http://www.businesswire.com/news/home/20091105006719/en
WARSAW, Poland--(Business Wire)--
Condensed Interim Consolidated 3 quarter
Financial Statements 2009
of Bank BPH SA Capital Group
SELECTED FINANCIAL DATA PLN'000 EUR`000
Consolidated income statement Period from 01 Jan. 2009 to 30 Sept. 2009 Period from 01 Jan. 2008 to 30 Sept. 2008 Period from 01 Jan. 2009 to 30 Sept. 2009 Period from 01 Jan. 2008 to 30 Sept. 2008
I. Interest income 602 294 573 196 136 907 167 371
II. Fee and commission income 395 041 358 709 89 796 104 742
III. Profit (loss) before income tax -82 438 164 081 -18 739 47 911
IV. Profit (loss) for the period attributable to equity holders of the Bank -63 617 111 344 -14 461 32 512
Consolidated statement of cash flows
V. Net cash flow from operating activities -566 942 -1 595 438 -128 871 -465 862
VI. Net cash flow from investing activities -128 502 -49 629 -29 210 -14 491
VII. Net cash flow from financing activities -40 052 201 198 -9 104 58 749
VIII. Total net cash flows -735 496 -1 443 869 -167 185 -421 605
Ratios Period from 01 Jan. 2009 to 30 Sept. 2009 Period from 01 Jan. 2008 to 30 Sept. 2008 Period from 01 Jan. 2009 to 30 Sept. 2009 Period from 01 Jan. 2008 to 30 Sept. 2008
IX. Earnings/losses per ordinary shareattributable to equity holders of the Bank (PLN / EUR) -2.22 3.88 -0.50 1.13
X. Diluted earnings/losses per ordinary share attributable to equity holders of the Bank (PLN / EUR) -2.22 3.88 -0.50 1.13
Ratios As at 30 Sept. 2009 As at 31 Dec. 2008 As at 30 Sept. 2009 As at 31 Dec. 2008
XI. Book value per share (PLN/EUR) 55.11 57.77 13.05 13.84
XII. Diluted Book value per share (PLN/EUR) 55.11 57.77 13.05 13.84
XIII. Dividend paid per ordinary share (PLN/EUR) 0.00 0.00 0.00 0.00
Consolidated statement of financial position As at 30 Sept. 2009 As at 31 Dec. 2008 As at 30 Sept. 2009 As at 31 Dec. 2008
XIV. Total assets 15 270 469 15 826 026 3 616 366 3 793 027
XV. Amounts owed to the Central Bank 251 923 48 386 59 661 11 597
XVI. Amounts owed to banks 1 458 043 619 390 345 295 148 449
XVII. Amounts owed to customers 9 929 730 10 271 713 2 351 568 2 461 824
XVIII. Shareholders' equity 1 582 451 1 658 836 374 757 397 574
XIX. Minority interests 89 714 81 112 21 246 19 440
XX. Share capital 143 581 143 581 34 003 34 412
XXI. Number of shares 28 716 230 28 716 230 28 716 230 28 716 230
Capital adequacy As at 30 Sept. 2009 As at 31 Dec. 2008 As at 30 Sept. 2009 As at 31 Dec. 2008
XXII. Capital adequacy ratio (%) 12.27 12.30 12.27 12.30
Individual positions of the condensed interim consolidated financial statement
of Bank BPH SA Capital Group were converted into EURO according to the following
principles:
* Selected consolidated statement of financial position and book value per share
- converted using the average EURO exchange rate in PLN announced by the Central
Bank on the balance sheet day: 30.09.2009 - 4.2226; 31.12.2008 - 4.1724;.
* Selected consolidated income statement and condensed consolidated statement of
cash flows - converted using the average rate of exchange, which is an
arithmetic mean of the average rates announced by the Central Bank and at the
end of each month of three quarters; 2009 - 4.3993, 2008 - 3.4247.
Contents
Consolidated income statement
Consolidated statement of comprehensive income
Consolidated statement of financial position
Consolidated statement of changes in equity
Condensed consolidated statement of cash flows
Notes to condensed interim consolidated financial statements
1.Basic information about the Bank BPH SA and the Bank BPH Group
2.Statement of compliance
3.Principles of preparation of the condensed interim consolidated financial
statements
4.Estimates
5.Business segment reporting
6.Net interest income
7.Impairment charges
8.Net fee and commission income
9.Net trading income and revaluation
10.General administrative expenses
11.Result on other operating income and expenses
12.Income tax expense
13.Cash and balances with the Central Bank
14.Trading assets
15.Loans and advances to and placements with banks
16.Loans and advances to customers
17.Loan impairment
18.Investment financial assets
19.Property and equipment
20.Intangible assets
21.Amounts owed to banks
22.Amounts owed to customers
23.Liabilities evidenced by certificates
24.Provisions
25.Trading liabilities
26.Dividends
27.Contingent liabilities
28.Cash and cash equivalent
29.Related party transactions
30.Significant events after the balance sheet date
31.Employee benefits
32.Risk management
Main risks
Market risk
Currency risk
Interest rate risk
Liquidity risk
Operating risk
Credit risk
Derivatives
Consolidated income statement
PLN`000
Notes Period from Period from Period from Period from
01 Jul. 2009 to 30 Sept. 2009 01 Jan. 2009 to 30 Sept. 2009 01 Jul. 2008 to 30 Sept. 2008 01 Jan. 2008 to 30 Sept. 2008
Interest income 190 962 602 294 201 479 573 196
Interest expenses -91 789 -318 486 -80 194 -218 803
Net interest income 6 99 173 283 808 121 285 354 393
Impairment charges 7 -44 055 -87 536 1 223 -15 776
Net interest income incl. impairment charges 55 118 196 272 122 508 338 617
Fee and commission income 141 528 395 041 122 333 358 709
Fee and commission expenses -28 461 -79 185 -31 581 -87 010
Net fee and commission income 8 113 067 315 856 90 752 271 699
Dividends 3 6 0 0
Net trading income and revaluation 9 18 763 59 096 28 520 74 896
Net income from investments 712 -1 539 1 773 1 304
General administrative expenses 10 -183 596 -666 007 -202 001 -599 876
Result on other operating income and expenses 11 12 174 13 878 9 934 77 441
Profit (loss) before income tax 16 241 -82 438 51 486 164 081
Income tax expense 12 8 918 25 965 -10 876 -36 190
Profit (loss) for the period 25 159 -56 473 40 610 127 891
1. Attributable to equity holders of the Bank 22 320 -63 617 36 274 111 344
2. Attributable to minority interest 2 839 7 144 4 336 16 547
Earnings/losses and diluted earnings/losses per ordinary share attributable to equity holders of the Bank (PLN) 0.78 -2.22 1.26 3.88
Earnings/losses and diluted earnings/losses per ordinary share (PLN) 0.88 -1.97 1.41 4.45
Consolidated statement of comprehensive income
PLN`000
Period from Period from
01 Jan. 2009 to 30 Sept. 2009 01 Jan. 2008 to 30 Sept. 2008
Profit/loss for the period -56 473 127 891
Other comprehensive income: -11 716 12 066
Net income due to revaluation of securities available for sale (net of tax) 1 784 1 442
Net income of hedging derivatives (net of tax) -20 652 10 624
Net income from released hedging instrument (after deferred tax) 7 152 0
Total comprehensive income -68 189 139 957
1. attributable to equity holders of the Bank -76 791 123 410
2. attributable to minority interest 8 602 16 547
Consolidated statement of financial position
PLN`000
Notes As at 30 Sept. 2009 As at 30 Jun. 2009 As at 31 Dec. 2008
Assets
Cash and balances with Central Bank 13 760 990 691 010 761 722
Trading assets 14 729 459 772 656 1 541 492
Hedging derivates 10 694 7 922 49 155
Loans and advances to and placements with banks 15 704 328 1 407 916 2 422 456
Loans and advances to Customers 16 9 811 936 9 484 576 8 888 736
incl.: loan impairment 17 -395 302 -353 610 -276 935
Investments financial assets 18 2 237 082 1 379 962 1 027 528
Property and equipment 19 377 392 390 059 315 612
Intangible assets 20 143 488 146 796 155 166
Assets and disposal groups held for sale 18 000 18 000 18 000
Other assets 477 100 476 409 646 159
incl.: deferred tax assets 358 922 363 547 484 903
Total assets 15 270 469 14 775 306 15 826 026
PLN`000
Notes As at 30 Sept. 2009 As at 30 Jun. 2009 As at 31 Dec. 2008
Liabilities
Amounts owed to Central Bank 251 923 0 48 386
Amounts owed to banks 21 1 458 043 984 937 619 390
Amounts owed to Customers 22 9 929 730 9 969 440 10 271 713
Liabilities evidenced by certificates 23 585 752 586 209 625 014
Provisions 24 231 001 249 664 364 475
incl.: deferred tax liability 164 529 169 846 314 501
Trading liabilities 25 691 730 783 653 1 758 875
Hedging derivates 2 351 2 406 0
Other liabilities 447 774 552 973 398 225
Total Equity: 1 672 165 1 646 024 1 739 948
incl.: shareholders` equity 1 582 451 1 560 083 1 658 836
incl.: minority interests 89 714 85 941 81 112
Total equity and liabilities 15 270 469 14 775 306 15 826 026
Book value per share (in PLN) 55.11 54.33 57.77
Consolidated statement of changes in equity
PLN`000
Equity attributable to equity holders of the Bank Minority interests TOTAL SHAREHOLDERS' EQUITY
Share capital Retained profits Revaluation reserve Supplementary capital Risk fund charge Other Reserves SHAREHOLDERS' EQUITY
Opening balance of shareholders' equity on 1 January 2009 143 581 343 859 25 988 98 403 273 064 773 941 1 658 836 81 112 1 739 948
Profit (loss) for the period 0 -63 617 0 0 0 0 -63 617 7 144 -56 473
Other comprehensive income
Net income due to revaluation of securities available for sale (net of tax) 0 0 326 0 0 0 326 1 458 1 784
Net income of hedging derivatives (net of tax) 0 0 -20 652 0 0 0 -20 652 0 -20 652
Net income from released hedging instrument (after deferred tax) 0 0 7 152 0 0 0 7 152 0 7 152
Total other comprehensive income 0 0 -13 174 0 0 0 -13 174 1 458 -11 716
Total comprehensive income 0 -63 617 -13 174 0 0 0 -76 791 8 602 -68 189
Charge for supplementary capital 0 -28 730 0 28 730 0 0 0 0 0
Charge for reserve capital 0 -65 133 0 0 0 65 133 0 0 0
General risk fund charge 0 -35 274 0 0 35 274 0 0 0 0
Share transactions from payments 0 0 0 0 0 406 406 0 406
Closing balance on 30 September 2009 143 581 151 105 12 814 127 133 308 338 839 480 1 582 451 89 714 1 672 165
PLN`000
Equity attributable to equity holders of the Bank Minority interests TOTAL SHAREHOLDERS' EQUITY
Share capital Retained profits Revaluation reserve Supplementary capital Risk fund charge Other Reserves SHAREHOLDERS' EQUITY
Opening balance of shareholders' equity on 1 January 2008 143 581 291 711 -11 021 50 890 260 147 765 196 1 500 504 61 224 1 561 728
Profit (loss) for the period 0 111 344 0 0 0 0 111 344 16 547 127 891
Other comprehensive income
Net income due to revaluation of securities available for sale (net of tax) 0 0 1 442 0 0 0 1 442 0 1 442
Net income of hedging derivatives (net of tax) 0 0 10 624 0 0 0 10 624 0 10 624
Total other comprehensive income 0 0 12 066 0 0 0 12 066 0 12 066
Total comprehensive income 0 111 344 12 066 0 0 0 123 410 16 547 139 957
Charge for supplementary capital 0 -47 513 0 47 513 0 0 0 0 0
Charge for reserve capital 0 -108 345 0 0 0 108 345 0 0 0
General risk fund charge 0 -12 917 0 0 12 917 0 0 0 0
Reclassification due to Bank`s spin-off 0 99 600 0 0 0 -99 600 0 0 0
Closing balance on 30 September 2008 143 581 333 880 1 045 98 403 273 064 773 941 1 623 914 77 771 1 701 685
Roczne Jednostkowe Sprawozdanie Finansowe Banku BPH SA
Condensed consolidated statement of cash flows
PLN`000
Notes Period from Period from Period from Period from
01 Jul. 2009 to 30 Sept. 2009 01 Jan. 2009 to 30 Sept. 2009 01 Jul. 2008 to 30 Sept. 2008 01 Jan. 2008 to 30 Sept. 2008
I. Net cash flow from operating activities 61 876 -566 942 28 057 -1 595 438
II. Net cash flow from investing activities -5 565 -128 502 -31 115 -49 629
III. Net cash flow from financing activities -2 069 -40 052 87 558 201 198
IV. Total net cash flows 54 242 -735 496 84 500 -1 443 869
OPENING BALANCE OF CASH AND CASH EQUIVALENTS 28 - 2 615 443 - 3 557 520
CLOSING BALANCE OF CASH AND CASH EQUIVALENTS 28 - 1 879 947 - 2 113 651
CHANGE OF CASH AND CASH EQUIVALENT IN THE BALANCE SHEET - -735 496 - -1 443 869
Notes to condensed interim consolidated financial statements
1.Basic information about the Bank BPH SA and the Bank BPH Group
Bank BPH Spółka Akcyjna is a bank with its registered address in Poland, Al.
Pokoju 1, 31-548 Kraków. The Bank is registered with the District Court for
Kraków - Śródmieście, Cracow, 11th Commercial Department of the National Court
Register, under No. KRS 0000010260. Tax identification code (NIP) -
675-000-03-84.
The core business line of Bank BPH SA includes receiving financial deposits,
maintaining bank accounts, extending loans, executing bank monetary payments and
conducting banking activities under the Banking Law. The business objectives are
described in the Bank`s Articles of Association.
Bank BPH SA is the parent entity of Bank BPH SA Capital Group (hereinafter
referred to as Bank BPH Capital Group, Bank BPH Group, the Capital Group or the
Group).
As at 30 September 2009, the condensed interim financial statements of Bank BPH
Group cover BPH PBK Zarządzanie Funduszami Sp z o.o., its subsidiary in which
the Bank holds 100% shares and votes at the Shareholders` Meeting, along with
BPH Towarzystwo Funduszy Inwestycyjnych SA., in which the Bank holds directly
50.14% shares and votes at the General Shareholders` Meeting.
2.Statement of compliance
The condensed interim consolidated financial statements of Capital Group have
been prepared in accordance with International Accounting Standard IAS 34
Interim Financial Reporting, as adopted by the European Union and other
applicable regulations.
In accordance with Decree of the Ministry of Finance dated 19 February 2009 on
current and periodic information provided by issuers of securities and the
conditions for recognition as equivalent information required by the law of a
non-Member State (Official Journal from 2009, No 33, item 259), the Group is
required to publish the financial results for the nine months ended September
30, 2009 which is deemed to be the interim financial reporting period.
3.Principles of preparation of the condensed interim consolidated financial
statements
Condensed interim consolidated financial statements have been prepared in Polish
Zloty, and all amounts, unless indicated otherwise, are stated in thousand
zlotys.
This report does not contain all the information required in the annual
consolidated financial statements; therefore it should be read together with the
consolidated financial statements of Bank BPH Group for the financial year
concluded on 31 December 2008.
The Bank BPH Group consolidated financial statements for the financial year
concluded on 31 December 2008 are available for inspection in the District Court
for Krakow-Śródmieście, 11 Commercial Section of the National Court Register,
Krakow, 7 Przy Rondzie street and on the Bank`s internet page: www.bph.pl.
a.Significant accounting policies
Except for the subsequent changes described below, the accounting policies
adopted by the Group in these condensed interim consolidated financial
statements are the same as those approved by the Group in its consolidated
financial statements as at and for the year ended 31 December 2008.
b.Changes to accounting policies
Due to changed definition of IAS 7 `Cash flow account`, definition of cash and
its equivalents was also modified. The scope of cash and its equivalents was
expanded to cover other financial assets that mature within 3 months (from the
date of acquisition) with small risk of impairment. Cash and its equivalents
were presented in detail in note 28.
Starting from 1 January 2009, the Group applied changes to IAS 1 `Financial
statements presentation` and introduced report on total revenues.
Since 1 January 2009, the Group has presented information on segments in line
with IFRS 8 `Operational segments`. Introduction of IFRS 8 did not impact the
comparative data included in this condensed interim consolidated financial
statement.
c.Comparative Data
As a result of changes in the definition of cash and cash equivalents and as a
result of the change to the presentation of Securities with original maturity up
to three months (the change made in the annual consolidated financial statements
for the financial year ended 31 December 2008) adjustments to the prior period
cash flow statements have been made as follows to ensure comparability:
1 Jan. 2008 - 30 Sept. 2008 Change the definition of cash and cash equivalents 1 Jan. 2008 - 30 Sept. 2008
(unadjusted) (adjusted)
I. Net cash flow from operating activities -1 062 600 -532 838 -1 595 438
II. Net cash flow from investing activities -49 629 0 -49 629
III. Net cash flow from financing activities 201 198 0 201 198
Total net cash flows -911 031 -532 838 -1 443 869
OPENING BALANCE OF CASH AND CASH EQUIVALENTS 2 015 414 1 542 106 3 557 520
CLOSING BALANCE OF CASH AND CASH EQUIVALENTS 1 104 383 1 009 268 2 113 651
CHANGE OF CASH AND CASH EQUIVALENT IN THE BALANCE SHEET -911 031 -532 838 -1 443 869
Similarly as a result of changes to the financial data presentation in the
annual consolidated financial statements for the financial year concluded on 31
December 2008, to ensure comparability, the Group introduced the following
modifications to comparative data presentation for 1 January 2008 - 30 September
2008:
(i) The margin on derivatives and options with customers is now reported under
`Net trading income and revaluation` while previously it was reported under `Net
fee and commission income`,
(ii) Dividends received have been reclassified from `Net interest income` to
`Dividends`,
(iii) `Result on other income and expenses` has been reclassified to `Result on
other operating income and expenses`,
(iv) The Group no longer discloses the caption `Result on operating activity`.
