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

The Gulf Today - Business - - INTERNATIONAL -

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.

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