Improved efficiency in difficult times- BRE Bank Group results in Q2 2009

Improved efficiency in difficult times- BRE Bank Group results in Q2 2009

Q2 results affected by high provisionsRising income - sound business fundamentals.Continued recovery of deposits - we grow four times faster than the market!Costs under control - the successful BREnova project!
Results affected by high provisions

In Q2 2009, BRE Bank reported a loss of PLN 61.6 million. The result was a consequence of high provisions set up in accordance with the Bank's conservative approach, mainly for liabilities of the clients who got into trouble due to currency options (the total adverse influence of this factor amounts to nearly PLN 239 million). Moreover, the result was affected by the problems with cash loans offered by mBank to external clients (the Bank has already withdrawn the offer) and the trouble faced by the leasing sector.

BRE Bank creates sound business fundamentals

In Q2 2009, the BRE Bank Group reported income of PLN 714.8 million, up by 29.2% on a year-on-year basis (excluding one-off transactions).  The high growth in profitability of core banking operations was triggered by:
- satisfactory interest result (up by 8.7% compared with Q1);
- increased commission result - a rise of 29.8% compared with Q1 (despite a fall in the number of loans granted).

At the same time, we managed to keep strict cost discipline which allowed us to maintain almost unchanged cost level compared with Q1 2009.

Therefore, the cost-to-income ratio for the BRE Bank Group improved from 56.4% a year ago (excluding one-off transactions) to 52.1% at the end of June 2009.

Continued recovery of deposits - we grow four times faster than the market!

"It was our conscious decision not to participate in the deposit war, which resulted in a reduction in the deposit base seen in the end of last year; at the same time we kept on observing the market, as we knew that this situation will not last forever" - says Mariusz Grendowicz, President of the Management Board of BRE Bank.

In Q2 2009, the value of deposits rose by as much as PLN 3.5 billion. What it means is that the deposits of the BRE Bank clients rose by 10%, whereas in the same period, the market reported a rise not much higher than 2.5%." "We care about building a strong and stable deposit base. The funds attracted to banks by effective marketing campaigns are extremely sensitive to market offers - they flow to and out of banks equally easily. It is not a good method of building a business. Certainly not a method BRE Bank would use" - adds Grendowicz.

Continuing success of the BREnova project

In difficult times BRE Bank relies on effectiveness and optimal use of resources. The capital adequacy ratio has been rising -  from 10% in December and 9.2% in the middle of last year to 11% at the end of June 2009, which shows that the Group is consistent in implementing the plans for maintaining the ratio above 10% in the long-term.

"Capital is of major importance in times of crisis. Therefore, BRE Bank not only retained the total profit generated last year, but also focused largely on even better use of the existing capital base, in particular, by reducing the value of unused credit facilities which increase the risk-weighted assets" - says Mariusz Grendowicz.

The financial results generated by the BRE Bank Group confirm the effects of the BREnova project: intensive sale of products which do not require capital involvement (e.g. Cash Management improved its result from PLN 22 million to PLN 26,5 million), focus of mBank and MultiBank on non-mortgage products, and sustainable growth in the deposit base  boost recurrent income.

BRE Bank- responsible partner for difficult times

In H1 2009, the value of BRE Bank's credit portfolio rose by 5.3%. The result is slightly better than that reported by the sector and - stresses Mariusz Grendowicz - is an important signal for the market and the entrepreneurs that "the tap with loans is still on and that good projects may still count on BRE Bank's support." In the retail area, BRE remains one of just a few financial institutions whose clients may still be granted a loan to finance 100% of real property.

BRE Bank took a responsible approach to the clients who got into trouble due to currency options and economic crisis.  The Bank is engaged in a dialog with entrepreneurs to whom it offers innovative debt restructuring solutions suitable for the current capabilities of a given company.  

"We will not leave the entrepreneurs alone with their problems. It would be irresponsible of us and would stand in contradiction with the values that we cherish. We want to be a partner for the Polish business, especially in difficult times, as we know that partner relations will pay off in the future and in times of prosperity" -  stresses Grendowicz.

Peaceful days draw near

Ryszard Petru, chief economist of BRE Bank, forecasts that in 2009 the Polish GDP will grow by 1% and the inflation rate will fall in the upcoming months. Unfortunately, the situation on the labour market will deteriorate. Despite the loss reported in Q2 caused by high provisions, it was the best quarter in terms of income in the history of BRE Bank. We managed to improve the cost-to-income ratio, which speaks in favour of the Bank's effectiveness. Moreover, BRE is a reliable and safe institution - the capital adequacy ratio is maintained at a stable level exceeding 10%.
Attachments
presentation-2q-en.pdf

pdf | 867 KB

PobierzDownload
appendix-3-strategic-subsidiaries-of-the-bre-bank-group.doc

doc | 362 KB

PobierzDownload
appendix-2-retail-banking.doc

doc | 358 KB

PobierzDownload
appendix-1-corporates-and-financial-markets.doc

doc | 357 KB

PobierzDownload