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2018 Financial and Social Report

The following information provide Profit and Loss data for the Group’s three business segments: Retail, Corporate and Treasury, ALM and Other. Retail segment includes services to mass market individual Clients, affluent Clients, individual entrepreneurs and small businesses (of annual turnover below PLN 5 million). Corporate segment includes services to medium and large companies as well as public sector entities. The segment of Treasury, ALM (assets and liabilities management) and Othercovers the Group’s activity as regards investments on Bank’s own account, brokerage, inter-bank market transactions, taking positions in debt securities and other operations, which are not assigned to other segments.

 

The total operating income of the Retail segment in 2018 amounted to PLN 1,812.6 million and increased strongly by 9.0% yearly mainly thanks to high dynamics of Net interest income (+9.8% year-on-year), whereas  Net commission income decreased slightly (-0.7% year-on-year). Operating costs of retail segment increased less than Total operating income i.e. by 7.3% year-on-year. As a result of the above factors, Pre-provision income grew in 2018 by 10.9%. Net impairment provisions presented small increase by 2.6% yearly, thus Operating Profit of Retail segment grew even stronger than Pre-provision income, i.e. by 13.3% year-on-year to the level of PLN 678.0 million.

Retail segment (PLN million)
2018 2017 Change y/y
Net interest income * 1 242.4 1 131.1 9.8%
Net commission income 500.7 504.4 -0.7%
Other income** 69.5 27.4 153.7%
Total operating income 1 812.6 1 662.9 9.0%
Total operating costs (957.8) (892.4) 7.3%
Pre-provision income 854.8 770.5 10.9%
Impairment provisions and other cost of risk** (176.9) (172.4) 2.6%
Operating profit 678.0 598.1 13.3%

(*) Part of interest income generated by this segment (so called liquidity premium) has been recognized in the third segment of “Treasury, ALM and other” in accordance to Recommendation P of the Polish regulator (KNF)

(**) Fair value adjustment of credit portfolio (PLN 19.9 million in 2018) has been moved to pro-forma cost of risk. Cost of risk includes also result from modification.     

The total operating income of Corporate segment in 2018 amounted to PLN 530.3 million and presented a robust increase by 8.4% yearly, thanks to visible increase of its all main items: Net interest income (by 9.6% year-on-year), Net commission income (by 4.9% year-on-year) and Other income (by 11.9% year-on-year). Operating costs increased by 5.4% year-on-year. The abovementioned factors resulted in a strong growth of Pre-provision income by 10.7% year-on-year. The value of net impairment provisions on loans to companies decreased visibly in 2018 year by PLN 22.6 million (or by 27.6%) year-on-year, which was a very positive factor strengthening profitability of that segment. As a result, Operating profit of Corporate segment recorded very high increase of 26.4% to the level of PLN 252.5 million.

Corporate segment (PLN million)
2018 2017 Change y/y
Net interest income* 291.2 265.7 9.6%
Net commission income 163.7 156.1 4.9%
Other income 75.3 67.3 11.9%
Total operating income 530.3 489.1 8.4%
Total operating costs (218.6) (207.5) 5.4%
Pre-provision income 311.7 281.6 10.7%
Impairment provisions and other cost of risk** (59.2) (81.8) -27.6%
Operating profit 252.5 199.8 26.4%

(*) Part of the interest income generated by this segment (so called liquidity premium) has been recognized in the segment of “Treasury, ALM and other” in accordance to Recommendation P of the Polish regulator (KNF)

(**) Cost of risk includes also result from modification.  

The total operating income of Treasury, ALM (assets and liabilities management) and Other segment in 2018 amounted to PLN 384.7 million and decreased by 8.3% yearly. Operating costs decreased more than Total operating income, i.e. by 10.9% year-on-year. Pre-provision income of this segment for 2018 amounted to PLN 293.1 million recording a decrease by 7.5%. The contribution of impairment and other cost of risk was negligible – only PLN -0.5 million in 2018, as a result of that Operating profit of Treasury, ALM  and Other segment recorded a similar scale decrease, i.e. by 7.3% year-on-year to the level of PLN 292.7 million for 2018.

Treasury, ALM and other segment (PLN million)
2018 2017 Change r/r
Net interest income* 283.8 299.7 -5.3%
Net commission income (3.4) 3.1
Other income 104.2 116.8 -10.8%
Total operating income 384.7 419.6 -8.3%
Total operating costs (91.5) (102.8) -10.9%
Pre-provision income 293.1 316.8 -7.5%
Impairment provisions and other cost of risk** (0.5) (1.2) -59.2%
Operating profit 292.7 315.7 -7.3%

(*) Part of the interest income generated by other segments (so called liquidity premium) has been recognized in the segment of “Treasury, ALM and other” in accordance to Recommendation P of the Polish regulator (KNF)

(**) Cost of risk includes also result from modification.