Small and Medium Enterprise Banking

The Small and Medium Enterprise (SME) Banking area provided services to three main customer sub-segments in 2021: 

The SME Banking Area sales network as of 2021 included 6 SME Banking Regions grouping 45 SME Business Centers located in 34 local markets with the greatest potential.

In Q4 2021, the Bank conducted a strategic review of the organisational structure in the SME Banking Area. As a result, from 1 January 2022, the territorial extents of regions were changed and the previous 6 SME Banking Regions were consolidated to 3 Regions. This change was intended to align the regional sales network in the SME Banking Area with the organisational changes taking place in the Corporate Banking Area and consequently better capture of the synergies between SME Clients and Medium-sized Corporate Clients (MID CAP).

The Bank’s model of servicing SME clients is a model based on relationship. Its essence is the individual service of the advisor, who is responsible for the entire relationship of the client with the bank. In addition, to fully meet the needs of customers, teams of specialists are dedicated to provide services to SME companies, offering a high standard of sales service and product consultancy, based on knowledge and experience in the field of cash management, treasury, leasing, factoring and trade financing.

SME customers can benefit from ongoing operational support through the retail branch network, online and mobile banking channels offered by the Bank, as well as rely on telephone operational and information support from a dedicated Business Service Area.

The Bank offers a wide range of products addressed to Small and Medium-sized Enterprises, characterized by high flexibility, which allows the Bank to adjust many parameters to individual customer needs.

The Bank’s offer dedicated to the SME segment includes products such as: transaction products within the account or package already owned, Internet and mobile banking: BiznesPl@net, GOmobile Biznes, FX Pl@net, BNP Paribas Connect Host to Host – integration of the financial and accounting system with the Internet banking system, deposit products, loan products, trade finance products, financial market transactions, factoring services offered in cooperation with BNP Paribas Faktoring Sp. z o.o., leasing services offered in cooperation with BNP Paribas Leasing Services Sp. z o.o.

In 2021, the criteria for segmentation of customers into the SME line were changed, which from the beginning of this year included customers with net sales revenues for the last year in the range between PLN 4 and 60 million (previously: PLN 4-40 million).

The activities of the SME area in 2021 focused mainly on sales activity by:

• increasing the customer base,
• reversing the negative trend of loan volumes, which were decreased due to the COVID-19 pandemic and the launch of the state support addressed to companies as government aid programmes in 2020,
• increasing the level of customer and cross-sell transactions mainly in the area of cash management and foreign exchange transactions.

Despite the restrictions related to the ongoing COVID-19 pandemic and the lower demand of credit by SME companies, especially in the first half of the year, the SME Banking area increased the sales volume of new credit limits. In 2021, sales of new credit limits increased by 27% y/y. It is worth noting that approximately 47% of new credit volumes were directed to customers of the AGRO sub-segment, which was the highest result of credit sales in this sub-segment over the last 5 years.

In 2021, the Bank’s result was also positively influenced by other activities undertaken in the SME area:

In 2021, the Bank continued its efforts to support its SME Customers under the government aid programs:

In 2021, in addition to the above activities, the Bank carried out work related to the further development of processes digitalisation and optimization, including in particular credit and post-sales processes.

With respect to guarantees and letters of credit the Bank offers effective and comprehensive services based on dedicated IT solutions.

In 2021, the Bank on the instructions of clients of the SME Banking Area:

• issued 634 bank guarantees for the total amount of PLN 173.4 million,
• opened 133 import letters of credit for the total amount of PLN 38.3 million and handled 82 export letters of credit for the total amount of PLN 22.4 million issued by third-party banks in favor of these Customers.

As of 31 December 2021, deposits of Small and Medium Enterprise Banking customers on a consolidated basis amounted to PLN 12,966,188 thousand and were PLN 444,358 thousand or 3.5% higher than at the end of 2020. The structure of the portfolio did not change significantly compared to the end of 2020 (increase in the share of current accounts by 0.3 p.p., to 94.5%, with a simultaneous decrease in the share of term deposits by 0.3 p.p., to 0.4% and overnight deposits decreased by 0.1 p.p. to 0.3%).

As at 31 December 2021, the value of the SME Banking segment’s net credit and loan portfolio on a consolidated basis amounted to PLN 7,262,029 thousand (an increase of PLN 207,429 thousand, or 2.9%, than at the end of 2020). The largest increase in value concerned overdrafts and leasing.

The SME Banking segment generated a gross profit of PLN 80,582 thousand in 2021 (compared to PLN 106,012 thousand in the first half of 2020, an decrease of 24% y/y).

The decrease in the result was due to, in particular, higher risk costs and allocation costs than in 2020.

The result on banking activities of Small and Medium Enterprises Banking in 2021 amounted to PLN 449,798 thousand and was 1.3% higher compared to 2020. This was the result of an improvement in net fee income and trading profit possible due to, for example, changes in pricing policy and higher customer activity, especially in the second half of 2021. Result on banking activity of the SME segment accounted for 9.4% of the Group’s banking activity in the analyzed period.