Major events in 2018

In 2018 the Bank’s Group began the third year of pursuing the strategy “We support the development of Poland and the Poles”, in response to the changing market environment and the need to adapt to the new challenges which the banking sector and the Polish economy face.The direction of the transformations of the Bank’s business model is closely related to the dynamically developing digitization of social life and Poland’s economic development strategy.

In 2018 the PKO Bank Polski SA Group focused on innovation, by beginning to implement a new organizational operating model, developing modern mobile banking, implementing new, attractive products and services, and investing in landmark technologies to ensure the best offer for its Customers.

In 2018 PKO Bank Polski SA referred to important values and traditions, and emphasized the importance of Polish history in the context of this year’s 100th anniversary of Poland regaining its independence and preparations for the centenary of operations of PKO Bank Polski SA. The new approach was presented on the marketing communications platform, starting with the spot “Key decisions” directed by Tomasz Bagiński. The implemented communications formula was part of the strategy pursued by the Bank and its purpose is connecting the product and image campaigns.

As the only company in Poland from among 37, PKO Bank Polski SA was accepted to the FTSE Russell index for large companies in developed markets after the reclassification of the status of the Polish market to a developed one in September 2018. This is both a sign of appreciation for the strength of the Polish economy and for the Bank’s position, it successes to-date and its strategic potential for further development.

The European Banking Authority announced the results of the consecutive edition of European stress tests in which forty-eight of the largest European banks took part, including two from Poland. The results of the conducted tests showed that PKO Bank Polski SA is the most resilient institution in the group to negative macroeconomic scenarios. The Bank’s strong capital base causes the forecast levels of CET 1 to meet supervisory standards even in extremely unfavourable conditions. It is, among other things, the Bank’s business model that has a positive impact on the results achieved. The model is based on traditional financial instruments such as credits and deposits and is supported by a developed system of risk management.

Best Mobile Banking in the World

PKO Bank Polski SA offers its Customers the most developed mobile banking system in the world – the IKO application. As at the end of 2018 the number of activations of the app amounted to nearly 3.1 million.

In March 2018 IKO ranked first in the Retail Banker International mobile applications ranking of the 100 largest banks in the world. The ranking is based on Customer reviews from iOS and Android application stores. IKO with a total score of 4.8/5 from among nearly 150 thousand reviews outstripped banks from all over the world.

PKO Bank Polski SA became the key partner of Ekstraklasa and made its debut as the Official Bank of the matches. The Bank signed a contract covering the period until the end of the 2020/2021 season. The objective of the project is to promote Polish sports, build a strong football league, education of young talents by clubs and promotion of football among the youngest. The Bank’s logo will be visible on the shirts of Ekstraklasa players, on 16 stadiums and in transmissions of matches during all the 296 matches in 37 rounds.

• PKO Bank Polski SA fully implemented a solution based on blockchain technology. The Bank used the new technology to confirm the authenticity and constancy of documents sent via email. New product regulations were sent in digital form for the first time to more than 5 million of the Bank’s Customers. This was the widest use of the blockchain technology in banking in Europe, in terms of scale. The solution was developed jointly with the National Clearing Fund, in cooperation with the Polish-British company Coinfirm, as part of the innovation and modern technologies development platform “Let’s Fintech with PKO Bank Polski!”.The blockchain platform Trudatum enhances the solutions related to recording and maintaining data, and at the same time ensures effective and cryptographically secured document compliance. The technology that the Bank decided to implement in its own systems is a landmark in the area of collecting and publishing documents and files.

• On 29 November 2018 a Notarial Deed establishing the limited liability company Operator Chmury Krajowej was signed. In 2019 another shareholder plans to accede to the company – Polski Fundusz Rozwoju SA. The Company’s business will be to provide comprehensive data safekeeping and processing services. The product offer covers in particular cloud, transformation and security services for enterprises and public institutions. The company will accelerate digitization of the Polish economy and will provide safe solutions compliant with the global trend for transferring data to cloud computing.
• An investment fund, PKO VC (venture capital), was established in the Group. It will invest in start-ups and fintechs. The new fund will operate in two ways: the first is to look for companies in which the majority of interest should be acquired to include them in the Group, and the second is to acquire minority interest. In August 2018 PKO Bank Polski SA purchased investment certificates issued by PKO VC – fundusz inwestycyjny zamknięty aktywów niepublicznych (closed-ended non-public assets fund) with a total value of PLN 200 million.
• Under the Digital Transformation Program PKO Bank Polski SA started implementing the New Working Model based on agile project management methods. The purpose of the new model is to accelerate and increase productivity of the implemented changes which will lead to an increase in customer satisfaction and enable achieving the mid- and long-term business goals.

