Financial Results for 1Q08
Page 1
Financial Results for 1Q2008
Kick-Start of Business Rebuilding
Warsaw, May 9, 2008
Financial Results for 1Q08
Page 2
Executive summary
Macroeconomic situation
1Q08 financial results
Appendices
Loan book overview
Business development
Financial Results for 1Q08
Page 3
Financial Highlights
Continued business only
1Q08
1Q07
1Q08/ 1Q07
Net interest income
154
107
44%
Net F&C
87
88
1%
Net trading result
-8
3
-
Total net revenue*
235
199
18%
Costs
192
130/169**
48%/14%**
Other operating result
34
4
792%
Impairment charges
-8
-13
42%
Pre-tax profit
68
58
16%
Net profit
47
39
21%
Total net revenue=NII+Net F&C+Net trading result+Net income from investments; Deposits=Amounts owed to customers; Loans=Net loans and advances to customers
IFRS consolidated data in PLNm
B/S changes in 1Q08 (in PLNm)
8% deposits to 6,055 (from 5,621)
5% loans
to 6,501 (from 6,165)
5% equity
to 1,551 (from 1,473)
3% assets
to 12,604 (from 13,027)
** Excluding impact of „Cost Allocation” in 1Q07
Financial Results for 1Q08
Page 4
Efficiency Ratios (%)
ROE net = net profit to av. shareholders’ equity; ROE pre-tax = pre-tax profit to av. shareholders’s equity; ROA = net profit to av. assets; CIR = general administrative expenses/ (total net revenue + other
operating result); Margin = NII to av. total assets
0.0 pp
.
ROE
pre-tax
1.3 pp
.
ROE
net
19,3
19,3
0
2 5
1Q08
2007
0.1 pp
.
ROA
net
6.8 pp
.
CIR
13,4
12,1
0
1 7
1Q08
2007
1,5
1,4
0
2
1Q08
2007
71,8
64,9
50
1Q08
2007
1.3 pp
.
Margin
4,79
3,53
0
5 ,5
1Q08
2007
2.5%
Net profit/
FTE
(PLNths)
55,0
56,4
30
1Q08
2007
5.0 pp
.
Loans/
Assets
52
47
0
5 5
1Q08
2007
3.0 pp
.
Loans/
Deposits
107
110
0
12 0
1Q08
2007
Financial Results for 1Q08
Page 5
Bank BPH Key Statistics
as at end-March 2008
*Bank BPH customers have free of charge access to more than 3,200 ATMs
(including 1,249 of EuroNet and all Pekao machines); **Without unpaid,
maternity and child care leaves; ***Bank started to acquire Corporate Clients
from 30 Nov. 2007 i.e. immediately after spin-off; ****Active cards only
Branch Network Density by Voivodship
Key data
2007
1Q08
Outlets
200
200
Partner outlets
0
20
Own ATMs*
206
206
Employees (FTEs)**
3,172
3,422
Retails Clients, including (‘000):
692.9
699.1
Private Individuals
626.4
629.4
Small Enterprises
66.5
69.7
Corporate Clients***
18
286
Retail banking cards, including (‘000):
494.5
518.6
Credit cards****
98
104.8
Debit cards
385.9
403.9
Charge cards
10.6
9.9
(1) Regional GDP per capita (in % of Polish average); Source:
Company data, Central Statistical Office
Lubuskie
Dolnoslaskie
Wielkopolskie
Zachodniopomorskie
Pomorskie
Kujawsko
-
Pomorskie
Warminsko
-
Mazurskie
Podlaskie
Mazowieckie
Lubelskie
Podkarpackie
Malopolskie
Swietokrzyskie
Lodzkie
Slaskie
Opolskie
