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Integrated Report 2020

Implementation of the strategy in 2020

Since the beginning of March 2020, events in the country and across the world have been dominated by the COVID-19 pandemic. The whole economy has been confronted with a completely new reality, where health and safety have become an undisputed priority.

For many industries, including the banking sector, this meant a redefinition of business models and processes so that they could continue to function in a world of limited direct contact between people. Despite this unprecedented challenge, the Bank managed to remain fully operational. Stability and liquidity were maintained. Customers were provided with full sales and service support, and employees were equipped with all available safety measures.

Solid foundations for future growth were evident in the Bank’s relatively high resilience compared to the sector. Despite a three-fold cut in NBP interest rates having a negative impact on net interest income, the Bank maintained its revenue generating capacity and was able to focus on further implementation of Customer improvements. The Bank focused on implementing new solutions to support digital sales and significant loan transactions in the corporate segment. The pandemic had a significant impact on the business activity of the Bank’s Customers, which was evident in lower loan demand from businesses or lower sales of consumer loans. On the other hand, the Bank achieved record high mortgage sales and maintained a level of personal account sales similar to 2019. At the same time, the Bank continued to actively promote green solutions for its Customers, working on reducing its own carbon footprint.

The passing year has proven that the Fast Forward strategy, i.e.: intelligent and responsible growth, improvement of efficiency and quality and focus on people – supported by digitalisation –continues to be valid in the new reality. Thus, the Bank plans its continuaiton in the last year of its horizon.

Further actions within the strategy are described in the table below

STRATEGIC ASSUMPTIONS

concentration of resources (people, IT and capital) on the most profitable products and segments in order to increase Customer acquisition, sales and, consequently, increase of financial results

ACHIEVEMENTS IN 2020

  • Record sales of mortgage loans at PLN 5.6 billion compared to PLN 4.3 billion in 2019.
  • 257 thousand personal accounts sold in 2020.
  • Dynamic development in the area of e-commerce on the Allegro platform.
  • Establishing cooperation with MediaMarkt store chain from the fourth quarter of 2020.
  • Cooperation with Decathlon store chain.
  • The total value of loans granted by the Bank to finance projects that support sustainable development at the year-end 2020 was PLN 2.7 billion, and only in 2020 the Bank granted PLN 993 million of „green” financing.
  • Zielona Hipoteka (“Green Mortgage”) – offer for Customers applying for a loan to finance energy efficient properties.
  • Launch of the long-term car rental offer together with Arval. Full insurance and service package and a discount for Bank Customers.
  • First guarantee agreement with the EIB for energy efficiency investments with a target value of PLN 742 million.
  • Concluding contracts for syndicated financing:
    • Polimery Police project (The Bank acted as one of the main organizers of financing and coordinator of interest rate risk hedging instruments. This is the largest investment in the history of the Azoty Group and in the chemical industry for many years – it will allow Poland to become independent of polypropylene imports),
    • new wind and photovoltaic farms under construction by Qair Polska (consortium with EBRD up to a total of PLN 630 million),
    • a multi-annual investment plan for PKP Energetyka (the Bank acted as the Bookrunner and the main organiser).
  • Concluding contracts with CIECH Group entities for reverse factoring. As a result of the cooperation, the CIECH Group received a total limit of PLN 200 million at its disposal.

STRATEGIC ASSUMPTIONS

simpler product offer – especially in the area of Retail Banking, as well as simplified and interactive communication with Customers, simplified processes and focus on Customer service, optimization of traditional distribution channels and migration of Clients to digital channels, simplification of the organisation to increase its effectiveness

