Saturday , February 4 2023

PKO BP and Pekao most resilient to the crisis – Banks


The largest Polish banks are in the first European trio in terms of capital stability in the event of recession and rising unemployment.

Polish banks were in the midst of the stress tests launched this spring by the European Banking Authority (EBA) based on data from the end of 2017. The survey covered 48 European creditors and was linked to two macroeconomic scenarios: the basic and extreme.

Not just prestige

Given the lowest variability of the Tier 1 capital ratio in the extreme scenario, PKO BP, the leader of the Polish banking sector, is the best bet. This coefficient would be 15.62% in 2020. With regard to the extreme scenario, the fall in GDP is down 1.3%. in 2019 and, among other things, raising the unemployment rate to 9.2%. and a fall in asset prices, a small change at the end of 2017, Tier 1 ratio PKO BP is 16.50%. (adjusted for the 2017 reporting changes would be 15.91%). Pekao was in third place (second in Spanish Santander, the owner of the third largest asset of the Polish bank). At Pekao in 2020, in the extreme scenario, the Tier 1 ratio would drop to 14.55%, which is relatively small (at the end of 2017, the ratio would be 16.43%, converted to 15.99%).

It is not just a prestigious issue, it is also important for the ability to pay dividends. The Polish Financial Supervisory Authority will use the results of stress tests in the current oversight activity and in the so-called individual stress test markup that receives banks willing to pay a 100% dividend. In Pekao, the problem is easy to create almost a year ago, the buffer would not be high (1.27 percentage points) and should not grow now, so Pekao should be able to pay again next year the entire dividend profit.

Ambitions and hopes

However, at PKO BP, the case is more complex. This bank, a year ago, will receive a surplus of high stress tests at a height of 2.86 percentage points. Now, according to our analysts' estimates, this buffer should decrease as the sensitivity of the bank's capital indicators to the shock scenario proved to be much lower than during the recent crisis tests that the KNF But he's going to determine it right now. Therefore, there is hope that the new expense could be even lower.

Of course, PKO BP has no chance to pay 100%. profits on dividends, but must build a surplus of "coefficients and paper", capable of extinguishing 100%, as mortgage loans in accordance with KNF requirements will most likely reduce the rate of payment by 50 percentage points, ie the bank will allocate 50% of the shareholders' shares. of profits (this year will pay 25%, the first dividend of PKO BP in 2014). These corrections are so-called K1 and K2 criteria are first related to the share of mortgage loans in the portfolio (in a systematic decline), and the second depends on the number of mortgages granted during 2007-2008 (this change will no longer be possible ).

Good results of stress tests can translate into an individual niche for this reason, so that PKO BP would contribute to the ability to pay profits the following year. The Bank itself has such hopes and, moreover, it will be helped by the wider use of preferential risk weights for mortgage lending, which will give it a silent capital exemption of even 0.51 percentage points. comments one of the analysts asking for anonymity.

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