Situation on the banking market in Poland
In 2022, the banking sector generated a net profit of PLN 12.5 billion, compared to PLN 6.0 billion in the corresponding period of the previous year, up PLN 6.5 billion. What had the largest impact on the higher net result was the interest income (up by 29.4 billion y/y) whose increase was determined by the series of interest rate increases continued by the MPC. Also, a positive impact was also exerted by higher commission income (up by PLN 1.3 billion) and lower level of provisions (down by PLN 1.8 billion).
In 2022, margins improved. As interest rates grew higher, the net interest margin (NIM) 6 was increasing the entire period, and as at the end of December the indicator amounted to 3.20% compared to 2.07% at the end of December 2021.
At yearend 2022, the asset value of the banking sector was PLN 2,741 billion, up 6.6% from December 2021.
The growth rate of loans in the non-financial sector in early 2022 improved compared to 2021, which was impacted by demand of households as well as businesses facing a continued economic rebound after the COVID-19 pandemic. The potentially stronger growth was limited by consequences of the armed conflict over the eastern border, higher inflation and increased interest rates. In December 2022, the value of credits in the non-financial sector amounted to PLN 1.118 billion, a decrease of 0.9% compared to December 2021.
At the end of December 2022, deposits of the non-financial sector totaled PLN 1,651 billion, an increase of 6.5% compared to the end of 2021. Corporate deposits remained the highest increase in the structure of deposits. Household deposits grew at a slower rate than a year prior.
The banking sector’s own funds for capital ratios, calculated in accordance with the regulations laid down in the CRR Regulation, was PLN 214 billion at the end of September 2022, down 6.5% from the end of September 2021.
In 2022, the sector’s capital situation remained stable. The banking sector’s total capital ratio at the end of September 2022 was 18.21%, while the Tier I capital ratio at the end of this period was 16.35%.
* NIM indicator – the relation of the interest result of 12 consecutive months to average interest assets in the same period of 13 consecutive months.
**, *** ROA and ROE indicator – the relation of the sum of the financial result of 12 consecutive months to, respectively, average assets and average capital in the same period of 13 consecutive months. ROE relates to the aggregate commercial and cooperative banking sector (without branches of credit institutions), ROA relates to the entire banking sector.
**** R/I ratio – relation of write-offs and provisions (provisions+impairment or reversal of impairment) to revenue (total net operating income) – rolling average from 12 months.
***** C/I ratio – relation of costs (costs of an operation+depreciation of fixed assets and intangible assets) to revenue (total net operating income) – rolling average from 12 months.
Activity and product offering
Bank Pekao Group
On the Polish market, the Bank offers competitive products and services, high-level customer service and a developed distribution network. A broad product offering, innovative solutions and individual approach provide clients with comprehensive financial service. An integrated service model, in turn, guarantees the highest quality of products and services, as well as their alignment with the changing needs. The Bank systematically strengthens its market position in the strategic areas of business.
On 3 January 2021, the Bank acquired the enterprise and the liabilities of Idea Bank after the Bank Guarantee Fund applied the forced resolution procedure.
Idea Bank was commercial bank offering banking services provided to individual and institutional clients, such as, among others, acceptance of cash deposits payable on demand or upon maturity and keeping accounts for such deposits, granting loans, granting bank guarantees, issuing securities. The acquisition of Idea Bank did not entail any payment from Bank Pekao. As a result of the transaction the PZU Group acquired Idea Bank’s assets and liabilities whose total estimate fair value was negative. Considering the foregoing, on 8 January 2021 Pekao received from BFG support in the form of a subsidy of PLN 193 million to cover the difference between the value of the acquired liabilities and the value of the acquired property rights of Idea Bank.
At the end of Q3 2022, Bank Pekao was the second largest bank in Poland (in terms of the value of its assets).
As part of its account offering, Bank Pekao concentrated its efforts on promoting its savings account – Konto Oszczędnościowe, by offering higher interest rate for the first six months after opening the account. The Bank also offered attractive bonuses of up to PLN 200 for participating in the “open a selfie account” promotion consisting in using online identity verification. After introducing the referral program in the PeoPay app and Pekao24 online banking, the Bank saw an increase in the number of clients joining the program and accounts opened based on a referral.
