PKO Bank Polski SA (PKO), Poland’s largest bank, said first-half net income rose 6 percent as higher revenue from loans helped mitigate increased provisions for bad credit.
Profit increased to 1.95 billion zloty ($590 million) from 1.84 billion zloty a year earlier, the Warsaw-based bank said today in a statement. That met the 1.93 billion-zloty average prediction of eight analysts surveyed by Bloomberg. Bad loan provisions rose to 1.1 billion zloty from 881.4 million zloty.
Earnings may slow in the second half, according to Chief Executive Officer Zbigniew Jagiello.
“Taking into account that the economic growth in the second half of this year will slow compared to a year earlier, earnings in this period will also decelerate,” Jagiello said today. “Still, full-year profit will be at a similar level as last year.”
Polish banks face weaker earnings as a slowing economy cuts demand for credit and prompts lenders to increase provisions for bad loans. Their combined profit rose 3.1 percent to 8.04 billion zloty in the first half compared with a 37 percent increase for the whole of 2011, the country’s central bank said in a report on Aug. 1. At Bank Pekao SA (PEO), Poland’s largest lender, six-month profit rose 3.7 percent.
PKO’s net interest income, a measure of revenue from lending, rose 13 percent to 4 billion zloty, the bank said.
The bank, which plans to work on a three-year strategy in the fourth quarter, expects to keep its cost-to-income ratio below 45 percent and post a “double digit” return on equity, a measure of profitability, through 2015, Jagiello told reporters. PKO’s costs were 39 percent of income in the first half, while ROE was 17.5 percent.
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