PKO Bank Polski Poland - an interesting place on the investment map for the Danish entrepreneurs

Copenhagen, 29th of April 2014

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Leading bank in Poland and CEE

The largest universal bank in Poland since 1919 and among the leading banks in CEE by total assets net income, total equity, loans and deposits, size of customer base and distribution network;

No. 1 in the Polish banking sector, the best known bank brand (prompted awareness 93%);

One of the Top 28 banks in Europe in terms of market capitalization;

Ranked among Top 10 out of 91 European Banks during 2011 EBA stress test and positively passed another EBA capital and transparency exercises (2011-2013);

Strong credit rating by S&P (A-) and Moody’s (A2);

Listed on the Warsaw Stock Exchange since 2004, the largest stock exchange in the CEE.

Shareholders structure (March 31, 2014)

Key financial information (PLN bn) 2009 2010 2011 2012 2013 2013/ 2012

Net loans 117 131 141 143 150 +4.9%

Total assets 156 170 190 193 199 +3.1%

Deposits 125 133 146 146 152 +4.1%

Equity 20 21 23 24 25 +4.2%

Total Banking Income 8.9 10.2 11.1 11.6 10.7 -7.8%

Net profit 2.3 3.2 3.8 3.7 3.2 -13.5%

Earnings per share, diluted (PLN) 1.86 2.57 3.05 2.99 2.58 -13.7%

Dividend per Share (PLN) 1.90 1.98 1.27 1.80 x x

Loan to Deposit Ratio 93.2% 98.3% 96.4% 98.1% 98.5% +0.4 pp.

Impaired Loans Ratio (1)

7.6% 8.0% 8.0% 8.9% 8.2% -0.7 pp.

(Core) Tier 1 Ratio 13.3% 11.3% 11.2% 11.8% 12.5% +0.7 pp.

Net Interest Margin (2)

3.9% 4.4% 4.6% 4.7% 3.7% -1.0 pp.

Cost Income Ratio 47.9% 41.7% 39.6% 40.3% 43.2% +2.9 pp.

RoAE (3)

14.8% 14.9% 17.5% 16.0% 13.2% -2.8 pp.

Strong leadership on the Polish market

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Users of electronic banking services

Employees

Branches

ATMs

Agencies

2,992

1,186

1,074

6.1 million 25,437

Corporate customers

12,000

Retail customers

7.4 million

SME customers 362,000

Capital Group /key assets/

4

Nordea* Bank Polska

Nordea* Finance Polska

Nordea* Polska TUnŻ

*On April 2014 Nordea Bank Polska SA stock shares were purchased by PKO Bank Polski SA. Nordea trademark is used with the consent of Nordea Bank AB.

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Poland – an attractive investment destination for entrepreneurs

GDP cumulative growth

Source : IMF, PKO Bank Polski

50

100

150

200

250

300

1995 1998 2001 2004 2007 2010 2013 2016 2019

Poland Hungary

Czech Republic Slovakia

Romania Sweden

Denmark

% IMF WEO Forecast

rank country

1 China

2 USA

3 India

4 Indonesia

5 Brazil

6 Germany

7 Mexico

8 Thailand

9 United Kingdom

10 Japan

11 Russia

11 Vietnam

13 Australia

14 Poland

15 South Africa

16 Canada

16 France

Foreign investment atractivness ranking 2013

• Poland is the largest economy among East European EU member states and one of the largest markets in the EU as a whole. Polish economy is growing in a stable manner and avoided outright recession even during the global financial crisis and European debt crisis.

• The lack of substantial disequilibria in the economy (low and stable inflation rate, falling current account deficit, relatively low government public debt) allow the conduct of predictable economic policies.

• Investment climate in Poland is improving not only in absolute terms but also relative to main peer countries making Poland one of the most attractive markets for foreign investors globally.

