bank pekao s.a. group financial results after 2 q 200 6
DESCRIPTION
BANK PEKAO S.A. GROUP Financial results after 2 Q 200 6. Growth creating value CA IB’s Annual Emerging Europe Conference. Istanbul , 5-6 October , 2006. DISCLAIMER. Forward looking statement - PowerPoint PPT PresentationTRANSCRIPT
BANK PEKAO S.A. GROUP
Financial results after 2Q 2006
Istanbul, 5-6 October, 2006
Growth creating value
CA IB’s Annual Emerging Europe Conference
DISCLAIMER
Forward looking statement
This presentation contains certain forward-looking statements with respect to the financial
condition, results of operations, and businesses of Bank Pekao S.A. These statements and
forecasts involve risk and uncertainty because they relate to events and depend upon
circumstances that will occur in the future. There are a number of factors which could cause
actual results or developments to differ materially from those expressed or implied by these
forward looking statements and forecasts. The statements have been made with reference
to forecast price changes, economic conditions and the current regulatory environment.
Nothing in this announcement should be construed as a profit forecast.
AGENDA
Macro scenario
3
Second quarter consolidated results
Integration process
7,97,7
7,8
7,1
6,9
6,8
6,6
7,37,37,2
6,06,2
6,7
5,96,46,2
5,85,6
5
6
7
8
9
JAN'0
5FEB
MAR
APRM
AYJU
NJU
LAUG
SEPO
CTNO
VDEC
JAN'0
6FEB
MAR
APRM
AYJU
N
EXPORT (EUR bn)
4
Source: Central Statistical Office, National Bank of Poland
GDP (% Y/Y)
4,0
2,22,9
5,55,2
3,9
4,3
5,9
4,24,7
6,8
4,8
4,0
0,0
1,0
2,0
3,0
4,0
5,0
6,0
7,0
8,0
2Q 03 3Q 03 4Q 03 1Q 04 2Q 04 3Q 04 4Q 04 1Q 05 2Q 05 3Q 05 4Q 05 1Q 06 2Q 06
POLISH ECONOMY TRENDS
-0,6
1,4
4
6,5
10,17,4
14,4
8,6
4,9
4,8
0,71,5
5,3
-3
-1
1
3
5
7
9
11
13
15
2Q 03 3Q 03 4Q 03 1Q 04 2Q 04 3Q 04 4Q 04 1Q 05 2Q 05 3Q 05 4Q 05 1Q 06 2Q 06
INVESTMENTS (% Y/Y)
2,6
4,9
2,8
2,31,41,4
5,2
2,7
5,1
2,22,7
5,1
4,4
0
1
2
3
4
5
6
2Q 03 3Q 03 4Q 03 1Q 04 2Q 04 3Q 04 4Q 04 1Q 05 2Q 05 3Q 05 4Q 05 1Q 06 2Q 06
CONSUMPTION (% Y/Y)
Source: National Bank of Poland
5
BANKING SECTOR TRENDS
9,4 9,1
11,6
8,4
-0,2
11,4
9,2
10,4
7,98,2
6,04,8
-1,0
1,0
3,0
5,0
7,0
9,0
11,0
13,0
15,0
3Q 03 4Q 03 1Q 04 2Q 04 3Q 04 4Q 04 1Q 05 2Q 05 3Q 05 4Q 05 1Q 06 2Q 06
TOTAL SECTOR LENDING (% Y/Y) TOTAL SECTOR DEPOSITS (% Y/Y)
DYNAMIC OF HOUSEHOLDS AND CORPORATE LENDING IN THE POLISH BANKING SECTOR (% Y/Y)
18,922,8
25,4
28,8
15,5
14,1
13,9
13,8
15,5
12,212,6
10,3
5,13,92,81,5
0,8
-3,4
-3,9
-8,2
-7,1
-4,8-2,3
1,6
-15,0
-10,0
-5,0
0,0
5,0
10,0
15,0
20,0
25,0
30,0
35,0
3Q 03 4Q 03 1Q 04 2Q 04 3Q 04 4Q 04 1Q 05 2Q 05 3Q 05 4Q 05 1Q 06 2Q 06
Households Corporate
DYNAMIC OF HOUSEHOLDS AND CORPORATE DEPOSITS IN THE POLISH BANKING SECTOR (% Y/Y)
-0,5
5,63,13,63,3 4,44,2
0,60,60,0-0,5
-6,2
17,7
21,7
16,8
21,5
14,1
24,4
24,8
25,9
32,828,5
2421,1
-12,0
-7,0
-2,0
3,0
8,0
13,0
18,0
23,0
28,0
33,0
38,0
3Q 03 4Q 03 1Q 04 2Q 04 3Q 04 4Q 04 1Q 05 2Q 05 3Q 05 4Q 05 1Q 06 2Q 06
Households Corporate
9,6
16,0
13,6
11,8
7,4
5,44,6
3,3
1,83,2
3,5
6,1
1,0
3,0
5,0
7,0
9,0
11,0
13,0
15,0
17,0
2Q 03 4Q 03 1Q 04 2Q 04 3Q 04 4Q 04 1Q 05 2Q 05 3Q 05 4Q 05 1Q 06 2Q 06
AGENDA
Macro scenario
6
Second quarter consolidated results
Integration process
NET INCOME (PLN mil.)
