Sunk in the red
Investors and analysts were ready for bad news from BRE Bank, but few suspected it would be this harsh. The bank corrected its asset value by roughly zł.400 million, causing 2004's zł.116 million gross profit to plunge to a zł.284 million loss.
The revolution in the bank's balance sheet is related to a change at the firm's helm, which took place last autumn. Long-time president Wojciech Kostrzewa resigned from the post and became CEO of media holding ITI. Kostrzewa, known for his determined and aggressive rule, was replaced with Sławomir Lachowski, who immediately started a thorough re-examination of BRE's financial condition. The results are dramatic, but Lachowski argues: "The corrections didn't have a significant influence on the fact that operating results have improved a lot." He asserts that, thanks to those one-time corrections, none of the strategic business of the bank is aggravated by extra costs. However, the operating revenues from its core business, corporate banking, dropped by zł.30 million against 2003's figures.
"We have been too optimistic in judging entrepreneurs' will to expand and invest," said the vice-president responsible for corporate clients, Krzysztof Kokot. Just hours after the publication of the Q4 results last week, Kokot filed his resignation, effective the next day.
Despite the recent setbacks, BRE is maintaining its strategic goals: a 12 percent return on equity (ROE) in 2005 and a gross profit of zł.250 million. For its retail banking branches, the board is aiming for a zł.31 million gross profit. This year the figure was similar, only in the red.
"Year on year a zł.60 million rise on retail alone is a lot," says BZ WBK's Marcin Jabłczyński, adding that despite Lachowski's achievements, he would be "less optimistic than the board" on achieving these goals, which assume a 20 percent ROE in two years' time.
The revolution in the bank's balance sheet is related to a change at the firm's helm, which took place last autumn. Long-time president Wojciech Kostrzewa resigned from the post and became CEO of media holding ITI. Kostrzewa, known for his determined and aggressive rule, was replaced with Sławomir Lachowski, who immediately started a thorough re-examination of BRE's financial condition. The results are dramatic, but Lachowski argues: "The corrections didn't have a significant influence on the fact that operating results have improved a lot." He asserts that, thanks to those one-time corrections, none of the strategic business of the bank is aggravated by extra costs. However, the operating revenues from its core business, corporate banking, dropped by zł.30 million against 2003's figures.
"We have been too optimistic in judging entrepreneurs' will to expand and invest," said the vice-president responsible for corporate clients, Krzysztof Kokot. Just hours after the publication of the Q4 results last week, Kokot filed his resignation, effective the next day.
Despite the recent setbacks, BRE is maintaining its strategic goals: a 12 percent return on equity (ROE) in 2005 and a gross profit of zł.250 million. For its retail banking branches, the board is aiming for a zł.31 million gross profit. This year the figure was similar, only in the red.
"Year on year a zł.60 million rise on retail alone is a lot," says BZ WBK's Marcin Jabłczyński, adding that despite Lachowski's achievements, he would be "less optimistic than the board" on achieving these goals, which assume a 20 percent ROE in two years' time.
