BRE Bank Group closed the first half of 2008 with a consolidated gross profit of PLN 721.0 million (PLN 640.3 million net), indicating a 35.9% growth against similar period last year.
The performance in the first six months of the year was strongly influenced by one-off transactions. These included the divestment of Vectra S.A. at a gross profit of approx. PLN 137.7 million, and the merger of PTE Skarbiec-Emerytura and PTE Aegon, valuated in BRE Bank Group's books at PLN 67.2 million. The gross return on equity (ROE) stood at 44.1% (40.7% in 2007), and 31.5% exclusive of one-off transactions (33.8% in 2007).
Today we may boast very good financial and business performance figures for the first half of 2008. First months under new management marked a period of intensive works focused on building investor relationships. We are also continuing the process of improving the utilisation of synergies within the Group, which presently is not being as effectively managed as we could wish for - said Mariusz Grendowicz, CEO - the operations of BRE Ubezpieczenia are another step in the right directions, allowing the Company to gradually take-over the provision of complex services to the Group in the field of insurance products. We can already see the first effects of these actions, he added.
In the first half of 2008, the main impacts included:Continuous growth of credit portfolio and client deposits, in both the corporate and retail segments. In a year, the credit portfolio indicated a growth rate of 36.7% (approx. PLN 10.7 billion), resulting in the share in total assets reaching 61.3% as at the end of June 2008. The tendencies referred to above are reflected in continuous growth of income from repeatable operations.Considerable contribution of subsidiaries into the performance of the Group. Gross profit generated by Group companies (continued and abandoned operations jointly) stood at PLN 155.4 million, against PLN 117.6 million y/y, indicating a 32% growth.Considerable growth of revenues from forex transactions with clients (income from exchange positions growing by 25% y/y).Falling prices of securities, resulting in falling income from valuation, recorded under the item "other trading operations", caused by deteriorating condition of the financial market in the second quarter of the year.Growing encumbrance of Group income with costs ensuing from impairment of credits and loans against last year's figures has been caused by unusual, positive balance of bank provisions in the first half of the year, caused by high rate of dissolution of provisions.High cost discipline, applied both by the Bank and its subsidiaries.
After the first half of the year, we can boast very good implementation levels of the objectives set for 2008. After we announced these plans, the market considered them to be highly ambitious. The levels of implementation reached indicate that we stand a good chance of fulfilling our plans - said the CEO, Mr. Grendowicz.
The objectives for 2008 announced by the Bank assumed an 18.5% growth in deposits within the Group. After the first half of the year, the growth reached the level of 12.3%. The annual credit growth was planned to reach 34.0% - standing at 17.8% after the first two quarters. The asset growth, assumed at 21% in the annual plan, has currently reached 15.6%.
As we announced three months ago, works are under way on the verification of the Bank's strategy. We shall present the strategy at the autumn session of Supervisory Board to discuss it - comments Mariusz Grendowicz. Our actions are aimed at streamlining the operations, although in case of complex business operations, such as those of BRE Group, we will need time to take a closer look at the Company's operations from different perspectives.
Corporates and Financial Markets
In the first half of 2008, the Corporates and Financial Markets Division (affiliating the Corporate Clients and Institutions and Commercial and Investment Operations areas) generated gross profit of PLN 438.3 million, indicating a y/y growth by 39.8%, i.e. PLN 124.7 million. Hence, the Division made a decisive contribution of 61% into the Group's profit. Assets also indicated a considerable annual growth rate in both assets (growth by 21%, from PLN 39.9 billion to PLN 48.3 billion) and liabilities (growth by 15.9%, from PLN 38.1 billion to PLN 44.2 billion). This dynamic growth rate in operations was in particular reflected by:high level of interest income (PLN 355.6 million)commission income (PLN 177.7 million)income from forex transactions (PLN 187.4 million), The objectives for 2008 set for the Corporates and Financial Markets Division assumed annual credit growth rate of 17.0%. As soon as after the first quarter of the year, this ratio stood at 15.0%.
Companies operating within the Corporates and Financial Markets area maintained their strong contribution into the Division performance. BRE Leasing, BRE Bank Hipoteczny, Dom Inwestycyjny and Intermarket Bank AG indicated strongest impact upon the performance levels.
(details in Enclosure No. 1)
Retail Banking
As at the end of first half of 2008, the Retail Banking Division (mBank, MultiBank and Private Banking & Wealth Management) indicated a gross profit of PLN 174.8 million. Compared to PLN 126.7 million a year ago, it means a high, 38% growth rate, accounting for 24% share in the gross consolidated profit of the Group. As at the end of the first half of 2008, BRE Bank has been servicing as many as 2.3 million retail clients in Poland, who opened 2.7 million accounts. Against the first two quarters of 2007, the number of mBank and MultiBank clients has grown by 26%, and of accounts - by 27%.