Below are presented summaries of the impact of change on the profit and loss
account:
PLN`000
1 Jan. 2008 - 30 Sept. 2008 Change in the presentation of the margin, income and operating costs 1 Jan. 2008 - 30 Sept. 2008
(unadjusted) (adjusted)
Interest income 573 196 - 573 196
Interest expenses -218 803 - -218 803
Net interest income 354 393 - 354 393
Impairment charges -15 776 - -15 776
Net interest income incl. impairment charges 338 617 - 338 617
Fee and commission income 368 570 -9 861 358 709
Fee and commission expenses -87 010 - -87 010
Net fee and commission income 281 560 -9 861 271 699
Dividends 0 - 0
Net trading income and revaluation 65 035 9 861 74 896
Net income from investments 1 304 - 1 304
General administrative expenses -599 876 - -599 876
Result on other operating income and expenses 78 336 -895 77 441
Result on operating activity 164 976 -164 976 -
Result on other income and expenses -895 895 -
Profit before income tax 164 081 - 164 081
Income tax expense -36 190 - -36 190
Profit for the period 127 891 - 127 891
1. Attributable to equity holders of the Bank 111 344 - 111 344
2. Attributable to minority interest 16 547 - 16 547
4.Estimates
The preparation of the interim financial statements requires management to make
judgements, estimates and assumptions that affect the reported amounts in the
financial statements.
The estimates and assumptions, subject to ongoing monitoring by the Group
management, are based on historic experiences and other factors, such as
expected future events that are justified at a point in time. While the
estimates are based on the best knowledge of the current environment and the
Group, the actual results may differ from those estimated.
In preparing these condensed interim consolidated financial statements of the
Group, the significant judgements made by management in applying the Group`s
accounting policies and the key sources of estimation uncertainty were the same
as those applied to the consolidated financial statements as at and for the year
ended 31 December 2008.
During the nine months ended 30 September 2009 management reassessed its
estimates in respect of:
* impairment of financial assets and provision for contingent liabilities (notes
14, 17 and 24)
* fair value of derivatives (notes 14, 25 and 32)
* provisions for employment benefits and restructuring (notes 24 and 31).
5.Business segment reporting
Division into business segments
The Group has adopted IFRS 8 Operating Segments, effective from 1 January 2009.
An operating segment is a component of the Group that engages in business
activities from which it may earn revenues and incur expenses, including
revenues and expenses that relate to transactions with any of the Group`s other
components. All operating segments` operating results are reviewed regularly by
the Group`s management to make decisions about resources to be allocated to the
particular segment.
Segment results, assets and liabilities include items directly attributable to a
segment as well as those that can be allocated on a reasonable basis.
Unallocated items comprise mainly EIR settlement and result of re-investing of
other assets and liabilities. Moreover unallocated items include profit and loss
items that cannot be attributed to other segments.
Bank BPH Group`s business segmentation is key to management policies. The Group
manages its operations under two strategic customer segments and the
International Markets` (INM) segment. Strategic customer segments include:
Retail Banking and Corporate Banking, which offer banking products and services
to customers. Under retail banking segment two subsidiaries` activities are
being recognised: BPH PBK Zarządzanie Funduszami Sp. z.o.o and BPH indirect
subsidiary BPH Towarzystwo Funduszy Inwestycyjnych SA.
The International Markets Segment, which sells and develops treasury and
investment products as well as capital market and custody services to corporate
and retail customers, is also responsible for interest rate, foreign currency
and liquidity risk management.
Bank BPH SA Group PLN`000
INCOME STATEMENT Business segments Other (not assigned to segments) Eliminations Consolidated value
Retail Corporate INM*
1 2 3 4 5 6 (2+3+4+5+6)
1 Jan.2009-30 Sept. 2009 1 Jan.2008-30 Sept. 2008 1 Jan.2009-30 Sept. 2009 1 Jan.2008-30 Sept. 2008 1 Jan.2009-30 Sept. 2009 1 Jan.2008-30 Sept. 2008 1 Jan.2009-30 Sept. 2009 1 Jan.2008-30 Sept. 2008 1 Jan.2009-30 Sept. 2009 1 Jan.2008-30 Sept. 2008 1 Jan.2009-30 Sept. 2009 1 Jan.2008-30 Sept. 2008
Interest income 752 154 758 789 100 799 45 759 412 021 482 276 82 733 117 180 -745 413 -830 808 602 294 573 196
External income 436 833 425 685 49 713 22 007 94 584 100 636 21 164 24 868 0 0 602 294 573 196
Internal income 315 321 333 104 51 086 23 752 317 437 381 640 61 569 92 312 -745 413 -830 808 0 0
Interest expense -486 201 -437 456 -67 027 -37 397 -465 267 -513 542 -45 404 -61 216 745 413 830 808 -318 486 -218 803
External expense -250 624 -139 279 -30 570 -15 150 -37 292 -64 374 0 0 0 0 -318 486 -218 803
Internal expense -235 577 -298 177 -36 457 -22 247 -427 975 -449 168 -45 404 -61 216 745 413 830 808 0 0
Net interest income 265 953 321 333 33 772 8 362 -53 246 -31 266 37 329 55 964 0 0 283 808 354 393
Impairment charges -84 991 -24 275 -2 599 8 499 54 0 0 0 0 0 -87 536 -15 776
Fee and commission income 341 891 327 205 43 547 30 438 9 603 1 066 0 0 0 0 395 041 358 709
Fee and commission expense -65 638 -81 311 -9 734 -3 809 -3 813 -1 890 0 0 0 0 -79 185 -87 010
Net fee and commission income 276 253 245 894 33 813 26 629 5 790 -824 0 0 0 0 315 856 271 699
Net trading income and revaluation -1 010 1 144 5 342 8 718 63 781 66 939 -9 017 -1 905 0 0 59 096 74 896
General administrative expense -552 264 -484 118 -77 944 -80 737 -35 799 -35 025 0 4 0 0 -666 007 -599 876
Other** -5 111 88 -1 604 -275 2 931 12 537 77 307 0 0 12 345 78 745
Profit (loss) before income tax -96 064 60 089 -7 528 -30 133 -19 695 2 755 40 849 131 370 0 0 -82 438 164 081
Income tax 0 0 0 0 0 0 25 965 -36 190 0 0 25 965 -36 190
Profit (loss) for the period -96 064 60 089 -7 528 -30 133 -19 695 2 755 66 814 95 180 0 0 -56 473 127 891
Profit (loss) for the period attributable to equity holders of the Bank -103 208 43 542 -7 528 -30 133 -19 695 2 755 66 814 95 180 0 0 -63 617 111 344
Profit (loss) for the period attributable to minority interest 7 144 16 547 0 0 0 0 0 0 0 0 7 144 16 547
* Excluding treasury product sales by the Treasury Product & Financial
Institutions Area in International Markets Division that are fully reported
under either the Corporate or the Retail Segment.
**Dividends + Net income from investments + Net income from other operating
costs and revenues.
PLN`000
Assets Retail Corporate INM Other (not assigned to segments) Total assets
Total assets 30 September 2009 7 956 775 1 509 730 2 875 362 2 928 602 15 270 469
30 June 2009 7 471 953 1 371 970 2 845 106 3 086 277 14 775 306
31 December 2008 8 153 962 891 068 3 399 273 3 381 723 15 826 026
PLN`000
Liabilities Retail Corporate INM Other (not assigned to segments) Total Liabilities
Total Liabilities 30 September 2009 9 438 787 1 648 423 1 073 845 3 109 414 15 270 469
30 June 2009 9 093 469 1 535 029 932 246 3 214 562 14 775 306
31 December 2008 9 137 153 888 909 963 074 4 836 890 15 826 026
6.Net interest income
PLN `000
Period from Period from Period from Period from
01 Jul. 2009 to 30 Sept. 2009 01 Jan. 2009 to 30 Sept. 2009 01 Jul. 2008 to 30 Sept. 2008 01 Jan. 2008 to 30 Sept. 2008
Interest income on: 190 962 602 281 201 328 572 856
Central Bank 2 649 9 538 3 584 9 038
banks 2 975 21 594 15 053 61 156
other financial institutions 1 743 6 419 1 445 7 823
non-financial institutions 159 452 482 849 165 132 437 380
budget institutions 424 1 281 -3 117 2 042
hedging derivatives 2 244 7 215 1 141 3 712
securities 21 475 73 385 18 090 51 705
Interest expenses -91 733 -318 305 -80 069 -218 509
Central Bank -1 210 -1 506 0 0
banks -6 643 -21 818 -10 154 -59 847
other financial institutions -1 218 -2 970 -290 -1 054
non-financial institutions -75 106 -267 558 -57 822 -132 259
budget institutions -2 738 -8 918 -4 614 -7 512
hedging derivatives 267 -1 024 -2 877 -5 808
securities issued by Bank BPH -5 085 -14 511 -4 312 -12 029
Net income from leasing business -56 -168 26 46
income 0 13 151 340
expense -56 -181 -125 -294
NET INTEREST INCOME 99 173 283 808 121 285 354 393
Interest income is inclusive of interest on securities reported at fair value
through profit or loss (FVO), which amounts to PLN 49,915 ths from 1 Jan. 2009
to 30 Sept. 2009 (period from 1 Jan. 2008 to 30 Sept. 2008: PLN 33,296 ths). The
interest income on trading securities is reported under net trading income.
Interest income includes PLN 17,644 ths from 1 Jan. 2009 to 30 Sept. 2009
(period from 1 Jan. 2008 to 30 Sept. 2008: PLN 17,986 ths) as the settlement of
fees and commissions directly linked to financial assets or liabilities (both
income and direct incremental expense) that are settled at amortised cost with
effective interest rate.
The net interest income on impaired financial assets amounts to PLN 19,502 ths
(period from 1 Jan. 2008 to 30 Sept. 2008: PLN 15,751 ths).
7.Impairment charges
PLN`000
Period from Period from Period from Period from
01 Jul. 2009 to 30 Sept. 2009 01 Jan. 2009 to 30 Sept. 2009 01 Jul. 2008 to 30 Sept. 2008 01 Jan. 2008 to 30 Sept. 2008
Increase -71 121 -173 778 -37 680 -107 420
impairment charge for loans and advances -63 120 -157 335 -32 076 -90 596
charge for incurred but not reported losses on loans and advances (net IBNR) -8 001 -16 443 -4 816 -12 788
provisions for contingent liabilities 0 0 -788 -4 036
Decrease 27 066 86 242 38 903 91 644
release of impairment charge for loans and advances 21 962 59 790 23 217 62 578
recoveries from written-off receivables 5 946 26 249 15 686 29 039
provisions for contingent liabilities -842 203 0 27
IMPAIRMENT CHARGES -44 055 -87 536 1 223 -15 776
8.Net fee and commission income
PLN`000
Period from Period from Period from Period from
01 Jul. 2009 to 30 Sept. 2009 01 Jan. 2009 to 30 Sept. 2009 01 Jul. 2008 to 30 Sept. 2008 01 Jan. 2008 to 30 Sept. 2008
Income from: 141 528 395 041 122 333 358 709
securities and custodian business 6 486 18 068 5 119 12 240
loans and advances 24 001 61 378 7 451 22 690
domestic payments 59 287 169 502 53 643 157 464
foreign payments 4 236 12 270 4 072 12 139
transactional exchange rate result 18 876 55 523 12 315 33 195
investment fund management and distribution of participation units 23 464 63 253 31 110 112 030
other 5 178 15 047 8 623 8 951
Expenses on: -28 461 -79 185 -31 581 -87 010
securities and custodian business -2 086 -5 251 -1 608 -3 920
loans and advances -2 079 -4 784 -1 001 -2 637
domestic payments -20 999 -60 387 -17 655 -56 982
foreign payments -276 -857 -207 -513
investment fund management and distribution of participation units -1 025 -2 435 -8 865 -15 254
other -1 996 -5 471 -2 245 -7 704
NET FEE AND COMMISSION INCOME 113 067 315 856 90 752 271 699
Net fee commission income includes PLN 4,581 ths from custodian business (period
from 1 Jan. 2008 to 30 Sept. 2008: PLN 1,434 ths).
Net fee and commission income includes PLN 61,378 ths of commission income from
financial assets and liabilities reported on a pro-rata basis depending on their
maturity dates (vs. period from 1 Jan. 2008 to 30 Sept. 2008: PLN 22,690 ths)
and PLN -4,784 ths in costs (vs. period from 1 Jan. 2008 to 30 Sept. 2008: PLN
-2,637 ths).
Following the change to the presentation of the margin earned on derivatives and
options transactions concluded with customers (as described in the Note 3.
Principles of preparation of the condensed interim consolidated financial
statements, letter c) Comparative Data) period from 1 Jan. 2008 to 30 Sept. 2008
net fee and commission income decreased by PLN 9,861 ths.
9.Net trading income and revaluation
PLN`000
Period from Period from Period from Period from
01 Jul. 2009 to 30 Sept. 2009 01 Jan. 2009 to 30 Sept. 2009 01 Jul. 2008 to 30 Sept. 2008 01 Jan. 2008 to 30 Sept. 2008
Result on fixed income instruments -2 206 -6 474 250 -2 668
Exchange gain 20 969 65 570 28 270 77 564
NET TRADING INCOME AND REVALUATION 18 763 59 096 28 520 74 896
The result on fixed-income securities includes PLN 1,684 ths in interest income
from trading securities (compared to PLN 2,108 ths in the period from 1 Jan.
2008 to 30 Sept. 2008).
Following the change to the presentation of the margin earned on derivatives and
options transactions concluded with customers (as described in the Note 3.
Principles of preparation of the condensed interim consolidated financial
statements, letter c) Comparative Data) period from 1 Jan. 2008 to 30 Sept. 2008
net trading income and revaluation increased by PLN 9,861 ths.
The item `Exchange gain` includes a PLN 4,905 ths (period from 1 Jan. 2008 to 30
Sept. 2008: 0 PLN) of financial derivatives` valuation adjustment due to
counterparty risk. The item `Result on fixed income instruments` includes a PLN
56 ths (period from 1 Jan. 2008 to 30 Sept. 2008: 0 PLN) adjustment of valuation
of financial derivatives.
10.General administrative expenses
PLN`000
Period from Period from Period from Period from
01 Jul. 2009 to 30 Sept. 2009 01 Jan. 2009 to 30 Sept. 2009 01 Jul. 2008 to 30 Sept. 2008 01 Jan. 2008 to 30 Sept. 2008
Employment costs -89 365 -351 681 -105 280 -298 718
Salaries -78 211 -313 422 -91 796 -251 510
Retirement and other benefits 407 2 863 147 -6 840
Obligatory social security charges -11 561 -41 122 -13 631 -40 368
Building maintenance and rents -27 987 -91 654 -24 592 -68 893
Other expense -45 258 -150 985 -45 954 -138 595
Depreciation -20 986 -71 687 -26 175 -93 670
GENERAL ADMINISTRATIVE EXPENSES -183 596 -666 007 -202 001 -599 876
Salaries for the period from 1 Jan. 2009 to 30 Sept. 2009 include costs of
employment restructuring in the amount of PLN 62,345 ths.
Building maintenance and rents, other expense and depreciation include the
provisions in the amount of PLN 12,615 ths. for the period from 1 Jan. 2009 to
30 Sept. 2009 for costs of restructuring connected with necessity to optimize
the distribution network.
11.Result on other operating income and expenses
PLN`000
Period from Period from Period from Period from
01 Jul. 2009 to 30 Sept. 2009 01 Jan. 2009 to 30 Sept. 2009 01 Jul. 2008 to 30 Sept. 2008 01 Jan. 2008 to 30 Sept. 2008
Other operating income from 14 831 25 556 13 839 101 824
Sale or liquidation of fixed assets and assets held for sale 91 147 -119 19 396
Release of provisions and impairment allowances 1 563 4 994 637 929
Litigations (recoveries, damages received, etc.) 1 462 5 290 1 838 5 389
Other 11 715 15 125 11 483 76 110
Other operating expenses for -2 657 -11 678 -3 905 -24 383
Sale or liquidation of fixed assets and assets held for sale -36 -39 0 0
Charges for provision and impairment allowances 27 -1 890 829 -9 716
Litigation costs -604 -3 699 -2 377 -6 445
External debt collection costs 0 0 -23 -767
Other -2 044 -6 050 -2 334 -7 455
RESULT ON OTHER OPERATING INCOME AND EXPENSES 12 174 13 878 9 934 77 441
Other operating income in the period from 1 Jan. 2009 to 30 Sept. 2009 includes
amounts received for interest in the amount of PLN 10,285 thousand related to
the refund of the income taxes indicated in `Adjustment of previous years`
within Note 12.
Following the change to the presentation of result on operating income and
expenses (as described in the Note 3. Principles of preparation of the condensed
interim consolidated financial statements, letter c) Comparative Data) the
result on operating income and expenses decreased by PLN 895 ths.
12.Income tax expense
PLN`000
Period from Period from Period from Period from
01 Jul. 2009 to 30 Sept. 2009 01 Jan. 2009 to 30 Sept. 2009 01 Jul. 2008 to 30 Sept. 2008 01 Jan. 2008 to 30 Sept. 2008
Current tax -8 289 -4 183 39 301 46 434
Current year 2 266 5 454 39 301 46 434
Adjustments of previous years -10 555 -9 637 0 0
Deferred tax -629 -21 782 -28 425 -10 244
Deferred tax liability -5 277 -145 123 -44 359 37 619
Deferred tax assets 4 648 123 341 15 934 -47 863
TOTAL INCOME TAX IN THE INCOME STATEMENT -8 918 -25 965 10 876 36 190
13.Cash and balances with the Central Bank
PLN`000
As at 30 Sept. 2009 As at 30 Jun. 2009 As at 31 Dec. 2008
Cash 423 968 323 303 369 172
Balances with the Central Bank 333 605 360 858 384 506
Debt securities and bills issued by the State Treasury and other public issuers eligible for discounting at the Central Bank 3 417 6 849 8 044
Bills of exchange eligible for rediscounting 3 417 6 849 8 044
CASH AND BALANCES WITH THE CENTRAL BANK 760 990 691 010 761 722
14.Trading assets
PLN`000
As at 30 Sept. 2009 As at 30 Jun. 2009 As at 31 Dec. 2008
Debt securities (by type and issuer) 32 883 39 975 186 856
issued by central government institutions 32 883 39 975 186 856
- Treasury bonds 32 699 39 787 186 678
- Eurobonds 184 188 178
Positive market value of derivatives 696 576 732 681 1 354 636
TRADING ASSETS 729 459 772 656 1 541 492
The item `positive market value of derivatives` includes a valuation adjustment
for counterparty risk in the amount of 4,907 thousand zlotys.
