Year’s highlights

2019 was the fourth consecutive year of pursuing the strategy “We support the development of Poland and the Poles” by the Group. The strategy is a response to the changing market environment and the need to adapt to the new challenges ahead of the banking sector and the Polish economy.

Annual Report

Operations conducted by the Group in 2019 allowed it to achieve very good financial results and strengthen its leading position among the largest financial institutions in Poland.

In 2019 PKO Bank Polski celebrated its 100th anniversary. The bank’s history began on 7 February 1919 when the Chief of State Józef Piłsudski, the Prime Minister Ignacy Paderewski and the Minister of Post and Telegraphs Hubert Linde signed a decree, on the basis of which Pocztowa Kasa Oszczędnościowa was created. The bank has since become the trend-setter of the financial sector in Poland: introducing attractive products and services, investing in breakthrough technologies and implementing innovative solutions. The direction of its business model’s transformation is closely related to dynamically evolving digitization of the social life in Poland and the country’s economic development strategy.

The new strategy of PKO Bank Polski

In 2019, we updated the strategy “We support the development of Poland and the Poles”. In subsequent years, we will utilize modern technologies and deepen the relationship with our customers by responding to their individual needs through remote channels, precise offer personalization and advanced analytics, in order to become PKO Bank of the Future.

The updated strategy extended the time frame of until 2022 and acquired new challenging financial goals. By 2022, the bank’s Group plans to achieve return on equity of 12%, reduce cost-to-income ratio to 41%, maintain the cost of risk within the range of 0.60-0.75% and earn an annual net profit over PLN 5 billion. One of the goals is also related to an effective management of capital adequacy, which would enable the capital ratios to meet the criteria for dividend disbursement. The strategy also includes non-financial factors – environmental, social and governance. PKO Bank Polski will pursue its strategy along four pillars, becoming:

Accessible, mobile and personal
Open and innovative
Digital and effective
Shaping competences of the future

The best mobile banking in the world

We offer our customers the most advanced mobile banking system
in the world – the IKO application. At the end of 2019, the number of active IKO applications reached 4.2 million.

For the second time, IKO was ranked first out of 100 mobile applications by Retail Banker International in February 2019. The ranking is based on customer reviews provided in iOS and Android application stores. IKO received an average score of 4.8/5 based on nearly 300 thousand reviews, far exceeding scores given to mobile applications of banks from all over the world.

IKO is the most popular and most transactional application in Poland. Every half a second our clients make mobile payments, and they already log into IKO 60% more often than they do using the iPKO online banking website. So far, they have made 350 million transactions via IKO.

The Group expands its operations

  • Following a call for shares subscription, PKO Leasing acquired 11.2 million shares in a public company Prime Car Management (PCM), which accounted for 94.4% of the company’s share capital. It subsequently acquired the remaining shares through a squeeze-out, obtaining 100% shares by the end of June 2019. The synergy resulting from acquisition of PCM and its subsidiaries is the reinforcement of the PKO Leasing Group’s leading position in the lease sector, allowing the Group to expand its fleet management and car rental services.
  • In 2019, the National Cloud Operator announced its strategic partnership with a global technological partner – Google. The goal of the cooperation is to support Polish companies in implementing and utilizing advanced cloud technology in conducting their business. The Google Cloud Platform products will be included in the company’s offer, and Google will open a Google Cloud region in Warsaw – an infrastructure and software hub for customers based in Poland and the broader Central European region. The bank owns 50% of the company’s shares, while the Polish Investment Fund (PFR) is the second shareholder.
  • PKO BP Finat and PFR concluded an agreement to create an Employee Capital Plan Records System, which began its operations on 1 July 2019. The system was integrated with all entities that currently service the Employee Capital Plans to ensure the ongoing aggregation of information from the whole market.

PKO Bank Polski becomes the sponsor of the Polish Premier League

For two consecutive seasons, the top football class in Poland will hold the title of PKO Bank Polski Ekstraklasa (Premier League) starting from 1 July 2019. The bank’s brand, as the title sponsor, will be present at all 296 matches during 37 rounds. As part of the agreement, PKO Bank Polski has remained the official bank supporting the premier league and continued projects, already launched in the previous season. In 2019, the bank also launched a partnership programme addressed to various clubs in the premier league. The new initiative enables clubs to obtain additional financing upon promotion of the bank’s products among fans.

The Group introduces “green products” and improves its ESG rating

In 2019, the Group introduced new products in its offer to support sustainable development and environmental initiatives:

