Poll

Significant events in the Capital Group in 2013

1.44 million
clients of Bank
Pocztowy
As at 31.12.2013

1. Growing client base

At the end of 2013 Bank Pocztowy had the total of 1,438.8 thousand clients, including:

  • 1,246.5 thousand consumers (in 2013 the number grew by 127.4 thousand),
  • 177.2 thousand microenterprises versus 177.6 thousand at the end of 2012,
  • 15.1 thousand other institutional clients (small and medium enterprises, public sector entities, public benefit institutions and entities in the Poczta Polska Capital Group).The number of the Bank’s clients in the segment grew by 0.8 thousand in 2013.

The dynamic growth in number of clients has proved the efficiency of the product offer policy applied by the Bank. The policy is based on offering simple, user-friendly products and avoiding complicated procedures and incomprehensible communication.

2. Significant increase in new loans

In 2013 the Bank Pocztowy Capital Group took steps to optimize its balance sheet structure and increase the share of highly profitable assets, in particular consumer loans. At the end of December 2013 the total gross loans and advances to customers granted by the Group amounted to PLN 5,180.5 million, i.e. by PLN 485.9 million (i.e. 10.3%) more than at the end of 2012. The Group had a 0.6% share in credit receivables from the banking sector clients1.

The increase in new loans of the Group was related to:

  • an increase in credit receivables from individuals.At the end of 2013 they amounted to PLN 4,105.7 million and grew by 541.3 million (i.e. by 15.2%) versus the end of 2012. The growth resulted from a growth in the number of new consumer loans,which amounted to PLN 1,723.1 million and grew by 22.3% in 2013,
  • stabilization of credit exposure extended to institutional clients.Credit receivables of the Group in this category reached PLN 638.6 million,
  • decrease in credit exposure to local authorities. It amounted to PLN 356.6 million and was by 13.7% lower than in the previous year. The deterioration resulted from a difficult financial position of local authorities, a decrease in the credit liabilities towards the banking sector, and low market attractiveness for the Group resulting from relatively low profitability.

Loans and advances to customers of the Bank Pocztowy S.A. Capital Group (in PLN '000)

  31.12.2013 Structure
(31.12.2013)
31.12.2012 Structure
(31.12.2012)
Change 2013/2012
 PLN '000   %
Loans and advances to customers (gross)  5,180,504  100.0%  4,694,651  100.0%  485,853  10.3 %
Overdraft facilities  79,626  1.5%  69,379  1.5%  10,247  14.8 %
Term loans  5,100,878  98.5%  4,625,272  98.5%  475,606  10.3 %
individuals  4,105,692  79.3%  3,564,369  75.9%  541,323  15.2 %
institutional clients  638,572  12.3%  647,471  13.8%  (8,899)  (1.4)%
local authority  356,614  6.9%  413,432  8.8%  (56,818)  (13.7)%
Net impairment allowances on receivables  124,792  -  95,106  -  29,686  31.2 %
Net loans and advances  5,055,712  -  4,599,545  -  456,167  9.9 %


Loans growth dynamics (2009=100)

Loans growth dynamics (2009=100)

Credit receivables from clients of the Bank Group (PLN million)*

Credit receivables from clients of the Bank Group (PLN million)*

* In 2009 and 2010 interest on loans was not assigned to individual Bank client categories. In 2009 it was PLN 7,576 thousand, in 2010 - PLN 9,061 thousand.
In 2009 gross loans amounted to PLN 1,844 million, in 2010: PLN 2,565 million.

The Group’s credit exposure structure had changed in the last years and also in 2013. First of all, the share of loans and advanced to consumers, i.e. of the largest group in the structure, increased. At the end of 2013 such exposures accounted for 79.3%, i.e. were by 3.4 p.p. higher than the previous year.

In the years 2009-2013 the Bank Pocztowy Capital Group acquired new loans considerably faster than the banking sector. The value of loans and advances in the Group grew by 280.9%, as compared to the growth in the entire banking sector of 130.8%.

Key competitors of the Bank Pocztowy Capital Group are entities with a well-developed traditional sales network, such as PKO Bank Polski S.A., Bank Pekao S.A., cooperative banks and credit unions.

3. Increase in consumer deposits

At the end of December 2013 liabilities of the Bank Pocztowy Capital Group to clients totaled PLN 6,230.6 million versus PLN 6,318.0 million at the end of 2012 (a 1.4% decrease). The Group had a 0.7% share in credit liabilities to the banking sector clients.
In 2013 deposits of consumers grew in the Groupup to PLN 4,157.2 million versus PLN 4,063.0 million at the end of 2012 (a 2.3% growth).
The value of funds kept on accounts of institutional clients totaled PLN 1,974.7 million and dropped by 2.7% during the year.