15.Loans and advances to and placements with banks by type
PLN`000
As at 30 Sept. 2009 As at 30 Jun. 2009 As at 31 Dec. 2008
Money market placements 358 909 952 486 1 560 642
Other including 345 172 455 019 858 872
current accounts 73 654 101 581 90 992
buy-sell-back transactions receivables 0 0 81 831
loans and advances - under cash collateral 186 967 279 378 577 084
cash in transit 84 551 74 060 108 965
Gross total 704 081 1 407 505 2 419 514
EIR adjustments 0 0 86
Interest 247 411 2 856
LOANS AND ADVANCES TO AND PLACEMENTS WITH BANKS 704 328 1 407 916 2 422 456
4.Loans and advances to customers by type
PLN`000
As at 30 Sept. 2009 As at 30 Jun. 2009 As at 31 Dec. 2008
Loans and advances 9 883 289 9 660 338 8 761 424
from financial institutions 46 157 51 104 74 620
from non-financial institutions 9 828 062 9 607 937 8 684 963
from government institutions 9 070 1 297 1 841
Other: 314 936 167 489 383 002
buy-sell-back transactions 235 073 99 522 307 347
loans and advances - under cash collateral 20 828 19 659 46 646
loans and advances to customers in transit 27 693 25 744 17 632
other 31 342 22 564 11 377
Investments in financial leases 5 227 5 227 5 250
GROSS TOTAL 10 203 452 9 833 054 9 149 676
EIR adjustments -19 188 -18 334 -12 238
Discount on purchased loans -165 -76 -216
Loan loss provision -395 302 -353 610 -276 935
Interest 23 139 23 542 28 449
LOANS AND ADVANCES TO CUSTOMERS 9 811 936 9 484 576 8 888 736
5.Loan impairment
PLN`000
IMPAIRMENT IBNR TOTAL
Opening balance (01 Jan. 2009) 226 369 50 566 276 935
Impairment charges 157 335 16 443 173 778
Release of impairment charges -59 790 0 -59 790
Used -11 435 0 -11 435
Revaluation -18 0 -18
Other 15 832 0 15 832
Closing balance (30 Sept. 2009) 328 293 67 009 395 302
6.Investment financial assets
PLN`000
As at 30 Sept. 2009 As at 30 Jun. 2009 As at 31 Dec. 2008
Assets available for sale 679 171 530 568 651 577
Debt instruments 664 434 515 984 638 977
Treasury bonds 330 179 274 258 318 446
Treasury bills 334 255 241 726 320 531
Equity instruments 14 737 14 584 12 600
interests 1 725 1 718 1 251
other 13 012 12 866 11 349
Debt securities designated as at fair value through profit or loss (FVO) 1 532 175 823 569 348 951
bonds 683 354 701 172 318 332
Treasury bills 848 821 122 397 30 619
Investments certificates designated as at fair value through profit or loss (FVO) 25 736 25 825 27 000
INVESTMENTS FINANCIAL ASSETS 2 237 082 1 379 962 1 027 528
7.Property and equipment by type
PLN`000
As at 30 Sept. 2009 As at 30 Jun. 2009 As at 31 Dec. 2008
Land (including perpetual usufruct) 24 301 24 301 2 311
Buildings, premises 146 229 147 488 85 711
Other property and equipment 198 667 206 110 186 370
Property and equipment under construction 8 195 12 160 41 220
PROPERTY AND EQUIPMENT 377 392 390 059 315 612
Movements in property and equipment
PLN`000
Total property and equipment
GROSS OPENING BALANCE (01 Jan. 2009) 875 334
- purchased 114 755
- other increase/decrease -214
- disposal/donation/sale -18 037
- assets and disposal groups held for sale -169
GROSS CLOSING BALANCE (30 Sept. 2009) 971 669
OPENING BALANCE OF CUMULATIVE DEPRECIATION (01 Jan. 2009) -535 386
- change in the year -34 826
CLOSING BALANCE OF CUMULATIVE DEPRECIATION (30 Sept. 2009) -570 212
OPENING BALANCE OF IMPAIRMENT CHARGES (01 Jan. 2009) -24 336
- change in the year 102
- assets and disposal groups held for sale 169
CLOSING BALANCE OF IMPAIRMENT CHARGES (30 Sept. 2009) -24 065
NET CLOSING BALANCE (30 Sept. 2009) 377 392
8.Intangible assets by type
PLN`000
As at 30 Sept. 2009 As at 30 Jun. 2009 As at 31 Dec. 2008
Goodwill 107 659 107 659 107 659
Other intangible assets 35 829 39 137 47 507
INTANGIBLE ASSETS 143 488 146 796 155 166
Movements in intangible assets
PLN`000
Total Intangible Assets
GROSS OPENING BALANCE (01 Jan. 2009) 658 947
- purchased 7 242
- disposal/donation/sale -15
GROSS CLOSING BALANCE (30 Sept. 2009) 666 174
OPENING BALANCE OF CUMULATIVE DEPRECIATION (01 Jan. 2009) -501 456
- change in the year -18 905
CLOSING BALANCE OF CUMULATIVE DEPRECIATION (30 Sept. 2009) -520 361
OPENING BALANCE OF IMPAIRMENT CHARGES (01 Jan. 2009) -2 325
- change in the year 0
CLOSING BALANCE OF IMPAIRMENT CHARGES (30 Sept. 2009) -2 325
NET CLOSING BALANCE (30 Sept. 2009) 143 488
9.Amounts owed to banks by type
PLN`000
As at 30 Sept. 2009 As at 30 Jun. 2009 As at 31 Dec. 2008
Account balances 2 950 3 327 1 086
Money market placements 789 930 526 206 414 272
Other: 663 281 454 762 202 851
amounts owed under cash collateral 173 434 108 408 201 163
accounts for special purpose funds 3 760 4 985 985
sell-buy-back transactions 486 034 340 047 0
other 53 1 322 703
GROSS TOTAL 1 456 161 984 295 618 209
EIR adjustments -2 -1 0
Interest 1 884 643 1 181
TOTAL AMOUNTS OWED TO BANKS 1 458 043 984 937 619 390
10.Amounts owed to customers by type
PLN`000
As at 30 Sept. 2009 As at 30 Jun. 2009 As at 31 Dec. 2008
Account balances 3 828 140 3 287 729 2 980 267
Deposits 5 646 915 6 161 486 7 037 916
Loans and advances received 2 834 3 080 3 606
Other: 312 841 419 971 209 896
sell-buy-back transactions 79 859 160 030 23 877
amounts owed under cash collateral 130 605 161 940 104 029
other 102 377 98 001 81 990
GROSS TOTAL 9 790 730 9 872 266 10 231 685
EIR adjustments -1 248 -1 623 -468
Interest 140 248 98 797 40 496
TOTAL AMOUNTS OWED TO CUSTOMERS 9 929 730 9 969 440 10 271 713
11.Liabilities evidenced by certificates by type
PLN`000
As at 30 Sept. 2009 As at 30 Jun. 2009 As at 31 Dec. 2008
Certificates 620 768 622 837 660 820
GROSS TOTAL 620 768 622 837 660 820
EIR adjustments -715 -654 -494
Discount -34 301 -35 974 -35 976
Interest 0 0 664
TOTAL LIABILITIES EVIDENCED BY CERTIFICATES 585 752 586 209 625 014
LONG-TERM LIABILITIES EVIDENCED BY CERTIFICATES
issued from 1 January 2009 to 30 September 2009
Debt financial instrument by type Currency Nominal value - PLN THS Interest rate Redemption date Quoting market
Own deposit certificates PLN 15 282 depends on WIG20 2010-03-29 not quoted
Own deposit certificates PLN 27 080 depends on WIG20 2010-04-01 not quoted
Own deposit certificates PLN 9 410 dependent on EUR/PLN rate quoted by NBP, defined from Screen Page 2010-05-17 not quoted
Own deposit certificates PLN 16 436 dependent on EUR/PLN rate quoted by NBP, defined from Screen Page 2010-05-17 not quoted
Own deposit certificates PLN 44 933 linked to stock-exchange indices: DJ Euro Stoxx 50, S&P500, Nikkei225, FTSE 100 2012-03-27 not quoted
Own deposit certificates PLN 10 456 linked to stock-exchange indices: Standard & Poor`s 500(SPX) 2012-05-15 not quoted
Own deposit certificates PLN 17 858 afternoon fixing for gold quoted on the London Bullion Market, expressed in USD per 1 ounce as defined and published by the London Gold Market Fixing Limited (Bloomberg: GOLDLNPM 2012-07-02 not quoted
Own deposit certificates PLN 4 258 afternoon fixing for gold quoted on the London Bullion Market, expressed in USD per 1 ounce as defined and published by the London Gold Market Fixing Limited (Bloomberg: GOLDLNPM 2012-07-02 not quoted
Own deposit certificates PLN 19 678 Reference Rate: WIG20 Index 2011-08-08 not quoted
Own deposit certificates PLN 11 073 Reference rate: CHF to PLN exchange rate expressed in PLN according to NBP fixing and determined from a Screen Page. Where on the Day of Interest Rate Fixing the Issuer cannot determine the value of the Reference Rate, as it is not available on the Screen Page, the Issuer, acting in good faith and with due diligence, will determine the Rate. 2010-08-26 not quoted
Own deposit certificates PLN 13 408 Reference rate (i) 1) WIG20 index (Bloomberg code: WIG20) for i=1 2) Hang Seng China Enterprises Index (Bloomberg code: HSCEI) for i=2 2012-10-04 not quoted
Own deposit certificates USD 4 605 Reference rate (i) 1) WIG20 index (Bloomberg code: WIG20) for i=1 2) Hang Seng China Enterprises Index (Bloomberg code: HSCEI) for i=2 2012-10-04 not quoted
12.Provisions
PLN`000
As at 30 Sept. 2009 As at 30 Jun. 2009 As at 31 Dec. 2008
Deferred tax liability 164 529 169 846 314 501
Other: 66 472 79 818 49 974
Provisions for retirement benefits and similar obligations 22 509 23 041 25 113
Provision for unused holidays 10 926 15 758 11 498
Provision for restructuring costs 19 746 28 691 0
Provisions for contingent liabilities 12 961 12 118 13 163
Other 330 210 200
TOTAL PROVISIONS 231 001 249 664 364 475
Movements in provisions for liabilities related to employees, for restructuring
costs, for contingent liabilities and in other provisions
PLN`000
As at 1 Jan. 2009 provision created provision release use other As at 30 Sept. 2009
Provision for retirement benefits and similar obligations 25 113 2 744 -4 576 -772 0 22 509
Provision for unused holidays 11 498 5 074 -4 148 -1 498 0 10 926
Provision for restructuring costs 0 62 345 0 -42 599 0 19 746
Provision for contingent liabilities 13 163 0 -202 0 0 12 961
Other 200 128 0 0 2 330
TOTAL 49 974 70 291 -8 926 -44 869 2 66 472
13.Trading liabilities
PLN`000
As at 30 Sept. 2009 As at 30 Jun. 2009 As at 31 Dec. 2008
Negative fair values of derivatives 691 730 783 653 1 748 782
Liabilities from short sales 0 0 10 093
TOTAL TRADING LIABILITIES 691 730 783 653 1 758 875
14.Dividends
On 27 May 2009, The General Meeting of the Bank has passed the resolution on the
profit distribution, in which no dividend payment for 2008 is envisaged. The
decision is in line with the Supervisory and Management Boards` recommendations.
15.Contingent liabilities
Court proceedings
As at September 30, 2009, the total value of all court cases was PLN 58,420 ths,
which represents 3.69% of the Group's shareholders' funds.
The above amount is made up of PLN 16,848 ths which is the value of disputed
items in suits brought by the Bank, and disputed items in which the Bank is the
defendant amount to PLN 41,572 ths.
As at September 30, 2009, the Bank had made litigation provisions for cases that
were likely to result in an outflow of means containing economic benefits. The
provisions set up as of September 30, 2009 amount to PLN 11,827 ths (PLN 12,294
ths as of June 30, 2009; PLN 11,941 ths as of December 31, 2008).
Also as at September 30, 2009, there were no cases before courts or state
administrative authorities with regard to the Bank's liabilities or receivables
whose value would represent at least 10% of the Group's shareholder funds.
The Group has no material settlements subject to proceedings before courts,
arbitrage authorities or public administration bodies.
Off-balance sheet
PLN`000
As at 30 Sept. 2009 As at 30 Jun. 2009 As at 31 Dec. 2008
I. Contingent liabilities granted and received 6 365 256 6 888 932 5 979 188
1. Contingent liabilities granted: 2 401 356 2 555 090 2 329 286
a) financing 2 272 331 2 439 372 2 238 022
b) guarantee 129 025 115 718 91 264
2. Contingent liabilities received: 3 963 900 4 333 842 3 649 902
a) financing 3 058 830 3 387 173 2 803 592
b) guarantee 905 070 946 669 846 310
II. Liabilities connected with the execution of buy/sell transactions 26 169 457 27 309 411 30 025 292
III. Other: 63 516 674 72 980 859 92 593 758
Securities received as guarantees and other collateral deducted from risk weighed assets 386 958 346 523 246 170
Transactions in securities 117 994 139 880 0
Liabilities under transactions in financial instruments 63 011 722 72 494 456 92 347 588
TOTAL OFF-BALANCE ITEMS 96 051 387 107 179 202 128 598 238
16.Cash and cash equivalent
For condensed consolidated cash flow statements, the balance of cash and its
equivalents includes the following balances that mature within 3 months (from
the date of acquisition) with small risk of impairment.
PLN`000
As at 30 Sept. 2009 As at 30 Jun. 2009 As at 31 Dec. 2008
Cash and balances with Central Bank (Note 13) 760 990 691 010 761 722
Loans and advances to and placements with banks (Note 15) 517 182 1 128 280 1 844 743
money market placements 358 909 952 486 1 560 642
current accounts 73 654 101 581 90 992
buy-sell-back transactions 0 0 81 917
cash in transit 84 551 74 060 108 965
interest 68 153 2 227
Debt securities held for liquidity management purpose 601 775 6 415 8 978
Total Cash and Cash equivalent 1 879 947 1 825 705 2 615 443
17.Related party transactions
Dominant company
The majority shareholder of Bank BPH is GE Money Bank SA, which holds 65.9%
shares and votes at Bank BPH General Shareholders` Meeting. GE Money Bank SA is
part of the General Electric Company (which also owns an additional 5.13% of
additional shares through DRB Holdings B.V.).
Details of transactions with affiliated entities
As at 30 September 2009 the balances of receivables from and payables to the GE
Group were as follows:
PLN`000
As at 30 Sept. 2009 As at 30 Jun. 2009 As at 31 Dec. 2008
Parent company Other GE Group companies Total Parent company Other GE Group companies Total Parent company Other GE Group companies Total
Receivables (with interest), including: 94 009 1 836 95 845 198 069 1 789 199 858 1 007 487 0 1 007 487
- Placements 94 009 0 94 009 198 069 0 198 069 1 007 487 0 1 007 487
- Other receivables 0 1 836 1 836 0 1 789 1 789 0 0 0
Liabilities, including: 1446 5 485 6 931 1 775 1 978 3 753 949 0 949
- Current liabilities 1446 793 2 239 1 775 1 456 3 231 949 0 949
- Other liabilities 0 4 692 4 692 0 522 522 0 0 0
Derivative transactions, including 0 391 791 391 791 0 232 714 232 714 0 0 0
- Foreign currency exchange transactions 0 163 894 163 894 0 55 758 55 758 0 0 0
- Fx swap and forward 0 227 897 227 897 0 176 956 176 956 0 0 0
The table presents transactions active as at 30 September 2009, 30 June 2009 and
31 December 2008, including those prior to GE Group`s control.
The value of transactions concluded by Bank BPH SA Group in period from 1 Jan.
2009 to 30 Sept. 2009 with parent companies and other Group GE, and the value of
transactions concluded by Bank BPH SA Group in period from 1 Jan. 2008 to 30
Sept. 2008 with parent companies and other Group GE and UCI was as follows:
PLN`000
Period from 01 Jan. 2009 to 30 Sept. 2009 Period from 01 Jan. 2008 to 30 Sept. 2008
Parent company Other GE Group companies Total % Parent company Other GE/UCI Group companies Total %
share share
Foreign currency exchange transactions 0 5 399 656 5 399 656 25.2 0 5 551 543 5 551 543 5.0
Fx swap and forward 0 1 678 232 1 678 232 7.9 0 27 640 554 27 640 554 25.2
IRS/CIRS 0 0 0 0.0 0 6 350 811 6 350 811 5.8
FRA 0 0 0 0.0 0 740 830 740 830 0.7
Options 0 0 0 0.0 0 450 211 450 211 0.4
Placements 14 287 312 0 14 287 312 66.8 27 806 250 36 308 079 64 114 329 58.5
Deposits 0 1 456 1 456 0.0 8 216 3 415 442 3 423 658 3.1
Securities 28 800 0 28 800 0.1 0 252 000 252 000 0.2
Other receivables 0 0 0 0.0 0 643 213 643 213 0.6
Other liabilities 0 0 0 0.0 0 505 882 505 882 0.5
Total 14 316 112 7 079 344 21 395 456 100.0 27 814 466 81 858 565 109 673 031 100.0
Transactions with the parent company and group members reported for the GE Group
cover the period from 1 January to 30 September 2009 and the period from 18 June
to 30 September 2008 and for the UCI Group cover the period from 1 January to 17
June 2008.
Consultancy agreement - Master Services Agreement
During the first nine months 2009, the Master Services Agreement (MSA) concluded
by and between Bank BPH and GE Consumer Finance International Holdings SAS (GE
Consumer Finance), a General Electric Company subsidiary, was in force and
regulated co-operation between the Bank and GE Consumer Finance.
The purpose of the agreement is to provide support services by GE Consumer
Finance to Bank BPH including: accounting and finance, human resources, risk
management, security, information technology, public relations, internal audit.
The agreement is for a period of five years and will automatically continue
unless terminated by either of the parties on six months notice.
The costs related to the realization of the MSA for first nine months 2009
amounted to PLN 21,166 ths.
18.Significant events after the balance sheet date
Intention to integrate Bank BPH SA with GE Money
Bank BPH Extraordinary General Meeting of, held on 27 October, voted unanimously
in favor of merging the two Banks. On the same day, similar decisions were taken
by shareholders of GE Money Bank.
It is an intention of the Management Boards of the two Banks to complete the
legal merger in Q4 2009. The actual merger dates will depend on when the Banks
will secure all formal approvals necessary.