16
18
9
4
7
34
12
11
17
32
5
7
5
6
11
6
Gdansk/
Warsaw
Krakow
Katowice
/
Silesia
Poznan
Lubuskie
Dolnoslaskie
Wielkopolskie
Zachodniopomorskie
Pomorskie
Kujawsko
-
Pomorskie
Warminsko
-
Mazurskie
Podlaskie
Mazowieckie
Lubelskie
Podkarpackie
Malopolskie
Swietokrzyskie
Lodzkie
Slaskie
Opolskie
16
18
9
4
7
34
12
11
17
32
5
7
5
6
11
6
Gdansk/Gdynia/Sopot
Warsaw
Krakow
Katowice
/
Silesia
Poznan
<80%(1)
80%-95%(1)
95%-105%(1)
105%-120%(1)
>120%(1)
Number of outlets
<80%(1)
80%-95%(1)
95%-105%(1)
105%-120%(1)
>120%(1)
Number of outlets
E
m
p
lo
y
m
en
t
st
ru
ct
u
re
(F
T
E
s)
8
House Savings and Loan Office
House Savings and Loan Office
60
Corporate Centers and Corporate Macroregions
315
- Back office
46
Brokerage Office
1,228
Head Office
263
Credit Analyzes and Collection Centers
208
- Management of outlets
1,294
- Front office
Outlets, incl.:
Corporate Centers and Corporate Macroregions
- Back office
Brokerage Office
Head Office
Credit Analyzes and Collection Centers
- Management of outlets
- Front office
1, 817
Outlets, incl.:
Financial Results for 1Q08
Page 6
Behind:
Spin-off legally effective
November 29, 2007
Financial settlement of spin-off finalized
February 29, 2008
GE Money filing with KNF
Legal Background
Ahead:
KNF approval for GE Money to take control over Bank BPH
Acquisition of Bank BPH by GE Money
up to few weeks after KNF
approval
Completion of BPH285 migration to Pekao
end of May, 2008
Integration with GE Money Bank
by end of 1H2009
Financial Results for 1Q08
Page 7
Executive summary
Macroeconomic situation
1Q08 financial results
Appendices
Loan book overview
Business development
Financial Results for 1Q08
Page 8
5,8
6,5
6,5
6,3
4,3
3,2
2,4
6,9
6,0
4,8
4,0
4,4
5,4
6,3
6,6
6,6
7,3
0
9
1
Q
0
4
2
Q
0
4
3
Q
0
4
4
Q
0
4
1
Q
0
5
2
Q
0
5
3
Q
0
5
4
Q
0
5
1
Q
0
6
2
Q
0
6
3
Q
0
6
4
Q
0
6
1
Q
0
7
2
Q
0
7
3
Q
0
7
4
Q
0
7
E
1
Q
0
8
9,0
15,9
18,0
26,2
20,8
17,6
16,4
18,3
16,6
10,1
6,4
3,9
1,2
8,6
5,3
4,9
4,8
0
30
1
Q
0
4
2
Q
0
4
3
Q
0
4
4
Q
0
4
1
Q
0
5
2
Q
0
5
3
Q
0
5
4
Q
0
5
1
Q
0
6
2
Q
0
6
3
Q
0
6
4
Q
0
6
1
Q
0
7
2
Q
0
7
3
Q
0
7
4
Q
0
7
E
1
Q
0
8
2008 GDP Growth Forecast Still Above 5%
GDP (%, y/y)
Investments (%, y/y)
Contribution to GDP growth
5,0
4,4
5,2
4,7
6,9
5,0
3,7
5,6
5,1
2,5
2,5
5,1
1,6
1,4
5,3
2,7
4,4
0,5
7,75
1
Q
0
4
2
Q
0
4
3
Q
0
4
4
Q
0
4
1
Q
0
5
2
Q
0
5
3
Q
0
5
4
Q
0
5
1
Q
0
6
2
Q
0
6
3
Q
0
6
4
Q
0
6
1
Q
0
7
2
Q
0
7
3
Q
0
7
4
Q
0
7
E
1
Q
0
8
Private consumption (%, y/y)
All figures reported as quarter average (unless stated otherwise)
Despite global economy slow down, pace of economic
growth in Poland will stay above 5% in 2008 (5.8% for
1Q08)
Domestic demand: consumption and investments still
driving economic expansion
-3
-1
1
3
5
7
9
1Q04 3Q04 1Q05 3Q05 1Q06 3Q06 1Q07 3Q07 1Q08
p
e
rc
.
