Release Date: August 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- ING Bank Slaski SA (WAR:ING, Financial) reported a significant growth in client volumes, with over 60,000 new individual clients and 10,000 new small and medium-sized enterprises.
- The bank maintained a stable growth strategy, even in a challenging economic environment, contributing to a year-on-year increase in individual and corporate client segments.
- The bank's loan-to-deposit ratio improved slightly to 75.6% in the second quarter, indicating better balance sheet optimization compared to the market average.
- ING Bank Slaski SA (WAR:ING) achieved a 9% year-on-year increase in commission-related income, driven by strong performance in charge and credit card transactions.
- The bank's capital adequacy ratio reached 15.42%, reflecting strong financial stability and effective risk management.
Negative Points
- Net income for the second quarter was PLN965 million, a 12% decrease compared to the previous year, partly due to the impact of credit vacations.
- Operational costs increased by PLN215 million, or 12% year-on-year, driven by inflationary pressures and higher labor and third-party service costs.
- The cost of risk increased, with isolated areas of threat in the corporate sector leading to additional provisions.
- The bank experienced a redundancy of 270 staff year-on-year as part of structural adjustments to market conditions.
- There is a concern about the low investment levels in Poland, with the forecasted investment close to zero, posing a risk to future economic growth.
Q & A Highlights
Q: What is the current market share trend for ING Bank Slaski, and how does it compare to pre-2022 levels?
A: Brunon Bartkiewicz, CEO, explained that the bank's growth is an inherent part of its business model. Pre-pandemic events should be considered regular, and the bank took advantage of other banks' capital issues. Currently, the bank is experiencing stagnation in the corporate credit market, but hopes to return to normalcy as economic growth spreads.
Q: Can you elaborate on the threats related to the loan-to-deposit ratio?
A: Brunon Bartkiewicz, CEO, highlighted that the low loan-to-deposit ratio is due to the insufficient development of the capital market in Poland. This leads to excessive concentration in treasury bonds, posing risks. The bank needs to deconcentrate its rate and manage flows effectively to avoid structural imbalances.
Q: Why have IT costs fluctuated significantly, and why aren't they capitalized as CapEx?
A: Bozena Graczyk, CFO, explained that the bank uses an agile model, which ties costs to ongoing operations. Some expenses are capitalized, but many are not due to the nature of small, lean changes rather than large systemic solutions, making it more of an OpEx model.
Q: Are the issues in the corporate segment isolated or indicative of a trend?
A: Brunon Bartkiewicz, CEO, stated that the issues are isolated and not indicative of a broader trend. They are more individual phenomena rather than sector-wide problems, likening them to "islands" rather than connected trends.
Q: How does the bank view the impact of the national recovery plan on corporate loans?
A: Brunon Bartkiewicz, CEO, noted that the national recovery plan is not pushing banks out but rather coexisting with them. The economy's high absorption rate means that funding sources should have a multiplier effect, stimulating natural economic growth rather than relying solely on grants.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
