Financial Results of BRE Bank after Q2 2004

Financial Results of BRE Bank after Q2 2004

In Q2 2004 BRE Bank continued with dynamic growth and fast improvement of key financial indicators. Its H1 2004 net profit grew to nearly PLN 71 million, the Bank’s best profit figure in 3 years and a proof of stable upward trends already visible in Q1 2004. The Group’s total assets grew by almost PLN 4 billion year on year; they increased by approximately PLN 1.5 billion in Q2 2004 alone. This makes the Bank a market leader in terms of growth. Thanks to the Bank’s successful stock issue, its solvency ratio grew significantly and is 14.3% on a non-consolidated basis. Strong financial performance of mBank and MultiBank continued in Q2 2004.

The performance of Q2 2004 was in line with Management expectations. A strong improvement (year on year) was due to continued restructuring measures started in late 2002 and a stable growth of the Polish economy. Most importantly, many items of the Bank’s income statement showed fundamental improvement and stronger growth than owed to GDP growth alone. Particularly impressive is the performance of the core business (H1 2004 compared to H1 2003), including the growth in net interest income (up 41%), net commission income (up 21%), result on banking operations (up 20%), and the net profit (up 27%). The positive trend continued quarter by quarter in Q1 and Q2 2004. It is a proof of the Bank’s robust potential to use the opportunities offered by economic upturn. The structure of BRE Bank’s results suggests that the upward trend is very likely to continue later this year.Selected Financial Indicators, Q1/Q2 2003/2004 [PLN’000]
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In the past weeks, BRE Bank successfully closed two major transactions which will impact the Bank’s future performance. The new issue of BRE Bank stocks was completed in late June. The issue was successful, thanks to adequate price parameters set by the Bank Management, as demonstrated by strong investor interest and oversubscription. The net issue receipts were close to PLN 550 million, sufficient to fulfil the Bank’s needs of stable growth in coming years. The issue enabled the other strategic transaction, the acquisition of 50% of Rheinhyp-BRE Bank Hipoteczny stocks. Under a final agreement with Eurohypo AG dated 12 July 2004, BRE Bank became the sole owner of RHB stocks, a factor of the BRE Bank Group market expansion in the coming years.Thanks to the raised equity, BRE Bank significantly raised its solvency ratio which stood at 14.3% at the end of Q2 2004, up by over 5.5 percentage points quarter on quarter. As a result, the Bank more than fulfilled the regulatory requirement (8%) and opened the way to further fast growth in the years to come.Importantly, the performance of BRE Bank’s retail banking business in Q2 2004 was as strong as in Q1 2004. mBank closed H1 2004 with a pre-tax profit (as it did in Q1 2004) while MultiBank reported a positive EBIDTA. Both retail franchises boast excellent growth in sales. mBank has over 654 thousand clients. It opens an average of 1,200 new accounts daily. It has raised PLN 2.73 billion in deposits in more than 800 thousand accounts. The number of clients of the mBank Investment Fund Supermarket continues to grow. More than 59 thousand clients have invested over PLN 333 million over the internet.MultiBank also has a growing number of clients, currently over 153 thousand. Their deposits total over PLN 566 million while loans stand at PLN 1.38 billion. The most popular product is Financial Plans, mortgage loans totalling over PLN 1.51 billion (granted and approved).The sales results of mBank and MultiBank prove that the projected profitability of the retail business is most realistic as of 2005. However, owing to capital investment necessary to grow the business, the line will report negative earnings this year.GDP growth in Q2 2004 estimated at 6% had a positive impact on the Bank’s corporate banking business. Thanks to expected recovery in this market, the loan portfolio of the Group grew by approximately 17% (year on year). At the same time, the share of irregular loans in the portfolio fell to 13.6% (compared to 14.5% in Q1 2004). The Bank’s corporate line is helped by improving foreign trade performance driven by exports. Export transactions serviced by the Bank (in H1 2004) were up 27% year on year. BRE Bank believes that its share in foreign trade services offered to Polish companies will continue to grow in the coming months. With modification of the acquisition policy in the SME segment and the new function of SME sales co-ordinators in Regional Branches, BRE Bank’s growth rate of SME sales rose by 50% (year on year). A new type of investment loan, BRE-UNION launched in June 2004, expanded the offering of products designed for investments co-financed by the European Union. The Bank has continued to offer Polish SMEs complimentary training on raising EU funds. Over 900 entrepreneurs have participated in workshops since the autumn of 2003.In Q2 2004 BRE Bank continued its active investment banking operations. Its share in the non-Treasury debt market is growing steadily. The Bank is the leader in terms of debt under issued short-term securities and the second largest arranger of issues of debt with maturity over 1 year. BRE Bank has for years offered a wide range of products hedging clients against the volatility of foreign exchange and interest rates. Now these sophisticated products are offered not only by the BRE Bank Head Office but also by dealers in local markets across Poland. The Bank brings its service closer to clients, especially in less economically active regions of the country.In H1 2004, the BRE Bank Group subsidiaries continued to grow successfully. BRE Leasing won the second market position and recorded an almost 100% growth (year on year) in the total amount of leasing contracts which stood at PLN 707 million. Its net profit grew to PLN 4.9 million. Following the acquisition of the remaining 50% of stocks by BRE Bank, Rheinhyp-BRE Bank Hipoteczny will focus on financing commercial real estate and housing development projects. The Bank wants to be an important partner to Polish municipalities. It reported a net profit of PLN 2.6 million at the end of H1 2004. The Intermarket Bank Group reported a fast 30% growth in sales volumes (EUR 1.6 billion). Its net profit grew over 60% and stood at EUR 3.5 million. The fastest growing subsidiaries include Polfactor SA whose sales volumes nearly doubled and reached almost PLN 1 billion at the end of Q2 2004. Its net profit grew by a factor of 4 year on year and stood at PLN 3.1 million. The assets under management of the Skarbiec Asset Management Holding grew by approximately PLN 300 million year on year and reached almost PLN 4.3 billion. Skarbiec TFI reported a net profit of nearly PLN 2.6 million. BRE Bank SA Securities also recorded strong performance: its profit was almost PLN 4 million. It is the market leader in stock market trading in options (40%) and the second largest broker in forwards (12%).BRE Bank is very optimistic about the outlook for H2 2004. This is supported by the expected stable economic growth (5.6% in Q3 2004 forecast by BRE Bank’s Chief Economist J. Jankowiak), helping further expansion, especially in corporate and investment banking. In addition, thanks to the successful new stock issue, BRE Bank has raised equity necessary for future stable growth. The Bank’s high solvency ratio will help it to use opportunities offered by GDP growth. Another reason for optimism is the increasingly active acquisition of new clients, not only by mBank and MultiBank but also the Bank’s corporate banking business, especially SME clients. The sales and profits of the BRE Bank Group companies grow steadily. In spite of continued investment and resulting losses, the retail banking business has over the past two quarters proved its capacity of generating stable profitability as of 2005. BRE Bank expects that approximately one-third of its revenue will be contributed by the retail business in 2006. As it sees no opportunities of market consolidation at this time, BRE Bank will rely on organic growth in the nearest future.Kontakt dla mediów