In 2022, the Bank was also developing its offer dedicated to young clients by offering accounts for children (aged 0 to 17) and young people (aged 18-26). The Bank gave the youngest special bonuses which encouraged them to save money and use financial instruments.
In December 2022, Bank Pekao extended its offer by adding new cards to the account with 15 gaming images, gaming skins in the PeoPay Kids app and by simplifying the PeoPay app for teenagers. When opening an account with a card, clients can collect points worth PLN 100 to exchange for bonuses for gamers in the Mastercard loyalty program “Priceless Moments” , and receive additional PLN 200 for opening the selfie account and making a transaction
Additionally, the Bank participated in the educational fair for secondary school graduates „Salon Maturzystów” organized in 14 biggest academic cities, and continued cooperation with the Parliament of the Republic of Poland Students. Students who are going to travel abroad, for instance on a scholarship, can use the offer especially prepared by the Bank – Traveler’s Package, thanks to which they can issue the ISIC card with insurance free of charge.
In 2022, Bank Pekao also prepared a special offer for nationals of Ukraine. The procedure of opening a bank account was simplified, fees were canceled for keeping the account, handling cards and making withdrawals from ATMs as well as for transfers from Poland to banks in Ukraine both for individual and corporate clients.
Last year, the Bank extended its offer by adding the Credit Card with a Bison. This is the first subscription-type credit card in Poland available in three packages. When the card is issued, the Client can choose their package: standard, gold or platinum. The card is free in the standard package. It is possible to change the package without any fees, and adjust to the client’s needs without replacing the plastic card. Some of the greatest advantages of having the card include the option to spread repayment into convenient 0% installments, reimbursement for online purchases and for highway payments, insurance for online purchases and transactions, travel insurance, access to free airport lounges, and an exceptionally long interest-free period. The new card is made from 99% recycled raw material.
Due to the macroeconomic situation, including interest rate hikes, a fixed rate loan was introduced. The fixed rate offer offers clients the stability of the loan repayment and financial security of the household budget.
Additionally, the Bank also introduced the medical school loan with payment surety provided by BGK in cooperation with the Ministry of Health and Bank Gospodarstwa Krajowego. The loan offer is available for current students and candidates who will be starting medical programs at Polish higher education institutions.
In 2022, the Bank offered individual clients installment loan for the purchase of goods and services in online stores, with the loan period of even up to 60 months and the amount of loan of up to PLN 20,000. The entire process of getting the loan takes only few minutes and can be completed without leaving home. The identity is verified with open banking and videoverification services.
The slowdown in the home loan market translated into a decrease in the number of loan applications and the value of home loans granted. Therefore, Bank Pekao focused on adjusting the offer to current market conditions and needs. The offer was extended by, among others, home mortgage loan, and construction and mortgage loan with the guarantee of BGK, thus enabling clients to finance up to 100% of the value of their property, loan period extended to 35 years, loan option with an interest rate based on a periodic 5-year fixed rate, and an attractive new life insurance offer.
In 2022, the cooperation with the PZU Group was extended to grow the bancassurance offering. The Bank extended its offer by adding the following solutions:
- Świat Inwestycji Premium II – voluntary life insurance with unit-linked insurance;
- Pewny Profit – individual life insurance and endowment insurance;
- insurance package for the new Credit Card with Bison, which provides policyholder or return of goods paid for by card;
- life insurance for the mortgage loan – which can be purchased for a new or existing loan;
- motor insurance – available for clients in the omni-channel process, offered both by PZU and LINK4.
The Pekao Mutual Fund Management Company (Pekao TFI) is member of the Pekao Group. It is the oldest mutual fund management company in Poland. Pekao TFI provides clients with modern financial products and offers opportunities to invest in the largest capital markets on the globe. For many years it has been devising savings programs, including programs affording an opportunity to put aside more money for retirement under the third retirement pillar. Pekao TFI also offers portfolio management services and Employee Capital Schemes (ECSs). The company is in the ECS records and its offering is available also through the mojeppk.pl portal.
