Profits up as sector declines

Banks saw a slight drop in overall net profit during the first three quarters of 2001, although their revenue in real terms was up 6.6% year on year to zł. 472.7 billion ($115.3 billion), with a net profit of zł. 3.67 billion ($895 million), according to figures from the Banking Supervisory Inspectorate (GINB).

Despite a decline in earnings across the sector, the figures posted by Powszechna Kasa Oszczędności Bank Polski (PKO BP) and Bank Pekao were upbeat, accounting for about half of all net profits.

"The negative macroeconomic situation impacted most banks' figures by obliging them to increase reserves at a time when demand for credit was falling," said Robert Sobieraj, a banking analyst at Bank Handlowy.

Most banks said the downturn in economic growth and tightening in competition across the sector were the two main reasons behind the lower-than-expected figures. But high real interest rates have also led to a worsening of banks' credit portfolios and lower increases in clients taking new credit.

After the third quarter, Bank Pekao's net profit was zł. 903 million ($220 million), 50% higher than in the same period last year. The bank is maintaining its prediction of zł. 1.25 billion ($305 million) net profit for 2001. Analysts said the upbeat figures were a result of the bank's strategy of reducing interest rates on its credit portfolios more slowly than the declining interest rates. They said the bank also continued to gain in exchange transactions. Pekao's cost-to-income ratio fell to 48.2-50% by the end of the third quarter.

PKO BP saw its net profit increase to zł. 860 million ($210 million) in the first three quarters of the year from zł. 515.5 million ($125.5 million) after the first half. The bank even posted a credit income rise in the January-September period.

Powszechny Bank Kredytowy (PBK) posted a zł. 12 million ($2.93 million) net profit in Q3, Bank Przemysłowo-Handlowy (BPH) posted zł. 3.4 million ($829,000), Kredyt Bank (KB) zł. 13.8 million ($3.36 million) and Bank Handlowy (BPH) zł. 58.4 million ($14.24 million). All these banks were hit with outstanding credits to ailing companies such as steel mill Huta Katowice, Daewoo Motors Polska and Stalexport.

KB lowered its forecast for net profit in 2001 to zł. 162 million ($39.5 million), down 30% on earlier forecasts. The largest bank in terms of liquidity on the Warsaw Stock Exchange (WSE), BRE Bank, lowered its annual net profit forecast to zł. 325 million-zł. 360 million ($79.3 million-$87.8 million) from zł. 404 million ($98.5 million). The bank said that in the third quarter it noted falling income on exchange positions and financial instrument operations, caused by złoty volatility and turbulence on the WSE.

Bank Zachodni WBK (BZ WBK), as expected, saw low net profits of zł. 19.6 million ($4.78 million), down from zł. 92.3 million ($22.5 million) in the same period last year. This is largely due to Bank Zachodni's merger with WBK earlier this year, the bank said. Its annual net profit forecast remains unchanged at zł. 153 million ($37.3 million). BIG Bank Gdański (BIG BG) saw a net profit of zł. 20.1 million ($4.9 million) in the first three quarters, up from zł. 19.6 million ($4.78 million) in the same period last year. ING BSK held firm at zł. 183.3 million ($44.7 million), although it has shown signs of weakening in the fourth quarter. Bank Ochrony Środowiska (BOŚ), Fortis Bank, Bank Częstochowa, Amerbank, LG Petro and Nordea Bank Polska saw significant decreases in the third quarter.

Joe Harper