Poland's Pekao aiming for higher 2021 profit despite low rates

Votum SA

15/01/2021 13:40

By Agnieszka Barteczko and Anna Koper
    WARSAW, Jan 15 (Reuters) - Polish lender Pekao  PEO.WA  is
aiming to increase net profit this year after record low
interest rates and high risk costs hit earnings in 2020, its
acting chief executive told Reuters. 
    Polish banks have suffered from the low borrowing costs
introduced by the central bank to combat the economic fallout
from the COVID-19 pandemic, and Pekao's recently announced plan
to take over troubled Idea Bank  IDE.WA  has added to investors'
concerns about the bank's future profits.  urn:newsml:reuters.com:*:nL1N2JB0L1
    "This operation has attracted attention, but this is not
something that would change the bank (Pekao)," Leszek Skiba said
in an interview. 
    He said the biggest challenges this year for the sector
remained a drop in demand for loans, low interest rates, and
Swiss franc loans portfolios. Still, Pekao may increase its net
profit after a 40% slump in 2020. 
    "Our ambition is to improve it compared to 2020," Skiba
said. 
    Pekao is working on a strategy for 2021-23 and if rates
remain unchanged in that period its return on equity will not
return to its pre-pandemic level of around 9%, Skiba said. 
    But he hopes Pekao will pay a dividend in the second half of
this year, after the financial market regulator asked banks to
refrain from dividends in the first six months of the year. 
    "We want to remain a dividend bank," he added. 
    Pekao will focus on growing its current business without
acquisitions, Skiba said, adding there were no signs of
consolidation in the sector as banks that would potentially be
for sale have significant Swiss franc loan portfolios, which
make them "unsellable".
    The financial market regulator recently proposed that banks
shift their Swiss franc mortgages' portfolios into Polish zlotys
instead of facing many years of lawsuits from customers, who
face higher costs after a surge in the value of the franc.
    Skiba said banks were generally interested in the proposal. 

 (Reporting by Agnieszka Barteczko and Anna Koper. Editing by
Mark Potter)
 ((agnieszka.barteczko@thomsonreuters.com; +48226539700; Reuters
Messaging: agnieszka.barteczko.reuters.com@thomsonreuters.net))