The performance was influenced mainly by the dynamic growth of the credit portfolio in general, and mortgage credits in particular, resulting in considerable growth in interest and commission income. The Retail Banking Division made the strongest contribution into the growth of interest income of BRE Bank Group, indicating a 53.5% y/y growth (i.e. by PLN 105 million). Annual objectives for 2008 assumed a 41% annual growth rate in the credit operations of the Retail Banking Division.
After the first half of the year, the growth reached the level of 24.4%.
The share of Retail Banking in the Group's commission and interest income has been steadily growing, reaching 43.2% as at the end of June 2008 (against 38.1% in 2007).
(details in Enclosure No. 2)
Growth in gross profit generated by Group Companies
Since the beginning of 2008, the consolidated BRE Bank Group companies generated a gross profit of PLN 155.4 million, reaching a 32% growth against the PLN 117.6 million, generated in the first half of 2007. The largest contributors into the Group performance were: BRE.locum, BRE Bank Hipoteczny, Dom Inwestycyjny BRE, BRE Leasing and Intermarket Bank.
(details in Enclosure No. 3)
Ratio Analysis
High profitability, coupled with cost discipline, are reflected in improved levels of profitability and operating efficiency ratios against last year's figures.
In the first half of 2008, the return on equity (ROE) generated by BRE Bank Group stood at 44.1% (against 40.7% y/y). The ROE from one-off transactions (Vectra S.A., merger of PTE Skarbiec-Emerytura and PTE Aegon) stood at 31.5 %, against 33.8% in the first half of 2007.
Despite continuing growth in business operations, tight cost discipline has been maintained. Cost to income ratioin the first half of 2008, the cost to income ratio reached the level of 47.5%, against 53.4% in the same period last year. Liquidity ratio as at the end of June 2008 stood at 9.23%, against 10.4% as at the end of June last year, and 9.48% as at the end of March 2008. As at July 1st 2008 the ratio stands 9.63% and the inclusion of subordinated debt into own founds would cause further increase. Despite a considerable growth in own funds, mainly caused by accumulated profit for 2007, the drop against the last year's figure was caused by the incorporation, for the first time, by virtue of external regulations, of the operating risk requirement into the overall requirements of the Group. Moreover, the credit risk requirement increase by over 30% was applied in effect to the dynamic growth in credit operations. In consequence, the capital requirement indicated a growth from PLN 2.7 billion noted at the end of June last year to PLN 3.7 billion as at the end of the first quarter of 2008, and PLN 3.8 billion as at the end of June 2008. Simultaneously, as at the end of June 2008, the Group's own funds reached the level of PLN 4.4 billion, against PLN 3.5 billion as at the end of June of last year and PLN 4.3 billion as at the end of March 2008.
Today we may boast very good financial and business performance figures for the first half of 2008. First months under new management marked a period of intensive works focused on building investor relationships. We are also continuing the process of improving the utilisation of synergies within the Group, which presently is not being as effectively managed as we could wish for - said Mariusz Grendowicz, CEO - the operations of BRE Ubezpieczenia are another step in the right directions, allowing the Company to gradually take-over the provision of complex services to the Group in the field of insurance products. We can already see the first effects of these actions, he added.
In the first half of 2008, the main impacts included:Continuous growth of credit portfolio and client deposits, in both the corporate and retail segments. In a year, the credit portfolio indicated a growth rate of 36.7% (approx. PLN 10.7 billion), resulting in the share in total assets reaching 61.3% as at the end of June 2008. The tendencies referred to above are reflected in continuous growth of income from repeatable operations.Considerable contribution of subsidiaries into the performance of the Group. Gross profit generated by Group companies (continued and abandoned operations jointly) stood at PLN 155.4 million, against PLN 117.6 million y/y, indicating a 32% growth.Considerable growth of revenues from forex transactions with clients (income from exchange positions growing by 25% y/y).Falling prices of securities, resulting in falling income from valuation, recorded under the item "other trading operations", caused by deteriorating condition of the financial market in the second quarter of the year.Growing encumbrance of Group income with costs ensuing from impairment of credits and loans against last year's figures has been caused by unusual, positive balance of bank provisions in the first half of the year, caused by high rate of dissolution of provisions.High cost discipline, applied both by the Bank and its subsidiaries.
After the first half of the year, we can boast very good implementation levels of the objectives set for 2008. After we announced these plans, the market considered them to be highly ambitious. The levels of implementation reached indicate that we stand a good chance of fulfilling our plans - said the CEO, Mr. Grendowicz.
The objectives for 2008 announced by the Bank assumed an 18.5% growth in deposits within the Group. After the first half of the year, the growth reached the level of 12.3%. The annual credit growth was planned to reach 34.0% - standing at 17.8% after the first two quarters. The asset growth, assumed at 21% in the annual plan, has currently reached 15.6%.
