Q1 2005 Results of BRE Bank Group - press release

Q1 2005 Results of BRE Bank Group - press release

The opening quarter of 2005 was the best in 5 years for the BRE Bank Group. Consolidated net profit was more than twice as high as in the previous year, totalling PLN 64,228,000, which is the best consolidated financial result of BRE Bank of the past 15 quarters. The total assets increased by PLN 600 million over 1Q2004 figure; the results of the core business activities also improved decisively; in the case of interest income or operating results, they showed growth rates of several dozen percent. The above noted indicators provide evidence of the success of the restructuring measures undertaken by the end of last year and, most importantly, they allow for a significant degree of optimism concerning the feasibility of the annual plans, which were outlined in the strategy for the year 2005.

- “I regard the initial 3 months of the present year as the start of the principles of  ‘BREactivation’ programm, giving BRE Bank the opportunity to return to the times of its excellence. In order to attain this, a great effort lies ahead of us. Market position is determined by an excellent quality of services and modern products just as much as by financial results. In such a situation a company delivers value added both to its clients and   shareholders. Our strategy for the year 2007 calls for a return on equity (ROE) at a level of 20% before tax, so if we wish to accomplish that, in the current year we need to generate 14% ROE before tax. I am glad that the results of the 1st quarter 2005 provide tangible proof that these goals are feasible. All the budget targets were reached in keeping with the plan by the end of March, and some of the sales activities, such as in the case of retail banking, have significantly exceeded business plans.” – says the President of the Management Board of BRE Bank, Mr Sławomir Lachowski.Corporate and investment banking as a motor of profitability in 2005Business activity plans for the year 2005 assume the leading role of corporate and investment banking as the key business lines from the point of view of the Bank’s profitability. With this goal in sight intensive work is in progress on the remodelling of the BRE Bank’s contacts with business clients. – “I want BRE Bank to become the best financial institution for demanding corporate clients. We offer a spectrum of banking and non-banking products, such as leasing, factoring and, brokerage services, therefore I want our offer to be assessed from the BRE Bank Group point of view. Our product offer is addressed to selected target groups of customers for whom we have appropriate products and a model of service that suits their requirements and demands.   The group of large enterprises shall continue to be a strategic area of   our expansion, and we shall offer them competitive products and the best quality of service. Nevertheless, from now on, we shall attach increasing importance to small and medium sized enterprises. The market of the biggest corporations and capital groups is a strategic segment that complements the development of relationships with current customers” – says the Bank’s President, Mr S. Lachowski. Since April 2005, a new Management Board Member – Mr Janusz Wojtas – has been responsible for the corporate banking segment.Corporate banking: strategic subsidiaries - all profitableThe first quarter of 2005 brought good results with BRE Bank’s contacts with corporate customers. Compared to last year, the value of executed international payment orders increased by almost 1/4, and the number of transactions handled increased by 38%. This enables BRE Bank to maintain its second place on the market for services supporting Polish foreign trade. Almost 2,500 SME’s clients are taking advantage of the EFEKT and EFEKT Plus packages, of whom 1,500 are the new customers. Sales of SMEs packages also grew rapidly in the 1st quarter of 2005. The Bank provided these enterprises with 50% more packages than in the 1st quarter of last year. At present, almost every second firm on the list of 500 largest companies cooperate with BRE Bank.At the beginning of the year all the corporate banking business line subsidiaries generated net profits. BRE Leasingincreased its net profit to PLN 3.1 million (PLN 3 million a year earlier) and the value of leasing contracts went up by 36%, reaching PLN 237.8 million. The turnover of the companies of the Intermarket Bank Group (operating on the factoring market) increased in the 1st quarter by 13%, reaching EUR 850 million. Net profit of the Intermarket companies rose by 22% to the amount of EUR 2 million (against EUR 1.6 million in 2004). The turnover of Polfactor, which celebrated its tenth anniversary, exceeded PLN 500 million, 16% higher than in the year before.Retail banking: targeting the market top fourThe sales results of mBank and MultiBank in the initial 3 months of 2005 confirm that this will be a breakthrough year for the retail banking business line. Most of the planned PLN 31 million annual gross profit will be generated by mBank (PLN 28 million). By the end of the year the number of clients of mBank and MultiBank will approach 1.3 million, thanks to which BRE Bank will join the group of the top retail banks in Poland.The opening quarter of 2005 brought very good results of mBank – biggest internet bank in Poland. January 2005 belonged to one of the best months in mBank’s history in terms of the number of acquired accounts (45,730) and Clients (23,809). The maintenance of these trends over the two months that followed enabled the achievement of record breaking acquisition of 69,000 clients and over 128,000 accounts. Presently, mBank maintains over 1.1 million accounts and serves close to 850,000 Clients, who have deposited PLN 3,400 million at mBank and have taken advantage of credit products to the amount of almost PLN 1,000 million. The sales plans for the 1st quarter of 2005 