Efficiency Enhancement Program
As required under article 142 of the Banking law, the occurrence of any loss,
regardless of magnitude, automatically triggers the mandatory adoption and
submission of a formal remedy program to the Financial Supervision Authority. As
BPH has previously reported a loss in Q1 & Q2 2009, the Management and
Supervisory Boards of Bank BPH on October 20, 2009 approved a program, as
required by law, outlining the Bank`s business plans to restore sustainable
profitability and enhance the efficiency of the Bank.
Bank BPH has a very strong capital base and a high capital adequacy ratio
(10.97% at the end of September 2009 for the Bank only and 12.27% consolidated
with BPH TFI), with stable liquidity additionally enhanced by backup credit
facilities made available to it by GE Capital International Holdings
Corporation. Indeed, the measures that were implemented in the first half of
2009 were in part taken to keep the Bank safe during an uncertain economic
period and to continue it progress toward the planned integration with GE Money
Bank by the end of 2009.
The Program is wholly consistent with the 2009-2012 growth strategy, previously
disclosed on July 30, 2009, with the merger of Bank BPH and GE Money Bank by the
end of 2009 as its key component. The Program is shared by both Banks, having
been also approved on October 20, 2009 by the Management and Supervisory Boards
of GE Money Bank.
19.Employee benefits
Short-term employee benefits
The table below presents provisions for short-term employee benefits by
category:
by type
PLN`000
As at 30 Sept. 2009 As at 30 Jun. 2009 As at 31 Dec. 2008
Provision for employee salaries and bonuses 40 356 32 518 62 235
Provision for unused holidays 10 926 15 758 11 498
Provision for salaries` and bonuses` surcharges 11 162 8 558 11 449
Provision for restructuring costs 19 746 28 691 0
Total short-term employee benefits 82 190 85 525 85 182
Long-term employee benefits
Under long-term employee benefits, the Bank recognises liabilities on
retirement, disability pension, and death benefits.
The Bank commenced recognising liabilities for death benefits in 2008.
The Bank recognises the entire actuarial gains and losses in the profit and loss
account.
The table below presents long-term liabilities to employees.
PLN`000
Present value of liabilities As at 30 Sept. 2009 As at 30 Jun. 2009 As at 31 Dec. 2008
retirement benefits 20 272 20 805 23 125
disability pension benefits 112 111 120
death benefits 2 125 2 125 1 868
Total long-term employee benefits 22 509 23 041 25 113
Liabilities recognised in the statement of financial position 22 509 23 041 25 113
The table below shows the reconciliation of opening and closing balances of the
present value of long-term liabilities to employees.
Retirement benefits, disability pension benefits and death benefits
PLN`000
Opening balance (01 Jan. 2009) 25 113
cost of current employment 1 820
interest expense 614
costs of past periods 310
actuarial gains (-)/losses (+) -4 576
benefits paid out (-) -772
Closing balance (30 Sept. 2009) 22 509
The costs of current and past employment as well as actuarial gains/losses are
presented in the `Employment costs` item of the profit and loss account.
Interest expense is presented in the `Interest expense` item.
Long-Term Incentive Plan of General Electric Company (GE)
During the 3rd quarter of 2009, 28,000 new options for shares were allocated to
management board members under the General Electric Company Long-Term Incentive
Program.
In March 2009, the Bank`s managers were included in the General Electric Company
Long-Term Incentive Program. During the 3rd quarter of 2009 7,000 options for
shares were allocated to employees.
As at 30 September 2009, the General Electric Company Long-Term Incentive
Program covered 88,000 options for shares and 2,918 RSU allocated to management
board members and 32,125 options for shares allocated to employees.
20.Risk management
Main risks
For the purpose of risk monitoring, auditing and management, the Bank defines
processes specifically for the following risk categories:
* Market risk (currency, interest rate and share pricing risks);
* Liquidity risk;
* Operating risk;
* Credit risk.
Market risk
The management process and market risk measurement methods did not change as
compared to those described in condensed interim consolidated financial
statements of Bank BPH SA Group for the first half of 2009.
Currency risk
The management process and currency risk measurement methods did not change as
compared to those described in condensed interim consolidated financial
statements of Bank BPH SA Group for the first half of 2009.
The VaR measurement statistics for the currency risk position of Bank BPH for
the period from January to September 2009 (thousand zlotys) were:
Minimum value Maximum value Average value 30 September 2009 31 December 2008
46 411 133 70 69
Interest rate risk
The management process and interest rate risk measurement methods did not change
as compared to those described in condensed interim consolidated financial
statements of Bank BPH SA Group for the first half of 2009.
The exposure of the Bank BPH SA to interest rate risk movements presented in the
form of BpV sensitivity as at 30 September 2009, is shown below (thousand
zlotys):
CCY 0-3M 3M-6M 6M-1Y 1Y-3Y 3Y-5Y 5Y-10Y >10Y Total
EUR 25 6 -5 7 -18 4 -1 18
PLN -41 -25 68 -4 -42 53 -27 -18
USD 3 5 5 8 0 6 -1 26
CHF 4 -3 0 0 -1 -1 -2 -3
The VaR measurement statistics for the interest rate risk of Bank BPH for the
period from January to September 2009 (thousand zlotys) were:
Minimum value Maximum value Average value 30 September 2009 31 December 2008
1 568 5 746 3 610 1 783 2 500
Liquidity risk
Throughout the first nine months of 2009, the Bank maintained a high liquid
assets level and matched the asset and liability maturities. The actual
liquidity gap in millions of zlotys is presented below:
30 September 2009
a`vista up to 1 month 1 - 3 months 3 - 6 months 6 - 12 months 1 - 3 years 3 - 5 years more 5 years
actualised gap 1 235 2 075 -419 -344 -458 582 517 -1 602
cumulative gap 1 235 3 310 2 891 2 547 2 089 2 671 3 188 1 586
Operating risk
The management process and operating risk measurement methods did not change as
compared to those described in condensed interim consolidated financial
statements of Bank BPH SA Group for the first half of 2009.
Credit risk
The management process and credit risk measurement methods did not change as
compared to those described in condensed interim consolidated financial
statements of Bank BPH SA Group for the first half of 2009.
Quality of the credit portfolio
The quality structure of the Bank`s credit portfolio as at 30 September 2009,
split by segments (calculated on the nominal value of exposure) is presented in
the tables below.
[Financial Tables Not Included]
Summarised below is the credit portfolio quality structure measured by days
overdue, divided into business segments as at 30 September 2009:
[Financial Tables Not Included]
Results of the valuation of the portfolio
In the result of IBNR portfolio valuation, coverage of gross exposure by
allowance for incurred but not reported losses allowance, as at September 30,
2009 reached the level presented in the table below:
[Financial Tables Not Included]
The method of measuring credit exposure valuation for which value impairment
triggers have been identified as of September 30, 2009 is presented in the chart
below:
[Financial Tables Not Included]
The table below summarises the coverage of the impaired credit portfolio with
specific provisions at the Bank level and broken down by business segments:
[Financial Tables Not Included]
Derivatives
Transactions entered into by the Bank BPH Group include derivative transactions.
These transactions are concluded for trading purposes and in order to manage
currency risk and interest rate risk.
As at 30 September 2009 outstanding derivative transactions concluded by the
Bank BPH SA Group were as follows:
PLN`000 Nominal value by maturity
< 1 year 1 to 5 years > 5 years Total
Interest rate instruments, incl. 20 012 644 10 635 967 2 014 458 32 663 069
FRA 5 725 000 0 0 5 725 000
IRS 14 164 084 10 609 587 2 014 458 26 788 129
Interest rate options bought 0 13 190 0 13 190
Interest rate options sold 0 13 190 0 13 190
Other interest rate instruments 123 560 0 0 123 560
Currency instruments, incl. 8 333 028 4 600 411 57 312 12 990 751
FX forwards 808 706 95 865 0 904 571
FX swaps 2 718 346 12 668 0 2 731 014
CIRS 4 234 313 4 432 762 57 312 8 724 387
Currency options bought 263 362 38 003 0 301 365
Currency options sold 308 301 21 113 0 329 414
Equity instruments, incl. 1 216 170 1 710 166 0 2 926 336
Equity options bought 608 085 855 083 0 1 463 168
Equity options sold 608 085 855 083 0 1 463 168
Other instruments, incl. 0 44 232 0 44 232
Commodity options bought 0 22 116 0 22 116
Commodity options sold 0 22 116 0 22 116
TOTAL 29 561 842 16 990 776 2 071 770 48 624 388
The positive and negative mark-to-market of outstanding derivative transactions
as at September 30, 2009 was as follows:
PLN`000 Positive mark-to-market as at 30 Sept. 2009 Negative mark-to-market as at 30 Sept. 2009
Interest rate instruments, incl. 459 409 369 094
FRA 4 580 2 635
IRS 454 757 366 393
Interest rate options bought 16 0
Interest rate options sold 0 16
Other interest rate instruments 56 50
Currency instruments, incl. 216 357 290 504
FX forwards 87 209 9 779
FX swaps 67 947 27 749
CIRS 35 096 208 667
Currency options bought 26 105 3 432
Currency options sold 0 40 877
Equity instruments, incl. 27 997 27 997
Equity options bought 27 997 0
Equity options sold 0 27 997
Other instruments, incl. 2 317 2 317
Commodity options bought 2 317 0
Commodity options sold 0 2 317
TOTAL 706 080 689 912
Comments to the Abbreviated Mid-Year Consolidated Report of the Bank BPH Group for Q3 2009
Comments to For 3rd Quarter
Abbreviated Mid-Year 2009
Consolidated Report
of Bank BPH Group
Contents
1.Financial and operational highlights of Bank BPH SA Group
2.Policies applied in the Abbreviated Mid-Year Consolidated Financial Statement
and their changes
3.Macroeconomic conditions and market situation in Q3 2009
4.BPH stock performance
5.BPH Group operations
6.BPH rating
7.BPH Group Income Statement
7.1. Net interest income
7.2. Impairment charges
7.3. Net fee and commission income
7.4. Net trading result and revaluation
7.5. General administrative expenses
7.6. Asset impairment charges
7.7. Result on other operating income and expenses
7.8. Consolidated quarterly Income Statement
8.BPH Group statement of financial position
8.1. Assets
8.2 Loans and advances
8.3 Liabilities
9.Business segmentation
10.Important actions of BPH Group and list of key developments
11.Important details on the Bank`s human resources, assets and financial
standing and its financial performance
11.1. Employment restructuring
11.2. Real-estate acquisition
11.3. Changes in the Bank`s governing bodies
12.Developments after the quarterly report date with potential impact on future
financial performance
13.Factors affecting the Group`s future performance
14.BPH ownership
14.1. Ownership structure of BPH share capital
14.2. Intention to integrate Bank BPH with GE Money Bank
15.BPH shares held by the Management and Supervisory Boards` members
16.New proceedings before courts and other public administration bodies
17.Management Board`s position on actual performance against published annual
forecasts
18.Additional information
18.1. Seasonality or operational cycles
18.2. Dividend for 2008
18.3. Dividend received
1.Financial and operational highlights of Bank BPH SA Group
Items
Income Statement (PLN `000) 3Qs `09 3Qs `08 Change
- Net interest income 283 808 354 393 -19.9%
- Net fee and commission income 315 856 271 699 +16.3%
- Dividends 6 0 -
- Net trading income and revaluation 59 096 74 896 -21.1%
- Net income from investments -1 539 1 304 -218.0%
- Total net revenue¹ 657 227 702 292 -6.4%
- Impairment charges -87 536 -15 776 +454.9%
- General administrative expenses -666 007 -599 876 +11.0%
- Profit/ loss before income tax -82 438 164 081 -
- Profit/ loss for the period attributable to equity holders -63 617 111 344 -
Statement of financial position (PLN `000) Sept. 30, 2009 Dec. 31, 2008 Change
- Total assets 15 270 469 15 826 026 -3.5%
- Net amounts due from customers² 9 811 936 8 888 736 +10.4%
- Risk weighted assets 9 627 375 9 270 775 +3.9%
- Amounts due to customers 9 929 730 10 271 713 -3.3%
- Shareholders' funds 1 582 451 1 658 836 -4.6%
Ratios (%) 3Qs `09 2008 Change
- Return on equity before tax (ROE pre-tax) -7.80 11.17 -
- Return on equity after tax (ROE net) -6.02 7.29 -
- Return on assets (ROA net) -0.82 0.88 -
- Interest margin on total assets 2.82 3.65 -0,82pp.
- Cost income ratio (CIR) 99.24 80.55 +18.69pp.
- Capital adequacy ratio (CAR) 12.27 12.30 -0.03pp.
- Loans/ Deposits 98.81 86.54 +12.27pp.
- Share of impaired loans 5.9 4.2 +1.7pp.
Stock exchange data Sept. 30, 2009 December 31, 2008 Change
Share price (in PLN) 64.,2 35.,2 82%
Number of shares 28 716 230 28 716 230 0%
Market capitalization (in PLN MM) 1 843 561 1 010 811 82%
EPS (PLN)³ - 3.96 -
Book value per share (PLN) 55.11 57.77 -4.6%
P/E - 8.89 -
P/BV 1.2 0.61 100%
¹/ Net interest income + Net F&C +Dividends + Net trading income and revaluation
+ Net income from investments; ²/ excluding impairment charges; ³/ Description
of each ratio is defined in the glossary at the end of this Report
22.3MM ZLOTYS NET PROFIT IN Q3 2009
UNANIMOUS SHAREHOLDER APPROVAL FOR THE BANK BPH AND GE MONEY BANK MERGER
* Q3 gross profit of 16.2 million zlotys, net profit to shareholders of 22.3
million zlotys; after the three quarters, the net loss is down to 63.6 million
zlotys;
* Self-financed business growth: assets are up by 22%, and customer deposits by
23% y/y;
* Strong capital base with a 12.27% consolidated capital adequacy ratio;
* Provisions against credit losses rise by 44 million zlotys in Q3 to 87.5
million zlotys at the end of Sept. 2009;
* Merger approval by Bank BPH`s Extraordinary General Meeting - a milestone to
legal and operational merger; further growth of cross-sales between Bank BPH and
GE Money Bank.
In Q3, Bank BPH (hereunder referred to as `Bank` or `BPH`) visibly improved its
financial performance. The consolidated net profit to shareholders stood at 22.3
million zlotys after losses of 33.7 million zlotys and 52.1 million zlotys in Q1
and Q2, respectively. This improvement was not only implied by the revenue
performance, but also strong cost actions taken in 1H of this year, which -
excluding the restructuring charges of 44 million zlotys - dropped 3% q/q.
Total net revenue growth of 15% q/q (or 30 million) to 232 million zlotys was
driven by:
* A 6.1% q/q growth of the net interest income to 99.2 million zlotys in Q3
through a sustained squeeze on the interest expenses reduced by 7.4%;
* A growth of the net trading income from 1.3 to 18.8 million zlotys, mainly
thanks to a positive CIRS position;
* A growth of net fees and commissions` income by 2 million zlotys (113.1
million zlotys in Q3);
Operating expenses dropped by 21.4% q/q to 183.5 million zlotys in Q3.
One-off tax refund had a positive impact of 10.3 million zlotys on gross profit
as well as on current tax liabilities.
Looking at the year-to-date results, the Bank remained in the red. On the
positive side its cumulative net loss shrank from 85.9 million zlotys after Q2
to 63.6 million zlotys in September 2009. This improvement was a net effect of
the earlier restructuring decisions, which reduced the Bank`s cost base, and of
the continued macroeconomic difficulties. The general economic slowdown affected
the banking sector primarily through a deteriorating loan portfolio quality and
increasing financing costs.
The Bank generated 657.2 million zlotys of total net revenue during the first
three quarters, which was 6.4% less than at the same point of 2008. The lower
performance was primarily due to the net interest income figure of 283.8 million
zlotys, which fell short of the previous year`s figure of 354.4 million zlotys
by 70.6 million zlotys, or 19.9%. The net trading income and revaluation
position were also below the previous year`s performance at 59.1 million zlotys
after a 21.1% drop y/y. These setbacks could not be fully offset by the 44.2
million zlotys higher net fees and commissions income, which went up by 16.3%
from 271.7 million zlotys in Q3 2008 to 315.9 million zlotys
Despite an above-par loan book quality in comparison to the sector, the Bank
built up loan loss provisions. At the end of September 2009 they equaled 87.5
million zlotys after a 450% growth q/q. The higher provisioning may have weighed
down the Bank`s profit figure, but it reflected a conservative risk management
policy and provided extra security at a time of macroeconomic slowdown.
The Bank continued to grow its business in strategic target market segments.
This growth was the most visible in corporate banking and in the business
customer segment. The customers appreciated our innovative products, especially
in transactional banking using modern Internet platforms: BusinessNet,
DealingNetand the TransKasa POS network. In a notable trend of the retail
customer segment we recorded a further increase in the number of accounts served
via on-line and telephone channels.
Selected operational data
Items 30 September 2009 31 December 2008 Change (%)
Outlets 212 248 -14.5%
Partner outlets 1829 125 45.6%
Own ATMs¹ 261 266 -1.9%
Employment (in FTEs)² 3 975 4 265 -6.8%
Retail Customers (in ths), including: 778 761,0 2.2%
- Private Individuals (PI) 683 678,3 0.6%
- Small Enterprises (SE) 95 82,7 14.6%
Corporate Clients 1 643 1 196 37.4%
ROR accounts for PI (in ths) 477 461 3.5%
Harmonium packages for SE (in ths) 85 73 16.4%
Internet banking for PI & SE (in ths) 320 285 12.3%
Call Center for PI & SE (in ths) 482 445 8.3%
Retail banking cards for PI & SE (in ths), including: 511,7 515.7 -0.8%
- Credit cards (active) 83.3 88.3 -5.7%
- Debit cards 419.1 417.0 0.5%
- Charge cards 9.7 10.4 -6.7%
¹/ BPH Customers have free of charge access to Euronet machines; ²/ without
unpaid, maternity and child care leaves
A considerable progress was also made towards a legal and operational merger of
BPH and GE Money Bank (the `Banks`). On 27 October 2009, the Bank`s shareholders
unanimously approved the Merger Plan thus paving the way to the integration of
the Banks on the terms and conditions therein.
