its customers of all ages. For more than 10 years it has been developing the IKO mobile application and the PKO Junior offer. Currently, the IKO app has more than 100 functions and offers a wide range of services, including non-banking services under the VAS HUB technology. These include such solutions as telemedicine and cyber security. At the end of June 2023, the number of active IKO applications exceeded 7,6 million, and the quarterly number of transactions reached 212 million. The bank is also developing the PKO Junior offer, which has gained a modern look and new features. The PKO Junior offer has already been used by 730 thousand children.
Bezpieczny Kredyt 2% (subsides mortgage) and 31 thousand of Swiss franc mortgage agreements
From July 3 2023, the customers interested in taking advantage of the Bezpieczny Kredyt 2% (subsides mortgage) programme have the possibility to apply for this type of mortgage at PKO Bank Polski. Currently, more than 13 thousand applications have been submitted. This means that 7 out of 10 mortgage applications at PKO Bank Polski are applications under the programme. The average amount of the loan applied for is PLN 407 thousand. In the first half of 2023 PKO Bank Polski also continued to offer settlements to individual customers with active mortgage loans in Swiss francs. By the end of H1 2023, almost 32 thousand mediations had positively ended. The total number of settlements concluded by June 30 exceeded 31 thousand.
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PKO Bank Polski is the undisputed leader of the Polish banking sector, with the value of its assets amounting to PLN 461 billion. In the first half of 2023, the bank generated over PLN 2 billion net profit. The company serves 11.8 million customers. It is the basic provider of financial services for all customer segments, achieving the highest shares in the market of deposits, loans and in the market of private investment funds. Thanks to the development of digital tools, including the IKO application, which has been activated by customers over 7.6 million times, PKO Bank Polski is the most mobile bank in Poland.