As at 31 December 2022, the net asset value of Pekao TFI’s investment funds (including Employee Capital Schemes) totaled PLN 19.2 billion, down by PLN 1.1 billion or 5.5% compared to the end of December 2021.
Alior Bank Group
The Alior Bank Group is headed by Alior Bank. Alior is a universal deposit and credit bank, providing services to natural persons, legal persons and other domestic and foreign entities.
The bank’s core business comprises maintaining bank accounts, granting cash loans, issuing bank securities and purchase and sale of foreign currencies. The bank also conducts brokerage activity, provides financial advisory and intermediation services, arranges corporate bond issues and provides other financial services. Alior Bank has been a member of the PZU Group since 2015.
Alior Bank provides services predominantly to customers from Poland. In 2017, Alior Bank opened a foreign branch in Romania, offering retail banking products and services. The percentage of international clients in the overall number of the bank’s clients is low. At the end of Q3 2022, Alior Bank was the 8th largest bank in Poland in terms of the value of its assets.
The year 2022 was mostly dedicated to work on optimizing the existing and introducing new solutions for Alior Online and Alior Mobile. These efforts were correlated with the current strategy of Alior Bank and increasing revenue from the Internet and mobile channels. The bank continuously strives to improve the appeal of its flexible personal accounts offering by adding special options for key client segments (medical bundle, discounts and additional services for players).
Alior Bank remembers about its youngest clients, and so it started the remote process of opening the account for young clients. The process is dedicated to minors who are not yet clients of Alior Bank or already are clients and have a relationship to an adult client.
Since March 2022, Alior Bank regularly makes available its special offer “Weekendowe okazje” (Weekend opportunities). It is aimed at clients using online and mobile banking. This meets the needs of clients looking for a loan with 0% commission. In addition, from September 2022, clients using mobile banking can take advantage of a dedicated Mobile Loan offer. Since November, the Bank has also made available an attractively priced Birthday Loan for clients using mobile channels.
In 2022, the Bank continued to offer cash loan Clean Air (first introduced in 2021) linked to a subsidy granted under the Clean Air program of the National Fund for Environmental Protection and Water Management.
In February and March 2022, under the cooperation with BIK, the Bank introduced an offer in its stationary channels “BIK alerts at Alior Bank”. This allowed clients to access detailed information on their loans and obligations but also scam attempts using their data.
The difficult situation caused by external factors including, among others, rising interest rates, the outbreak of war in Ukraine, and the rising cost of living affected demand for mortgages in 2022. As part of additional activities in the product area, at the end of the year, the Bank launched the Light Start offering with interest rates based solely on a benchmark index in the first year of the loan, and extended the loan term to a maximum of 35 years. Parallel to its activities in the product area, the Bank decided to initiate changes in system and process areas.
In 2022, continuing to develop its deposit offer, Alior Bank introduced the Mobile Deposit for clients activating their Alior Mobile app and Nestor Deposit for 60+ clients for the first time.
In January 2022, continuing to develop its bancassurance product offering in cooperation with PZU Życie, Alior Bank offered its clients individual life insurance with unit-linked insurance – Multi Kapitał II. The product allows clients to enter into an individual life insurance contract, and have access to a number of unit-linked funds with different investment strategies, geographic region of investment, profit potential and level of investment risk. Owners of business accounts were offered ADD insurance and health care of PZU.
A new method was implemented to secure documents with data subject to bank confidentiality sent to customers as an attachment in an e-mail. In addition to previewing, clients now also can set their individual password to open attachments sent via e-mail. In order to increase security new changes were introduced – the method of subsequent logins to online banking using strong authentication, and the process of specifying the client’s browser as trusted at the aforementioned logins.
