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PKO BP’s Q1 2021 Net Profit Exceeds Expectations

PKO BP's Q1 2021 Net Profit Exceeds Expectations

The net profit of PKO BP Group in the first quarter of 2021 increased to PLN 1.177 million from PLN 503 million in the previous year. It turns out that the bank’s profits amounted to 5 percent. Above market expectations, which expected it to reach 1123.5 million PLN.

The forecasts of nine brokerage houses with respect to first-quarter earnings ranged from PLN 1,004 million to PLN 1,258 million.

The balance of provisions in the first quarter of 2021 amounted to a total of PLN 184 million, while analysts expected a write-off of PLN 248 million. Forecasts ranged from PLN 210 million to PLN 261 million.

In the first quarter, the bank did not make provisions for legal risks of mortgage loans in foreign currencies, while in the previous year the provision amounted to 85 million PLN.

PKO BP reported that in the first quarter there was a reversal of write-off related to the impact of COVID-19 on the loan portfolio in the amount of PLN 57 million.

The cost of credit risk decreased to 0.68 percent. from 0.78 percent in the fourth quarter.

The bank’s net interest income in the first quarter amounted to 2,312 million PLN and was slightly lower (3%) than the expectations of analysts, who had expected it to reach 2,376.9 million PLN (in the range of 2,290-2,490 million PLN) . Interest income decreased 15%. o/o and 13 per cent KD.

The bank said the net interest income fully reflects lower interest rates. The quarterly interest margin fell to 2.65 percent. by 3 percent in the fourth quarter.

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The commission result in the first quarter of 2021 amounted to PLN 1,044 million and was in line with market estimates of PLN 1,047 million (forecast ranged from PLN 1013.5 million to PLN 1095.7 million). Commission result increased by 7%. On an annual basis and 2 per cent Kuwaiti dinars.

The Bank announced that as a result of the closing of the foreign exchange position resulting from the decision of the Extraordinary General Assembly of shareholders to provide settlements to the concessionaires, the Group realized the result on the foreign exchange position in the amount of approximately PLN 156 million.

The Bank improved the result from the valuation of equity investments by PLN 76 million, and the change in the valuation relates primarily to shares of Visa.

Operating costs in the first quarter amounted to PLN 1,655 million, that is, they were in line with the consensus (1,638.1 million PLN). Costs decreased by 7 percent. On an annual basis, it increased by 17 percent. Kuwaiti Dinar. Regulatory costs alone decreased by 17%. Year / year 374 million PLN.

The cost-to-income ratio is 40.1 percent.

At the end of March 2021, there were 6,949 pending lawsuits against PKO BP regarding mortgage loans granted in previous years in foreign currencies, which means an increase in cases by KD 1,577. The total value of these cases is 1.87 billion PLN.

By the end of the first quarter, the courts had issued 85 final judgments in the cases against the bank. 52 of these provisions were favorable to PK BP.

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In April, the bank’s extraordinary general assembly approved the possibility of making settlements for franchisees. PKO BP has created a fund in the amount of PLN 6.7 billion to cover losses that will arise as a result of the conclusion of such settlements.

Total financing of clients of the PKO BP Group amounted to 248.8 billion PLN, i.e. a decrease of 4.9%. On an annual basis, it remained at the level of the previous quarter. Customer savings amounted to 370.5 billion PLN, an increase of 14.7%. o/o and 3.6% KD.

In the first quarter, the bank sold PLN 2.8 billion housing loans, while in the fourth quarter it was PLN 2.6 billion. PKO BP in February increased the availability of mortgage loans by increasing its LTV coefficient to 90%, which translated into an additional increase in loan sales.

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Sales of consumer loans amounted to PLN 3.2 billion, while in the fourth quarter it amounted to PLN 3 billion.

At the end of March 2021, the value of assets under management by PKO TFI amounted to 37.6 billion PLN. In the first three months of this year, customers invested PLN 2.8 billion in PKO TFI.

The Tier 1 Capital Ratio is 16.9% and the Total TCR Capital Ratio is 18.1%.


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