Pekao and PKO both riding high on good Q1 results

Arch rivals Pekao SA and PKO BP yesterday reported first-quarter profits of zł.2 billion between them - representing 50% of the combined profit of the Polish banking sector as a whole - as each vowed to beat the other to become Poland's number one bank at the end of 2008.

Pekao earned a record zł.1.14 billion in Q1, up 22.8% on a year ago. The company, which emerged as the country's number one bank by assets following its acquisition of BPH last year, consolidated BPH's results for the first time in Q1. "We could not have got off to a better start," beamed Luigi Lovaglio, the CEO.

However, analysts pointed out that the result was inflated by a one-off item and that revenue growth in fact was disappointing. Meanwhile, PKO BP's net profit soared by 41% in Q1, to zł.951 million.

Rafał Juszczak, the CEO, said that on current performance, net profit for the year could hit zł.4 billion, enabling PKO BP to supersede Pekao as the most profitable bank.

He also noted that PKO BP remained the market leader by the number of clients and was still the number one player in key segments, such as mortgages. His views were echoed by some market analysts.

Juszczak also revealed he held exploratory talks with OTP, the Hungarian bank, about a tie-up, last autumn and that OTP was, "Open for a close partnership with PKO BP". (Parkiet, p. 1, 14-15; Gazeta Wyborcza, p. 29; Rzeczpospolita, p. B3) R.M.