BNP Paribas Bank Polska reports PLN689 million third-quarter net profit

Third-quarter profit

The bank said on its 5 November earnings call that revenue rose 3% quarter on quarter and nearly 7% year on year, driven mainly by interest income. Its net interest margin improved by 12 basis points, and net interest income made up 75% of revenue. Return on tangible equity rose 2 percentage points to 15%, while the cost-to-income ratio stayed below 41% after the first nine months, better than after the first two quarters.

Loans, deposits and credit quality

The bank said gross loans rose 3% quarter on quarter and 9% year on year, with corporate and institutional lending growing fastest and SME loans up more than 5% quarter on quarter. Deposits grew in the quarter with disciplined pricing, led by retail, and the share of non-interest-bearing current account balances rose. Current accounts grew 14% in retail and business banking.

Cost of risk was 22 basis points for the quarter and 27 basis points cumulatively, stabilizing around 30 basis points. Impaired loans were stable at 2.6% of the portfolio. The number of Swiss franc mortgage lawsuits is declining and legal risk costs are relatively low, the bank said.

Customers and targets

Retail customer acquisition accelerated, supported by improved mobile onboarding and mObywatel integration. The bank added 204,000 net new retail customers after three quarters, about a fifth of its 1 million goal by 2030. It reported PLN6 billion of new sustainable production against a PLN25 billion pledge, about a quarter of the pledge.

Operating costs were nearly flat from the second quarter, which the bank described as under control. Investment product balances were under pressure amid a difficult market environment, and sales volumes were not a primary focus.

Outlook

Piotr Konieczny, vice-president of the management board for finance, said the bank is "moderately positive" on its net interest margin. He said margin pressure is expected to persist in coming quarters, with intense competition on loan pricing, particularly in corporate lending, where margins are lower than the bank initially assumed. The coming POLSTR benchmark adds uncertainty for loan margins next year, he said, though high sector liquidity should help stabilize funding costs and business growth should support the net interest income outlook.

Mortgage pricing is at breakeven, and the bank says it is selective and not aiming for mortgage market leadership in what it describes as a price war at those levels. Management said it will follow its Accelerate 2030 strategy, which assumes a 50-50 profit split with shareholders. If conditions are favorable, the board may recommend an increased payout, but management framed that as an outlook for the second part of the strategic period rather than an imminent change to dividend policy. The new OKI program will launch in January as soon as possible, and management views it as an addition to the customer offering rather than a major customer acquisition tool.

The bank flagged political and regulatory risks and potential for further sector burdens despite already high effective tax rates. It expects single-digit cost growth, but said revenue growth may be challenged by margin pressure and the introduction of the POLSTR benchmark.