Polish bank PKO profit up 17% in 3rd quarter
Poland’s largest lender is beneiting from improving conditions in Polish economy, despite record-low interest rates
WARSAW: Poland’s largest lender, PKO, reported a 17 per cent rise†in third-quarter net profit, as a growing economy boosted demand for banking services and products.
The state-run bank reported a net profit of 902 million zlotys ($248.61 million), above analysts’ expectations of 870 million zlotys.
The lender is benefiting from improving conditions in the Polish economy, despite record-low interest rates.
“The result is better than expected mainly thanks to better core revenues. The net fee and commission result improved, as well as net interest income. The bank uses its market position well,” Andrzej Powierza, an analyst with Citigroup said.
“The bank improved its risk management over last years, this is probably why the result on provisions is good in the third quarter,” he added, referring to the 7 per cent fall in provisions for bad loans.
Shares in PKO rose 1.6 per cent, while other banks were also gaining. Since the beginning of the year, its market valuation rose almost 38 per cent to $13.3 billion, outperforming the sector.
Poland’s biggest lender PKO has made an approach to buy Luminor, the Baltic business created last month by Nordic banks DNB and Nordea, two sources familiar with the matter said.
One of the sources said the approach had been rejected, but that state-controlled PKO was still interested in expanding in Lithuania, Latvia and Estonia. Luminor was created last month to combine DNB’S roughly 930,000 customers across the three Baltic countries with Nordea’s 350,000 customers there.
It is the third largest financial services provider in the Baltic banking market, with around 15 billion euros ($17 billion) in assets, as well as a 23 per cent market share in lending and 16 per cent share in deposits. Its book value is 1.6 billion euros, likely a starting price for any negotiations. PKO, with 286 billion zloty ($78 billion) of assets, is central and eastern Europe’s biggest bank. In 2014 it acquired Nordea’s Polish business for 2.8 billion zloty.
Both sources said PKO was looking to invest in the Baltics.
“PKO said it does not want to grow its operations here from zero,” the first one said. “PKO said they talked with Luminor about the acquisition but received absolutely no interest.”
The source did not say why Nordea and DNB had spurned PKO’S approach, nor whether further talks were possible.
The second source also said PKO had expressed an interest in Luminor, but did not say how this had been received.
The first source said at least some governments in the region would welcome PKO’S entry, but that they were sceptical about its prospects as the market is tightly held by Scandinavian banks which show no intention of relaxing their grip.