BPH inspires hope of another banking boom
BPH, Poland's third-largest bank, beat analysts' forecasts and posted a zł.250 million net profit for the second quarter, up 22 percent on the previous three months. The figure was flat when compared to the same period last year, but BPH's Q2 2004 was boosted by substantial one-off gains from asset sales and deferred tax add back. The bank also reported a 22-percent rise in its retail loan portfolio year-on-year to June 30, mostly thanks to strong mortgage growth. The volume of home loans rose to zł.8.4 billion for the same period, a jump of 34 percent.
"These are very good results," Robert Sobieraj, an analyst at Erste Securities, told Reuters. "On the positive side, there is their good interest income figure, and continued strong loan growth."
The mortgage figure is particularly encouraging. Earlier in the year analysts had predicted that home loans and mortgages would drive another bumper year for banks. So, can we expect more positive numbers when the other banks begin reporting their Q2 results?
Dariusz Górski, head CEE bank analyst for Deutsche Bank Securities, sounds a note of caution. BPH's results were solid, he says, but heavily dependent on foreign exchange (FX) mortgage loans, which several banks in Poland (including Bank Pekao, BZ WBK, and ING Bank Śląski) don't offer. The LIBOR (London interbank offered rate) on the Swiss franc is 0.75 percent, making it much more attractive for borrowers. With FX mortgages out of the picture, margins in the sector are being squeezed.
"Let's be honest," he says. "Apart from the retail segment and apart from mortgages in particular, growth wasn't very strong in the first half. If you look at the economy it grew by 2.1 percent in the first quarter. How much was the second? We don't know, but clearly below three. Investments are lagging and you have low interest rates." He is quick to add, however: "I would imagine that some cushion will come from bonds." Banks will make up for the slowdown, but last year's astronomical results probably won't return.
"Basically, they look decent," says Górski. "You have stable costs, some pick up in segments in some volumes and you have some very low debt costs. All together they are reasonably strong."
"These are very good results," Robert Sobieraj, an analyst at Erste Securities, told Reuters. "On the positive side, there is their good interest income figure, and continued strong loan growth."
The mortgage figure is particularly encouraging. Earlier in the year analysts had predicted that home loans and mortgages would drive another bumper year for banks. So, can we expect more positive numbers when the other banks begin reporting their Q2 results?
Dariusz Górski, head CEE bank analyst for Deutsche Bank Securities, sounds a note of caution. BPH's results were solid, he says, but heavily dependent on foreign exchange (FX) mortgage loans, which several banks in Poland (including Bank Pekao, BZ WBK, and ING Bank Śląski) don't offer. The LIBOR (London interbank offered rate) on the Swiss franc is 0.75 percent, making it much more attractive for borrowers. With FX mortgages out of the picture, margins in the sector are being squeezed.
"Let's be honest," he says. "Apart from the retail segment and apart from mortgages in particular, growth wasn't very strong in the first half. If you look at the economy it grew by 2.1 percent in the first quarter. How much was the second? We don't know, but clearly below three. Investments are lagging and you have low interest rates." He is quick to add, however: "I would imagine that some cushion will come from bonds." Banks will make up for the slowdown, but last year's astronomical results probably won't return.
"Basically, they look decent," says Górski. "You have stable costs, some pick up in segments in some volumes and you have some very low debt costs. All together they are reasonably strong."