ACHIEVEMENTS IN 2020

  • First on the market use of open banking for identity verification (KYC) for remote cash loan application.
  • Enabling the remote activation of loan moratoria. Suspension of capital and interest instalments for individual and corporate Customers.
  • The Financial Shield (Tarcza Finansowe): enabling applications for a Polish Development Fund (PFR) subsidy in the electronic banking system.
  • Opening a Bank account without having to leave home using the GOmobile application. Identity is verified on the based on a video of the Customer’s face.
  • Offering Customers the possibility to apply for a mortgage product without visiting a branch for applicants who are already the Bank’s Customers.
  • Offering Customers the possibility to pay for purchases in installments through a payment terminal in the store (or online). The service, created in cooperation with Mastercard and Polskie ePłatności company, will make the „Pay in installments” service available.
  • Cooperation with booking application Booksy via which Customers can arrange a meeting with an advisor on investment, savings or mortgage products in all of Bank’s branches.
  • Investment (together with PKO BP and Alior Bank) in Autenti start-up – the initiative to create a Polish standard for remote signing and digital document circulation. E-signature is systematically implemented in various areas, e.g. available in the sale of current / savings accounts, instalment loans and leasing). Bank is the first on the market offering corporate Clients access both to e-signature and qualified e-signature.
  • Increasing the clarity and readability of communication addressed to clients in cooperation with Simple Language experts.

STRATEGIC ASSUMPTIONS

significant improvement in the quality of Customer service and its satisfaction by changing the organisation and streamlining service processes and focusing on the relationship with the Client, recognition and appreciation of the loyalty of current Customers and change of meaning and approach to measure of Customer satisfaction

ACHIEVEMENTS IN 2020

  • An IBM Trusteer Rapport application (protecting from stealing electronically transferred data) made available to all Customers free of charge.
  • 124 of the Bank’s branches in non-cash format, including 2 partner branches.
  • 51 of the Banl’s branches with “Obiekt bez barier” („Facility without Barriers”) certificate, meeting the accessibility requirements for people with disabilities.
  • Implementing a free calculator on the agronomist.pl website for optimising nitrogen fertilisation of crops – minimisation of negative environmental impact.
  • Founding Customer Lab – an internal “knowledge about Customers centre” – for researching Customer preferences and needs.
  • Free assistance of a sign language interpreter – in the branches and on the Bank’s hotline – deaf people may use their own phone or a special tablet to connect with a professional interpreter who will introduce the Bank’s offer using Polish sign language.
  • Launching the Centre of Competence regarding the Anti-Crisis Shield (Tarcza Antykryzysowa) offering free consultations for Wealth Management segment Clients-entrepreneurs.
  • Implementation of campaigns supporting Polish entrepreneurs, e.g. joint action with OLX Get Poland started with transactions and We support local business.
  • A number of awards:
    • World’s Best Bank for Financial Inclusion 2020 – an award granted to the BNP Paribas Group by Euromoney magazine for its social commitment and increased accessibility in the implementation of products and services.
    • „Newsweek’s Friendly Bank” 3rd place in the Traditional Banking category and 2nd place in the Remote Banking category.
    • A 5-star, top rating in Forbes magazine’s private banking services rating for BNP Paribas Wealth Management.
    • 3rd place in the Golden Banker (Złoty Bankier) ranking in the Credit Card category.
    • 1st place in the ranking of premium accounts of the Bankier.pl website for My PREMIUM Account.
    • Service Quality Star (Gwiazda Jakości Obsługi) in a consumer study by the Polish Service Quality Program.

STRATEGIC ASSUMPTIONS

increased employee involvement through participation in projects and increased cooperation, revitalization of organizational culture through rewarding for results, focus on talents, attracting the best on the market and care for the best employees