The Banks expanded their business cooperation and improved the cross-selling. As
at the end of September, the BPH network sold 33 thousand cash loans offered by
GE Money Bank (`GEMB`) worth a combined total of 422 million zlotys. GEMB, in
turn, used its outlets to open nearly 9 thousand of BPH`s checking accounts for
individuals and signed 174 loan contracts with Small and Medium Sized
Enterprises (SME).
2.Policies applied in the Abbreviated Mid-Year Consolidated Financial Statement
and their changes
Principles adopted in the making of this Abbreviated Mid-Year Consolidated
Financial Statement of the Bank BPH Group for Q3 2009 are provided in the Notes
to this Report.
The Abbreviated Mid-Year Consolidated Financial Statement of the Bank BPH Group
for Q3 2009 comply with the same accounting policies and calculation
methodologies, as in the latest Annual Financial Statement and Consolidated
Financial Statement for 2008 and in the Abbreviated Mid-Year Consolidated
Financial Statement of the Bank BPH Group for the 1H of 2009.
On 17 June 2008, BPH joined the American corporation General Electric (`GE`),
which holds 71.0% of the Bank`s stock via GE Money Bank and DRB Holdings B.V.,
GE`s subsidiaries.
Bank BPH is the parent company of its Bank BPH Group and consolidates its
statements with its wholly owned subsidiary BPH PBK Zarządzanie Funduszami Sp. z
o.o., which itself is a majority shareholder (with a 50.14% stake) in BPH
Towarzystwo Funduszy Inwestycyjnych SA (`BPH TFI`).
3.Macroeconomic conditions and market situation in Q3 2009
According to estimates based on published monthly data Poland`s Q3 gross
domestic product (GDP) was 1.6% higher in real terms when compared to Q3 2008.
The slowdown rate of the domestic demand was reduced from -2.1% in Q2 to
-0.3%. The main positive contribution to the GDP growth rate was, according to
forecasts, provided by the net exports (1.9 percentage point) and household
consumption (1.2 pp.). GDP growth probably continued to suffer from the levels
of inventories (even if they were lower than in the previous two quarters) and
from low investments.
Consumer prices increased by 3.5%, in comparison to Q3 2008, as a combined
result of the following price movements:
* Food and non-alcoholic beverages up by 4.0% y/y;
* Alcoholic beverages and tobacco up by 10.6% y/y;
* Housing rent and bills up by 8.0% y/y;
* Education charges up by 3.1% y/y;
* Energy carriers up by o 9.6% y/y;
* Transport down by 1.5% y/y and footwear and apparel by 7.9% y/y.
Industrial sales` prices rose by 2.2% y/y. The largest increases were observed
in electricity, gas, steam and hot water utilities (+14.0% y/y) and in mining
(+11.1% y/y).
The Monetary Policy Council (RPP) left the Central Bank rates unchanged. At the
end of September, the reference rate stood at 3.5%, the rediscount rate at
3.75%, Lombard rate at 5.0% and the deposit rate at 2.0% pa., which all
represented the same levels as in Q2.
As at the end of September, the M3 aggregate cash supply rose by 9.7% y/y. The
greatest contributors to this figure were the increased household deposits,
which were up by 19.8% y/y. This substantial growth owed much to growth rates
observed at the beginning of the year, as the nominal volume of the deposit base
remained unchanged for several recent months. This is related to a considerable
slowdown in the income growth rates and to a gradual change in the preferred
savings products, as the falling interest rates encourage a move towards
alternative investments. Corporate deposits rose by 3.6% y/y in September. The
stabilization of the corporate deposit growth rate, at the annual scale, is a
result of a lower operational turnover combined with lower investment
expenditure.
The household borrowing growth rate fell to 26.2% y/y in September while
corporate credit rose by 6.5% y/y. The continued high growth rate in households
is largely an effect of the exchange rates whereby the weakening zloty inflates
the zloty value of FX loans. When adjusted for the exchange rate effect the
growth rate of borrowings suggests a slowdown in lending. In the corporate
sector the recent months were marked by a gradual shrinking of the credit
portfolio, as companies paid back more than they borrowed, which may result in a
negative growth rate at the end of the year.
Household and corporate debt growth (% y/y)
[Financial Tables Not Included]
1.BPH1 stock performance
The third quarter was the second quarter in a row when the main indices in
Warsaw (WSE) gained ground. A growing risk appetite and an increasing popularity
of investment funds pushed indices up in Q3. Governmental programs boosting
economic growth helped stabilize macroeconomic data and improved market
expectations.
Between the first trading day in July and the last day of September, the Warsaw
Stock Index (WIG) gained 22.46% and was followed by positive performances of:
WIG20, mWIG40 and sWIG80 at 16.42%, 27.18% and 20.69%, respectively. The banking
sector outperformed all these indices and its WIG-Banks index rose by 37.63%
during the period.
The main reason for a global stock market upturn, including in Warsaw, was an
investors` expectation of better macroeconomic performance. The actual published
data did not warrant the scale of growth on the stock markets. Substantial cash
reserves held by global investment funds and the positive climate surrounding
the capital markets encouraged investors to buy into share instruments. In spite
of its clearly more stable macroeconomics than in other countries of the region,
Poland remained to be perceived through the plight of the Baltic economies.
September was the seventh consecutive month of good results among domestic
investment funds. At the end of the quarter, their assets under management had
risen from 77.2 billion zlotys in Q2 to 88.2 billion zlotys, which represented a
14.25% growth q/q.
During Q3, the Bank`s stock gained 58.3% and outperformed all the main indices
(WIG, WIG20, mWIG40 and sWIG80), including the sector`s WIG-Banks index. On the
first trading day of the quarter, on 1 July, BPH stock closed at 40.55 zlotys
per share. Soon after, the stock posted the quarter`s minimum closing price of
40 zlotys on 10 and 13 July. For the subsequent four weeks, the Bank was gaining
at a hyperbolical rate and posted the quarterly maximum of 75 zlotys at the
close of 11 August. The stock was then slightly corrected and went into a
horizontal trend for about five weeks. The quarterly share turnover reached
809,270 shares, down by 23.5% from the previous quarter. The average daily
trading was 12,262 shares, which went for the average price of 58.9 zlotys per
share.
BPH stock and indices: WIG, WIG20, mWIG40 and WIG-Banks during Q3 (standardized
charts)
[Financial Tables Not Included]
1 Bank BPH SA has its shares listed on the main floor of the WSE, in the
continuous quoting system. At the end of Q3 2009 they belonged to WIG, mWIG40
and WIG-Banki (WIG-Banks) indices. The Bank`s Global Depository Receipts (GDRs)
are also listed on the London Stock Exchange.
1.BPH Group operations
Retail Banking Division (Retail Banking)
The Retail Banking Division was consistently rebuilding its customer base and
adding new products and services. At the end of the period, the Bank served
777.5 thousand retail customers, including 682.7 thousand private individuals
and 94.8 thousand small and medium sized companies. This represented a 1.6%
growth from Q2, when the overall number stood at 765.1 thousand. The greatest
increase was recorded in the business customer segment where the number rose by
3.6% during the quarter and by 21.7% over the year. The Bank has now 16.9
thousand more business customers than the year before.
The rapid expansion of this customer segment business was driven by new
additions to our transactional banking products offered on Internet platforms. A
new comprehensive integrated current account, known as Biznes Symetria Pro,
offers full control of the customer`s finance in the BusinessNet system, a
competitively priced on-linecurrency exchange via the DealingNet, cheap bank
transfers via the TransPłace service and a convenient cash access with
MasterCard Business Access debit cards. Q3 saw a roll-out of TradeNet, a new
transactional banking product for SMEs. Our marketing campaign promoting the new
company account "Unearthly business account" was a success boosting the number
of accounts and deposits. At the end of September, the Bank administrated 112
thousand deposit accounts of SMEs, 85 thousand of the Harmonium packages and 22
thousand of credit accounts.
The segment of private individual customers also saw an increase by 9.2 thousand
bringing the overall number from 673.5 thousand in Q2 to 682.7 thousand
customers at the end of September. The Bank had in this group of customers` 740
thousand deposit accounts, 477 thousand of checking accounts and 342 thousand
credit accounts, including 290 thousand cash loans and 51 thousand mortgages.
The Bank concentrated on expanding its deposit and investment banking offers. We
introduced a new Sezam Oszczędzam account featuring daily capitalization of
interest and a reasonable popularity among customers. The Bank was gradually
climbing its way up in the investment fund market and our BPH TFI grew the AUM
from 3.0 billion zlotys in June to 3.3 billion zlotys in September. This level
of assets represents a 3.8% market share.
Our Brokerage Office brought the overall number of investment accounts to 34.6
thousands, up by 10.9% in comparison to the year before. More than 35% of these
accounts (i.e. 12.3 thousand) are handled via the Internet.
The quarter saw the number of checking accounts go up by 6 thousand to 477
thousand and the number of customers with Sez@m on-line accounts increased by 10
thousand to 320 thousand. During the same period, the number of Call Centre
contracts with customers rose by 11 thousand to 482 thousand.
The overall volume of retail deposits is 400 million zlotys higher than the
credit portfolio. Retail deposits grew during the year by 18% to 8.7 billion
zlotys, but still fell short of the December 2008 figure by 800 million zlotys.
The retail`s credit portfolio closed the quarter at 8.3 billion zlotys after
growing at 22% y/y and by 1% q/q.
Private mortgages reached 4.24 billion zlotys and were 14% higher than the year
before. The Polish zloty-denominated mortgages were growing at 8% y/y, while
FX-denominated mortgages rose at a rate of 14% y/y, but that was mainly due to
the falling zloty value. No new FX mortgages had been granted since July 2006.
The Bank`s mortgage lending portfolio continued to excel in quality at just 2.6%
share of impaired loans.
Corporate Banking and Real-Estate Finance (Corporate Banking)
BPH successfully reconstructed its full range of products and services for
companies and offered competitive terms and conditions. This effort was
instrumental in attracting a consistently growing base of corporate customers,
which at the end of the period, reached 1,643 companies, or 170 more than in
June 2009.
Our corporate customers are served at 11 Corporate Centers in Warsaw (2) and
Szczecin, Gdansk, Krakow, Katowice, Wroclaw, Rzeszow, Lodz, Bydgoszcz and
Poznan.
The Bank recorded further increase in the transaction volume and the number of
customers using transactional banking. The BusinessNetsystem handles 1,360 large
corporate customers and 2,200 business customers. The TransKasa POS network is
recording ca. 200 thousand transactions worth 1.5 million zlotys per month. The
volume of transactions handled by the TransCash system topped 1 billion zlotys
in July. A similar performance is displayed by the TransCollect system, which
exceeded 2 million zlotys in July.
Working with MasterCard we rolled out a new version of our card transaction
management system Smartdata.gen2. This is a web application to organize,
consolidate and analyze transactions performed using corporate MasterCard cards.
The Bank has successfully deployed its self-financing strategy, as evidenced by
the volume and growth rate of corporate deposits compared with their borrowing.
The volume of loans granted at the end of the period stood at 1,590.6 million
zlotys (up by 7.9% q/q), and the volume of deposits attracted from the segment
rose by 8% to 1,573 million zlotys.
International Markets Division (INM)
BPH is consistently expanding its treasury offer for all groups of customers
served.
Very good sales results were achieved by the DealingNet system, which handled
on-line currency purchasing. During the period, the number of customers using
the platform rose by 40%, which attested to its sales success and a high
popularity among the customers.
During the first three quarters of 2009, INM generated 60.8 million zlotys of
net income from sales and treasury products and services which represented a 69%
growth y/y.
INM successfully placed four new issues of deposit certificates based on
international and Polish stock markets and offering 100% return of principal.
2.BPH rating
Current rating of BPH allocated by Moody`s Investors Service on 21 August 2008
is as follows:
Bank`s rating
BPH Long/ Short term Long/Short term Outlook BFSR
foreign currency deposits local currency deposits
Moody`s Baa2* / Prime-2 Baa2* / Prime-2 - D-*
*/ Under review for possible upgrade
On 3 November 2009 the Rating Agency Moody`s Investors Service maintained on
review for possible upgrade the D- Bank`s financial strength rating (BFSR) and
the Baa2 long-term bank deposit ratings of BPH. This follows the fact that the
BPH Extraordinary General Meeting unanimously approved the merger between Bank
BPH and GE Money Bank Polska. The Agency adds that the final approval for the
acquisition from the Polish authorities and the legal merger is expected to take
place before the end of this year.
Following this announcement Moody's considers that the original assumptions of
placing these ratings on review are still valid (please refer to the press
release `Moody's downgrades Bank BPH to Baa2; direction of the rating review
changed to possible upgrade`, dated 21 August 2008). Moody's expects to conclude
this review as soon as pro-forma combined financials are available and the legal
side of the merger process is finalized.
As stated in the previous press release, Moody's considers the overall outcome
of the merger to be positive for the following reasons: a) the combined entity
is expected to have greater franchise value which is an important competitive
factor given current trends in the Polish banking market; b) the corporate
profile of Bank BPH and consumer orientation of GE Money Bank will enable the
merged entity to position itself as universal bank; and c) there will be a
strong parental support from a highly rated parent.
On the other hand, this positive impact is likely to be partly offset by the
negative trends in the asset quality and risk weighted profitability. In the
current economic climate Moody`s expects further pressure on the non-performing
loans and post-provision profitability. Moody's also notes that BPH's
performance already came under pressure in H1, 2009 when the Bank announced net
losses for the period. However, the Agency notes that these losses were partly
due to one-off restructuring costs and the core income remained relatively
resilient in line with general market trends.
The review of the final rating will take into account these trends on the
financial fundamentals of the merged entity in the context of the current
operating environment.`
3.BPH Group Income Statement
7.1.Net interest income
Net interest income (PLN`000)
Q3 2009 Q3 2008 Change (1/2) 3Qs 2009 3Qs 2008 Change (5/6)
PLN `000 % PLN `000 %
1 2 3 4 5 6 7 8
Interest income 190 962 201 328 -10 366 -5.1 602 281 572 856 29 425 5.1
Interest expense -91 733 -80 069 -11 664 14.6 -318 305 -218 509 -99 796 45.7
Net income from leasing business -56 26 -82 -315.4 -168 46 -214 -465.2
Net interest income 99 173 121 285 -22 112 -18.2 283 808 354 393 -70 585 -19.9
During Q3, the Group generated 99,173 thousand zlotys in net interest income,
which was 18.2% less than the year before (i.e. by 22,112 thousand zlotys). The
year-to-date result stood at 283,808 thousand zlotys, or 19.9% less than the
year before (i.e. by 70,585 thousand zlotys). An improved credit margin and
growing lending volumes boosted the interest income by 5% y/y and partly offset
an adverse impact of the high cost of credit financing on the market (especially
in Q4 2008).
7.2.Impairment charges
Impairment charges (PLN`000)
Odpisy Q3 2009 Q3 2008 Change (1/2) 3Qs 2009 3Qs 2008 Change (5/6)
PLN `000 % PLN `000 %
1 2 3 4 5 6 7 8
Increase -71 121 -37 680 -33 441 88.8 -173 778 -107 420 -66 358 61.8
charge for the value of loans and advances -63 120 -32 076 -31 044 96.8 -157 335 -90 596 66 739 73.7
charge for incurred but unreported losses on loans and advances (net IBNR) -8 001 -4 816 -3 185 66.1 -16 443 -12 788 -3 655 28.6
provisions for contingent liabilities 0 -788 788 -100.0 0 -4 036 4 036 -100.0
Decrease 27 066 38 903 -11 837 -30.4 86 242 91 644 -5 402 -5.9
release for the value of loans and advances 21 962 23 217 -1 255 -5.4 59 790 62 578 -2 788 -4.5
recoveries from written-off receivables 5 946 15 686 -9 740 -62.1 26 249 29 039 -2 790 -9.6
provisions for contingent liabilities -842 0 -842 - 203 27 176 651.9
Impairment charges -44 055 1 223 45 278 3 702.2 -87 536 -15 776 71 760 454.9
The Bank closed the quarter with a negative balance of impairment provisions at
44,055 thousand zlotys. After the first three quarters, these provisions stood
at 87,536 thousand zlotys, which represents a 454.9% growth, as compared to the
same time of the previous year. Provisioning was still vulnerable to the
difficult macroeconomic environment reflected in the falling quality of the
credit portfolio across the Polish banking sector.
7.3.Net fee and commission income
Breakdown of net fee and commission income (PLN`000)
Odpisy Q3 2009 Q3 2008 Change (1/2) 3Qs 2009 3Qs 2008 Change (5/6)
PLN `000 % PLN `000 %
1 2 3 4 5 6 7 8
Securities and custody business 4 400 3 511 889 25.3 12 817 8 320 4 497 54.1
Loans and advances 21 922 6 450 15 472 239.9 56 594 20 053 36 541 182.2
Domestic payments 38 288 35 988 2 300 6.4 109 115 100 482 8 633 8.6
International payments 3 960 3 865 95 2.5 11 413 11 626 -213 -1.8
Net transactional exchange rate position 18 876 12 315 6 561 53.3 55 523 33 195 22 328 67.3
Investment fund management and distribution of participation units 22 439 22 245 194 0.9 60 818 96 776 -35 958 -37.2
Other 3 182 6 378 -3 196 -50.1 9 576 1 247 8 329 667.9
Net fee and commission income 113 067 90 752 22 315 24.6 315 856 271 699 44 157 16.3
The current period`s net fee and commission income of 113,067 thousand zlotys is
24.6% higher (i.e. by 22,315 thousand zlotys) than in Q3 2008 and 16.3% higher
(i.e. by 44,157 thousand zlotys) than at the beginning of the year. An
intensified credit campaign generated 36,541 thousand zlotys y/y more in the net
fee and commission income on loans, representing a 182.2% growth rate. This
result was additionally boosted by income from intermediary services involving
selling GEMB loans (27.8 million zlotys). A considerable impact on the final
fees and commissions` figure was made by a position on transactional exchanged
rate differences (greater by 67.3%, i.e. by 22,328 thousand zlotys). Other
components contributing to the net fee and commission income included revenues
from:
* Domestic payments (+8.6%, i.e. by 8,633 thousand zlotys from added checking
accounts); and
* Securities and custodian business, which grew by 54.1% (i.e. 4,497 thousand
zlotys).
Commissions from investment fund management and from the distribution of
participation units dropped during the year by 37.2% y/y (i.e. by 35,958
thousand zlotys), as a result of a much poorer condition of the stock market.
BPH TFI generated 33.6 million zlotys in fee and commission income, which was
24.6 million zlotys less than the year before and had a negative impact of the
Group`s overall fee and commission result.