OPERATING INCOME (PLN mil.)
7
ROE (%)
20,518,7
1H 05 1H 06
+1.8 p.p.
395418
447
2Q05 1Q06 2Q06
525 552595
2Q05 1Q06 2Q06
+13.2%+6.8%
+13.4%+7.9%
NET INCOME UP BY 19.3% Y/Y, DRIVEN BY SOUND OPERATING INCOME GROWTH (+15.8% Y/Y), CONFIRMING CAPABILITY TO DELIVER SUSTAINABLE RESULTS. ROE IMPROVED TO 20.5%
725
865
1H 05 1H 06
991
1147
1H 05 1H 06
+19.3%
+15.8%
TOTAL REVENUES (PLN mil.)
OPERATING EXPENSES (PLN mil.)
8
COST / INCOME RATIO (%)1103 1134 1179
2Q05 1Q06 2Q06
50,453,8
1H 05 1H 06
-3.4 p.p.
+6.9%+4.0%
+1.0%+0.2%
REVENUES UP BY 7.9% Y/Y, OPERATING EXPENSES UNDER CONTROL. COST/INCOME RATIO IMPROVED TO 50.4%
21442313
1H 05 1H 06
+7.9%
1154 1166
1H 05 1H 06
+1.1%
REVENUES (PLN mil.)
9
589 573 577
381 460 469
133133101
2Q05 1Q06 2Q06
% ch2Q 06/1Q 06
% ch2Q 06/2Q 05
+0.2%
+23.0%
-2.0%
+32.0%
+1.9%
+0.7%
1103 1134 1179
+6.9%+4.0%
HEALTHY STRUCTURE OF REVENUES WITH GROWTH DRIVEN BY NET FEE AND COMMISSION (+24.2%)
1127 1150
748929
270233
1H 05 1H 06
Net interest income Net fee & commission income Other
2 144 2 313
+7.9%
-13.6%
+24.2%
+2.1%
4,44%4,20% 4,10%
2Q 05 1Q 06 2Q 06
NET INTEREST MARGIN *
NET INTEREST INCOME (PLN mil.)
10
589 573 577
2Q05 1Q06 2Q06
-2.0%
+0.7%
NET INTEREST INCOME INCREASE BY 2.1 % Y/Y DRIVEN BY FURTHER IMPROVEMENT OF ASSETS MIX. NIM ALMOST STABLE AT 4.1%
*excluding sell buy back and buy sell back
4,35% 4,15%
1H 05 1H 06
1 127 1 150
1H 05 1H 06
+2.1%
11
27 621 25 894 25 941
16 502
20 22319 23816 415
21 66620 120
JUN'05 DEC'05 JUN'06
Retail (**) Mutual Funds (*) Corporate
60 538 65 251 67 830
+31.3%
-6.1%
+23.2%
+12.0%
+4.0%
CUSTOMERS SAVINGS (PLN mil.)