Source: UNCTAD, World Investment Report 2013

Ease of Doing Business* in Poland improves 1

11

21

31

41

51

61

71

81

2006 2007 2008 2009 2010 2011 2012 2013 2014

Poland Czech Republic Hungary

Source: World Bank, *rank in Ease of Doing Business ranking

6

Poland – an attractive investment destination for entrepreneurs

economic survey - investment attractiveness of the CEE countries

source: Deutsch-Polnische Industrie- und Handelskammer; PAIIZ

• Poland is the largest economy among East European EU member states and one of the largest markets in the EU as a whole. Polish economy is growing in a stable manner and avoided outright recession even during the global financial crisis and European debt crisis.

• The lack of substantial disequilibria in the economy (low and stable inflation rate, falling current account deficit, relatively low government public debt) allow the conduct of predictable economic policies.

• Investment climate in Poland is improving not only in absolute terms but also relative to main peer countries making Poland one of the most attractive markets for foreign investors globally.

Source: The fdi Report 2013 Increase in the number of greenflield projects in Poland

(percentage change 2011-2012)

Source: The fdi Report 2013, Global greenfield investment trends

3,99 3,96 3,81 3,77 3,67 3,63 3,55 3,52 3,43 3,35 3,2 3,06

0

1

2

3

4

5

analysis based on the opinion of 1623 companies 6- the most attractive 1 - least attractive

Top 10 Destinations Countries in Europe in 2012

Number of projects Country

812 UK

410 Germany

278 Spain

265 Russia

244 France

237 Poland

147 Ireland

145 Netherlands

138 Romania

133 Turkey

1062 Other

3891 Total

Poland +5%

France – 12%

UK – 8%

Germany – 4,7%

Russia -18%

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Benefits from EU accession

Primary sectors lost in importance

after Poland EU accession (gross VA

structure)

GDP per capita catching up with EU

Źródło: MFW, PKB w PPP Source: Eurostat

Źródło: MF, GUS, PKO Bank Polski

0.0

0.2

0.4

0.6

0.8

1.0

1998 2004 2013non-market services constructionagriculture, extraction, utilities manufacturingmarket services

0

20

40

60

80

100

1980 1985 1990 1995 2000 2005 2010

CEE Poland

% EU average

36%

66%

Net EU transfers to Poland

0

0.5

1

1.5

2

2.5

3

3.5

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

PKO BP

forecast% of GDP

• Poland underwent substantial transformation after joining the EU in 2004. The structure of economy changed in favor of more productive manufacturing industries and away from primary sectors, strong trade links with largest EU economies emerged and EU funds absorbtion boosted infrastructure development.

• To date Poland absorbed EUR 61,4 bn (on net) in EU transfers (both CAP and structural funds) equaling 16% of 2013 GDP.

• The economy is constantly catching up with the wealthiest countries in Europe, which manifests itself in higher incomes, better education and health care (ex HDI value increased by 12% since EU accession).

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Poland and its funds

Poland's largest beneficient of the EU budget 2014 – 2020;

From the European cohesion policy budget for 2014-2020 Poland will receive 82.5 billion Euro;

Programs for 2014-2020

Infrastructure and Environment – 27,5 bilion Euro;

Innovative Economy – 8,6 bilion Euro;

Human Capital – 4,4 bilion Euro;

Development of Eastern Poland

Technical Assistance

Regional Programmes

Source: www.funduszeeuropejskie.gov.pl

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Benefits from EU accession

Nominal yearly compensation per

employee

Source: AMECO

Source: Eurostat

• Since 2004, the unemployment rate in Poland explicitly declined;

• By Eurostat in February 2014 the unemployment rate in Poland was 9.7 percent. In the same period the unemployment rate for 28 EU countries amounted to 10.6 percent;

• The labor market situation was only better in few EU countries, including Denmark, where the unemployment rate was 7 percent (in February 2014);

• Nominal compensation per employee yearly in Poland is lower than in the euro area which means that the work in Poland is more competitive than in other European countries

Harmonized unemployment rate

4

8

12

16

20

24

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Poland

European Union

Euro Area

%

0

10

20

30

40

50

60

70

2004 2006 2008 2010 2012

Poland Denmark Finland

Sweden Norway United Kingdom

Euro Area

EUR thous.