The Q3 net fee and commission income covered 61.6% of the Group`s operating
costs. During the same period of the last year, the ratio was 44.9% (2009
year-to-date 47.4% vs. 45.3% in 2008).
7.4.Net trading result and revaluation
Net trading income and revaluation (PLN`000)
Q3 2009 Q3 2008 Change (1/2) Q3 2009 3Qs 2008 Change (5/6)
PLN `000 % PLN `000 %
1 2 3 4 5 6 7 8
Result on fixed income instruments -2 206 250 -2 456 -982.4 -6 474 -2 668 -3 806 -142.7
Exchange gain 20 969 28 270 -7 301 -25.8 65 570 77 564 -11 994 -15.5
Net trading income and revaluation 18 763 28 520 -9 757 -34.2 59 096 74 896 -15 800 -21.1
The Q3 trading result stood at 18,763 thousand zlotys, while after the first
nine months of the year it stood at 59,096 thousand zlotys. Compared to similar
periods of 2008 the current figures were lower by 34.2% and 21.1%, respectively.
This was a result of a lower net exchange position (by 25.8% and 15.5%
respectively) and of the net result on interest instruments (by 982.4% and
142.7%, respectively).
7.5.General administrative expenses
Changes in general administrative expenses (PLN`000)
Q3 2009 Q3 2008 Change (1/2) Q3 2009 3Qs 2008 Change (5/6)
PLN `000 % PLN `000 %
1 2 3 4 5 6 7 8
Salaries and employee benefits -89 365 -105 280 -15 915 -15.1 -351 681 -298 718 52 963 17.7
Building maintenance and rents -27 987 -24 592 3 395 13.8 -91 654 -68 893 22 761 33.0
Other expenses -45 258 -45 954 -696 -1.5 -150 985 -138 595 12 390 8.9
Depreciation -20 986 -26 175 -5 189 -19.8 -71 687 -93 670 -21 983 -23.5
TOTAL -183 596 -202 001 -18 405 -9.1 -666 007 -599 876 66 131 11.0
When compared to Q3 2008, the costs of operation and general administration fell
by 9.1% (i.e. by 18,405 thousand zlotys) to 183,596 thousand zlotys. The same
costs on a year-to-date basis stood at 666,007 thousand zlotys after an increase
by 66,131 thousand zlotys y/y, or by 11%.
After the first three quarters of 2009, the Group`s salary expenditure increased
by 17.7% y/y (i.e. by 52,963 thousand zlotys) to 351,681 thousand zlotys. This
was mainly caused by the cost of severance packages and of protective measures,
at 62.4 million zlotys. It is worthwhile noting that the present quarter`s
salary expenses dropped 15.1% in comparison to the same period of 2008.
During the quarter, the costs of rent and maintenance of buildings grew by 13.8%
in comparison to the same period of the last year and by 33% y/y.
Depreciation fell by 23.5% y/y to 72 million zlotys, as a result of a
liquidation of tangible assets of 35 closed branches.
Other costs fell by 1.5% in comparison to Q3 2008.
7.6.Asset impairment charges
The Bank made 5,242 thousand zlotys in impairment charges on tangible assets
during the first nine months of 2009.
7.7.Result on other operating income and expenses
Other operating income and expenses (PLN`000)
Q3 2009 Q3 2008 Change (1/2) Q3 2009 3Qs 2008 Change (5/6)
PLN `000 % PLN `000 %
1 2 3 4 5 6 7 8
Other operating income from 14 831 13 839 992 7.2 25 556 101 824 -76 268 -74.9
Sale or liquidation of fixed assets and assets for sale 91 -119 210 176.5 147 19 396 -19 249 -99.2
Litigations (recoveries, damages received, etc.) 1 563 637 926 145.4 4 994 929 4 065 437.6
Other 1 462 1 838 -376 -20.5 5 290 5 389 -99 -1.8
Other operating expenses for 11 715 11 483 232 2.0 15 125 76 110 -60 985 -80.1
Sale or liquidation of fixed assets and assets for sale -2 657 -3 905 1 248 -32.0 -11 678 -24 383 12 705 -52.1
Charges for provision and impairment -36 0 -36 - -39 0 -39 -
Litigation costs 27 829 -802 -96.7 -1 890 -9 716 7 826 -80.5
External collection costs -604 -2 377 1 773 -74.6 -3 699 -6 445 2 746 -42.6
Other 0 -23 23 -100.0 0 -767 767 -100.0
Litigations (recoveries, damages received, etc.) -2 044 -2 334 290 -12.4 -6 050 -7 455 1 405 -18.8
TOTAL 12 174 9 934 2 240 22.5 13 878 77 441 -63 563 -82.1
In Q3, the Group generated 12,174 thousand zlotys in the result on other income
and expenses, which was 2,240 thousand zlotys more than in the same period of
the last year. The year-to-date figure was 13,878 thousand zlotys, which was
63,563 thousand zlotys less y/y. During the period, other operating income
included a 10,285 thousand zlotys refund of an income tax item. During the first
nine months of the year, the dominating component of `Other operating income`
was a combined amount of 55.4 million zlotys in income from a migration
agreement with Pekao and from an outsourcing agreement for services performed to
Pekao. This income is no longer continued in 2009, as the last of the agreements
(outsourcing) expired in May 2008. Additionally, other operating income of 2008
included a positive net result of a sale of a building in Marynarska Street,
Warsaw, which yielded a net amount of 19.4 million zlotys in Q2 2008.
7.8.Consolidated quarterly Income Statement
The table below summarizes the BPH Group quarterly data.
Consolidated quarterly Income Statement (in PLN`000)
Q2 2009 Q3 2009 Q2 2008 Q3 2008
Interest income 192 595 190 962 184 922 201 479
Interest expenses -99 104 -91 789 -67 120 -80 194
Net interest income 93 491 99 173 117 802 121 285
Impairment charges -26 978 -44 055 -9 283 1 223
Net interest income incl. impairment charges 66 513 55 118 108 519 122 508
Fee and commission income 136 159 141 528 118 831 122 333
Fee and commission expenses -25 117 -28 461 -23 738 -31 581
Net fee and commission income 111 042 113 067 95 093 90 752
Dividends 3 3 0 0
Net trading income and revaluation 1 347 18 763 13 993 28 520
Net income from investments -3 630 712 -1 476 1 773
General administrative expenses -233 700 -183 596 -205 431 -202 001
Result on other income and expenses 51 12 174 34 136 9 934
Profit (loss) before income tax -58 374 16 241 44 834 51 486
Income tax expense 8 325 8 918 -9 904 -10 876
Profit (loss) for the period -50 049 25 159 34 930 40 610
1. Attributable to equity holders of the Bank -52 154 22 320 28 017 36 274
2. Attributable to minority interest 2 105 2 839 6 913 4 336
Change in selected items of the consolidated profit and loss account between Q3
and Q2 2009
In Q3 the Bank generated 22,320 thousand zlotys in net profits compared to a
loss of 52,154 thousand zlotys in Q2.
The Bank generated 99,173 thousand zlotys of net interest income, which was 6.1%
(5,682 thousand zlotys) more than in Q2. The main reason for this good result
was a 7.4% drop in interest costs owing to lower costs of customer deposits. The
interest revenues were only slightly lower, by 0.8%, primarily due to lower
revenues from interbank deposits.
The quality of the credit ³portfolio deteriorated by 0.6 pp., in reflection of
the difficult macroeconomic environment. The Bank had to respond by making
higher Q3 impairment charges of 44,055 thousand zlotys, which was 63.3% (17,077
thousand zlotys) more than in Q2.
The net fee and commission income had improved in comparison to Q2 by 1.8%
(2,025 thousand zlotys) reaching 113 067 thousand zlotys. This was primarily
owed to higher commissions on: (i) loans and advances - paid by GEMB in return
for BPH`s sales of their loan agreements (10.8 million zlotys in Q3 and 12.8
million zlotys in Q2), and (ii) domestic payments.
The Bank generated 18,763 thousand zlotys in the Q3 trading income, thus adding
1,347 thousand zlotys to the Q2 figure. The main driver of this result was a
positive pricing of the CIRS position.
In comparison to Q2 the cost of operation and general administration fell by
21.4% (i.e. by 50,104 thousand zlotys) to 183,596 thousand zlotys. The employee
cost was reduced by 27,895 thousand zlotys to 89,365 thousand zlotys, due to the
layoffs (434 FTEs less than in June) and accruals released. Also the building
rent and maintenance costs fell by 15.5% (i.e. 5,122 thousand zlotys) following
the closure of 35 branches. As a result, our depreciation costs fell by 22.1% to
20,986 thousand zlotys.
The result on other income and expenses was 12,174 thousand zlotys in comparison
to 51 thousand zlotys in Q2. Much of this result is due to a single item of tax
recovery worth 10,285 thousand zlotys.
4.BPH Group statement of financial position
8.1.Assets
The Group recorded increases in: `Amounts due from customers` by 923.2 million
zlotys (10.4%), `Tangible fixed assets` by 61.8 million zlotys (19.6%) and
`Investment-grade financial assets` by 1,209.6 million zlotys (117.7%). These
gains, however, were offset by falling positions in: `Amounts due from banks` by
1,718.1 million zlotys (70.9%) and `Trading-grade financial assets` by 812
million zlotys (52.7%). As a result the total assets dropped by 555.6 million
zlotys (3.5%) in comparison to the end of 2008 to 15,270.5 million zlotys.
Changes to asset breakdown (PLN`000)
Assets As at 30 Sept. 2009 As at 31 Dec. 2008 Change (1/2) As at 30 June 2009 Change (5/6)
PLN `000 % PLN `000 %
1 2 3 4 5 6 7
Cash and balances with Central Bank 760 990 761 722 -732 -0.1 691 010 69 980 10.1
Trading assets 729 459 1 541 492 -812 033 -52.7 772 656 -43 197 -5.6
Hedging derivates 10 694 49 155 -38 461 -78.2 7 922 2 772 35.0
Amounts due from banks 704 328 2 422 456 -1 718 128 -70.9 1 407 916 -703 588 -50.0
Amounts due from customers 9 811 936 8 888 736 923 200 10.4 9 484 576 327 360 3.5
Including impairment write-offs -395 302 -276 935 -118 367 42.7 -353 610 -41 692 11.8
Other financial assets 2 237 082 1 027 528 1 209 554 117.7 1 379 962 857 120 62.1
Property and equipment 377 392 315 612 61 780 19.6 390 059 -12 667 -3.2
Intangibles 143 488 155 166 -11 678 -7.5 146 796 -3 308 -2.3
Assets and disposal groups held for sale 18 000 18 000 0 0.0 18 000 0 -
Other assets 477 100 646 159 -169 059 -26.2 476 409 691 0.1
Total assets 15 270 469 15 826 026 -555 557 -3.5 14 775 306 495 163 3.4
8.2Loans and advances
As at the end of September 2009, non-performing loans accounted for 5.9% of the
loan portfolio (up by 1.7 pp. against the end of 2008). It was attributable to
the deteriorating condition of borrowers caused by a general economic slowdown.
BPH Group loan portfolio including discount loans reported in note `Cash and
balances withthe Central Bank` (PLN`000)
As at 30 Sept. 2009 % As at 30 June 2009 % As at 31 Dec. 2008 %
Impaired loans* 587 616 5.9 513 409 5.3 365 291 4.2
Non-impaired loans* 9 299 090 94.1 9 153 778 94.7 8 404 177 95.8
Total 9 886 706 100 9 667 187 100 8 769 468 100
*nominal amount
8.3Liabilities
The Group reported shifts in the structure of refinancing, including an increase
in `Amounts due to banks`, which went up by 135.4% (i.e. 838.6 million zlotys)
and a decrease of `Trading-grade financial liabilities`, down by 1,067.1 million
zlotys (i.e. 60.7%). The item `Provisions` includes 19.7 million zlotys of an
employment restructuring provision.
Changes to financing sources (PLN`000)
Liabilities As at 30 Sept. 2009 As at 31 Dec. 2008 Change (1/2) As at 30 June 2009 Change (5/6)
PLN `000 % PLN `000 %
1 2 3 4 5 6 7
Amounts due to the Central Bank 251 923 48 386 203 537 420.7 0 251 923 -
Amounts due to banks 1 458 043 619 390 838 653 135.4 984 937 473 106 48.0
Amounts due to customers 9 929 730 10 271 713 -341 983 -3.3 9 969 440 -39 710 -0.4
Liabilities evidenced with certificates 585 752 625 014 -39 262 -6.3 586 209 -457 -0.1
Provisions 231 001 364 475 -133 474 -36.6 249 664 -18 663 -7.5
Trading financial liabilities 691 730 1 758 875 -1 067 145 -60.7 783 653 -91 923 -11.7
Hedging derivates 2 351 0 2 351 - 2 406 -55 -2.3
Other liabilities 447 774 398 225 49 549 12.4 552 973 -105 199 -19.0
Equity 1 582 451 1 658 836 -76 385 -4.6 1 560 083 22 368 1.4
Minority interests 89 714 81 112 8 602 10.6 85 941 3 773 4.4
Total liabilities 15 270 469 15 826 026 -555 557 -3.5 14 775 306 495 163 3.4
5.Business segmentation
The BPH Group`s business is segmented along its organizational lines. The Bank`s
Group is organized and managed under strategic customer segments, including
Retail Banking and Corporate Banking with profit center competences, and the
International Markets` segment. The latter is mainly responsible for the
development and sales of treasury and investment products and for capital market
and custodian services for customer with corporate and retail segments, but also
for the management of interest rate, currency and liquidity risks.
Selected items of the Consolidated Income Statement and the Consolidated
Statement of Financial Position by business segments (PLN`000)
Consolidated income statement Business segments Other (not allocated to segments) Consolidated value (1+2+3+4)l
Retail Corporate INM*
1 2 3 4 5
Net interest income 1 Jan.2009 - 30 Sept. 2009 265 953 33 772 -53 246 37 329 283 808
1 Jan.2008 - 30 Sept. 2008 321 333 8 362 -31 266 55 964 354 393
Impairment charges 1 Jan.2009 - 30 Sept. 2009 -84 991 -2 599 54 0 -87 536
1 Jan.2008 - 30 Sept. 2008 -24 275 8 499 0 0 -15 776
Net fee and commission income 1 Jan.2009 - 30 Sept. 2009 276 253 33 813 5 790 0 315 856
1 Jan.2008 - 30 Sept. 2008 245 894 26 629 -824 0 271 699
Net trading income and revaluation 1 Jan.2009 - 30 Sept. 2009 -1 010 5 342 63 781 -9 017 59 096
1 Jan.2008 - 30 Sept. 2008 1 144 8 718 66 939 -1 905 74 896
General administrative expenses 1 Jan.2009 - 30 Sept. 2009 -552 264 -77 944 -35 799 0 -666 007
1 Jan.2008 - 30 Sept. 2008 -484 118 -80 737 -35 025 4 -599 876
Profit/loss before income tax 1 Jan.2009 - 30 Sept. 2009 -96 064 -7 528 -19 695 40 849 -82 438
1 Jan.2008 - 30 Sept. 2008 60 089 -30 133 2 755 131 370 164 081
Statement of financial position
Total assets 30 Sept. 2009 7 956 775 1 509 730 2 875 362 2 928 602 15 270 469
30 June 2009 7 471 953 1 371 970 2 845 106 3 086 277 14 775 306
31 Dec. 2008 8 153 962 891 068 3 399 273 3 381 723 15 826 026
Total liabilities 30 Sept. 2009 9 438 787 1 648 423 1 073 845 3 109 414 15 270 469
30 June 2009 9 093 469 1 535 029 932 246 3 214 562 14 775 306
31 Dec. 2008 9 137 153 888 909 963 074 4 836 890 15 826 026
* Excluding treasury product sales by the Treasury Product & Financial Institutions Area in International Markets Division that are fully reported under either the Corporate or the Retail Segment.
6.Important actions of BPH Group and list of key developments
BPH Group as at 30 September 2009
The BPH Group includes Bank BPH and two entities: BPH PBK Zarządzanie Funduszami
Sp. z o.o. (direct subsidiary) and BPH TFI SA (indirect subsidiary, held via BPH
PBK Zarządzanie Funduszami Sp. z o.o.). The remaining shares in BPH TFI SA
belong to General Electric Capital Corporation based in Stamford, USA.
Composition of BPH Group
Company Registered address Bank`s % of votes at the company`s GM Shareholders` equity (PLN`000) Assets (PLN`000)
Dominant entity
Bank BPH Spółka Akcyjna Krakow
Consolidated subsidiaries
BPH PBK Zarządzanie Funduszami Sp. z o.o. Warsaw 100.00% 10 386 10 388
Indirect subsidiary
BPH Towarzystwo Funduszy Inwestycyjnych SA Warsaw 50.14% 179 927 198 776
During Q3, BPH TFI focused on winning new customers through marketing and
promotion activities that leveraged very good rates of return achieved by
individual funds and their high ranking positions. A particularly important
sales role was played by the Fundusz Obligacji 2 bond fund. Modifications were
made to the structure of the Individual Pension Account (IKE), to make it more
attractive to new customers. BPH TFI continued to work in close cooperation with
the Bank, but also grew sales via external distributors and actively pursued its
own marketing activity targeting the existing and new customers alike.
At the end of September 2009, BPH TFI managed 12 investment funds, including an
umbrella fund (including 13 sub-funds), 10 closed-ended investment funds and a
specialized liquidity bond fund.
BPH TFI is offering a full range of funds that meet the expectations of both
retail and institutional customers. We also offer worldwide administration
service for customer security holdings.
After a stabilization of assets under management in Q2, BPH TFI saw the assets
grow to 3.3 billion zlotys in Q3. At the end of the period, the company had a
3.8% market share.
The company`s good performance did not go unnoticed in business rankings. In
July, BPH TFI was ranked second among 18 TFIs by the Parkiet specialized stock
exchange daily and in August our Fundusz Obligacji 2 was named the Fund of the
Month by the Puls Biznesu daily.
7.Important details on the Bank`s human resources, assets and financial standing
and its financial performance
11.1.Employment restructuring
To align the level and structure of employment with the Bank`s scale of business
and with the macroeconomic environment the Management Board agreed with the
trade unions terms and conditions of a two-step lay-off plan covering up to 928
employees. The process will be completed by November.
The decision was dictated by the need to optimize the distribution network,
including consolidation of branches, centralization of the sales follow-up
processes and the back-office, and a need to restructure the workforce at the
Head Office in the light of the planned integration with GEMB.