* total PPIM mutual funds, ** Bank only
+7.7%
+5.1%
+0.2%
- savings of retail customers
+4.8% +2.3%45 132 46 16444 036
TOTAL SAVINGS UP BY 12% Y/Y, WITH CONTRIBUTION OF BOTH RETAIL AND
CORPORATE
% chJUN06/JUN05
% chJUN06/DEC05
20 22319 238
16 415
2Q 05 4Q 05 2Q 06
+5.1%
+23.2%
26,2%26,1%26,6%28,0%31,4%
36,4%
2Q 05 4Q 05 1Q 06 Apr 06 May 06 June 06
MUTUAL FUNDS – VOLUMES (PLN mil.)
MARKET SHARE
2Q 2006 MUTUAL FUNDS ASSETS STRUCTURE*
Bonds MF Equity MFBalanced MF
* all Pioneer funds - domestic and international
12
STRUCTURE OF MF SOLD BY PEKAO (%)
78,3%
26,1%10,5%
17,1%
60,3%
63,0%
4,6% 13,5%26,5%
2Q05 4Q 05 2Q 06
RESILIENT MUTUAL FUNDS, +5.1% YTD DESPITE DIFFICULT MARKET IN Q2.MARKET SHARE STARTED TO STABILISE. FURTHER IMPROVEMENT IN ASSETS MIX
33.7%
51.3%
15.0%
8 177 8 8577 313
24 332 25 058 25 371
JUN'05 DEC'05 JUN'06
Retail Corporate
31 645 33 235 34 229
* Nominal value
CUSTOMERS LOANS* (PLN mil.)
13
+8.2%
+3.0%
+21.1%
+4.3% +1.2%
+8.3%
% chJUN06/JUN05
% chJUN06/DEC05
TOTAL LOANS UP BY 8.2% Y/Y WITH „POŻYCZKA EKSPRESOWA” AND PLN
MORTGAGE LOANS AS MAIN DRIVERS IN RETAIL LENDING (+21.1% Y/Y)
14
SUCCESSFUL SALE OF „POŻYCZKA EKSPRESOWA” ALLOWED TO BUILD A STOCK OF PLN 1.8 BLN
STOCK VOLUME (in PLN mil.)
1790
581
1H 05 1H 06
VOLUME SOLD (in PLN mil.)
689
911
1H 05 1H 06
+32.2% +208.1%
15
VOLUME OF MORTGAGES SOLD (PLN mil)
615
456
2Q 05 2Q 06
VOLUME OF PLN MORTGAGES STOCK (PLN mil)
3242
3777
2672
JUN 05 DEC 05 JUN 06
VOLUME OF FX MORTGAGES STOCK (PLN mil)
716638
847
JUN 05 DEC 05 JUN 06
+41.4%
+16.5% -24.7%
-10.9%
CONTINUOUSLY IMPROVING SALES (+35% 2Q/2Q) ALLOWED FOR 41% INCREASE IN STOCK OF PLN MORTGAGE LOANS
+34.9%
1020
793
1H 05 1H 06
+28.6%
FEE AND COMMISSION INCOME (PLN mil.)
16
196 205 214
58 57 6340 46
5487
151 139
2Q05 1Q06 2Q06
+16.0%
-8.3%
+9.4%
+4.0%
+35.6%
+59.1%
+7.7%
+8.9%
381 460 469
+23.0%
+1.9%
STRONG GROWTH OF FEE AND COMMISSION INCOME (+24.2% Y/Y), WITH MUTUAL FUNDS (+68.1%) AND LENDING (+42.7%) AS MAIN DRIVERS
% ch2Q 06/1Q 06
% ch2Q 06/2Q 05
392 419
113 12070
100172
290
1H 05 1H 06
Accounts & transactions Cards Lending Mutual Funds
748 929
+42,7%
+68.1%
+6.5%
+6.8%
+24.2%
17
COSTS (PLN mil.)
