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BANK PEKAO S.A. GROUP Financial results after 2Q 2006 Istanbul, 5-6 October, 2006 Growth creating value CA IBs Annual Emerging Europe Conference.

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Presentation on theme: "BANK PEKAO S.A. GROUP Financial results after 2Q 2006 Istanbul, 5-6 October, 2006 Growth creating value CA IBs Annual Emerging Europe Conference."— Presentation transcript:

1 BANK PEKAO S.A. GROUP Financial results after 2Q 2006 Istanbul, 5-6 October, 2006 Growth creating value CA IBs Annual Emerging Europe Conference

2 DISCLAIMER Forward looking statement This presentation contains certain forward-looking statements with respect to the financial condition, results of operations, and businesses of Bank Pekao S.A. These statements and forecasts involve risk and uncertainty because they relate to events and depend upon circumstances that will occur in the future. There are a number of factors which could cause actual results or developments to differ materially from those expressed or implied by these forward looking statements and forecasts. The statements have been made with reference to forecast price changes, economic conditions and the current regulatory environment. Nothing in this announcement should be construed as a profit forecast.

3 AGENDA r Macro scenario 3 r Second quarter consolidated results r Integration process

4 EXPORT (EUR bn) 4 Source: Central Statistical Office, National Bank of Poland GDP (% Y/Y) POLISH ECONOMY TRENDS INVESTMENTS (% Y/Y) CONSUMPTION (% Y/Y)

5 Source: National Bank of Poland 5 BANKING SECTOR TRENDS TOTAL SECTOR LENDING (% Y/Y)TOTAL SECTOR DEPOSITS (% Y/Y) DYNAMIC OF HOUSEHOLDS AND CORPORATE LENDING IN THE POLISH BANKING SECTOR (% Y/Y) DYNAMIC OF HOUSEHOLDS AND CORPORATE DEPOSITS IN THE POLISH BANKING SECTOR (% Y/Y)

6 AGENDA r Macro scenario 6 r Second quarter consolidated results r Integration process

7 NET INCOME (PLN mil.) OPERATING INCOME (PLN mil.) 7 ROE (%) +1.8 p.p % +6.8% +13.4% +7.9% NET INCOME UP BY 19.3% Y/Y, DRIVEN BY SOUND OPERATING INCOME GROWTH (+15.8% Y/Y), CONFIRMING CAPABILITY TO DELIVER SUSTAINABLE RESULTS. ROE IMPROVED TO 20.5% +19.3% +15.8%

8 TOTAL REVENUES (PLN mil.) OPERATING EXPENSES (PLN mil.) 8 COST / INCOME RATIO (%) -3.4 p.p. +6.9% +4.0% +1.0% +0.2% REVENUES UP BY 7.9% Y/Y, OPERATING EXPENSES UNDER CONTROL. COST/INCOME RATIO IMPROVED TO 50.4% +7.9% +1.1%

9 REVENUES (PLN mil.) 9 % ch 2Q 06/1Q 06 % ch 2Q 06/2Q % +23.0% -2.0% +32.0% +1.9% +0.7% % +4.0% HEALTHY STRUCTURE OF REVENUES WITH GROWTH DRIVEN BY NET FEE AND COMMISSION (+24.2%) % -13.6% +24.2% +2.1%

10 NET INTEREST MARGIN * NET INTEREST INCOME (PLN mil.) % +0.7% NET INTEREST INCOME INCREASE BY 2.1 % Y/Y DRIVEN BY FURTHER IMPROVEMENT OF ASSETS MIX. NIM ALMOST STABLE AT 4.1% *excluding sell buy back and buy sell back +2.1%

11 % -6.1% +23.2% +12.0% +4.0% CUSTOMERS SAVINGS (PLN mil.) * total PPIM mutual funds, ** Bank only +7.7% +5.1% +0.2% - savings of retail customers +4.8% +2.3% TOTAL SAVINGS UP BY 12% Y/Y, WITH CONTRIBUTION OF BOTH RETAIL AND CORPORATE % ch JUN06/JUN05 % ch JUN06/DEC05

12 +5.1% +23.2% MUTUAL FUNDS – VOLUMES (PLN mil.) MARKET SHARE 2Q 2006 MUTUAL FUNDS ASSETS STRUCTURE* Bonds MFEquity MFBalanced MF * all Pioneer funds - domestic and international 12 STRUCTURE OF MF SOLD BY PEKAO (%) RESILIENT MUTUAL FUNDS, +5.1% YTD DESPITE DIFFICULT MARKET IN Q2. MARKET SHARE STARTED TO STABILISE. FURTHER IMPROVEMENT IN ASSETS MIX 33.7% 51.3% 15.0%

13 * Nominal value CUSTOMERS LOANS* (PLN mil.) % +3.0% +21.1% +4.3% +1.2% +8.3% % ch JUN06/JUN05 % ch JUN06/DEC05 TOTAL LOANS UP BY 8.2% Y/Y WITH POŻYCZKA EKSPRESOWA AND PLN MORTGAGE LOANS AS MAIN DRIVERS IN RETAIL LENDING (+21.1% Y/Y)