The Bank’s Group offers a comprehensive range of state-of-the-art products and services, both to individual Customers and to firms and companies, irrespective of their size, industry, and development stage. The Bank analyses Customer expectations and adapts the current offer so as to best meet both credit and non-credit Customer needs, and best meet competitive requirements.

In its actions taken in 2018 PKO Bank Polski SA, among other things:

• offered promotion of cash advances addressed to Customers who had no relations with the Bank previously or who intend to transfer the repayment of their loans and advances to PKO Bank Polski SA, as well as an offer dedicated to Customers without debt in respect of cash loans with the Bank;
• offered new entrepreneurs “Pożyczka na Start” (Start-up Advance) up to PLN 100 thousand for any purpose, and leases up to PLN 120 thousand for vehicles of up to 3.5 tonnes;
• introduced a special promotional 100-day deposit “Lokata Niepodległościowa” which bears an interest rate of 1918% for new funds;
• introduced to the offer basic payment account “Podstawowy Rachunek Płatniczy”, available to persons aged 13 and older who do not have an account in Polish currency;
• introduced the possibility of purchasing participation units in a new open umbrella fund PKO Portfele Inwestycyjne, with separated subfunds: PKO Bursztynowy, PKO Szafirowy, PKO Rubinowy, PKO Szmaragdowy and PKO Diamentowy;
• made available an on-line currency-exchange office in its transaction services. Customers may conclude transactions in 28 currency pairs at attractive exchange rates and without a fee for access to the service;
• launched the option to register Customer’s firms with the Central Registration and Information on Business via iPKO electronic banking. This is the first such solution on the market, developed jointly with the Ministry of Entrepreneurship and Technology;

• launched the program “Polska Bezgotówkowa” (Cashless Poland) in its branches; under the program small retailers who have not accepted cashless payments before will receive a free card acceptance service over 12 months;
• introduced further electronic banking services for firms – the new solutions are: the firm assistant that ensures full control over firm finances on a 24-hour a day basis thanks to online banking, and e-sklep – which enables establishing an e-shop using the transaction service iPKO and managing finances and orders from one point;
• launched sales of motor insurance: OC with Zielona Karta (liability insurance valid abroad), Autocasco (all risks insurance), NNW (accident insurance) and Assistance insurance. The possibility of purchasing, as one batch, policies from various insurers under one sale process is a novelty on the market. Policies may be purchased even 6 months in advance to avoid potential changes in motor insurance rates;
• introduced an oncological policy “OnkoPlan”, which ensures a wide range of support in the event of falling ill with a malignant tumour, both during treatment and after it is completed;
• launched a Garmin Pay and Apple Pay service.

The activities in which the PKO Bank Polski SA Group engaged in 2018 allowed it to achieve very good financial results and to reinforce its leading position among the largest financial institutions in Poland.

The more than two-digit net profit growth was determined by:

1. an improvement in the result on business activities which reached PLN 13 347 million (+6.3% y/y), mainly due to an increase in net interest income of 8.7% y/y, realized as a result of an increase in interest income caused by an increase in volumes and in net interest margins;
2. a slight increase in general administrative expenses (an increase of 2.1% y/y);
3. a drop in the cost of risk to 0.59%.

As a result of the actions taken in 2018 the scale of operations increased significantly:

• total assets amounted to PLN 324 billion (+PLN 27 billion y/y);
• financing granted to Customers increased to PLN 230 billion (+PLN 16 billion y/y);
• amounts due to Customers increased to PLN 243 billion (+PLN 22 billion y/y).

In 2018 the Bank’s Group:

• retained a high share in the loans and savings market at a level of 17.6% and 18.4% respectively;
• strengthened its leading position on the individuals’ investment fund market and achieved a market share of 22.2%;
• ranked first on the sales market of housing loans for individuals* with a share of over 28% – in 2018 loans for a record amount exceeding PLN 15 billion were granted.

* Data of the Polish Bank Association.