300 302 304
80
201201198
7880
2Q05 1Q06 2Q06
-2.0%
+0.8%
+0.1%
578 582 584
-2.0%
+1.4%
+1.5%
2Q 05 1Q 06
Headcount 16 161 15 917 15 891
COSTS UNDER CONTROL, CONFIRMING GROUP EXCELLENT COST MANAGEMENT
2Q 06
595 606
397
161 158
401
1H 05 1H 06
Personnel costs Non-personnel+BGF Depreciation
-1.8%
+1.8%
+1.1%
1154 1166
+1.1%+1.0%
+0.2%
% ch2Q 06/1Q 06
% ch2Q 06/2Q 05
28 080 28 450 29 081
5 0645 191 5 169
DEC 05 MAR'06 JUN'06
Performing Impaired
NPL RATIO*
83,9% 85,7% 87,8%
DEC 05 MAR'06 JUN'06
PROVISION COVERAGE RATIO 0,93%0,75% 0,65%
2Q 05 1Q 06 2Q 06
COST OF RISK
* In accordance with IFRS
18
FURTHER IMPROVEMENT OF COST OF RISK, DOWN TO 0.65%, THANKS TO
BETTER MACROECONOMIC CONDITIONS AND EFFICIENT RISK MANAGEMENT
15.6% 15.4% 14.8% % chJUN06/MAR06
% chJUN06/DEC05
-2.4%
+3.6%
-2.0%
+2.2%
SUMMARY
Best ever profit
Growth volume both retail and corporate
Further improvement of the commercial
effectiveness throughout the Group
Efficient cost control and risk management
19
AGENDA
Macro scenario
20
Second quarter consolidated results
Integration process
21
Integration project launched on 22 May and proceeding at full speed
14 Task Forces were created, with ~300 people involved in the
integration planning
Proper integration governance process in place, with bi-weekly Program
Leader reviews and monthly Steering Committees, managed by Project
Management Office on daily basis
INTEGRATION PROJECT SET UP
22Completed
Phase 1 Phase 2 Phase 3 Phase 4
-Integration
implementation
- „As is”
assessment of
operating models
- Evaluation of
spin off options
New Bank fully in place
- Preparation to disposal
- Preparation of high level integration plan
- Pre-closing integration activities
PROJECT APPROACH REFLECTING AMBITIOUS TIMETABLE
July 2006 October 2006 December 2007*
* final deadline from IT perspective to be validated
Business assessment
Pekao• Supervisory
Board
Program Leadership
Steering Committee
• UniCredit• BPH • Pekao
UniCredit sponsorship
Compliance/Legal /Tax
M&A
Corporate and
Treasury
Retail
Project Management Office
Working teams
Target outlets
Subsidiaries
Focused on supporting other teams in the first phase
Pekao• Management
Board
BPH• Supervisory
Board
BPH• Management
Board
Communication
• PR, HR, Legal, IR
Financials
HR
Logistics IT/Operations
Risk
Accounting
Spin-off/ integration
Subsidiaries
PROJECT ORGANISATION
23
24
TASK FORCES ACHIEVED SIGNIFICANT PROGRESS, IN LINE WITH EXPECTATIONS
Methodology for outlets selection developed
„As is” comparison of the operating models completed, with high level
aspirations for the New Bank close to completion
Retention plan for key resources prepared, program to exchange of
middle management planned
Comprehensive communication program in place
25
Appendix
26
BANKING SECTOR TRENDS
DYNAMIC OF HOUSEHOLDS LENDING IN THE POLISH BANKING SECTOR (% YTD)
-2
3
8
13
18
23
28
I0 II III IV V VI VII VIII IX X XI XII
2003 2004 2005 2006
DYNAMIC OF HOUSEHOLDS DEPOSITS IN THE POLISH BANKING SECTOR (% YTD)
-3
-2
-1
0
1
2
3
4
5
I II III IV V VI VII VIII IX X XI XII
2003 2004 2005 2006
DYNAMIC OF CORPORATE DEPOSITS IN THE POLISH BANKING SECTOR (% YTD)
DYNAMIC OF CORPORATE LENDING IN THE POLISH BANKING SECTOR (% YTD)
-2
3
8
13
18
23
28
33
38
I II III IV V VI VII VIII IX X XI XII
2003 2004 2005 2006
-6
-4
-2
0
2
4
6
I II III IV V VI VII VIII IX X XI XII
2003 2004 2005 2006
27
Source: Central Statistical Office, National Bank of Poland
1,80,8
0,40,71,4
3,44,44,44,4
1,71,7
0,5 0,8
4,24,2
4,64,54,9
5,96,6
6,96,1
5,55,65,2
5,3
4,04,5 4,04,5
5,06,06,5
6,5
5,85,35,35,35,3
2Q 03 3Q 03 4Q 03 1Q 04 2Q 04 3Q 04 4Q 04 1Q 05 2Q 05 3Q 05 4Q 05 1Q 06 2Q 06
Inflation EOP 3M WIBOR Intervention rate
INFLATION, INTERVENTION RATE, 3M WIBOR
4500,0
4550,0
4600,0
4650,0
4700,0
4750,0
4800,0
4850,0
4900,0
4950,0
2004
I III V VII IX XI
2005
I III V VII IX XI
2006
I III V
AVER. EMPLOYMENT IN ENTERPRISES SECTOR (THS.)
