Release Date: August 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Bank Polska Kasa Opieki SA (BKPKF, Financial) reported a 4% year-on-year increase in net profit, excluding one-off events.
- The loan portfolio grew by 6% year-on-year, indicating strong lending performance across all segments.
- The bank's non-performing loan (NPL) ratio dropped below 5%, reflecting improved credit quality.
- The bank achieved a significant increase in mobile banking customers, up 11% year-on-year, enhancing digital engagement.
- The bank maintains a strong capital position, allowing for a dividend payout strategy of 50% to 75% of net profit.
Negative Points
- The macroeconomic outlook for Poland shows a slow recovery with low investment appetite, impacting growth prospects.
- High personnel costs, including one-off bonus payments, negatively impacted the bank's financial performance.
- The bank faces legal risks related to foreign currency loans, with provisions impacting profitability.
- Interest rate cuts are not expected soon, which may affect the bank's interest income and profitability.
- The bank's cost-to-income ratio increased due to higher operating costs, impacting overall efficiency.
Q & A Highlights
Q: We assume that the interest rates will remain stable given the situation in the market? Or is there any additional factor we should look at?
A: Robert Sochacki, Vice President of Management Board, explained that while global markets might see interest rate cuts, Poland's unique economic conditions, such as high wage growth, suggest that interest rate cuts are not expected soon. The monetary policy council is focused on reaching the inflation target, and until inflation is controlled, rate cuts are unlikely.
Q: How does the new bonus system differ from the previous one, and does it significantly increase the multiplier in the calculation of the bonus?
A: Dagmara Wojnar, CFO, stated that the new bonus system is linked to the bank's performance, exceeding business targets. There were two significant one-off factors impacting results: adjustment of the provision for unused holiday entitlement and a bonus payment made in May, based on an April agreement.
Q: Can you explain the slightly higher cost of risk in the corporate sector?
A: Marcin Gadomski, Vice President of the Management Board, noted that the higher cost of risk is mainly in the transport and construction sectors, which rely on investments that have not rebounded, and in the wood-based, wood processing, and wood products industries.
Q: Why did the cost of the payment moratorium change, and why is it going to cost less?
A: Dagmara Wojnar explained that the participation of eligible customers in the moratorium was lower than initially estimated, leading to a realignment of estimates to actual data, resulting in a lower cost.
Q: What is the impact of the new accounting approach for Swiss franc mortgages?
A: Dagmara Wojnar stated that the bank aligned its accounting approach with market practices, treating Swiss franc mortgages as a legal risk rather than a credit risk. This change had a positive impact on last year's results but will negatively impact this year's results by PLN240 million.
Q: Are there any plans for foreign expansion in the current strategy?
A: Robert Sochacki mentioned that the current strategy for 2021-2024 is ending, and while analytical preparations for a new strategy are underway, no decisions regarding foreign expansion have been made yet.
Q: What is the bank's dividend paying capacity for the current year?
A: Marcin Gadomski indicated that the bank's NPL ratio and financial services authority requirements will influence dividend capacity. The NPL ratio for dividend requirements was slightly different from financial reporting, but the bank aims to maintain a ratio below 5%.
Q: How will new regulations and capital requirements impact future operations?
A: Marcin Gadomski explained that the bank is implementing new regulations, and while the final numbers will be known after full implementation, the impact on the portfolio is expected to be minimal. The bank aims to meet long-term funding targets through issuance or deposit products.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