As we announced three months ago, works are under way on the verification of the Bank's strategy. We shall present the strategy at the autumn session of Supervisory Board to discuss it - comments Mariusz Grendowicz. Our actions are aimed at streamlining the operations, although in case of complex business operations, such as those of BRE Group, we will need time to take a closer look at the Company's operations from different perspectives.
Corporates and Financial Markets
In the first half of 2008, the Corporates and Financial Markets Division (affiliating the Corporate Clients and Institutions and Commercial and Investment Operations areas) generated gross profit of PLN 438.3 million, indicating a y/y growth by 39.8%, i.e. PLN 124.7 million. Hence, the Division made a decisive contribution of 61% into the Group's profit. Assets also indicated a considerable annual growth rate in both assets (growth by 21%, from PLN 39.9 billion to PLN 48.3 billion) and liabilities (growth by 15.9%, from PLN 38.1 billion to PLN 44.2 billion). This dynamic growth rate in operations was in particular reflected by:high level of interest income (PLN 355.6 million)commission income (PLN 177.7 million)income from forex transactions (PLN 187.4 million), The objectives for 2008 set for the Corporates and Financial Markets Division assumed annual credit growth rate of 17.0%. As soon as after the first quarter of the year, this ratio stood at 15.0%.
Companies operating within the Corporates and Financial Markets area maintained their strong contribution into the Division performance. BRE Leasing, BRE Bank Hipoteczny, Dom Inwestycyjny and Intermarket Bank AG indicated strongest impact upon the performance levels.
(details in Enclosure No. 1)
Retail Banking
As at the end of first half of 2008, the Retail Banking Division (mBank, MultiBank and Private Banking & Wealth Management) indicated a gross profit of PLN 174.8 million. Compared to PLN 126.7 million a year ago, it means a high, 38% growth rate, accounting for 24% share in the gross consolidated profit of the Group. As at the end of the first half of 2008, BRE Bank has been servicing as many as 2.3 million retail clients in Poland, who opened 2.7 million accounts. Against the first two quarters of 2007, the number of mBank and MultiBank clients has grown by 26%, and of accounts - by 27%.
The performance was influenced mainly by the dynamic growth of the credit portfolio in general, and mortgage credits in particular, resulting in considerable growth in interest and commission income. The Retail Banking Division made the strongest contribution into the growth of interest income of BRE Bank Group, indicating a 53.5% y/y growth (i.e. by PLN 105 million). Annual objectives for 2008 assumed a 41% annual growth rate in the credit operations of the Retail Banking Division.
After the first half of the year, the growth reached the level of 24.4%.
The share of Retail Banking in the Group's commission and interest income has been steadily growing, reaching 43.2% as at the end of June 2008 (against 38.1% in 2007).
(details in Enclosure No. 2)
Growth in gross profit generated by Group Companies
Since the beginning of 2008, the consolidated BRE Bank Group companies generated a gross profit of PLN 155.4 million, reaching a 32% growth against the PLN 117.6 million, generated in the first half of 2007. The largest contributors into the Group performance were: BRE.locum, BRE Bank Hipoteczny, Dom Inwestycyjny BRE, BRE Leasing and Intermarket Bank.
(details in Enclosure No. 3)
Ratio Analysis
High profitability, coupled with cost discipline, are reflected in improved levels of profitability and operating efficiency ratios against last year's figures.
In the first half of 2008, the return on equity (ROE) generated by BRE Bank Group stood at 44.1% (against 40.7% y/y). The ROE from one-off transactions (Vectra S.A., merger of PTE Skarbiec-Emerytura and PTE Aegon) stood at 31.5 %, against 33.8% in the first half of 2007.
Despite continuing growth in business operations, tight cost discipline has been maintained. Cost to income ratioin the first half of 2008, the cost to income ratio reached the level of 47.5%, against 53.4% in the same period last year. Liquidity ratio as at the end of June 2008 stood at 9.23%, against 10.4% as at the end of June last year, and 9.48% as at the end of March 2008. As at July 1st 2008 the ratio stands 9.63% and the inclusion of subordinated debt into own founds would cause further increase. Despite a considerable growth in own funds, mainly caused by accumulated profit for 2007, the drop against the last year's figure was caused by the incorporation, for the first time, by virtue of external regulations, of the operating risk requirement into the overall requirements of the Group. Moreover, the credit risk requirement increase by over 30% was applied in effect to the dynamic growth in credit operations. In consequence, the capital requirement indicated a growth from PLN 2.7 billion noted at the end of June last year to PLN 3.7 billion as at the end of the first quarter of 2008, and PLN 3.8 billion as at the end of June 2008. Simultaneously, as at the end of June 2008, the Group's own funds reached the level of PLN 4.4 billion, against PLN 3.5 billion as at the end of June of last year and PLN 4.3 billion as at the end of March 2008.
Download