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Consistent economic reform and integration with the EU translate into continued improvement of conditions for business development

Index of Economic Freedom, 2014

• According to the Heritage Foundation, and the "Wall Street Journal" - Poland has made progress in six of the ten indicators of economic freedom. Poland has reduced government spending, fiscal freedom, monetary, business, investment and trade..

• Since 1995 Polish economic freedom improves.

40

45

50

55

60

65

70

75

80

1995 1997 1999 2001 2003 2005 2007 2009 2011 2013

Poland Sweden

Czech Republic Hungary

Romania Slovakia

Denmark

pt.

Source: The Heritage Foundation

The Worldwide Governance Indicators, 2013

voice, accountability

political stability

government

effectiveness

regulatory quality

rule of law

corruption

CEE EU Members* Nordic Countries* * Poland

improvement

Source: World Bank, average for CEE EU Member states as well as Nordic countries. * CEE EU Member States sample includes: Bulgaria, Croatia, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Romania, Slovakia and Slovenia; ** Nordic countries sample includes: Denmark, Finland, Norway and Sweden

Human Development Index

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1

2000 2005 2010 2012

Romania Poland Hungary Slovakia Czech Republic Denmark Sweden

pt.

Source: UNDP

11

0

5

10

15

20

25

30

35

40

45

50

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Reszta świata Unia Europejska

% PKB

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8

2003 2005 2007 2009 2011 2013 2015 2017 2019

dane historyczne cel MNiSW

% PKB

Forecasts of economic growth in Poland suggest the economic recovery in the coming years

Gross domestic expenditure on R&D (% GDP)

Trends in FDI in Poland (stocks)

Source: Eurostat

Source: Central Statistical Office, Ministry of Science and

Higher Education

• The GDP growth is gaining momentum after slowdown due to recession in European Union

• The economy is getting more innovative, in line with Europe 2020 strategy

• Polish foreign trade as well as direct investment are dominated by partners from the European Union

• Net FDI inflow to Poland between 2004-2013 totaled on average EUR 6.8 bn annually

• Since 2004 to 2012, FDI stock of Polish companies abroad has grown 17.8 times (from EUR 2.5 to EUR 43.6 bn)

• In 2012, operating in Poland 58 Danish companies on the Polish market which invested at least EUR 1 million;

• Danish companies have invested the most in central and northern Poland

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Prospects for the development of economic cooperation between Polish and Denmark

Polish trade with Denmark (12M ma)

• Trade between Polish and Denmark since 2000 is growing each year;

• Reduction of the trade took place in 2008 and 2009 due to the global economic crisis;

• In 2012 the trade turnover between Poland and Denmark amounted 4.1 billion Euro;

0.5

1.0

1.5

2.0

2.5

Dec-99 Dec-01 Dec-03 Dec-05 Dec-07 Dec-09 Dec-11 Dec-13

exports to Denmark

imports from Denmark

bn EUR

Source: Eurostat

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Investment incentives

Governmental grants;

Governmental grants are provided on the basis of Program for the support of investments of considerable importance for Polish economy for years 2011-2020; Beneficiaries - Support can be applied for by companies planning investments in the following priority sectors: - automotive sector, - electronic sector, - aviation sector, - biotechnology sector, - modern services sector, - research and development (R&D).

Investment incentives in SEZ; The permitted level of regional aid available to the entrepreneur is dependant on: location of the investment, level of capital input, or costs of employing new workers and also, the size of the business seeking tax relief.

Industrial and technology parks

Industrial and technology parks are places which, due to a concentrations of firms from one sector and supporting science and research facilities, are enabled to develop quickly.

Investment incentives in gminas (municipalities) - real estate tax exemption The following is subject to the real estate tax: - land, - buildings or parts thereof, - buildings or parts of buildings associated with conducting an economic activity.

Source: Polish Information and Foreign Investment Agency

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Thank you very much for your attention