Letter from the Chairman of the Supervisory Board

On behalf of Supervisory Board, I have the pleasure to summarize the performance of Bank Pocztowy in 2014.

It was obviously a very good year for the Bank, despite a number of challenges faced by the banking sector in Poland, which had to cope with low interest rates, reduced interchange income and new supervisory requirements. Slowdown in the Polish economy and uncertain standing of financial markets reflected by a drop in stock prices at Warsaw Stock Exchange did not support growth in the banking sector, either.

The Bank Pocztowy Capital Group closed the year 2014 with very good performance, generating a net profit of PLN 43.6 million, which was 21% higher than in the prior year. Efficiency of its operations improved, too. Return on Equity (ROE) amounted to 10.5%.

Supervisory Board was informed about business and financial performance, as well as on organizational and infrastructural changes introduced in the Bank on an ongoing basis. In mid-2014, the Board accepted a new development strategy of Bank Pocztowy. It marks a new strategic direction for the Bank acting as a leader in retail banking in Poland on the regional level.

Adjusting strategic objectives to changes in its business environment, the new strategy assumes further rapid development of the Bank and improvement in its efficiency. Adding the remote banking to Bank’s mission shall contribute significantly to the execution of this strategy. The Bank is going to further teach clients finance and extend this education teaching them e-banking skills as well. It will also strengthen cooperation with its key shareholder. Using its experience and competencies in building and selling financial products, the Bank shall become a competency center for banking services and bancassurance in the Poczta Polska Capital Group.

Most importantly, the increase in the Bank's Capital Group seen in 2014 resulted from its sustainable growth, i.e. an increase in the scale of its operations accompanied with efficient management of costs and credit risk. During 2014, growing balances on retail client accounts translated into an increase in the Bank’s deposit base. The cash lending campaign progressed rapidly. As a result, in December 2014, the Capital Group’s balance sheet total amounted to PLN 7.7 billion and increased by 4.6% during the year. At the same time, the appropriate security level of operations was maintained. At the end of 2014, the Group’s solvency ratio amounted to 13.4%, while loan/deposit ratio was 82.0%.

In recent years, very good cooperation of the Bank Pocztowy Capital Group with its strategic partner, i.e. Poczta Polska I am the chairman of, has significantly contributed to the success. The Bank has provided financial services among others through the network of over seven thousand post offices, some of which are located in small villages where no banks exist, thanks to which Bank Pocztowy has played a crucial role in educating their citizens about finance and access to modern financial services.

Following recent shareholders’ decisions, all profits generated by the Bank have been invested in its further development. Additionally, the Bank has obtained PLN 650 million from issues of long-term bonds to fund its further growth. The success of these issues and attractive terms obtained clearly indicate that financial market players perceive Bank Pocztowy as a trustful and safe business.

As Supervisory Board Chairman, I am sure that Bank Pocztowy is well prepared to fulfil its mission and key strategic objectives in subsequent years.

Please be assured that Supervisory Board will provide its continuous support in achieving these stretch goals.

Yours faithfully,

Jerzy Jóźkowiak
Chairman of the Supervisory Board of Bank Pocztowy