p
o
in
ts
(
c
o
n
tr
ib
u
tio
n
t
o
G
D
P
g
ro
w
th
)
net exports
i nventories
i nvestments
publ i c consumpti on
pri vate consumpti on
GDP
Financial Results for 1Q08
Page 9
37,7
25,5
23,1
20,3
15,3
12,1
4,3
4,0
8,6
-4,5
-0,5
1,3
1,7
25,0
40,2
38,3
37,3
31,6
29,5
23,7
16,1
20,1
21,5
19,2
24,2
38,8
-10
0
10
20
30
40
50
1Q
05
2Q
05
3Q
05
4Q
05
1Q
06
2Q
06
3Q
06
4Q
06
1Q
07
2Q
07
Q
30
7
Q
40
7
1Q
08
Corporate
Household
8,6
17,8
26,0
19,9
16,8
15,2
24,2
22,9
21,0
21,5
23,0
29,9
22,3
15,7
9,7
7,8
5,3
8,5
9,3
8,3
4,5
5,0
6,9 8,6
11,7
8,3
0
5
10
15
20
25
30
35
40
1Q
05
2Q
05
3Q
05
4Q
05
1Q
06
2Q
06
3Q
06
4Q
06
1Q
07
2Q
07
3Q
07
4Q
07
1Q
08
Corporate
Household
4,9%
10,1%
13,6%
19,4%
19,6%
16,9%
6,8%
2001
2002
2003
2004
2005
2006
2007
Ever Increasing Inflation
CPI to reach its peak in 3Q08, but monetary policy
tightening cycle close to end – our expectations:
interest rates to be hiked to 6.00%
Corporate loans revival to continue in 2008
Household loans growth still exceeding 35%
Corporate and household loans
(%y/y, quarterly averages)
Corporate and household deposits
(%y/y, quarterly averages)
Inflation (%, y/y) and 1M WIBOR
NPL in commercial banks (share %)*
2,4
2
3,5
4,1
4,3
4,8
5,2
5,6
1,6
1,1
3,6
2,3
0,6 0,8
1,4
1,4
2,1
5,6
4,7 4,6
4,3 4,1
6,5
4,1
4,1
4,1
0
9
1Q
05
2Q
05
3Q
05
4Q
05
1Q
06
2Q
06
3Q
06
4Q
06
1Q
07
2Q
07
3Q
07
4Q
07
1Q
08
Inflation
1M WIBOR
*/ according to NBP
Financial Results for 1Q08
Page 10
Executive summary
Macroeconomic situation
1Q08 financial results
Appendices
Loan book overview
Business development
Financial Results for 1Q08
Page 11
198,5
234,6
46,8
-1,0
-10,2
1,0
0
140
280
1Q07
Net interest
income
Net F&C
Trading
result
Net income
from
investments
1Q08
54,0%
65,6%
37,2%
44,5%
-3,3%
1,5%
0,4%
0,0%
-5%
45%
95%
1Q07
1Q08
Net income from
investments
Trading result
Net F&C
Net interest
income
Total net revenue
18% growth (or PLN 36m) of net revenue driven by:
44% jump of net interest income mainly on higher loan
and deposit base
1% deterioration of net F&C i.a. due to higher costs of
domestic payments
Net trading result without interest income on trading
positions booked in NII; economic trading result equal to
PLN 5.5m
+18%
Net F&C coverage (%)
1Q08
1Q07
of general costs
45.4
67.8
of remuneration costs
105.3
129.0
PLNm
All data consolidated and pro-forma 1Q07 (spin-off adjusted) unless stated otherwise
Revenue Side
1Q08 vs. 1Q07
Financial Results for 1Q08
Page 12
192,4
130,2
39,1
14,5
2,0
4,0
2,7
0
100
200
1Q07
Personnel
Building
maintenance
& rents
Other
expenses
Depreciation Allocation of
costs*
1Q08
-13,4
-7,7
-15
-8
-1
1Q07
1Q08
Cost Side
1Q08 vs. 1Q07
Costs (incl. depreciation)
Impairment charges
+47.8% o
r +13.7%
without „
Cost allo
cation” i
mpact
Total costs up by 47.8% or 13.7% excl. positive impact of „Costs allocation”*