were therefore greatly exceeded by the mBank: by 81% in terms of deposits, by 24% in terms of the number of acquired Clients and by 14% in terms of loans granted.MultiBank – targeting demanding individuals and micro-enterprises had a good quarter too. It was a period of intensified activities for MultiBank, focusing on the branch network development, the product offer and sales promotions. The MultiBank also opened 6 new Financial Services Centres, including 4 partner outlets. The branch network increased therefore to 52 outlets (including 17 partner points).MultiBank increased in the 1st quarter of 2005 the volume of lending by 23% under the mortgage Financial Plans (in comparison to 1Q2004). Financial Plans granted to Clients amount of PLN 2,347 million (plan for the 1st quarter exceeded by 7%). The number of Clients served by the end of March 2005 increased to 208,000 persons. They deposited over PLN 761 million.Investment banking – favourable business trends support salesThe favourable business cycle trend on the Polish Treasury bonds market has leveraged the good performance of the investment banking business line. Thanks to intensive acquisition of orders for IRS and CIRS transactions, forwards and FX options, the BRE Bank managed to significantly surpass the assumed sales plans. By the end of the 1st quarter of 2005 the Bank occupied the second place amongst the organizers of corporate bond issues with maturities longer than one year (PLN 987.62 million) and with short term debt paper (PLN 1,597.70 million). The brokerage house Dom Inwestycyjny BRE Banku more than doubled its financial result of last year, achieving a net profit of PLN 5.5 million. The total value of assets under management by the asset management firms of the BRE Bank Group at the end of the 1st quarter 2005 amounted to PLN 4,559 million. During this period Skarbiec TFI was the first such firm in the history of Polish investment fund companies to introduce 2 Funds of Funds, which invest in participation units of other funds on the market.New International Financial Reporting Standards and operating performanceFrom January 1, 2005 the Bank prepares its financial reports in compliance with the IFRS standards. In the non consolidated financial report the subsidiary and associate companies are valued at cost with possible impairment losses being accounted for, without taking into account the Bank’s share in the current profit/loss generated by these companies (in the past the equity method of accounting was applied here). The change of the valuation principles applied to related companies is the cause behind the differences between the results and the value of equity, presented in the consolidated and non-consolidated financial reports of the Bank.Particular attention in the structure of results of the Group is drawn by the significant increase, compared against the same period of the previous year, of net interest income (67% up) and operating profit (70% up). Other major items of the profit and loss account, such as the result on trading operations (-4%) or fee and commission income (2%) were at a similar level as in the profitable 1st quarter of last year. Year on year, the total assets of the Group also increased by PLN 640 million and reached PLN 31,243 million. As anticipated in previous announcements, the BRE Bank maintains its solvency ratio at a safe level, amounting to 13,68% (non-consolidated). Cost discipline is also being maintained: the cost/income ratio has been decreased to 73% and the target is for it to fall below 60% by 2007.BREactivation – first quarter as a beginning of a new wayThanks to the restructuring measures, undertaken by the end of the year 2004, BRE Bank starts a new age in 2005.- “Following last year’s remedial actions, we are now ready for real expansion and a significant improvement in results by the end of 2005. I am pleased with the results as at the end of March, but we fully realize that this is just the beginning of the way, as our real target is annual results, not just success in selected quarters. We face intensive work on a change to the corporate banking model. We are just completing the stage of internal organisational changes, which will improve the effectiveness of   customer service and increase the acquisition of SME clients” – says the Chairman of the Management Board of BRE Bank, Mr. Sławomir Lachowski.BRE Bank wishes to address its products to those small, medium size and large enterprises, which have a high level demands concerning the scope and quality of financial products, and on the other hand are characterised by substantial independence when using standard products and services, including the intermediation provided by remote access channels.Presently, the Bank is also conducting activities targeting the increase of the rate of return on equity invested in the strategic subsidiaries and the determination, which ones amongst them may be able to effectively cope with the requirements, which they will have to face in the future. Assisted by intermediation provided by a renowned investment adviser, preliminary talks are being conducted with potential local and foreign investors concerning the attraction of an investor to the PTE Skarbiec-Emerytura pension fund.Furthermore, BRE Bank also conducts advanced work intended to adapt the structure of products offered by the companies of the Group, to the changing strategy of the BRE Bank. A further growth of cross-selling of the products of the companies like BRE Leasing, Polfactor, Skarbiec TFI, or CERI is one of the targets adopted for 2005.The  results of the 1st quarter show that the Bank has realistic grounds to be highly optimistic of the accomplishment of the business plans, which envisage the attainment of the following rations by the end of 2005: return on equity (ROE) of approximately 14% (before tax), cost to income ratio ca. 68%, solvency ratio of the Bank by the end of the year 2005: ca. 11%.Kontakt dla mediów