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Alior Bank’s 2015 Financial Results: Solid growth in line with expectations

Net of one-off events, the consolidated net profit of the Alior Bank Group was PLN 363 million in 2015, an increase of 12.6 percent year on year and in line with the guidance from the Management Board issued in March 2015. Net of the contribution to the National Borrower Support Fund and the increased contributions to the Bank Guarantee Fund following the bankruptcy of Spółdzielczy Bank Rzemiosła i Rolnictwa w Wołominie, the net profit of the Group was PLN 309 million, a decrease of 4.1 percent year on year.

The bank’s interest margin was 4.6 percent in 2015, much above the market benchmark, despite prevailing low interest rates and strong competition.

Alior Bank generated close to PLN 2.17 billion of net operating income in 2015, including PLN 1.5 billion of net interest income and PLN 332 million of net fee and commission income. Net income increased by 16 percent year on year.

Alior Bank is steadily improving its cost efficiency while growing its business. The cost/income ratio (C/I) was 48.1% net of off-events and 51.1% including one-offs at 2015 year-end.

Alior Bank’s total loans to clients stood at PLN 30.9 billion while deposits reached PLN 33.7 billion, representing an increase of 31 percent and 38 percent, respectively, year on year. The loan-to-deposit ratio was safe at 91.8 percent.

The Alior Bank Group’s balance-sheet total was more than PLN 40 billion at 2015 year-end, representing an increase of 32.6 percent year on year.

The implementation of the bank’s strategic initiatives proceeds according to plan, including the maximisation of synergies resulting from the merger with Meritum Bank as well as further development of the co-operation with T-Mobile Polska and the Romanian operator Telekom Romania Mobile Communications, a member of the Deutsche Telekom Group.

“In 2015, despite an adverse external environment, we continued to strengthen our market position and to grow our key business lines. We successfully completed strategic initiatives which prove that we can grow our on-going business while implementing the merger with Meritum Bank smoothly and efficiently,” said Wojciech Sobieraj, President of the Management Board of Alior Bank. “We laid a strong foundation for further dynamic organic growth. We also proved that we are ready, both operationally and technologically, to take on a leading role in prospective mergers and acquisitions,” added Mr Sobieraj.

The total operating income of Alior Bank was PLN 2.17 billion in 2015, representing an increase of 16 percent year on year. As a result of steady growth in the volume of loans and advances, the net interest income increased by 22 percent to PLN 1.5 billion. The net fee and commission income decreased, among others driven by reduced interchange fees, by 4.7 percent to PLN 332 million. The net trading and other income was PLN 333 million in 2015, an increase of 12.9 percent year on year.

Alior Bank’s consolidated net profit including the contribution to the National Borrower Support Fund and the increased contributions to the Bank Guarantee Fund following the bankruptcy of Spółdzielczy Bank Rzemiosła i Rolnictwa w Wołominie was PLN 309 million, representing a decrease of 4.1 percent year on year. Net of the one-off events, the Group generated a net profit of PLN 363 million, an increase of 12.6 percent year on year and in line with the guidance from the Management Board issued in March 2015.

Alior Bank’s C/I ratio was 5.1 percent at the end of 2015, representing an increase of 1.7 percentage points year on year. The costs reported by Alior Bank were driven by one-off events beyond the bank’s on-going operating activities (the bankruptcy of Spółdzielczy Bank Rzemiosła i Rolnictwa w Wołominie, the formation of the National Borrower Support Fund). Net of the impact of these factors on the profit and loss account, the C/I ratio was 48.1 percent at the end of 2015, representing a decrease of 1.3 percentage points year on year.

Loans granted by the Alior Bank Group to clients increased by 31 percent year on year to PLN 30.9 billion at the end of 2015. The volume of clients’ deposits was PLN 33.7 billion at the end of 2015, an increase of 38 percent year on year.

The operating merger of Meritum Bank and Alior Bank took place on 26 October 2015. The merger of the banks was completed within four months of the legal merger and eight months after the acquisition of Meritum Bank was closed. It was the fastest and most efficient merger in the Polish banking sector. As a result of the merger of the banks, their customer service standards have been harmonised and the Meritum Bank brand has been discontinued. The merged bank operates a single central IT system and uses best-in-class solutions and processes developed by experts originating from the two banks. In addition to Warsaw and Kraków, the bank has set up its third head office in Gdańsk. The application of the best experience of both institutions and the changes in the organisation accompanying the merger help the bank to improve its operating efficiency and use major cost and income synergies. The synergies amounted to PLN 38 million in 2015, compared to the cost of the merger at PLN 35 million. The synergies are expected to reach PLN 198 million in 2015-2017 while the total cost of the merger is estimated at PLN 50 million.

As a result of the successful co-operation of Alior Bank with T-Mobile Polska, another important Central European market has been added to the strategic alliance with the global telecom operator. Alior Bank signed an agreement with the Romanian operator Telekom Romania Mobile Communications, a member of the Deutsche Telekom Group, in August 2015. Alior Bank successfully completed its registration in Romania as a foreign credit institution within five months of the agreement. The bank’s branch in Romania will operate a business model similar to the existing co-operation between Alior Bank and T-Mobile Polska. Once its is launched, retail customers will have access to a broad range of state-of-the-art deposit and credit products matching the needs and the specificity of the Romanian market, as well as an attractive offer of product packages which combine telecom and banking services. The project has strategic importance to Alior Bank as the first step to its international expansion. The operating launch is scheduled in Q3 2016.

Alior Bank continues its strategic co-operation with the UK hypermarket chain Tesco. Tesco Finanse services are currently available in 71 hypermarkets. The bank is planning to expand the relations by adding new locations within the partner’s chain to its sales network, combined with steady expansion of the portfolio of products and services available to Tesco customers. Tesco Finanse is planning to acquire 250 thousand new clients by 2018.

Alior Bank is one of the most dynamically growing banks in Poland. The bank’s total assets stand at PLN 40 billion, making it the 13th biggest bank in Poland by balance-sheet total. Its 3 million clients, including more than 130 thousand corporate clients, are efficiently served by more than 6,000 employees and Poland’s 4th biggest banking distribution network comprised of more than 850 locations. In addition, selected products and services of Alior Bank are offered at 600 T-Mobile points of sale as part of the strategic alliance between the two partners, and in more than 71 Tesco locations. Since 2014, Alior Bank stock participates in WIG20, the large-cap index of the biggest and most liquid stocks listed on the Warsaw Stock Exchange (GPW).