recognized only until spin-off
Personnel expense up by 21% due to i.a. key staff retention, bonuses and base salary
upgrade as well as recruitment of new personnel (FTE number up by 250 in Q1)
1Q08
1Q07
PLNm
*referring to transactions between continued and discontinued operations
defined by internal cost allocation system introduced in relation to spin-off
39,1
169.3
Financial Results for 1Q08
Page 13
Assets Structure
1Q08 vs. end-2007
Assets
3% drop of assets as a result of: (i) closing short term liquidity buffer and consequent
shrinkage of investment financial assets (-45%) and (ii) decrease of other assets (-35%)
not fully offset by higher loans (+5%) and dues from banks (+38%)
Retail loans dominating total loan portfolio
Share of PLN denominated loans up to 64%
1 192
1 642
2 101
2 187
1 605
2 218
1 051
970
6 165
6 501
0
6 000
12 000
31.12.07
31.03.08
net loans*
trading assets
dues from banks
investments
financial assets
other
*Net loans and advances to customers
PLNm
13,027
12,604
-3.3%
26%
28%
70%
73%
1%
0%
1%
1%
0%
50%
100%
31.12.07
31.03.08
Organiz. Related Party
Corporate
Private Individuals
SME
Loans
Financial Results for 1Q08
Page 14
576
644
1 856
3 006
1 551
1 473
3 501
1 347
6 055
5 621
0
6 000
12 000
31.12.07
31.03.08
deposits*
dues to banks
evidenced by
certificates
shareholders'
equity
other
Liabilities Structure
1Q08 vs. end-2007
Liabilities
Deposits
62% reduction of dues to banks following i.a. closing of short term liquidity buffer
Almost 8% (or PLN 434m) upturn in deposits
* Amounts owed to customers
PLNm
27%
23%
74%
73%
3%
0%
0%
50%
100%
31.12.07
31.03.08
Corporate
Private Individuals
SME
Financial Results for 1Q08
Page 15
Executive summary
Macroeconomic situation
1Q08 financial results
Appendices
Loan book overview
Business development
Financial Results for 1Q08
Page 16
Loan Book Break-down by Segment And Currency
end-March 2008 vs. end-2007
Loan portfolio for Bank BPH stand-alone = utilized loans +
guarantees; PI – Private Individuals; SME – Enterprises with
up to PLN 10m annual turnover (within Retail Division)
Organiz. Related
Party
1% (vs. 1%)
Corporate
1% (vs. 0%)
SME
28% (vs. 26%)
Residential
mortgages
58%
(vs. 59%)
PI excl. Mtg
12% (vs. 14%)
62%
64%
3%
3%
35%
33%
0%
100%
31.12.2007
31.03.2008
PLN
EUR
CHF
Financial Results for 1Q08
Page 17
Impaired Loan Portfolio
Loan portoflio for Bank BPH stand-alone
Impaired loans
(% of total loans)
Provisions
(% of impaired loans)
11,2%
5,2%
3,1%
9,9%
3,1%
5,0%
0%
6%
12%
Total
PI
SME
31.12.2007
31.03.2008
67%
69%
67%
65%
69%
68%
60%
65%
70%
Total
PI
SME
31.12.2007
31.03.2008
Financial Results for 1Q08
Page 18
Loan Portfolio by Products
end-March 2008 vs. end-2007
Multipurpose
line; 36%
Mortgages;
0,1%
Revolving
loans; 63%
Guarantees;
1%
Other
5% (vs. 6%)
Mortgage
14% (vs.