Liabilities to customers of the Bank Pocztowy S.A. Capital Group (in PLN '000)

  31.12.2013 Structure
(31.12.2013)
31.12.2012 Structure
(31.12.2012)
Change 2013/2012
 PLN '000  %
Liabilities to clients  6,230,578  100.0%  6,317,949  100.0%  (87,371)  (1.4)%
institutional clients  1,974,662  31.7%  2,028,859  32.1%  (54,197)  (2.7)%
individual clients  4,157,171  66.7%  4,063,038  64.3%  94,133  2.3 %
public sector clients  98,745  1.6%  226,052  3.6%  (127,307)  (56.3)%


Liabilities growth dynamics (2009=100)

Liabilities growth dynamics (2009=100)

Source: Financial Supervision Authority, Bank Pocztowy

Structure of liabilities to the Bank Group clients (in PLN million)

Structure of liabilities to the Bank Group clients (in PLN million)

In the years 2009-2011 non-bank financial entities were classified as institutions, in line with the reporting standards applied in the Bank.

In the recent years, stable deposits of consumers accounted for two third of the total value of deposits.

From 2009 to 2013 the value of liabilities to clients grew by 192.7%, as compared to the growth in the entire banking sector of 134.2%.

4. Record high income and stable costs

In 2013 the Bank Pocztowy Capital Group generated the second-highest net profit since the Bank’s inception.It reached PLN 36.0 million and was by 7.5% lower than the record high net profit reported in 2012.

Key factors determining the financial profit or loss of the Group in 2013:

  • Income growth. The income grew by PLN 298.4 million and it was the highest result since the beginning of the Bank’s operations (2.1% year-over-year).In the environment with record low interest rates, net interest income increased thanks to a significant growth in new loans extended to consumers.
  • A decrease in operating expenses. At the end of 2013 operating expenses amounted to PLN 212.7 million and were by 2.6% lower than in 2012.
  • Increase in the impairment loss from PLN -25.1 million in 2012 to PLN-42.4 million in 2013 (68.9% growth).

Gross profit of the Bank Group in 2013 (in PLN million)

Gross profit of the Bank Group in 2013 (in PLN million)

*Income including profit/loss from other operations

Financial performance of the Bank Pocztowy S.A. Capital Group in 2013

  2013 2012 Change
2013/2012
Operating income1 (in PLN '000)  298,396  292,120  2.1 %
General and administrative expenses (in PLN ‘000)  (212,738)  (218,356)  (2.6)%
Profir before cost of risk (in PLN '000)  85,658  73,764  16.1 %
Net impairment losses (in PLN '000)  (42,398)  (25,099)  68.9 %
Gross profit (loss) (in PLN '000)  43,260  48,665  (11.1)%
ROA netto (%)  0.5  0.6  (0.1) p.p.
ROE netto (%)  9.6  11.4  (1.8) p.p.
C/I (%)  71.3  74.7  (3.4) p.p.
CAR (%)  12.8  14.0  (1.2) p.p.
Tier 1 (%)  9.5  9.9  (0.4) p.p.

1/ Group’s income with other operating revenue and expenses..

As a result of an income growth and cost discipline the cost/income ratio improvedand amounted to 71.3% in 2013, i.e. was by 3.4 p.p. lower than in 2012.

In 2013 every PLN 100 of invested equity generated PLN 9.6 of net profit, i.e. by PLN 1.8 less than in the previous year. Lower return on equity resulted from higher cost of risk.

Capital adequacy ratio of the Group remained high and it exceeded the minimum level recommended by the supervising authority. On 31 December 2013 the solvency ratio amounted to 12.8%, as compared to 14.0% in December 2012. Tier 1 capital ratio of the Group was also goodand amounted to 9.5% at the end of 2013.

5. Bond issue

In order to diversify funds for financing new lending, in 2013 Bank Pocztowy S.A. issued short-term and long-term treasury bonds.

In 2013, Bank Pocztowy organized the following bond issues:

  • Issue of short-term bonds, based on a resolution of the Extraordinary Shareholders Meeting of 26 April 2013 on the issue of short-term, ordinary non-interest bearing bonds. Under the Program the Bank will issue bearer shares with the face value of PLN 300 million with the maturity date from 14 days to 1 year. The bonds issued will not be traded in the over-the-counter Catalyst market. In 2013, Bank Pocztowy organized 3 issues of short-term bonds:

– on 27 August 2013 the Bank issued D1 series bonds with the face value of PLN 60 million. The issue covered 600 bonds with the face value of PLN 100,000 each. The issue price was PLN 99,154.10.Bond redemption at face value was carried out on 2 December 2013,
– on 30 September 2013 the Bank issued D2 series bonds with the face value of PLN 30 million. The series comprised 300 bonds with the face value of PLN 100,000 with the issue price of PLN 99,139.00 each. The Bank redeemed the bonds at face value on 8 January 2014,
– on 2 December 2013 the Bank issued D3 series bonds with the face value of PLN 50 million. The series comprised 500 bonds with the face value of PLN 100,000 with the issue price of PLN 98,405.30 each. The bonds will be redeemed on 2 June 2014 at their face value.

