• Gross Profit: PLN5.8 billion after three quarters; PLN2.6 billion in Q3.
• Net Profit: PLN4.3 billion after three quarters; PLN1.939 billion in Q3.
• Net Interest Income: PLN10.249 billion after three quarters, up 6% year-on-year; PLN3.6 billion in Q3, up 5% year-on-year.
• Net Fee Income: PLN2.184 billion after three quarters, up 9% year-on-year; PLN727 million in Q3, up 9% year-on-year.
• Total Income: PLN12.7 billion after three quarters, up 7% year-on-year.
• Return on Equity: 20.5% for the group.
• Liquidity Coverage Ratio (LCR): 206%.
• Customer Deposits: Grew by 4% year-on-year to over PLN218 billion.
• Gross Loans Portfolio: Grew by 8% year-on-year to nearly PLN200 billion.
• Operating Costs: Over PLN3 billion after three quarters, up 9% year-on-year.
• Cost-to-Income Ratio: 30% after three quarters.
• Credit Provisions: PLN908 million after three quarters; PLN297 million in Q3.
• Cost of Credit Risk: Stable at around 70 basis points.
• Legal Risk Costs: PLN1.6 billion after three quarters.

• Warning! GuruFocus has detected 2 Warning Sign with FRA:BZI.

Release Date: October 29, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Santander Bank Polska SA (FRA:BZI) reported a gross profit of PLN5.8 billion after three quarters, with PLN2.6 billion generated in the third quarter alone.
• The bank's digital customer base has grown significantly, with 4.5 million digital customers and 3.5 million mobile banking customers, marking a year-on-year increase of 7% and 12%, respectively.
• Customer deposits increased by 4%, and the gross loans portfolio grew by 8% year-on-year, reaching nearly PLN200 billion.
• Net interest income rose by 6% year-on-year to PLN10.249 billion, with a 5% increase in the third quarter compared to the same period last year.
• The bank's return on equity stands at a robust 20.5%, and it maintains excellent liquidity with a Liquidity Coverage Ratio (LCR) of 206%.

Negative Points

• The bank faced a significant tax burden of PLN2.3 billion and regulatory costs of PLN284 million, totaling over PLN2.6 billion, which matched the gross profit for the third quarter.
• Operating costs increased by 9% due to higher banking guarantee fund contributions and inflation-driven expenses, including a 9% rise in staff costs.
• The net balance of credit provisions after three quarters was PLN908 million, with a stable cost of credit risk around 70 basis points.
• The bank experienced a downgrade in the Corporate segment, leading to a growth in Non-Performing Loans (NPLs) by 30 basis points, although the NPL ratio remains below 5%.
• There is uncertainty in the mortgage market due to ongoing discussions about a new support program, which has affected sales in the third quarter.

Q & A Highlights

Q: Can the excellent growth in net interest margin be sustained, and what is the outlook on interest rate cuts? A: Michal Gajewski, President of the Management Board, explained that while interest rate cuts are expected, possibly in mid-2025, the bank has scenarios in place to manage net interest margin. The impact of rate cuts is expected to be offset by growth in volume, with a projected 100 basis points cut next year.

Q: Why is the level of provisions for Swiss franc loans considered low, and what parts of the portfolio might require more provisions? A: Michal Gajewski stated that the current level of provisions is adequate, based on their models. Additional provisions were related to legal costs and settlements, with nearly 12,000 settlements made. The portfolio is split into active and non-active parts, with a small percentage of lawsuits in the non-active part.

Q: How does Santander Bank Polska plan to defend its customer base against aggressive growth strategies from competitors like PKO BP? A: Michal Gajewski emphasized that the bank is not in a defensive position but is actively growing. The bank's strategy focuses on customer experience and value, which are expected to drive sustainable growth in customer numbers and profitability.

Q: Is there a possibility to extend payment holidays for distressed customers? A: Michal Gajewski believes state interference in contractual relationships is unlikely to continue. The bank, along with the Polish Bank Association, will discuss with regulators, but current solutions like the borrower support fund are deemed adequate for customer support.

Q: What was the impact of the mortgage loan sales stimulation program, and can growth in the corporate segment continue? A: Michal Gajewski noted that the impact of the mortgage sales program was low due to market uncertainty. However, the bank is optimistic about continued growth in the corporate segment, driven by investments in digital solutions and customer acquisition.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.