14%)
Overdraft
24% (vs.
20%)
Investment
Loan
31% (vs.
34%)
WCL*
26% (vs.
26%)
Other
15% (vs.
15%)
Real Estate
Loan
54% (vs.
54%)
Constr. Loan
32% (vs.
31%)
Card
16% (vs.
17%)
Personal
Overdraft
22% (vs.
22%)
Other
3% (vs. 3%)
Cash Loan
59% (vs.
58%)
PI (excl. Mtg): PLN 0.8bn (vs. PLN 0.8bn)
SME: PLN 1.8bn (vs. PLN 1.6bn)
Residential Mortgages: PLN 3.8bn (vs. PLN 3.6bn)
Corporate*: PLN 0.15bn (vs. PLN 0.06bn)
*Including Organizational Related Party
Loan portoflio for Bank BPH stand-alone
Financial Results for 1Qs 2008
Page 19
6,8
6,0
5,1
3
4
5
6
7
8
1Q07*
4Q07
1Q08
6,4
6,1
5,6
3
4
5
6
7
8
1Q07*
4Q07
1Q08
Retail Business Development – Total Sales
Retail loan volumes
+15%
Margins (%):
Retail deposit volumes**
+34%
Margins (%):
Growth in cash loan sales of Pożyczka od Ręki (+23% y/y to PLN 0.44 bn), while total
cash loan portfolio up by 13% y/y to PLN 0.50 bn
Focus on structured investment products (SCD)
2.9
3.4
3.0
2.4
PLN bn
PLN bn
Market shares (%):
Market shares (%):
2.4
2.8
2.4
2.1
*1Q07 post spin-off pro-forma
**including SCD (in Bank BPH b/s)
3.1
2.7
2.4
2.3
Financial Results for 1Qs 2008
Page 20
Number of Retail Customers per Products
as at end-March 2008
PI
SME
605
369
315
53
105
447
Total loans Consumer
loans
Mortgages
Credit
cards*
Personal
accounts
Deposits
81
19
11
5
2
60
Total loans WCL* and
debits
Investment
loans
Other loans Harmonium
packages
Deposits
*Active cards only
in ths
in ths
*Working capital loans
Financial Results for 1Qs 2008
Page 21
5,0
6,5
6,9
0,0
1,0
2,0
3,0
4,0
5,0
6,0
7,0
8,0
9,0
1Q07
4Q07
1Q08
Retail Business Development –
Investment Products
-28.7%
BPH TFI assets
BPH TFI assets down by -PLN 2bn vs. March’07 due to global slump on equity markets
BPH TFI market share of 4.5%
Five issues of structured deposits (PLN 0.34bn sales)
Top Dywidenda (April–May ‘07), Top Dywidenda 2 (July ‘07), Lokata Indeks Plus (Aug.-
Sept. ‘07), Lokata Stabilne Akcje (Oct.-Nov. ‘07), Lokata na Bank (Feb-Mar’08)
PLN bn
Financial Results for 1Qs 2008
Page 22
c.a. 2.5% market share
Growth of ROR packages: +26.4 ths y/y
55.4% share of color** packages (+4.1 pp. y/y)
Growth of PI deposit volume (+42% y/y)
447
434
420
300
350
400
450
500
1Q07*
4Q07
1Q08
+6.3%
Retail Business Development – RORs and
Term Deposits
(new customers acquisition)
ROR accounts for PI
*1Q07 post spin-off pro-forma
**Silver, Gold, Sez@m Max, Private Banking
‘000
Financial Results for 1Qs 2008
Page 23
SME and PI (in ’000)
1Q07*
4Q07
1Q08
Internet banking
197
227
242
Call center**
229
277
336
Retail Business Development –
Credit Cards & Alternative Distribution
Channels
Credit cards*
+23
%
‘000
*Active cards only
**incl. transactional services
+47
%
111
122
0
50
100
150
1Q07*
1Q08
Credit cards transaction volume
+10%
PLNm
105
98
80
0
20
40
60
80
100
120
1Q07
4Q07
1Q08
31%
Financial Results for 1Qs 2008
Page 24
60
57
53
0
20
40
60
80
1Q07*
4Q07
1Q08
+13%
Retail Business Development – Harmonium &
Quick Loans for SME
More than 86% of SME customers using Harmonium packages