The agreement with the trade unions included protective measures involving
re-skilling in order for the laid off employees to gain opportunities for other
jobs; compensation payments were also agreed depending on the duration of
employment at the Bank.
11.2.Real-estate acquisition
In February, BPH signed with Pekao a contract worth 138,240 thousand zlotys for
the perpetual usufruct of the land and the ownership of Pekao buildings in 25A
Towarowa Street, Warsaw. The real-estate hosts the Bank`s Warsaw offices. In
relation to this contract the Bank received from GE Capital International
Financing Corporation 39,600 thousand zlotys as a partial refund of expenditure
made on the purchase of the real-estate.
11.3.Changes in the Bank`s governing bodies
No changes in the Bank`s Management or Supervisory Boards` composition took
place in Q3 2009.
8.Developments after the quarterly report date with potential impact on future
financial performance
Efficiency Enhancement Program
As required under article 142 of the Banking law, the occurrence of any loss,
regardless of magnitude, automatically triggers the mandatory adoption and
submission of a formal remedy program to the Financial Supervision Authority. As
BPH has previously reported a loss in Q1 and Q2 2009, the Management and
Supervisory Boards of BPH on October 20, 2009 approved a program, as required by
law, outlining the Bank`s business plans to restore sustainable profitability
and enhance the efficiency of the Bank (`Program`).
BPH has a very strong capital base and a high capital adequacy ratio (10.97% at
the end of September 2009 for the Bank only and 12.27% consolidated with BPH
TFI), with stable liquidity additionally enhanced by backup credit facilities
made available to it by GE Capital International Holdings Corporation. Indeed,
the measures that were implemented in 1H 2009 were in part taken to keep the
Bank safe during an uncertain economic period and to continue it progress toward
the planned integration with GE Money Bank by the end of 2009.
The Program is wholly consistent with the 2009-2012 growth strategy, previously
disclosed on July 30, 2009, with the merger of BPH and GE Money Bank by the end
of 2009 as its key component. The Program is shared by both Banks, being also
approved on October 20, 2009 by the Management and Supervisory Boards of GE
Money Bank. A full report on this item is available at:
http://www.bph.pl/en/relacje_inwestorskie/raporty bieżące/
9.Factors affecting the Group`s future performance
In the subsequent quarter and beyond, the Group`s perfromance could be affected
by the following factors:
* Unchanged interest rates until Q1 2010. The NBP is most likely to maintain the
current interest until the end of the year. The new RPP, starting its term in
2010, is also expected to leave the monetary policy parameters unchanged in Q1.
* A potential continuation of the good sentiment at WSE and continued flow of
customers back to investment funds. This may contribute to a higher commission
income from these products and to a higher turnover and better performance of
the Brokerage Office.
* Falling deposit interest rates, deteriorating financial condition of
businesses and a slower growth rate of household income. These factors are
likely to gradually reduce the growth rates in deposits across the banking
sector. The slower growth of deposits should not affect interest rates due to
the sector`s over-liquidity. As a result the Bank should benefit from the
maturing of high-interest term deposits collected in Q4 2008.
* Economic stagnation. As credit portfolios across the sector are deteriorating
in quality the cost of credit risk is pushed up and banks` financial performance
suffers.
* Potential adverse events in Poland`s environment, such as serious financial
problems of a region`s country. This could weaken the zloty again and, as a
consequence, adversely affect the Bank`s operating costs via those cost items,
i.e. rents and IT services, which are denominated in foreign currencies.
Conversely, an appreciation of the zloty would have a positive effect on the
costs.
* Considerable fluctuation of certain financial instruments, including hedges
for FX credit portfolios, depending on the market condition. This involves a
risk of adverse changes to the pricing of such instruments and their impact on
the Bank`s financial performance.
* Potential new recommendations of the financial supervisory. Normally such
moves have lead to a curbing of lending.
* The Bank`s own restructuring during the first half of the year. This should
have a positive influence on our performance during the second half.
The Bank`s operations will certainly be affected by the planned merger with GE
Money Bank, which the Bank`s Management Board intends to complete by the end of
2009.
10.BPH ownership
14.1.Ownership structure of BPH share capital
All of the Bank`s shares are bearer shares and do not carry any restrictions on
ownership transfer or exercising of voting rights. All are also characterized by
the same scope of rights. Any limitations may only take place on the grounds of
special regulations e.g. Banking Law or Act on public offer.
As on the publishing date of the Financial Report for the First Half of 2009,
the Bank`s ownership structure was as follows:
BPH shareholding structure as at 4 August 2009
No. Shareholder SHARES AGM VOTES
Number % Number %
1 GE Money Bank SA (General Electric Company) 18 924 516 65.90 18 924 516 65.90
2 Klienci BZ WBK AIB Asset Management (1), incl.:: 4 073 503 14.19 4 073 503 14.19
incl.:BZ WBK AIB TFI SA poprzez: Arka BZ WBK Akcji FIO, Arka BZ WBK Rozwoju Nowej Europy FIO, Arka BZ WBK Akcji Środkowej i Wschodniej Europy FIO, Arka BZ WBK Akcji Środkowej i Wschodniej Europy FIZ, Arka BZ WBK Stabilnego Wzrostu FIO, Arka BZ WBK Zrównoważony FIO oraz Lukas FIO (2), incl.: 2 901 100 10.10 2 901 100 10.10
Arka BZ WBK Akcji FIO (3) 1 448 633 5.04 1 448 633 5.04
3 UniCredit S.p.A. 1 473 590 5.13 1 473 590 5.13
4 State Treasury 1 058 000 3.68 1 058 000 3.68
5 Other shareholders 3 186 621 11.10 3 186 621 11.10
TOTAL 28 716 230 100.00 28 716 230 100.00
(1) as at 4 August 2009
(2) as at 7 April 2009
(3) as at 13 May 2009
During the current reporting period, the structure underwent serious changes,
including:
* On 7 September, the State Treasury sold-off, in packages, all of the BPH stock
it held, i.e. 1,058,000 shares representing 3.68% of the Bank`s capital;
* During Q3, customers of BZ WBK AIB Asset Management S.A. gradually increased
their holdings in BPH. Eventually, on 23 September 2009, customers of BZ WBK AIB
Asset Management held 4,313,805 shares of BPH, which represented 15.02% of the
Bank`s share capital and the same share of GM votes;
* In a tender offer for the BPH stock, made on 30 July 2009 and completed on 29
September 2009, DRB Holdings B.V. of Schiphol-Rijk, The Netherlands (`DRB`), a
subsidiary of General Electric Company, became the owner of 1,473,590 shares in
the Bank representing 5.13% of their total number and 1,473,590 GM votes;
* In respect with the same tender offer UniCredit S.p.A. transferred all of its
1,473,590 shares of BPH, including the voting rights (5.13% AGM votes) to DRB
Holdings B.V. and has no stock of BPH since 29 September.
Current shareholding structure of Bank BPH
No. Shareholder SHARES AGM VOTES
Number % Number %
1 GE Money Bank SA (General Electric Company) 18 924 516 65.90 18 924 516 65.90
2 DRB Holding B.V. (General Electric Company 1 473 590 5.13 1473590 5.13
3 Klienci BZ WBK AIB Asset Management (1), incl.::: 4 313 805 15.02 4 313 805 15.02
incl.: BZ WBK AIB TFI SA poprzez: Arka BZ WBK Akcji FIO, Arka BZ WBK Rozwoju Nowej Europy FIO, Arka BZ WBK Akcji Środkowej i Wschodniej Europy FIO, Arka BZ WBK Akcji Środkowej i Wschodniej Europy FIZ, Arka BZ WBK Stabilnego Wzrostu FIO, Arka BZ WBK Zrównoważony FIO oraz Lukas FIO (2), incl.: 2 901 100 10.10 2 901 100 10.10
Arka BZ WBK Akcji FIO (3) 1 448 633 5.04 1 448 633 5.04
4 Other shareholders 4 004 319 13.95 4 004 319 13.95
TOTAL 28 716 230 100.00 28 716 230 100.00
(1) as at 4 August 2009
(2) as at 7 April 2009
(3) as at 13 May 2009
In view of the scheduled merger with GE Money Bank the Bank`s shareholding
structure may still change by the end of 2009.
14.2.Intention to integrate Bank BPH with GE MoneyBank
By integrating Bank BPH and GE Money Bank, General Electric Company will
consolidate its Polish banking business.
Management Boards of BPH and GEMB agreed, and their Supervisory Boards approved
on 29 July 2009, a reviewed Merger Plan1. It was decided that the Merger would
be based on Art. 124 (1) and (3) of the Banking Law in relation to Art. 492
(1)(1) of the Code of Commercial Companies (CCC), i.e. by a transfer of all the
GEMB assets to BPH and a simultaneous raising of BPH`s share capital through a
special merger issue of shares, which BPH would allocate to GEMB shareholders
(`Merger Shares`).
As a result of the Merger GEMB shareholders will become direct shareholders of
BPH. GEMB is holding 65.9% of BPH shares and for this reason the following
merger plan will be followed:
* Pursuant to Art. 494 (1) of CCC, BPH will assume all rights and obligations of
GEMB, including the ownership of the 65.9% share (`Treasury Shares`);
* GEMB shareholders will receive the Merger Shares in return for all of GEMB
assets transferred to BPH;
* Pursuant to Art. 13 of BPH Articles of Association and Art. 359 of CCC in
relation to Art. 362 (1)(3) and Art. 455 CCC, the Treasury Shares will be
redeemed.
It was decided that the parity rate for the Merger Shares would equal: 1.189.
This means that one (1) share in GEMB will bring its owner 1.189 BPH shares.
This parity ratio has been revised, without affecting the share capital, from
the original ratio of 0.825, as a result of GEMB`s share consolidation performed
in December 2008 (from 81,080,688 to 56,245,751 today).
As a result of the Merger the BPH`s share capital will be increased by
334,380,985 zlotys from 143,581,150 zlotys do 477,962,135 zlotys through an
issue of 66,876,197 BPH shares of the E-series at the face value of 5 zlotys
each.
In this process BPH was assisted by JPMorgan plc, as an independent advisor, who
also issued a fairness opinionfor the terms and conditions of the Merger. GEMB`s
advisor was Goldman Sachs International.
Bank BPH Extraordinary General Meeting of, held on 27 October, voted unanimously
in favor of merging the two Banks. On the same day, similar decisions were taken
by shareholders of GE Money Bank.
It is an intention of the Management Boards of the two Banks to complete the
legal merger in Q4 2009. The actual merger dates will depend on when the Banks
will secure all formal approvals necessary.
11.BPH shares held by the Management and Supervisory Boards` members
Among all the member of Bank BPH Supervisory Board and Management Board, only
Mirosław Boniecki, Deputy President of the Management Board, held 131 shares in
the Bank both as at September 30, 2009 and December 31, 2008.
12.New proceedings before courts and other public administration bodies
Information on proceedings before courts and other public administration bodies
are presented in Note 27 to the Condensed Interim Consolidated Financial
Statement of Bank BPH Group for Q3 2009.
13.Management Board`s position on actual performance against published annual
forecasts
BPH Management Board did not publish any forecasts of 2009 financial results.
14.Additional information
18.1.Seasonality or operational cycles
There are no material items that would be subject to seasonality or cyclic
patterns in BPH Group.
18.2.Dividend for 2008
On 27 May 2009, BPH General Meeting approved the Management Board resolution
(with positive opinion of the Supervisory Board) on not paying the dividend from
2008 profit. In justification to its motion, the Management Board drew attention
to the fact that under unfavorable macroeconomic conditions a solid capital base
is required to support the Bank`s development. Moreover, the merger between BPH
and GEMB involves execution of numerous projects absorbing the Bank`s financial
resources.
18.3.Dividend received
BPH received a dividend in the amount of PLN 6 thousand from Visa Inc.
Glossary of terms and abbreviations used in this Report
* AUM - assets under management.
* Book value per share - own equity per one share.
* bps - base points.
* BPH - Bank BPH SA or the Bank (joint stock company).
* BPH FIO - BPH TFI open-ended investment fund.
* BPH FIZ - BPH TFI close-ended investment fund.
* BPH TFI - an investment fund management company (BPH Towarzystwo Funduszy
Inwestycyjnych SA), an indirect subsidiary of BPH.
* Capital Adequacy Ratio (CAR) - capitals and funds after adjustments divided by
the total statutory capital requirement and multiplied by 12.5.
* CHF - Swiss franc.
* CIRS - Currency Interest Rate Swap (a currency interest-rate swap transaction
for Customers exposed to exchange rate risk and/or interest rate risk).
* Corporate Banking - the Corporate Banking and Real-Estate Finance Division of
BPH.
* Cost/Income ratio (C/I) - operating costs plus cost of general administration
(C) divided by net income from banking plus net of other operating costs and
revenues (I).
* EPS (Earnings per share) - profit attributable to equity holders for the last
four quarters per one share.
* EUR - €, the euro, common currency of the European Monetary Union.
* FX swap (or foreign exchange swap) - a derivative involving a exchange of an
agreed amount of two currencies on two pre-defined dates and at pre-defined
rates.
* GE - General Electric Company, a US-based international and one of the world`s
largest corporations.
* GEMB - GE Money Bank SA of Gdańsk, Poland.
* GM - General Meeting of Shareholders.
* IKE (Polish for Indywidualne Konto Emerytalne) - Individual pension Account.
* INM - the International Markets Division of BPH.
* KNF (Polish for Komisja Nadzoru Finansowego) - Polish Financial Supervisory
Authority, a consolidated regulator of the banking, capital, insurance and
pension fund markets, operating since 1 January 2008.
* KPMG - KPMG Audyt Sp. z o.o., BPH`s external auditor.
* KRI - key risk indicators.
* Loans/deposits ratio - net amounts due from customers divided by amounts due
to customers.
* Market capitalization - a number of shares traded divided by their closing
price at the Warsaw Stock Exchange on a given trading day.
* NBP - National Bank of Poland, Polish central bank.
* P/BV (Price/Book Value) - closing share price on a given day divided by book
value.
* P/E (Price/Earnings) - closing share price on a given day divided by profit
attributable to equity holders for the last four quarters per one share.
* Pekao - Bank Polska Kasa Opieki S.A., one of Poland`s largest Banks that took
over a portion of BPH`s assets after the latter`s spin-off in November 2007.
* PLN - the zloty, Polish currency.
* pp. - percentage point.
* Retail Banking - the Retail Banking Division of BPH.
* Return on Equity, gross (gross ROE) - income divided by the average equity
(that includes net income).
* Return on Equity, net (net ROE) - net income divided by the average equity
(that includes net income).
* Return on Assets, net (net ROA) - net income divided by total average assets.
* ROR - BPH current and saving account.
* RPP (Polish for Rada Polityki Pieniężnej) - Monetary Policy Council, a
collegial authority operating in conjunction with the National Bank of Poland
and responsible for Poland`s monetary policy.
* Share price - a closing price of BPH stock at the Warsaw Stock Exchange on a
give day (for 2008 and 2007 the share prices are quoted as at the closing on the
final trading days of these years, i.e. 31 Dec. 2008 and 28 Dec. 2007).
* SMEs (Small and Medium-Sized Enterprises) - a Retail Banking customer segment
at BPH.
* Total interest margin on assets - net interest income divided by total average
assets.
* UniCredit - Italian bank UniCredit S.p.A., the strategic investor of BPH from
November 2005 to June 2008.
* WSE - Warsaw Stock Exchange.
* y/y - year to year.
1 The original Merger Plan was signed on 23 September 2008. In November 2008,
the Management Boards of the two Banks decided to postpone the original date of
the legal merger in order to review plans of the Merged Bank in a dramatically
changed macroeconomic environment.
Condensed Interim Unconsolidated 3 quarter
Financial Statements of Bank BPH SA 2009
SELECTED FINANCIAL DATA PLN'000 EUR`000
Income statement Period from 01 Jan. 2009 to 30 Sept. 2009 Period from 01 Jan. 2008 to 30 Sept. 2008 Period from 01 Jan. 2009 to 30 Sept. 2009 Period from 01 Jan. 2008 to 30 Sept. 2008
I. Interest income 597 494 566 986 135 816 165 558
II. Fee and commission income 355 041 279 454 80 704 81 600
III. Profit (loss) before income tax -100 750 150 530 -22 901 43 954
IV. Profit (loss) for the period -70 745 122 196 -16 081 35 681
Statement of cash flows
V. Net cash flow from operating activities -492 116 -1 616 150 -111 862 -471 910
VI. Net cash flow from investing activities -131 480 -26 944 -29 887 -7 868
VII. Net cash flow from financing activities -40 052 201 198 -9 104 58 749
VIII. Total net cash flows -663 648 -1 441 896 -150 853 -421 028
Ratios Period from 01 Jan. 2009 to 30 Sept. 2009 Period from 01 Jan. 2008 to 30 Sept. 2008 Period from 01 Jan. 2009 to 30 Sept. 2009 Period from 01 Jan. 2008 to 30 Sept. 2008
IX. Earnings/losses per ordinary share(PLN / EUR) -2.46 4.26 -0.56 1.24
X. Diluted earnings/losses per ordinary share (PLN / EUR) -2.46 4.26 -0.56 1.24
Ratios At as 30 Sept. 2009 At as 31 Dec. 2008 At as 30 Sept. 2009 At as 31 Dec. 2008
XI. Book value per share (PLN/EUR) 52.30 55.25 12.39 13.24
XII. Diluted Book value per share (PLN/EUR) 52.30 55.25 12.39 13.24
XIII. Dividend paid per ordinary share (PLN/EUR) 0.00 0.00 0.00 0.00
Statement of financial position At as 30 Sept. 2009 At as 31 Dec. 2008 At as 30 Sept. 2009 At as 31 Dec. 2008
XIV. Total assets 15 104 518 15 664 970 3 577 066 3 754 427
XV. Amounts owed to the Central Bank 251 923 48 386 59 661 11 597
XVI. Amounts owed to banks 1 458 043 619 390 345 295 148 449
XVII. Amounts owed to customers 9 943 629 10 277 869 2 354 859 2 463 299
XVIII. Shareholders' equity 1 501 998 1 586 636 355 705 380 269
XIX. Share capital 143 581 143 581 34 003 34 412
XX. Number of shares 28 716 230 28 716 230 28 716 230 28 716 230
Capital adequacy At as 30 Sept. 2009 At as 31 Dec. 2008 At as 30 Sept. 2009 At as 31 Dec. 2008
XXI. Capital adequacy ratio (%) 10.97 11.22 10.97 11.22
Individual positions of the condensed interim unconsolidated financial
statements of Bank BPH were converted into EURO according to the following
principles:
* Selected statement of financial position and book value per share - converted
using the average EURO exchange rate in PLN announced by the Central Bank on the
balance sheet day: 30.09.2009 - 4.2226; 31.12.2008 - 4.1724.