ACHIEVEMENTS IN 2020

  • “Responsible Companies Ranking”: 1st place for the second year in a row in the general classification and 1st place in the banking, financial and insurance sectors.
  • The Silver Leaf CSR Award of the “Polityka” weekly.
  • The Bank joined the stock exchange WIG-ESG index of companies meeting environmental, social and corporate governance criteria.
  • Creation of the function of the Chief Sustainability Officer and the Sustainability Council which supervises strategic management of the ESG and Sustainable Development aspects.
  • 100% of “green electricity”, in 2020 – thanks to guarantees of the electricity renewable sources origin. Contract with Respect Energy. 100% of electricity which is purchased directly by the Bank will come from hydropower plants.
  • “Top Employer 2020” certificate – obtained for the seventh year in a row, attesting that our HR policy is compliant with the best practices on the market.
  • „Women Changing BNP Paribas” – an initiative promoting the development and support of women at the Bank.
  • Support for employees during the pandemic. Remote work, protective measures in offices, psychological assistance, tests for the presence of SARS-CoV-2. The Bank’s actions were assessed by representatives of banking trade unions as exemplary.
  • The corporate wellness: „Well” program – promoting a healthy lifestyle – 3.5 thousand employees participate in the program.
  • 22.5 thousand hours worked by employees as a part of social commitment.
  • Class scholarship program – 100 participants in 2020, PLN 24 million for the program over 18 years.
  • The “Good Kilometres” campaign – 70,000 km covered by employees.
  • 60 thousand trees planted. 25 thousand through participation in the Auction of Carbon Dioxide Units, 14 thousand as part of the Reforest Action campaign and 21 thousand as oxygen trees (an additional 29 thousand are planned).
  • 20 thousand protective masks and 2 thousand SARS-CoV-2 tests purchased by the Bank for medical facilities.
  • Over 750 laptops to students and organisations which needed support in online education or work.
  • The Bank joined the international Cool Farm Alliance (CFA), an industry consortium which brings together entities working for the development of sustainable agriculture.
  • Bank support for the Itaka Foundation Antidepressant Helpline. This will allow to extend the duty hours from 4 to 15 hours a week for 12 months. It is an important aid in the fight against depression, especially in times of a pandemic.

STRATEGIC ASSUMPTIONS

building a competitive advantage based on technologies: digitization to optimize costs through automation of operations, digitization enabling growth using comprehensive, multi-channel sales and service model as well as digitization supporting the identification of Customer needs through the use of CRM and data analytics to improve the matching of the offer and personalization of communication with Customer (using consistent online and mobile platforms)

ACHIEVEMENTS IN 2020

  • 1.3 million Customers actively using remote channels of communication with the Bank.
  • GOonline – finalisation of the migration of retail Customers to the new platform and thus switching off the old Pl@net system in May 2020. Number of GOonline users – 743 thousand
  • GOmobile – extension of the application’s functionality – Customers without a visit in the branch will, among other things, repay their credit card debt in instalments, prepay a loan or get access to the FX Pl@net currency exchange platform; it will also enable payments for parking and public transport tickets in GOmobile. Number of GOmobile users – 669 thousand.
  • GOmobile Business – new features in the mobile application, including: the use of biometrics to start the application, realising instant payments and handling split payments.
  • New Premium Banking offer along with the „Cyber” package, which takes care of the user’s online safety (darknet monitoring and BIK Alerts service).
  • Elimination of paper forms when opening an account at a branch and making cash deposits and withdrawals.
  • Implementation of EVA chatbot to support the operations of the Central Purchasing Department awarded in the Purchasing Leader 2020 competition.

Realisation of strategic financial targets in 2020

XLS
MEASURE STRATEGIC TARGET REALISATION IN 2020 COMMENTS
increase in the net banking income faster than the market +3.4% y/y
  • The Group generated an increase in banking income compared to 2019 due to higher net fee & commission income, net trading income and net other operating income and expenses. The increase in these income items offset the decrease in net interest income following the interest rate cut in 2020.
  • In 2020, net revenues of the sector recorded a decline of 4.1% y/y
ROE >10% 6.3%
  • The Bank’s profitability was under pressure due to the impact of the COVID-19 pandemic on the external environment (lower customer activity, interest rate cuts by the MPC, increased cost of risk due to worsening macroeconomic outlook).
  • Despite the unfavorable environment, the Group achieved a ROE of 6.3%, higher than the 5.7% achieved in 2019, when however the Bank’s performance was burdened by integration costs. ROE excluding integration costs was 8.7% in 2019.
  • The ratio for the banking sector for 2020 was 3.5%.
C/I around 50% 53.3%
  • The Bank’s cost efficiency measured with cost/income ratio improved to 53.3% (compared to 64.2% on a reported basis, and 55.3%, with integration costs excluded, in 2019). It was made possible by an increase of income and maintaining cost discipline.
  • The ratio for the banking sector (taking into account bank tax) was 58.0%

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