New e-Harmonium package launched – cheapest on the market
Deposit base enhanced (+7% y/y)
Growth of loans for SME: 25% y/y (to PLN 1.84bn)
Harmonium packages
‘000
*1Q07 post spin-off pro-forma
Financial Results for 1Q08
Page 25
3,77
3,65
3,35
42,7%
41,1%
27,4%
3
1Q'07
2007
1Q08
0%
50%
100%
Retail Business Development –
Mortgage Lending
Residential Mortgages
Market shares (%):
+12
%
PLN share
3.9
2.9
Sale of mortgage loans higher by 5% in 1Q08 vs. 4Q07
As at 31.03.2008
Total
PLN
FX
Av. maturity*
19.1 years
16.5 years
21.1 years
Av. amount** (in PLN ‘000)
128
128
-
Av. LTV***
50%
58%
45%
NPL
2.2%
2.5%
1.9%
Portfolio growth dynamics
(March’08/ March’07)
12%
75%
-11%
*contractual maturity; **loans granted in 1Q2008 with only small portion of FX loans; ***current LTV
adjusted to mortgage collaterals revaluation
PLN bn
*1Q07 post spin-off pro-forma
3.1
Financial Results for 1Q08
Page 26
Corporate Banking – Ambitious Strategy
Re-establishing of Corporate Centers network throughout the country: 8 Centers
already operational for all 10 Centers planned to be opened by end-2008
Human capital and resources being restored
Pre spin-off product and service quality retained - most of products already in active
sales
Customer portfolio to be gradually rebuilt - 286 new corporate customers served at
the end of 1Q (revised plan to have over 1,200 customers at end-2008)
56
124
Deposits
90
149
Loans
1Q average
March 31, 2008
Volumes (in PLNm)
Financial Results for 1Q08
Page 27
Corporate Banking - Transactional Banking
TransKasa
: recent cooperation
agreement with Kolporter: B2C
services enabling collection of utility
payments (by over 80 country-wide
billers) at press-rooms and shops;
TransKasa installed in ca. 1,000 Points
of Sale (POS) all over the country
Corporate Customers Service:
BusinessLine servicing ca. 300 clients
Cash Management
Electronic Banking
BusinessNet
BusinessNet
1Q08 monthly growth
1Q08 monthly growth
0
50
100
150
200
250
300
I
II
III
BusinessNet sales increase: currently
240 customers in place
Financial Results for 1Q2008
Page 28
INM Business Development
1
st
place of Research Team in macro-economic
ranking of Parkiet Daily in 1Q08
Focus on rebuilding INM/ Treasury Sales and
implementation of new products for Corporate
and SME segments
Introduction of business model for sales of
financial market products and services in Retail/
SME, Corporate and Financial Institutions
segments
1
st
Place
in macroeconomic
ranking
Jan-Mar 2008
PLN 86m
of
Structured
Investment Products
Originated
Jan-Mar 2008
136%
100%
1Q'07
1Q'08
Sales margin from treasury products for Corporate
and Retail segments*
* results from sales of treasury products and custody services generated by INM Division are
presented entirely in the results of Retail and Corporate segments
+36
%
43% y/y growth of sales of
structured investment products for
Retail Clients in 1Q08
36% y/y increase of net income
from sales of treasury products (incl.
fixed income) for Retail/ SME,
Corporate and Financial Institutions
Clients in 1Q08