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Banking Market In Poland 2009-2011, CEE Banking Series, Update 1H2009,

Intelace Research
October 1, 2009
118 Pages - SKU: INTL2492634

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Countries covered: Poland

Year of change. After the turbulent beginning of the year 2009 with abrupt currency depreciation and sudden standstill on the inter-bank market, the summer 2009 brought some relief to banks. The pressure on exchange rate has eased and most of toxic derivatives held by corporate clients have expired or have been settled. Also the money market started slowly to work again with more liquidity available in the system. Unfortunately the negative consequences of financial crisis are still not over. The level of non-performing assets is still on rise - Only in 1H 2009 this ratio* recorded an increase by almost 50% to 5.9%. As a result, despite quite successful reduction of operating expenses performed by most banks, the huge value of newly created provisions: 5.7 bn PLN [1H09] vs. 1.4 bn PLN [1H08] has been dragging bank's results down. The combined net profit of all banks fell down by nearly 50% YoY to 4.3 bn PLN in the first half of 2009.

Competitive landscape. During the first half of 2009 no significant changes in market concentration could be observed. The market leader PKO BP was able to increase its market share by a fraction while its major rival Pekao continued to lose market share. Among other big players only BRE bank was able to grow in 1H 2009. In contrast, ING was losing market due to increasing deposits outflow. The three recent entrants: Alior, Allianz and Meritum were developing quickly, however, producing much more costs than revenues. AIG bank sale has been finally closed by an equity swap with Santander. At the same time there have been new rumors about other ownership changes with: Kredyt Bank, BZ WBK and GE-BPH as possible acquisition targets, quoted most frequently. On the buyer's side, apart of just raising equity PKO BP, some French and Spanish banks, in particular SG, are reported to plan further growth in Poland.

Expansion of infrastructure. In the first half of 2009 the trend of quick infrastructure growth known from previous years has been reversed. Most banks started to review their distribution networks with selective closures and personnel cuts, being part of larger operating costs improvement programs. Only few players continued opening of new branches (for example Eurobank, Alior, Allianz). Other exception with no or little cost cuts were online banking platforms like: mBank, ING direct, or investments of banks in automated services (for example: self service areas in outlets, call-centers, internet banking functionalities etc.). The reason for this situation is that most banks perceive the future for mass retail banking services to be increasingly dependent on direct channels/self service solutions.

Perspectives & mid-term forecast. It can be expected that revenues of banks will stagnate within next quarters while costs will continue going up, driven by increasing costs of risk. As a result of persisting high funding costs and relatively low interest rates charged on existing loan portfolios (due to common indexation of loans to WIBOR), the net interest income of banks is not likely to grow significantly, despite slightly rising volumes. Consequently, the net profit of banks will fall sharply in 2009 and it is also not likely to increase substantially in 2010. In contrary to profits, the outlook for key banking volumes in 2009/2010 is more optimistic. Both client deposits and loans are not expected to register a negative growth on a YoY basis. Retail banking segment will remain relatively strong although demographic trends will gradually erase positive effects of reduced income tax and lower social security rates - factors, that contributed to a relatively strong retail deposits growth in 2009. In corporate business, deposits may tend to increase faster than lending due to reduced investments and cash hoarding by enterprises

1. Macroeconomic overview: Slide 1: Executive summary; Slide 2: Poland - General overview; Slide 3: Key macroeconomic indicators, 2003-2009H1; Slide 4: Foreign trade statistics, C/A balance, FDIs, 2003-2009H1; Slide 5: Warsaw Stock Exchange - Turnover, Market cap and indexes, 2004-2009H1; Slide 6: Unemployment and wages, 2003-2009H1; Slide 7: Disposable income in households and income distribution, 2003-2008; Slide 8: Consumer confidence Index evolution, 2007-8/2009
2. Banking market: 2.1. Banking market - General trends; 2.2. Banking market - Regulatory overview; 2.3. Banking market - Banking Infrastructure
3. Retail banking: 3.1. Payment cards
4. Corporate banking: Slide 66: Corporate subjects, number and revenues, 2007; Slide 67: Corporate deposits and loans evolution, 2004-2009H1; Slide 68: Top players on the corporate banking market, 2009H1; Slide 69: Brokerage business, top players, 2004-2009H1; Slide 70: Leasing market, structure by industry, top players, 2004-2008; Slide 71: Factoring market, 2004-2008; Slide 72: Non-treasury debt securities market, 2004-2008
5. Banks profitability: Slide 73: Average retail and corporate banking rates offered and implied margins evolution, 2006-7/2009; Slide 74: Commercial banks profitability tree - market averages evolution, 2006-2009H1; Slide 75: Commercial banks revenue costs and profits composition, 2009H1; Slide 76: Top 5 commercial banks profitability tree - peers comparison, 2009H1; Slide 77: Segment reporting (1/2): volumes, revenues and profit by segment (retail, corporate, other), 2009H1; Slide 78: Segment reporting (2/2): volumes, revenues and profit by segment (retail, corporate, other), 2009H1
6. Banks valuation and M&A activity: Slide 79: Strategic control map for major listed banks in Poland, 2009H1; Slide 80: Market multiples for major listed banks in Poland, 8/2009; Slide 81: Efficiency of top banks in Poland - Cost to income, Assets/Personnel/Branches benchmarks, 2009H1; Slide 82: Share price performance on the stock market for key listed banks in Poland, 01-08/2009; Slide 83: Recent acquisition transactions on the Polish banking market, 2007-2009; Slide 84: Recent mergers on the Polish banking market, 2009
7. Top banks profiles: Slide 85-86: Bank profiles: PKO Bank Polski; Slide 87-88: Bank profiles: Bank Pekao; Slide 89-90: Bank profiles: BRE Bank; Slide 91-92 Bank profiles: ING Bank Œl¹ski; Slide 93-94: Bank profiles: BZ WBK
8. Mid-term forecasts: Slide 95: Banking assets forecast, 2009-2011; Slide 96: Key retail volumes forecast, 2009-2011; Slide 97: Key corporate volumes forecast, 2009-2011; Slide 98: Commercial banks - P&L forecast, 2009
9. Note on methodology

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Banking Market In Poland 2009-2011, CEE Banking Series, Update 1H2009,

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