Letter from the President of the Management Board of BRE Bank

Letter from the President of the Management Board of BRE Bank

Dear Sirs,
today we have presented results of the BRE Bank Group for Q1 2009. I find them important for a number of reasons.  I have been acting as President of the Management Board of BRE Bank since March 2008.  A lot of things have happened in that time not only inside the organisation itself ,but above all, in our environment. Hardly anyone could have predicted that consequences of the American crisis would be so serious and that they would leave their mark on Europe's economic landscape.
It is my conviction that BRE Bank has passed the “exam” on crisis. Late in 2008, we presented the market with the BREnova Project, which was to prepare us for the expected economic slowdown. To put it in a soldier's jargon, we "stood in close formation," concentrated on our strong points and built our operation on solid and strong foundations. The first quarter of 2009 saw the beginning of the Project and the first tangible results both in the area of new income initiatives and in cost control. We focused on making the most of the Group's potential, of the client base and on innovative products and partnership, which always made us distinct from other companies on the market. It is the time of crisis that tests the quality of relationship with our Clients best .The almost eight per cent growth in lending proves that we passed the test , and at the same time, we reduced the provisions for option receivables from over PLN 84 to 70 million. Results of the changes can also be seen in the business model of the retail banking. As we have already announced, the activity of mBank and MultiBank on the mortgage loans market will be reduced with the aim of diversifying sources of income. After the first three months of 2009, there has been a clear change in the structure of retail loans, consisting in reduction of the new mortgage loans share from 60% in Q4 2008 to 39% in Q1 2009. The quality change was concomitant with a high growth in pre-tax results of the retail banking, which amounted to PLN 74 million in Q1 against a loss of PLN 8.7 million reported in Q4 2008.
The BREnova Project also affected the costs of the Bank. During the first months of 2009, we were focused on cutting administrative costs and reducing employment. In this area, we managed to develop a reasonable severance pay package which allowed us to comply with the employment reduction plan (employment was cut by 405 persons). As a result of the actions taken, the reduction in administrative costs accounted for as much as 24%. On the basis of cost initiatives, either introduced or planned, we expect further cost reductions.
Obviously, it is still too early to say that the crisis is over, therefore we remain careful in establishing business goals, and try to respond flexibly to the changing environment. The Q1 results show that such a policy proves to be effective and that BRE was able to manage tough market conditions. It is worth stressing that the Q1 results were achieved solely from recurring operations, which means that the performance is based on actual core business. I truly believe that the pre-tax profit of PLN 103 million is a nice surprise, as we managed to exceed analyst forecasts and market expectations.

Dear Sirs,
in reply to the question of the three most important achievements of Q1 2009, I can say with confidence that we passed the "exam on crisis," our operations are based on a stable capital adequacy ratio, and we continue extending loans. Not forgetting that the Polish economy is suffering turbulence, we observe carefully the environment and respond flexibly to the changes.

Your faithfully
Mariusz Grendowicz
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prezentacja-2009-i-kw-pl-pr.pdf

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zalacznik-nr-2-bankowosc-detaliczna-en-final.doc

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zalacznik-nr-1-pion-korporacji-i-rynkow-finansowych-en-final.doc

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

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