In 2022, in connection with the war in Ukraine, the bank developed an offer for Ukrainian citizens. It included online and mobile banking in Ukrainian, and product documentation for clients who do not speak Polish. A Basic Payment Account for Ukrainian citizens was also introduced to the offer for refugees who did not have the required identity documents needed to open a standard account. This account has a limited functionality only a needed for basic daily activities.
The bank’s efforts also focused on introducing a number of facilities and solutions for business customers. In 2022, Alior Bank offered:
- ADD insurance and health care provided by PZU – offer targeted at businesses in all segments of the market. Entrepreneurs can insure themselves, their family members, their employees and their relatives. Depending on the selected variant, PZU arranges medical benefits and covers their costs in case of illness or required treatment after an accident;
- bonuses for users of the Mastercard with Plus debit card;
- deposits with higher interest rate – deposits were introduced with fixed interest rate of 2.5% per annum for two months and 4% per annum for 5 months;
- special offer of the 4×4 account for Ukrainian enterprises and one-person businesses operated by Ukrainian citizens – this offers includes exemption from fees for maintaining the basic account, online transfers to the Social Insurance Institution (ZUS) and the Tax Office, and bonuses of even up to PLN 1,500 per year for active use of the banking services. Additionally, the bank decided not to charge monthly fees for maintaining an auxiliary account in PLN and foreign currencies, the use of a company debit card, and fees for domestic, cash, foreign and savings packages. A refund of fees for transfers made to Ukraine was also introduced;
- contactless payments Xiaomi Pay – this offer adds to the list of mobile payments; it allows the user to make contactless payments with Mi Smart Band 6 NFC, Xiaomi Watch S1 or Xiaomi Watch S1 Active;
- Fast Track – offer of financing for medium and large enterprises with the credit decision taken already in 4 working days. The Fast Track can be used to finance up to 10% of the annual sales revenue generated by the enterprise – a maximum of PLN 10 million.
Alior Towarzystwo Funduszy Inwestycyjnych or Alior TFI (formerly Money Makers) is part of the Alior Bank Group. The company was established in 2010 and its operations, originally as a brokerage house, focused on asset management services. Following a transformation, from July 2015, it has been operating as a Mutual Fund Management Company.
Alior Bank’s cooperation with its subsidiary Alior TFI comprises primarily the company’s core business, i.e. development and management of mutual funds and representing them vis-a-vis third parties.
Distribution and customer service
Pekao Bank
The bank’s customers can use a broad network of branches and ATMs, which provides convenient access throughout Poland, as well as a professional call center and a competitive Internet banking and mobile banking platform for individual and corporate clients, and for small and micro businesses.
As at 31 December 2022, the bank had 597 own branches and 1,328 own ATMs.
In 2022, Bank Pekao consistently executed the digital transformation process, comprising initiatives focused on development of sales and improvement of the quality of service in the remote channels, automation and robotization of the processes and enriching the offering to include state-ofthe-art digital services.
In 2022, Bank Pekao added numerous new solutions and options to its online banking Pekao24, PeoPay and PeoPay Kids, for instance:
- an account can be opened by individual customers and for one-person businesses with the mObywatel (mCitizen) app in the process of online identity verification („selfie”);
- remote card handling – clients can assign and change the PIN to a credit card, temporarily block or completely block a credit card, order a new one, change the limit of an additional card for Credit Card with a Bison, verify online debit card data,
- new applications can be submitted for social and aid benefits (300+, 500+, RKO – Family Welfare Capital), including applications for Ukrainian citizens;
- payments can be made for parking in paid parking zones and the option of purchasing public transport tickets is extended to include the GZM Metropolises (covers 41 cities);
- Under Open Banking, services were implemented and developed to access information on payment accounts held with other banks (so-called AIS) such as balance and transaction history; now, it is easier to apply for a loan, overdraft or credit card, track account balances and order transfers from accounts at other banks (so-called PIS), and also confirm identity for the purpose of a new installment process and prospects applying for a cash loan;
- mortgage loan can be partially repaid, and the principal and interest installments on a mortgage loan can be suspended, including the so-called „credit vacations”;
- new notifications for standing orders, BLIK, statuses of payment orders and official requests, and notifications of receipts;
- option to purchase Treasury Bonds and automobile insurance;
- redirection to processes and services in electronic channels from web services, which will shorten the purchase path and increase sales in remote channels;
- availability of a number of new transfer orders/certificates for microenterprises and the individual client, including, among others, certificates of the overdraft limit (full repayment and closure of the limit and the amount of the current debt), closure of a savings account, notification of a client’s death, and other;
- implementation of functionalities to help the client manage their budget: suggested payments, option to repeat a transfer directly from the history of operations, presentation of the status of payments at risk, prediction of Direct Debits and Pekao Transfer Order;
- access to the PeoPay app for the clients of the Brokerage House – clients who have the Pekao24Makler service but do not have an account with the bank can use PeoPay;
- implementation of PeoPay demo to show all the options of the bank’s mobile app; the demo is used in sales processes to present the bank’s mobile offer to clients;
- BLIK service for the youngest clients in the PeoPay Kids app and new options especially for children: introducing gaming skins in the PeoPay Kids app and gaming card images; making the PeoPay app available for teenagers.
