Summary of the year 2015

Letter of the President of the Management Board of the 9th Tenure

Dear Sirs and Madams,

The year 2015 was a special period for Bank Pocztowy, as we celebrated the 25th anniversary of the Bank’s registration. In the last 25 years we have evolved from a settlement institution to the bank aspiring to the position of the consumer banking leader in all regions of Poland, which intensively works on a mobile offer. Our last-year achievements contributed a lot to these changes.

At the same time, it was a difficult year for the banking sector impacted by a number of events influencing banks' performance. Apart from record low interest rates, which adversely affected interest income, and a mandatory reduction of fees on card transactions, banks made higher contributions to the Bank Guarantee Fund and incurred costs of creating the Borrowers Support Fund.

In April 2015 the Bank adopted a new strategy based on three key growth drivers – simplicity, safety and a good price of services. This implies a special focus on consumers and simplest services offered at a good price. At the same time, we plan further integration with Poczta Polska, in particular in the area of products and the sales network.

In 2015 the Bank Pocztowy Group generated a net profit of PLN 34 million and the total income of PLN 328 million. Return on equity reached 6.9%, i.e. slightly more than in the entire banking sector. Our performance was very good considering the market situation.

Despite the challenging environment, Bank Pocztowy can be proud of its numerous achievements.

We are very satisfied with the growing portfolio of individuals and companies, as the number of Bank Pocztowy’s clients has reached ca. 1.5 million. In December 2015 the total credit receivables of the Bank Pocztowy Capital Group amounted to PLN 5.5 billion and the total liabilities due to deposits reached PLN 5.7 billion. Having simplified our offer and streamlined processes in the last 12 months we have managed to achieve record high sale of cash loans exceeding PLN 1 billion. We have achieved a 20% growth in receivables and reported record high total receivables of PLN 2 billion.

Importantly, in 2015 the quality of the credit portfolio of Bank Pocztowy was higher than the market average and so was the interest margin, which reached 3.6% (versus 2.3% for the entire sector). This is particularly important, because determining its future value and profitability the indicator is of key importance for Bank Pocztowy.

Other major events, which occurred in 2015 included activities aimed at floating the Bank on the Warsaw Stock Exchange. Although the decision has been postponed due to a disadvantageous market situation, potential investors positively assessed our business model and stable performance reported in the recent years. Such opinions give an optimistic outlook for the Bank. At the same time, in September 2015 the Bank’s shareholders took a major decision to inject PLN 60 million of capital by way of a private placement. Both our shareholders have taken new shares at the same time keeping the existing ones. The funds acquired have improved the solvency ratio and they will enable the Bank to grow substantially in the coming years.

In 2015 we also started works on one of the key projects included in the long-term development strategy of the Bank, i.e. the new EnveloBank brand to be launched in 2016. The project is based on the everyday bank idea responding to financial needs of clients and other requirements related to numerous everyday tasks and chores. The brand will offer much more than mobile banking services and at the same time the Bank will make the first step towards creating an exceptional network of partners and additional services included in our product offer.

In the fast changing world, EnveloBank will certainly contribute to transforming the Bank’s culture, help us acquire young clients and drive further growth and value for our stakeholders.

This is all ahead of us, but now we are presenting a report on the performance of the Bank Pocztowy Capital Group generated in 2015.

Best regards,
Szymon Midera
President of the Management Board of the 9th Tenure