  • Issue of ordinary B2 series bonds. On 13 December 2013 the Bank issued 14,785 ordinary bearer bonds with the face value of PLN 10,000 each. They are floating interest bonds determined as WIBOR6M+margin of 140 b.p., equal to 4.10% in the first interest period. Bond redemption date was set at 13 December 2016.13 March 2014 was the first day when B2 series bonds were quoted in the over-the-counter Catalyst market.

In order to strengthen its capital base, in 2012 Bank Pocztowy S.A. issued subordinated C series bonds with the face value of PLN 50 million.In February 2013 the Bank introduced them to the over-the-counter Catalyst market. They are floating interest bonds maturing on 5 October 2022.

At the end of December 2013 the total amount of bonds issued by the Bank was PLN 525,190 thousand, including PLN 297,340 thousand of bonds quoted on the Catalyst market.

Bank Pocztowy S.A. provided detailed information on the issue of bonds in its current reports, which are available at the website of the Catalyst market and the Bank.

6. Awards and distinctions

Nagroda kod sukcesuIn 2013 Bank Pocztowy S.A. consequently implemented its strategy, which was appreciated by market participants and recognized in form of awards and distinctions granted to the Bank for key areas of its operations. Individual awards were also won by the Bank’s managers and experts.

In February 2013 Bank Pocztowy was granted a Success Code award by the Wprost weekly for product simplicity and financial education program for unbanked persons. The organizers additionally emphasized that the Bank’s strategy translated into one of the most dynamic growths in the sector considering the number of new accounts.

Bank Pocztowy came second in the increase in the number of personal accounts for yet another year. The result was confirmed by a cyclical report of Bankier.pl web portal published in March. The report summarized activities of banks in the entire 2012 and the ranking prepared by PR News for the first half of 2013.

An important event for the Bank, confirming its growing role in the banking market in Poland, was the 5th edition of the Banking Forum Conference which was held in April.On this occasion Bank Pocztowy was granted three prestigious awards – The fasters growing Bank, The best Bank in the small/medium bank category and a title Manager of the Year for the Chairman of the Management Board of Bank Pocztowy S.A., Tomasz Bogus.

nagrody_3.jpg1.jpgIn June 2013 the Bank was voted the best bank offering consumer loans in the poll Top 50 Banks in Poland. When selecting the winners, the authors of the ranking considered two criteria – loans (defined as receivables from individuals) and a number of accounts. The growth and the absolute value of the increase were taken into account.

A cash loan offered by Bank Pocztowy was awarded several times during 2013. In June it was ranked first in the ranking of the Bankier.pl web portal twice, in Mayit came first in the ranking of TotalMoney.pl and in August it was ranked second in the ranking prepared by experts of Money.pl

Moreover, Pocztowe Konto Firmowe (Company Postal Bank Account) was also awarded by the market in July and August. It was ranked third in the ranking of Money.pl comparing 83 business accounts available in the market. The account was also on the third place of the ranking of Bankier.pl.

2.jpgTransparency of the information policy and the top quality of reporting of Bank Pocztowy S.A. was appreciated in October 2013 when the Bank was granted an award for the best Management’s report on the activities of the Bank for 2012 in the Banks and Financial Institutions category of The Best Annual Report competition organized by the Institute of Accountancy and Taxes.

Bank Pocztowy was ranked third in a satisfaction survey for Internet users in 2013. It was the second award granted to the Bank by Wirtualna Polska web portal and a yet another form of recognizing the Bank for its quality and growing position in the banking market. The ranking was prepared for the third time upon a request of wp.pl web portalby Expandi. The firm analyzed nearly 180 thousand Internet posts placed on various forums, comments under articles, in blogs and social networks.91% of all comments about Bank Pocztowy were either positive or neutral, which is the best result amount 20 banks compared. The ranking showed that Internet users particularly appreciate the Bank's credit offer.

Monika Kurtek, Chief Economist of Bank Pocztowy S.A. was granted an individual prestigious Bull and Bear 2012 award in the ranking organized by Gazeta Parkiet. She was ranked first for her accuracy in assessing market projections for 2012 beating over 20 teams of analysts from banks and financial institutions.

Nagrody

7. Post balance sheet events

In January 2014, Bank Pocztowy S.A. entered into the following agreements with Poczta Polska S.A.:

  • an arrangement concerning early repayment of the subordinated loan granted to the Bank in July 2011;
  • a new subordinated loan agreement for the amount equal to the amount of the loan granted in July 2011.

The objective of these activities was to maintain capital measures at appropriate levels determined by supervising institutions.

Index:
1 Source: WEBIS data for Bank Pocztowy, data of the National Bank of Poland for Monetary receivables and liabilities of financial institutions, December 2013 - for the banking sector
2 Source: WEBIS data for Bank Pocztowy, data of the National Bank of Poland for Monetary receivables and liabilities of financial institutions, December 2013 - for the banking sector

Annual Report 2013 - Bank Pocztowy