Bank Polska Kasa Opieki (PEO) Q2 2024 earnings summary

Executive summary

• Net profit for H1 2024 grew 4% year-over-year, excluding one-off events, reaching PLN 2,936 million, driven by high interest rates, strong retail and corporate performance, and digital transformation, though reported net profit fell to PLN 2,938 million due to higher legal risk costs and accounting changes.

• Loan portfolio expanded 6% year-over-year to PLN 180 billion, with strong growth in new PEX, SME financing, and deposit growth of 13%.

• Digitization rate in retail rose to 89%, with active mobile banking customers exceeding 3.3 million, up 11% year-over-year.

• Maintains leadership in corporate banking, payments, and custodian services, recognized by Global Finance awards.

• Strategy from 2021–2024 remains on track, with continued focus on ESG, dividend payments, and a review underway for post-2024 period.

Financial highlights

• Net interest income rose 10% year-over-year in H1 2024, with a 6–7 basis point margin increase and operating income at PLN 7,678 million.

• Loan volumes up 6%, deposit volumes up 13% year-over-year; retail loan volumes grew 11%, with mortgage loan sales up over 3x and cash loan sales up 24%.

• Net fee and commission income increased by 1% year-over-year, supported by capital market activities.

• Operating costs increased 13–13.5% year-over-year, mainly due to personnel costs and inflation, but cost-to-income ratio held at 36.7%.

• ROE at 19.9–20.1% in H1 2024, down from 26.2–27.2% in H1 2023.

Outlook and guidance

• GDP growth for Poland forecasted at 3% for 2024, accelerating to 4.3% in 2025, with consumption as the main driver.

• Interest rates in Poland expected to remain high until at least mid-2025, with NBP rates unchanged amid inflationary pressures.

• Bank aims to maintain NPL ratio below 5% and continue dividend payouts between 50% and 75% of net profit.

• Credit holiday program for PLN mortgage loans expected to impact results through end-2024.

• No significant impact anticipated from upcoming regulatory changes, including benchmark reform.