Summary of Performance
Net profit of Bank Pekao S.A. Group attributable to equity holders for 2014 amounted to PLN 2,714.7 million allowing return on average capital (ROE) at the level of 11.5% achieved with a strong capital base reflected by the total capital ratio at 17.3% (Basel III). Normalized ROE (return on minimum equity equivalent to the total capital ratio at 10%) amounted to 17.3%.
As financial data of 2014 don't include results of PJSC UniCredit Bank – sold on July 16, 2013 – in the subsequent part of this chapter, financial information dynamics is discussed excluding PJSC UniCredit Bank from the year 2013 to ensure comparability.
The Group's net profit attributable to equity holders reported for 2014 was lower by PLN 52.6 million, i.e. 1.9% in comparison to 2013, mainly due to lower trading result and the impact of regulatory constraints.
The strength of the liquidity structure of Bank Pekao S.A. Group is reflected by net loans to deposits ratio at 88.8% at the end of December 2014. This together with strong equity level enables for further sound and stable development of the Group's activities.
In the area of mortgage lending, the Bank continued its policy of offering only PLN mortgage loans. The residual stock of mortgage loans denominated in foreign currencies, almost entirely acquired as a result of the merger of the spun-off part of Bank BPH SA in 2007, represents only 4.3% of total loans of the Bank.
- In 2014, the Group's operating income amounted to PLN 7,345.7 million, a decrease of PLN 147.9 million, i.e. 2.0% in comparison with 2013 mainly due to decrease in net non-interest income partially compensated by higher net interest income achieved despite significant pressure of lower interest rates.
- Total net interest income, dividend income and income from equity investments in 2014 amounted to PLN 4,532.8 million and was higher by PLN 22.8 million, i.e. 0.5% compared to the previous year thanks to higher volumes fully compensating negative impact of lower interest rates including reduction of the NBP Lombard rate determining the maximum interest rate applicable to loans. In 2014, average WIBOR 3M rate stood at the level of 2.51%, and was lower by 52 b.p. than in 2013, while the NBP Lombard rate went from 4.0% at the end of 2013 to 3.0% at the end of 2014.
- The Group's net non-interest income in 2014 amounted to PLN 2,812.9 million, a decrease of PLN 170.7 million, i.e. 5.7% in comparison with 2013 mainly due to lower net fee and commission income (affected by lower interchange rates decreasing card related fees, unfavorable market conditions influencing mutual funds and brokerage fees as well as OFE reform and migration to the Internet channels) and lower trading result, in particular lower gains on disposal of available for sale financial assets.
- In 2014, the operating costs were kept under control and amounted to PLN 3,425.5 million. They were lower than the operating costs in 2013 by PLN 12.7 million, i.e. 0.4% despite new prudential charge of Banking Guarantee Fund introduced in the fourth quarter of 2013.
- The Group's net impairment losses on loans and off-balance sheet commitments amounted to PLN 559.6 million in 2014, a decrease of PLN 98.9 million, i.e. 15.0% as compared with 2013. As at December 31, 2014, the ratio of impaired receivables to total receivables amounted to 6.8% and was better by 0.5 p.p. in comparison to the end of 2013.
- As at the end of December 2014, the total amounts due to the Group's customers and debt securities issued amounted to PLN 129,466.0 million, an increase of PLN 6,605.6 million, i.e. 5.4% in comparison to the end of 2013, despite a decrease by PLN 6,122.5 million of liabilities to Open Pensions Funds (OFE) due to pension funds reform introduced in the first quarter of 2014. Excluding OFE, total amounts due to the Group's customers and debt securities issued increased by PLN 12,728.1 million, i.e. 11.3% in comparison to the end of 2013.
The total volume of retail customers deposits, Structured Certificates of Deposit and other amounted to PLN 55,934.6 million at the end of December 2014, an increase of PLN 4,518.3 million, i.e. 8.8% in comparison to the end of 2013.
The value of net assets of investment funds managed by Pioneer Pekao TFI S.A. amounted to PLN 17,115.1 million at the end of December 2014, an increase of PLN 703.6 million, i.e. 4.3% in comparison to the end of 2013.
The total volume of corporate customers deposits, repo and sell-buy-back transactions, Certificates of Deposit, Pekao Bank Hipoteczny S.A. covered bonds, interest and other amounted to PLN 73,531.4 million at the end of December 2014, an increase of PLN 2,087.3 million, i.e. 2.9% as compared to the end of 2013, excluding OFE an increase of PLN 8,209.8 million in comparison to the end of 2013.
- As at the end of December 2014, the volume of total customers' financing amounted to PLN 121,192.8 million, an increase of PLN 11,642.2 million, i.e. 10.6% in comparison to the end of 2013.
As at the end of December 2014, the volume of retail loans amounted to PLN 49,264.0 million, an increase of PLN 4,788.6 million, i.e. 10.8% in comparison to the end of 2013.
The volume of corporate loans, non-quoted securities, reverse repo transactions and securities issued by non-monetary entities amounted to PLN 71,928.8 million, an increase of PLN 6,853.6 million, i.e. 10.5% in comparison to the end of 2013.