14 14 SUCCESSFUL SALE OF POŻYCZKA EKSPRESOWA ALLOWED TO BUILD A STOCK OF PLN 1.8 BLN STOCK VOLUME (in PLN mil.) VOLUME SOLD (in PLN mil.) +32.2%+208.1%

15 15 VOLUME OF MORTGAGES SOLD (PLN mil) VOLUME OF PLN MORTGAGES STOCK (PLN mil)VOLUME OF FX MORTGAGES STOCK (PLN mil) +41.4% +16.5%-24.7% -10.9% CONTINUOUSLY IMPROVING SALES (+35% 2Q/2Q) ALLOWED FOR 41% INCREASE IN STOCK OF PLN MORTGAGE LOANS +34.9% +28.6%

16 FEE AND COMMISSION INCOME (PLN mil.) % -8.3% +9.4% +4.0% +35.6% +59.1% +7.7% +8.9% % +1.9% STRONG GROWTH OF FEE AND COMMISSION INCOME (+24.2% Y/Y), WITH MUTUAL FUNDS (+68.1%) AND LENDING (+42.7%) AS MAIN DRIVERS % ch 2Q 06/1Q 06 % ch 2Q 06/2Q ,7% +68.1% +6.5% +6.8% +24.2%

17 17 COSTS (PLN mil.) -2.0% +0.8% +0.1% % +1.4% +1.5% 2Q 05 1Q 06 Headcount COSTS UNDER CONTROL, CONFIRMING GROUP EXCELLENT COST MANAGEMENT 2Q % +1.8% +1.1% % +1.0% +0.2% % ch 2Q 06/1Q 06 % ch 2Q 06/2Q 05

18 NPL RATIO* PROVISION COVERAGE RATIO COST OF RISK * In accordance with IFRS 18 FURTHER IMPROVEMENT OF COST OF RISK, DOWN TO 0.65%, THANKS TO BETTER MACROECONOMIC CONDITIONS AND EFFICIENT RISK MANAGEMENT 15.6% 15.4% 14.8% % ch JUN06/MAR06 % ch JUN06/DEC % +3.6% -2.0% +2.2%

19 SUMMARY Best ever profit Growth volume both retail and corporate Further improvement of the commercial effectiveness throughout the Group Efficient cost control and risk management 19

20 AGENDA r Macro scenario 20 r Second quarter consolidated results r Integration process

21 21 Integration project launched on 22 May and proceeding at full speed 14 Task Forces were created, with ~300 people involved in the integration planning Proper integration governance process in place, with bi-weekly Program Leader reviews and monthly Steering Committees, managed by Project Management Office on daily basis INTEGRATION PROJECT SET UP

22 2 Completed Phase 1 Phase 2Phase 3 Phase 4 -Integration implementation - As is assessment of operating models - Evaluation of spin off options New Bank fully in place - Preparation to disposal - Preparation of high level integration plan - Pre-closing integration activities PROJECT APPROACH REFLECTING AMBITIOUS TIMETABLE July 2006 October 2006December 2007* * final deadline from IT perspective to be validated

23 Business assessment Pekao Supervisory Board Program Leadership Steering Committee UniCredit BPH Pekao UniCredit sponsorship Compliance/ Legal /Tax M&A Corporate and Treasury Retail Project Management Office Working teams Target outlets Subsidiaries Focused on supporting other teams in the first phase Pekao Management Board BPH Supervisory Board BPH Management Board Communication PR, HR, Legal, IR Financials HR Logistics IT/Operations Risk Accounting Spin-off/ integration Subsidiaries PROJECT ORGANISATION 23

24 24 TASK FORCES ACHIEVED SIGNIFICANT PROGRESS, IN LINE WITH EXPECTATIONS Methodology for outlets selection developed As is comparison of the operating models completed, with high level aspirations for the New Bank close to completion Retention plan for key resources prepared, program to exchange of middle management planned Comprehensive communication program in place

25 25 r Appendix

26 26 BANKING SECTOR TRENDS DYNAMIC OF HOUSEHOLDS LENDING IN THE POLISH BANKING SECTOR (% YTD) DYNAMIC OF HOUSEHOLDS DEPOSITS IN THE POLISH BANKING SECTOR (% YTD) DYNAMIC OF CORPORATE DEPOSITS IN THE POLISH BANKING SECTOR (% YTD) DYNAMIC OF CORPORATE LENDING IN THE POLISH BANKING SECTOR (% YTD)

27 27 Source: Central Statistical Office, National Bank of Poland INFLATION, INTERVENTION RATE, 3M WIBOR AVER. EMPLOYMENT IN ENTERPRISES SECTOR (THS.)

28 28 Dynamics of USD and EURO rates (average in month)

29 PROFIT AND LOSS ACCOUNT 29

30 BALANCE SHEET 30


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