In 2022, Bank Pekao introduced a new mobile app for enterprises – PeoBIZ. It offers a new interface and a wide scope of functionalities, for instance,
- save login with Touch ID / Face ID;
- quick check of the finances and turnover on the account;
- expanded functionality of domestic transfers: transfers to the phone, Express Elixir;
- transfer to phone – the option to make a transfer in the mobile application to the phone number of an individual (e.g. contractor, client, company employee).
In addition, electronic banking clients can use new functionalities, such as:
- changing or supplementing payment instructions for foreign exchange transfers;
- adding or modifying authorizations in the Pekao Trade service;
- presenting data of the customer service team with an up-todate list of direct contacts to individual bank employees;
- faster viewing of transactions carried out with the bank’s cards.
Alior Bank
At yearend 2022, Alior Bank had 534 outlets (168 traditional branches, 7 Private Banking branches, 13 Corporate Banking Centers and 346 partner centers). The bank’s products were also offered in the chain of 10 mortgage centers and a network of roughly 3 thousand intermediaries. The Bank also conducts its business through a Branch in Romania, where customer service is provided through remote channels.
By the end of 2022, Alior Bank upgraded its 74 branches to the new format. The role of the new branches is primarily to digitize clients and branch processes, provide convenience and privacy for clients, and improve bankers’ convenience. The distinguishing features of these branches include their innovative design and the use of modern technologies.
Alior Bank’s traditional branches are located throughout Poland, in particular in cities with more than 50 thousand residents. They offer the full range of the bank’s products and services. Partner centers are located in smaller towns and in selected locations in Poland’s major cities. They offer a broad range of services and deposit and credit products for retail and business clients.
Cooperation between the bank and its partner centers is based on an outsourcing agency agreement. Agents provide exclusive agency services to the bank in respect to the distribution of products. These services are provided in locations owned or leased by agents approved by the bank. The bank’s products are also offered through the networks of financial intermediaries.
Alior Bank also uses distribution channels based on a modern IT platform incorporating: online banking, mobile banking, call centers and the DRONN technology. Using the Internet, the bank makes it possible to enter into agreements for: savings and checking accounts, currency accounts, savings accounts, deposits, debit cards and brokerage accounts. These channels are also used to accept applications for credit products: cash loans, credit cards, overdraft limits and mortgage loans. Using the Internet, the bank also offers installment loans in an online process and offers services of a currency exchange office.
The year 2022 was mostly dedicated to work on optimizing the existing and introducing new solutions for Alior Online and Alior Mobile. These efforts were correlated with the current strategy of Bank and increasing revenue from the Internet and mobile channels.
In relation to this, further new features and a number of changes were also implemented in both online and mobile banking regarding the appearance and handling of the products Alior Bank offers.
The year 2022 was a landmark year in the technological development of applications Alior Mobile. Following the expectations of users of the Alior Mobile app, further options of personalization were added. For instance, it is possible to set the login screen background or select the screen mode (light, dark or auto). Also, it is possible now to personalize the Payments and Services tab, and a My Cards section was added to the Products tab.