28
Dynamics of USD and EURO rates(average in month)
84,6
81,7
100,098,6
101,5
104,5
96,2
80,5
88,985,8
83,484,4
89,7
83,885,184,4
80,5
83,7
100,0
104,3
85,6
96,0
102,4
89,2
87,288,0
84,384,385,382,882,281,5
83,2
84,2
86,383,7
70,0
75,0
80,0
85,0
90,0
95,0
100,0
105,0
110,0
XII-
03 II IV VI
VIII X
XII-
04 II IV VI
VIII X
XII-
05 II IV VI
PLN/USD PLN/EURO
PROFIT AND LOSS ACCOUNT
29
(PLN mil)2Q06 2Q05 1Q06
% ch. 2Q06/2Q05
% ch. 2Q06/1Q06
Net interest income 577,1 588,9 573,3 -2,0% 0,7%
Net fees & commissions 468,8 381,2 460,1 23,0% 1,9%
Other non interest income 132,8 132,6 100,6 0,2% 32,0%
Total revenues 1 178,8 1 102,7 1 134,0 6,9% 4,0%
Operating costs (incl. depr.) -583,6 -577,8 -582,4 1,0% 0,2%
Operating income 595,2 524,9 551,6 13,4% 7,9%
Net provisions -51,4 -65,4 -58,4 -21% -12,0%
Subsidiaries' results 15,2 10,6 20,8 43% -26,9%
Gross profit 559,0 470,2 514,0 19% 8,8%
Tax -112,2 -75,3 -95,7 49% 17,2%
Net income 446,9 394,9 418,3 13% 6,8%
BALANCE SHEET
30
(PLN mil)
30.06.2006 30.06.2005 31.12.2005% ch.
30.06.06/30.06.05
% ch. 30.06.06/31.12.05
Cash and balances with Central Bank 3 028,0 3 200,0 3 574,7 -5,4% -15,3%
Loans and advances to banks 9 051,0 7 286,1 6 966,0 24,2% 29,9%
Loans and advances to customers 29 048,3 26 748,4 28 229,8 8,6% 2,9%
Net investment in the finance lease 859,9 638,5 745,8 34,7% 15,3%
Securities 20 124,4 18 722,8 18 774,4 7,5% 7,2%
Investments in associated undertakings 155,0 149,3 167,8 3,8% -7,6%
Tangible and intangible fixed assets 2 028,4 2 119,2 2 087,7 -4,3% -2,8%
Other assets 2 497,9 1 652,2 1 425,3 51,2% 75,3%
TOTAL ASSETS AND LIABILITIES 66 793,0 60 516,6 61 971,9 10,4% 7,8%
Amounts due to the Central Bank 1 839,0 2 054,2 1 950,7 -10,5% -5,7%
Amounts due to other banks 4 484,4 2 081,1 1 997,0 115,5% 124,6%
Amounts due to customers 49 866,0 45 993,8 46 847,8 8,4% 6,4%
Other liabilities 2 691,5 2 556,6 2 644,3 5,3% 1,8%
Provisions 90,1 106,2 109,2 -15,2% -17,5%
Share capital 166,8 166,5 166,5 0,2% 0,2%
Other capital and reserves 7 640,0 6 815,0 8 241,0 12,1% -7,3%
LIA
BIL
ITIE
SA
SS
ET
S