* Selected income statement and condensed statement of cash flows - converted
using the average rate of exchange, which is an arithmetic mean of the average
rates announced by the Central Bank and at the end of each month of three
quarters; 2009 - 4.3993, 2008 - 3.4247.
Contents
Income statement
Statement of comprehensive income
Statement of financial position
Statement of changes in equity
Condensed statement of cash flows
Notes to the condensed interim unconsolidated financial statements
1.Basic information about the Bank BPH SA
2.Statement of compliance
3.Principles of preparation of the condensed interim financial statements
4.Net fee and commission income
5.Dividends
6.General administrative expenses
7.Investment financial assets
8.Related party transactions
Income Statement PLN`000
Notes Period from Period from Period from Period from
01 Jul. 2009 to 30 Sept. 2009 01 Jan. 2009 to 30 Sept. 2009 01 Jul. 2008 to 30 Sept. 2008 01 Jan. 2008 to 30 Sept. 2008
Interest income 190 433 597 494 199 097 566 986
Interest expenses -91 821 -317 409 -80 228 -219 155
Net interest income 98 612 280 085 118 869 347 831
Impairment charges -44 055 -87 536 1 223 -15 776
Net interest income incl. impairment charges 54 557 192 549 120 092 332 055
Fee and commission income 126 787 355 041 96 680 279 454
Fee and commission expenses -26 038 -72 745 -20 964 -65 910
Net fee and commission income 4 100 749 282 296 75 716 213 544
Dividends 5 3 6 0 27 754
Net trading income and revaluation 18 763 59 096 28 520 74 896
Net income from investments 712 -1 539 1 773 1 304
General administrative expenses 6 -178 149 -647 047 -195 223 -576 330
Result on other operating income and expenses 12 230 13 889 9 988 77 307
Profit (loss) before income tax 8 865 -100 750 40 866 150 530
Income tax expense 10 623 30 005 -8 940 -28 334
Profit (loss) for the period 19 488 -70 745 31 926 122 196
Earnings/losses and diluted earnings/losses per ordinary share (PLN) 0.68 -2.46 1.11 4.26
Statement of comprehensive income
PLN`000
Period from Period from
01 Jan. 2009 to 30 Sept. 2009 01 Jan. 2008 to 30 Sept. 2008
Profit/loss for the period -70 745 122 196
Other comprehensive income: -14 299 12 071
Net income due to revaluation of securities available for sale (net of tax) -799 1 447
Net income of hedging derivatives (net of tax) -20 652 10 624
Net income from released hedging instrument (after deferred tax) 7 152 0
Total comprehensive income -85 044 134 267
Statement of financial position
PLN`000
Assets Notes As at 30 Sept. 2009 As at 30 Jun. 2009 As at 31 Dec. 2008
Cash and balances with the Central Bank 760 990 691 010 761 722
Trading assets 729 459 772 656 1 541 492
Hedging derivates 10 694 7 922 49 155
Loans and advances to and placements with banks 704 300 1 407 826 2 350 580
Loans and advances to customers 9 811 936 9 484 576 8 888 736
incl.: loan impairment -395 302 -353 610 -276 935
Investments financial assets 7 2 078 426 1 225 216 953 124
Property and equipment 375 205 387 838 313 121
Intangible assets 142 656 145 883 154 032
Assets and disposal groups held for sale 18 000 18 000 18 000
Other assets 472 852 469 612 635 008
incl.: deferred tax assets 355 798 361 358 482 587
Total assets 15 104 518 14 610 539 15 664 970
PLN`000
Liabilities Notes As at 30 Sept. 2009 As at 30 Jun. 2009 As at 31 Dec. 2008
Amounts owed to the Central Bank 251 923 0 48 386
Amounts owed to banks 1 458 043 984 937 619 390
Amounts owed to customers 9 943 629 9 977 860 10 277 869
Liabilities evidenced by certificates 585 752 586 209 625 014
Provisions 229 927 248 956 363 831
incl. deferred tax liability 163 809 169 492 314 211
Trading liabilities 691 730 783 653 1 758 875
Hedging derivates 2 351 2 406 0
Other liabilities 439 165 543 116 384 969
Shareholders` equity 1 501 998 1 483 402 1 586 636
Total equity and liabilities 15 104 518 14 610 539 15 664 970
Book value per share (in PLN) 52.30 51.66 55.25
Statement of changes in equity
PLN`000
Share capital Retained profits Revaluation reserve Supplementary capital Risk fund charge Other Reserves TOTAL SHAREHOLDERS` EQUITY
Opening balance of shareholders` equity on 1 January 2009 143 581 323 618 25 646 48 000 273 064 772 727 1 586 636
Profit (loss) for the period 0 -70 745 0 0 0 0 -70 745
Other comprehensive income
Net income due to revaluation of securities available for sale (net of tax) 0 0 -799 0 0 0 -799
Net income of hedging derivatives (net of tax) 0 0 -20 652 0 0 0 -20 652
Net income from released hedging instrument (after deferred tax) 0 0 7 152 0 0 0 7 152
Total other comprehensive income 0 0 -14 299 0 0 0 -14 299
Total comprehensive income 0 -70 745 -14 299 0 0 0 -85 044
Charge for supplementary capital 0 -8 731 0 8 731 0 0 0
Charge for reserve capital 0 -65 133 0 0 0 65 133 0
General risk fund charge 0 -35 274 0 0 35 274 0 0
Share transactions from payments 0 0 0 0 0 406 406
Closing balance on 30 September 2009 143 581 143 735 11 347 56 731 308 338 838 266 1 501 998
PLN`000
Share capital Retained profits Revaluation reserve Supplementary capital Risk fund charge Other Reserves TOTAL SHAREHOLDERS` EQUITY
Opening balance of shareholders` equity on 1 January 2008 143 581 216 601 -11 020 47 843 260 147 763 982 1 421 134
Profit (loss) for the period 0 122 196 0 0 0 0 122 196
Other comprehensive income
Net income due to revaluation of securities available for sale (net of tax) 0 0 1 447 0 0 0 1 447
Net income of hedging derivatives (net of tax) 0 0 10 624 0 0 0 10 624
Total other comprehensive income 0 0 12 071 0 0 0 12 071
Total comprehensive income 0 122 196 12 071 0 0 0 134 267
Charge for supplementary capital 0 -157 0 157 0 0 0
Charge for reserve capital 0 -108 345 0 0 0 108 345 0
General risk fund charge 0 -12 917 0 0 12 917 0 0
Reclassification due to Bank`s spin-off 0 99 600 0 0 0 -99 600 0
Closing balance on 30 September 2008 143 581 316 978 1 051 48 000 273 064 772 727 1 555 401
Roczne Jednostkowe Sprawozdanie Finansowe Banku BPH SACondensed statement of
cash flows
PLN`000
Period from Period from Period from Period from
01 Jul. 2009 to 30 Sept. 2009 01 Jan. 2009 to 30 Sept. 2009 01 Jul. 2008 to 30 Sept. 2008 01 Jan. 2008 to 30 Sept. 2008
I. Net cash flow from operating activities 64 585 -492 116 19 667 -1 616 150
II. Net cash flow from investing activities -8 212 -131 480 -32 130 -26 944
III. Net cash flow from financing activities -2 069 -40 052 87 558 201 198
IV. Total net cash flows 54 304 -663 648 75 095 -1 441 896
OPENING BALANCE OF CASH AND CASH EQUIVALENTS - 2 543 567 - 3 538 154
CLOSING BALANCE OF CASH AND CASH EQUIVALENTS - 1 879 919 - 2 096 258
CHANGE OF CASH AND CASH EQUIVALENT IN THE BALANCE SHEET - -663 648 - -1 441 896
Notes to the condensed interim unconsolidated financial statements
1.Basic information about the Bank BPH SA
Bank BPH Spółka Akcyjna (hereinafter `the Bank`) is a bank with its registered
address in Poland, Al. Pokoju 1, 31-548 Kraków. The Bank is registered with the
District Court for Kraków - Śródmieście, Cracow, 11th Commercial Department of
the National Court Register, under No. KRS 0000010260. Tax identification code
(NIP) - 675-000-03-84.
The core business line of Bank BPH SA includes receiving financial deposits,
maintaining bank accounts, extending loans, executing bank monetary payments and
conducting banking activities under the Banking Law. The business objectives are
decsribed in the Bank`s Articles of Association.
2.Statement of compliance
The condensed interim unconsolidated financial statements of the Bank BPH have
been prepared in accordance with International Accounting Standard IAS 34
Interim Financial Reporting, as adopted by The European Union and other
applicable regulations.
In accordance with Decree of the Ministry of Finance dated 19 February 2009 on
current and periodic information provided by issuers of securities and the
conditions for recognition as equivalent information required by the law of a
non-Member State (Official Journal from 2009, No 33, item 259), the Bank is
required to publish the financial results for the nine months ended September
30, 2009 which is deemed to be the interim financial reporting period.
3.Principles of preparation of the condensed interim financial statements
Condensed interim unconsolidated financial statements of Bank have been prepared
in Polish Zloty, and all amounts, unless indicated otherwise, are stated in
thousand zlotys.
This report does not contain all the information required in the annual
financial statements; therefore it should be read together with the financial
statements of Bank BPH for the financial year concluded on 31 December 2008.
Unconsolidated financial statement of Bank BPH SA for the financial year
concluded on 31 December 2008 are available for inspection in the District Court
for Krakow-Śródmieście, 11 Commercial Section of the National Court Register,
Krakow, 7 Przy Rondzie street and on the Bank`s internet page: www.bph.pl.
a.Significant accounting policies
Except for the subsequent changes described below, the accounting policies
adopted by the Bank in these condensed interim unconsolidated financial
statements are the same as those approved by the Bank in its unconsolidated
financial statements as at and for the year ended 31 December 2008.
b.Changes to accounting policies
Due to changed definition of IAS 7 `Cash flow account`, definition of cash and
its equivalents was also modified. The scope of cash and its equivalents was
expanded to cover other financial assets that mature within 3 months (from the
date of acquisition) with small risk of impairment.
Starting from 1 January 2009, the Bank applied changes to IAS 1 `Financial
statements presentation` and introduced a report on total revenues.
Since 1 January 2009, the Bank has presented information on segments in line
with IFRS 8 `Operational segments`. Introduction of IFRS 8 did not impact the
comparative data included in this condesed interim unconsolidated financial
statement.
c.Comparative Data
As a result of changes in the definition of cash and cash equivalents and as a
result of the change to the presentation of Securities with original maturity up
to three months (the change made in the annual financial statements for the
financial year ended 31 December 2008) adjustments to the prior period cash flow
statements have been made as follows to ensure comparability:
1 Jan. 2008 - 30 Sept. 2008 Change the definition of cash and cash equivalents 1 Jan. 2008 - 30 Sept. 2008
(unadjusted) (adjusted)
I. Net cash flow from operating activities -1 085 285 -530 865 -1 616 150
II. Net cash flow from investing activities -26 944 0 -26 944
III. Net cash flow from financing activities 201 198 0 201 198
Total net cash flows -911 031 -530 865 -1 441 896
OPENING BALANCE OF CASH AND CASH EQUIVALENTS 2 015 414 1 522 740 3 538 154
CLOSING BALANCE OF CASH AND CASH EQUIVALENTS 1 104 383 991 875 2 096 258
CHANGE OF CASH AND CASH EQUIVALENT IN THE BALANCE SHEET -911 031 530 865 -1 441 896
Similarly as a result of changes to the financial data presentation in the
annual financial statements for the financial year concluded on 31 December
2008, the ensure comparability, the Bank introduced the following modifications
to comparative data presentation for the period from 1 January 2008 to 30
September 2008:
(i) The margin on derivatives and options with customers is now reported under
`Net trading income and revaluation` while previously it was reported under `Net
fee and commission income`,
(ii) Dividends received have been reclassified from `Net interest income` to
`Dividends`,
(iii) `Result on other income and expenses` has been reclassified to `Result on
other operating income and expenses`,
(iv) The Bank no longer discloses the caption `Result on operating activity`.
Below are presented summaries of the impact of change on the profit and loss
account:
PLN`000
1 Jan. 2008 - 30 Sept. 2008 Change in the presentation of the margin, income and operating costs 1 Jan. 2008 - 30 Sept. 2008
(unadjusted) (adjusted)
Interest income 594 740 -27 754 566 986
Interest expenses -219 155 - -219 155
Net interest income 375 585 -27 754 347 831
Impairment charges -15 776 - -15 776
Net interest income incl. impairment charges 359 809 -27 754 332 055
Fee and commission income 289 315 -9 861 279 454
Fee and commission expenses -65 910 - -65 910
Net fee and commission income 223 405 -9 861 213 544
Dividends 0 27 754 27 754
Net trading income and revaluation 65 035 9 861 74 896
Net income from investments 1 304 - 1 304
General administrative expenses -576 330 - -576 330
Result on other operating income and expenses 78 202 -895 77 307
Result on operating activity 151 425 -151 425 -
Result on other income and expenses -895 895 -
Profit before income tax 150 530 - 150 530
Income tax expense -28 334 - -28 334
Profit for the period 122 196 - 122 196
d.Other
Further part of these condensed interim unconsolidated financial statements
presents information and data that is important for appropriate assessment of
the Bank`s economic and financial situation and its financial performance, and
which was not included in the condensed interim consolidated statements of Bank
BPH SA Group for the three quarters of year 2009. Other information and
explanations presented in the condensed interim consolidated financial
statements of Bank BPH SA Group for the three quarters of year 2009 contain all
important information, which also serves as explanatory data to these
unconsolidated statements of the Bank.
4.Net fee and commission income
PLN`000
Period from Period from Period from Period from
01 Jul. 2009 to 30 Sept. 2009 01 Jan. 2009 to 30 Sept. 2009 01 Jul. 2008 to 30 Sept. 2008 01 Jan. 2008 to 30 Sept. 2008
Income from: 126 787 355 041 96 680 279 454
securities and custodian business 6 009 17 214 3 987 11 108
loans and advances 24 001 61 378 7 451 22 690
domestic payments 59 287 169 502 53 643 157 464
foreign payments 4 236 12 270 4 072 12 139
transactional exchange rate position 18 876 55 523 12 315 33 195
investment fund management and distribution of participation units 10 112 26 429 10 677 37 995
other 4 266 12 725 4 535 4 863
Expenses on: -26 038 -72 745 -20 964 -65 910
securities and custodian business -2 086 -5 251 -1 608 -3 920
loans and advances -2 079 -4 784 -1 001 -2 637
domestic payments -20 999 -60 387 -17 655 -56 982
foreign payments -276 -857 -207 -513
other -598 -1 466 -493 -1 858
NET FEE AND COMMISSION INCOME 100 749 282 296 75 716 213 544
5.Dividends
On 27 May 2009, The General Meeting of the Bank has passed the resolution on the
profit distribution, in which no dividend for 2008 is envisaged. The decision is
in line with the Supervisory and Management Boards` recommendations.
On 27 March 2008, BPH PBK Zarządzanie Funduszami Sp. z o.o., the Bank`s
subsidiary paid PLN 27,754 ths to the Bank as dividend from 2007 profit.
6.General administrative expenses
PLN`000
Period from Period from Period from Period from
01 Jul. 2009 to 30 Sept. 2009 01 Jan. 2009 to 30 Sept. 2009 01 Jul. 2008 to 30 Sept. 2008 01 Jan. 2008 to 30 Sept. 2008
Employment costs -86 124 -341 963 -101 805 -287 496
Salaries -75 201 -304 548 -88 519 -241 012
Retirement and other benefits 532 3 219 240 -6 584
Obligatory social security charges -11 455 -40 634 -13 526 -39 900
Building maintenance and rents -27 589 -90 548 -24 332 -68 046
Other expense -43 768 -143 807 -43 204 -127 948
Depreciation -20 668 -70 729 -25 882 -92 840
GENERAL ADMINISTRATIVE EXPENSES -178 149 -647 047 -195 223 -576 330
7.Investment financial assets
PLN`000
As at 30 Sept. 2009 As at 30 Jun. 2009 As at 31 Dec. 2008
Assets available for sale 520 515 375 822 577 173
Debt instruments: 508 590 363 904 565 722
Treasury bonds 328 852 272 883 255 114
Treasury bills 179 738 91 021 310 608
Equity instruments: 11 925 11 918 11 451
shares 10 200 10 200 10 200
interests 1 725 1 718 1 251
Debt securities designated as at fair value through profit or loss (FVO) 1 532 175 823 569 348 951
bonds 683 354 701 172 318 332
Treasury bills 848 821 122 397 30 619
Investments certificates designated as at fair value through profit or loss (FVO) 25 736 25 825 27 000
TOTAL INVESTMENTS FINANCIAL ASSETS 2 078 426 1 225 216 953 124
8.Related party transactions
As at 30 September 2009, the balance of receivables and liabilities of the Bank
with respect to consolidated subsidiaries was as follows:
PLN`000
As at 30 Sept. 2009 As at 30 Jun. 2009 As at 31 Dec. 2008
BPH PBK ZF and BPH TFI BPH PBK ZF and BPH TFI BPH PBK ZF and BPH TFI
Other receivables 9 168 4 160 3 290
Liabilities, including: 13 899 8 420 6 156
- term deposits 11 327 7 184 4 820
Off balance guarantee commitments granted 15 446 16 946 1 007
The value of transactions concluded during three quarters of year 2009 with
consolidated subsidiaries was as follows:
PLN`000
Period from Period from
01 Jan. 2009 to 30 Sept. 2009 01 Jan. 2008 to 30 Sept. 2008
BPH PBK ZF and BPH TFI BPH PBK ZF and BPH TFI
Other receivables 0 5 405
Deposits 1 643 325 57 384
Other liabilities 0 4
Off balance guarantee commitments granted 15 867 0
There were no unconsolidated subsidiaries or affiliated companies at 30
September 2009, 30 June 2009 and December 31, 2008.
Translation of the document originally issued in Polish
Bank BPH SA
Copyright Business Wire 2009
