Bank Polski (PKO) Q4 2025 (Q&A) earnings summary

Executive summary

• Management addressed consumer protection charges, noting higher fines from the Polish customer protection office and a conservative provisioning approach for ongoing proceedings.

• Achieved PLN 10.7 bn net profit for 2025, up 14.8% year-over-year, including PLN 4.4 bn in CHF legal risk provisions.

• Double-digit growth in both customer financing (+11.1% y/y) and customer savings (+14.4% y/y).

• ROE reached 19.5% for 2025, with a cost/income ratio of 31.1% and cost of risk at 30 bps.

• Maintained a strong capital base with CET1 at 15.57%, exceeding regulatory and dividend criteria.

Financial highlights

• PLN 79 million fine from the customer protection office was recognized, with additional reserves created for potential future fines.

• Net interest income grew by 8.3% y/y on a comparable basis; net interest margin at 4.76% for the year, declining to 4.52% in Q4 due to rate cuts.

• Fee and commission income increased by 2.4% y/y, with Q4 growth accelerating to 8.5% y/y.

• One-off positive effects in 2024 card business fees (PLN 140–150 million) will not recur in 2025, but 2026 is expected to see growth.

• Asset quality improved: NPL ratio decreased to 3.34% at year-end.

Outlook and guidance

• Net interest income (NII) is expected to remain stable in 2026, with volume growth and hedging offsetting lower rates and margin pressure in the corporate segment.

• Fee and commission income is projected to grow, driven by asset management, brokerage, card, and FX businesses, with 2026 expected to outperform 2025.

• ROE target above 18% for 2027 is reaffirmed, assuming a 26% CIT rate and no significant CHF provisioning.

• Operating costs to rise with continued strategic investments; income tax burden to increase due to higher statutory rate.

• No new significant consumer protection fines are anticipated for 2026, but management cannot fully exclude the possibility.