  • PKO Leasing launched an entrepreneurial lease or loan for financing of photovoltaic cells up to PLN 250 000,
  • the Bank included in its offer an Eco Cash loan for the purchase and installation of solar panels up to PLN 50 000,
  • PKO Bank Polski and PKO Bank Hipoteczny jointly introduced a “green-mortgage”option, which allows customers to obtain a lower mortgage margin if they present an energy performance certificate for the purchased property,
  • the two banks were the first banks in Poland to join the European pilot project Energy Efficient Mortgages (EEM), aimed at creating standardized solutions for mortgage loans that finance properties adopting energy-efficient solutions,
  • the bank launched new treasury products for corporate customers: transactions for CO2 emission rights – the Commodity Swap and Commodity Forward,
  • PKO Bank Polski, together with a consortium of foreign banks, organized and placed an issue of Polish green T-bonds worth EUR 2 billion on the Euro market,
  • PKO Bank Hipoteczny issued the first green mortgage covered bonds in Poland, in total carrying out two issues of such bond in 2019 with a nominal value of PLN 500 million,
  • the Group took part in a consortium of five banks, which granted financing to the Energa SA Group in the form of an ESG-linked revolving loan of PLN 2 billion,
  • the bank participated in a BIZNESMAX guarantee scheme by the State Development Bank (BGK) to provide loans for pro-environmental projects,
  • PKO TFI launched a new investment fund “PKO Environment and Social Responsibility Global” – the fund’s assets are invested in entities whose operations are environmentally-friendly and generate a positive impact on the society, while its first valuation was performed on 23 October 2019.

Our activities have been reflected in higher ESG ratings:

  • FTSE Russell improved ESG rating awarded to PKO Bank Polski (an increase from 1.6 to 3.3 on a scale of 1 to 5, where 5 is the highest score),
  • MSCI increased the bank’s rating from BB to BBB,
  • Sustainalytics reduced the bank’s ESG risk score from 32.9 to 24.0 (on a scale from 0 to 100), which indicates a lower risk assessment from a high to medium level.

The ESG Sustainalytics rating is one of the adjustments used in the WIG-ESG index launched on 3 September 2019. The bank’s participation in the index is at the highest level possible at 10%.

We develop digital services

We offer modern and comprehensive solutions to address the needs of our customers by introducing and developing innovative services in digital communication, which include iPKO and iPKO Biznes services, and IKO mobile application. The Group provides its customers with professional tools that facilitate their control over finances and conducting business activities:

  • we launched additional e-banking services for companies: e-Bookkeeping, e-Lawyer, and e-Enforcement,
  • we launched an electronic identification service (e-Identity), which gives the bank’s customers the possibility to log on to public administration portals using their banking login and password,
  • as the first bank in Poland, we introduced the possibility to pay income taxes on the governmental portal using the Paybynet system,
  • we launched a service via iPKO site enabling the purchase of gift cards for selected-platforms access (e.g. Google Play, Office 365, Netflix),
  • we implemented an investment advisory service via iPKO site (Inwestomat),
  • we introduced the possibility of purchasing city transport tickets in the IKO mobile application,
  • we provided two functions in our online currency exchange office – the possibility to order currency exchange when the exchange rate reaches the required value, and to set standing orders,
  • we adapted to the PSD2 recommendations – implemented changes for customers in iPKO and Inteligo services, IKO mobile application, and in handling payment cards by introducing additional authorization for certain operations, masking one-off passwords, or shortening sessions in the online service.

Key financial data of the PKO Bank Polski Group

Operations conducted by the Group in 2019 allowed it to achieve very good financial results and strengthen its leading position among the largest financial institutions in Poland.

Net profit of the PKO Bank Polski Group in 2019 amounted to PLN 4 031 million, which indicates an increase of 7.8% y/y. The net profit growth was determined by:

  • an improvement in the result on business activities, which reached PLN 14 670 million (+10.0% y/y), mainly due to an increase in net interest income of 10.0% y/y, resulting from an increase in volumes,
  • an increase in operating expenses of 4.3% y/y, mainly the costs of employee benefits, and amortization and depreciation,
  • deterioration of net write-downs and impairment of PLN 261 million as a result of:
    • recognition of the costs of legal risk of mortgage-backed loans in convertible currencies of -PLN 451 million in 2019,
    • improvement in the remaining net write-downs and impairment of PLN 190 million and a reduction in the cost of credit risk to 0.47%.

As a result of business decisions taken in 2019, there was a clear increase in the scale of operations:

  • total assets reached over PLN 348 billion (+PLN 24 billion y/y),
  • financing granted to customers increased to more than PLN 245 billion (+PLN 15 billion y/y);
  • amounts due to customers increased to PLN 256 billion (+PLN 17 billion y/y).

In the course of 2019, the Group:

  • retained a high share in the loans and savings market of 17.9% and 18.4% respectively,
  • was the leader on the investment funds market for individuals with a share of 20.1%.

2018 2019 Change (y/y)
Net profit (in PLN million) 3 741 4 031 7.8%
Net interest income 9 345 10 279 10.0%
Net fee and commission income 3 013 3 047 1.1%
Result on business activities 13 339 14 670 10.0%
Administrative expenses -5 897 -6 148 4.3%
Tax on certain financial institutions -950 -1 022 7.6%
Net write-downs and impairment -1 451 -1 712 18.0%
Total assets 324 255 348 044 7.3%
Total equity 39 101 41 578 6.3%
ROA net 1.2% 1.2% 0.0%
ROE net 10.0% 10.0% 0.0%
ROTE net 11.0% 10.9% -0.1%
C/l (cost-to-income ratio) 44.2% 41.9% -2.3%
Net interest margin 3.41% 3.41% 0.0%
Share of impaired loans 4.9% 4.1% -0.8%
Cost of credit risk 0.59% 0.47% -0.12%
Total capital ratio 18.88% 18.42% -0.46%
Tier 1 capital ratio (CET 1) 17.54% 17.16% -0.38%

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