Moreover, Alior Online and Alior Mobile now have information about an expired/valid ID document visible after logging in, along with the option to go directly to the RP ID Card data update form.
In order to increase security new changes were introduced – the method of subsequent logins to online banking using strong authentication, and the process of specifying the client’s browser as trusted at the aforementioned logins.
In 2022, Alior Online banking was extended by adding MojeID. It is a secure online identity confirmation tool for commercial and public services. It enables the completion of many formalities that previously required personal authentication of data electronically. The MojeID service may be used by every adult client as long as the supplier allows such a form of entering into agreements and confirming identity.
Alior Online and Alior Mobile added a new Ukrainian language version, thus allowing easy access to the account through remote banking for clients from Ukraine. Online banking Alior Online and mobile banking Alior Mobile are now available in four languages: Polish, English, Russian and Ukrainian.
Alior Online made available the service to make applications for 500+ for children from Ukraine. Those who arrived legally from Ukraine to Poland after February 23, 2022 due to war and remained in Poland had the option of submitting the applications.
In addition, a new My Accounts service was implemented on both platforms. It is used to manage all payments in one place. This gives clients the ability to pay electricity, gas and other bills with a single click. Alior Mobile added a new functionality in the form of a Payment Basket, where the client can add various transfers and approve them with a single authorization.
The bank also introduced the option to pay with an inactive debit or credit card. An inactive card can be added to a virtual wallet, for instance Google Pay or Apple Pay, in Alior Mobile, and use it to make payments. The details screen of an inactive card can be used to change the PIN and limits, block, cancel or close the card. The card is activated upon physical receipt.
Clients or Alior Bank can also use Alior Online to apply for the IRA and IRSA brokerage accounts. Online banking now has the option to make an own transfer to an IRA/IRSA account that the customer owns or is authorized to use.
The bank also gave the clients the option to manage their consents for marketing of PZU Group companies through Alior Online and Alior Mobile.
In December 2022, Alior Bank offered Alior Pay, a service with a credit limit (up to PLN 3,000) to defer payments made with a card, BLIK in stationary and online stores or by transfer from an account with Alior Bank. Now, Alior Pay can be used by clients of Alior Bank who have a savings and checking account and receive an invitation in the form of a push notification to their cell phone.
For clients’ convenience, paperwork was reduced to a minimum, and the limit is applied for only once.
In 2022, Alior Bank was working on new digital banking for business clients. In 2022, the bank entered into an agreement with COMARCH to introduce and manage its system. The project is scheduled to be implemented between 2023 and 2025. The new online banking will be based on four main pillars:
- active mobile application,
- client self-service,
- ERP class system,
- modern platform www.
Factors, including threats and risks, that may affect the operations of the banking area in 2023
- the outlook for the economy, which will affect demand for banking products and changes in the cost of risk;
- the tax and regulatory environment, including in particular the existence of a tax on certain financial institutions, high equity requirements, contributions to Bank Guarantee Fund (BFG), costs of further adjustments to numerous regulatory solutions (e.g. MIFID II, GDPR, PSD II, MREL);
- the institutional environment, especially foreign currency mortgages, as well as potential rulings by the Court of Justice of the European Union, the Supreme Court or other state institutions in this regard;
- reform of the reference index, i.e., replacing the WIBOR index with WIRON.
- credit vacations and mortgage loans offered at 2% interest. The burden of the former was observed in Q3 2022, and this factor will remain present in 2023 as well. For each quarter of the year, borrowers will be entitled to one month of credit vacation. Mortgage loans with an interest rate of 2%, on the other hand, are a solution offered to people up to the age of 45 who do not have and have not had an apartment, house or cooperative right to an apartment or house. The maximum value of such a loan is PLN 500,000 for a single person and PLN 600,000 for a married couple or parents with a child. For 10 years of loan repayment, the government will subsidize the loan installment, and the subsidy will cover the difference between the actual interest rate and the 2% offered;