FINANCIAL RESULTS

Adrian Firek

Relationship Manager

Przemek Gdański

President of the BNP Paribas Bank Polska Management Board

Last year was historic in three dimensions – we achieved the highest net profit, we had the highest level of provisions for Swiss franc risk and, for the first time, there is a huge chance to pay a dividend, for which our Shareholders have been waiting for a very long time. In 2023, we consistently pursued our business strategy. I am particularly pleased with the increases in all revenue categories and key segments of our business. We are carrying on our technological transition and keep rolling out new digital solutions for our Customers, as reflected in the increase in transactional activity and the number of remote channel users. Our efforts in the digitalization and ESG areas were met with international acclaim in 2023 – among the accolades we won was the Innovation in Digital Banking Award 2023 and two Euromoney Awards for Excellence 2023 – for ESG as well as our offering targeted at corporate Customers.

Key figures

PLN 1,013million

net profit

PLN 7,283million

net banking income

42.5%

cost/income

8.2%

ROE

PLN 161.0billion

assets

PLN 88.9billion

gross loans

PLN 967million

net profit w/o credit holidays impact

41.1%

cost/income w/o costs of BGF, IPS and credit holidays impact

7.7%

ROE w/o credit holidays impact

In 2023, there was a significant improvement in the economic situation for companies listed on the WSE, but the activities of banks remained influenced by the high level of inflation, still high interest rates, low demand from individual Customers for credit products and the need to increase the volume of provisions related to the CHF loan portfolio.

We continued the implementation of the GOBeyond strategy for 2022-25, which started in 2022, and which focuses on organic growth while maintaining a responsible approach to risk management.

Thanks to our business model and consistently implemented strategy, despite the significant impact of legal risk related to the CHF loan portfolio on the results, we generated a net profit of PLN 571 million, i.e. 129%, higher than in 2022.

Net profit

PLN 1,013 million
    • 129 %

      y/y

The impact of legal risk related to the CHF loan portfolio in 2023 burdened the Group’s results with an amount of nearly PLN 2 billion in 2023, 167% higher y/y.

Statement of profit or loss

The Group’s net banking income was higher by 36% compared to 2022 and amounted to PLN 7,3 billion.

The most important events affecting the NBI level in 2023 and its comparability with 2022 were the consequences of changes in the macroeconomic situation, including in particular the continuing high level of inflation and interest rates.

Result on banking activity

    • 5,352 PLN million

      2022

    • 7,283 PLN million

      2023

    • 36 %

      y/y

Net interest margin in relation to average assets amounted to 3.4% and was 0.1 p.p. higher y/y.

Elements of the regulatory environment that had a positive impact on the 2023 results compared to 2022 included a reduction in the total value of BGF contributions as well as the absence of IPS costs. As a result, total administrative costs and depreciation incurred in 2023 were only by PLN 57 million, i.e. 1.9%, higher compared to 2022. Costs excluding BGF and IPS costs would have been 10.9% higher y/y.

The Cost/Income ratio calculated on the basis of reported volumes was 14.3 p.p. lower compared to 2022 as a result of the mentioned decrease in regulatory costs while improving the level of the net banking income.

The high quality of the Group’s loan portfolio and timely servicing of loans translated into a low cost of risk. The share of impaired receivables in the loan portfolio was 3.0% at year-end 2023.

The Group’s return on equity (ROE) was higher that at the end of 2022 and stood at 8.2%.

Statement of financial position

Total assets

    • 150,109 PLN million

      2022

    • 161,026 PLN million

      2023

    • 7 %

      y/y

The Group’s total assets as at the end of 2023 were higher by PLN 10.9 billion compared to the end of 2022. The most important change in the Group’s asset structure compared to that at the end of 2022 was a decrease in the share of the loan portfolio with a concurrent increase in receivables from banks and cash and balances with the Central Bank. A factor that to some extent influenced the decrease in the share of the loan portfolio was the change in the recognition of the impact of legal risk arising from CHF mortgage litigations from 1 January 2023, resulting in a change in the presentation and value of the loan portfolio measured at amortized cost and net assets.

In 2023, there was a further increase in the total value of Customer deposits. This trend was noticeable both in the segment of Retail Customer (+3% y/y) and the Institutional Customer segment (+8% y/y). The Customer deposit structure also changed – the share of term deposits further increased at the expense of current accounts (11% at the end of 2021, 31% at the end of 2022 and 32% at the end of 2023).

At the end of 2023, net loans and advances to Customers (the sum of portfolios measured at amortized cost and measured at fair value) decreased by PLN 2.4 billion, compared to the end of 2022. The portfolio of Institutional Customers increased slightly by 0.3% y/y, while the volume of loans to Retail Customers decreased by 8.0%, mainly as a result of a decline in the value of the mortgage loan portfolio.

The Tier 1 capital ratio at the end of 2023 was 12.51%, and the total capital ratio was 16.67%. Both ratios remain above the required regulatory values.

2021 2022 2023 Change 2023/2022
Statement of financial position (PLN million)
Total assets 131,777 150,109 161,026 7.3%
Total net loans and advances to customers (sum of portfolios measured at amortised cost and measured at fair value through profit or loss) 86,299 88,631 86,248 (2.7%)
Deposits 100,991 119,529 126,714 (6.0%)
Statement of profit or loss (PLN million)
Net profit 176 441 1,013 129.3%
Net profit normalized1 176 1,166 967 (17.1%)
Net banking income 4,809 5,352 7,283 36.1%
Result on provisions for legal risk related to foreign currency loans -1,045 -740 -1,978 167.3%
Net impairment losses on financial assets and contingent liabilities -266 -275 -34 (87.5%)
General administrative expenses & Depreciation and amortization -2,544 -3,038 -3,096 1.9%
Financial ratios
Net ROE 1.5% 3.9% 8.2% 4.2 p.p.
Net ROE normalized1 1.5% 10.2% 7.7% (2.4 p.p.)
C/I 52.9% 56.8% 42.5% (14.3 p.p.)
C/I normalized1 49.9% 42.9% 41.1% (1.8 p.p.)
Net interest margin 2.51% 2.46% 3.43% 0.97 p.p.
Cost of risk (0.32%) (0.30%) (0.04%) 0.26 p.p.
Total Capital Ratio (TCR) 16.91% 15.55% 16.67% (1.12 p.p.)
  1. due to the change in the recognition of the impact of legal risk arising from CHF mortgage litigation from 1 January 2023 in accordance with IFRS 9, restated values are presented in column 2022 for the categories Net Assets and Loans and advances to Customers.
  2. normalized values calculated excluding credit holidays in 2022-2023 and integration costs incurred in connection with the implementation of the merger processes in 2016-2020.

Management Board Report

Management Board Report on the activities of BNP Paribas Bank Polska S.A. Group in 2023

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