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Situation on the banking market in Poland

In 2021, the banking sector was recovering from the losses it suffered in 2020, but the pre-pandemic levels were not yet reached. Stronger demand for loans along with the ongoing economic recovery and low interest rates, coupled with lower credit risk impairment charges, contributed to the improvement in financial performance. However, demand for loans in distinct categories remained varied with the mortgage sector performing best. The sector still faces the challenge of rebuilding its profitability (which has declined due to changes in the monetary policy in 2020) and also the materialization of risks associated with foreign currency loan portfolios.

At the end of December 2021, there were 30 commercial banks, 511 cooperative banks and 37 branches of credit institutions operating in Poland. The banking network comprised a total of 5,211 branches, 2,587 offices, agencies and other customer service outlets and 2,993 representative offices (including partner centers). Therefore, the banking network comprised a total of 10,791 outlets, i.e. 966 fewer outlets than at the end of the previous year.

Headcount in the banking sector at the end of December 2021 fell to 143.0 thousand people and was 6.0 thousand (4.0%) lower than at end of 2020.

In 2021, the banking sector generated a net profit of PLN 8.8 billion, compared to PLN -0.3 billion in the corresponding period of the previous year, up PLN 9.1 billion. The largest impact on the increase in the net result was exerted by the following factors, among others: result on provisions and write-offs for credit risk (down by PLN 5.5 billion y/y) and result on commissions (up by PLN 2.3 billion y/y). Moreover, dividend income was significantly larger (PLN 0.5 billion y/y).

Throughout 2021, the interest margin remained above 2%. As at the end of December, this metric stood at 2.07% (compared to 2.26% as at the end of December 2020).

The banking sector’s return on equity (ROE) after December 2021 was 4.34%, representing an increase by 4.43 pp y/y. ROA increased from -0.01% in December 2020 to 0.36% at the end of December 2021. The smaller scale of write-offs caused the R/I ratio (the ratio of the banking sector’s provisions and write-offs to operating income) to drop to 19.62% at the end of 2021 (-10.79 pp y/y). The slowdown in the y/y rate of decline in operating income (with costs kept under control) reduced the C/I ratio in the whole sector from 63.4% at the end of 2020 to 58.8% at the end of 2021.

At yearend 2021, the net asset value of the banking sector was PLN 2,573 billion, up 9.5% from December 2020.

Loans and advances in December 2021 stood at PLN 1,364 billion, up 5.9% y/y. Despite the record low level of interest rates (during three quarters of 2021), deposits continued to grow, albeit at a decreasing rate. As at the end of December 2021, they increased to PLN 1,870 billion, or 10.2% y/y.

At the end of December 2021, deposits of the non-financial sector totaled PLN 1,549 billion (net of frozen deposits), representing an increase by 8.0% y/y. The largest rate of growth was maintained by corporate deposits, although its rate was gradually declining. Household deposits also grew at a slower rate than in 2020.

At the end of September 2021, the banking sector’s own funds for capital ratios, calculated in accordance with the regulations laid down in the CRR1 Regulation, was PLN 228 billion, down 0.4% from the end of September 2020.

In 2021, the sector’s capital situation remained stable. The banking sector’s total capital ratio at the end of September 2021 was 19.98%, while the Tier I capital ratio at the end of this period was 17.95%.

Activity and product offering

Bank Pekao Group

Bank Pekao is a universal commercial bank offering a full range of banking services provided to individual and institutional clients operating chiefly in Poland. The Bank Pekao Group consists of financial institutions operating on the following markets: banking, asset management, brokerage services, transaction advisory, leasing and factoring. Since 2017, Bank Pekao has been part of the PZU Group.

The Bank offers competitive products and services on the Polish market, 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 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 2021, Bank Pekao was the second largest bank in Poland (in terms of the value of its assets)

New products and services

The key factor in the pursuit of Bank Pekao’s new strategy is growth of the portfolio of payment cards. As at the end of 2021, the Bank had over 4.6 million cards issued to retail clients, or 140 thousand more than a year earlier. In 2021, the value of non-cash transactions reached the highest level in history and was over 22% greater than the year before. A number of initiatives were implemented to encourage customers to make use of non-cash payments, emphasizing their convenience and security. Pekao held an ECO Lottery to promote cashless payments and environmentally friendly activities. Card payments enabled the customers to participate in a lottery for an AUDI Q4 e-tron electric car and 36 electric bikes. The number of the ECO Lottery participants was twice as high as in 2020. Part of the profit from transactions made with cards registered in the lottery was allocated by the Bank to supporting and protecting the Homole Gully Nature Reserve.

Moreover, attractive vouchers for purchases in popular stores were offered to customers who paid with their card, a 10% refund for online transactions was also offered along with the possibility of repayment for purchases made with the card in 0% installments. Also, in July, an option of a quick remote increase in the credit card limit was launched as part of the bank’s ready-made credit offering. Customers may set an additional card limit after logging in to the Pekao24 online platform or the PeoPay mobile app.

The card offering was extended with the Revolutionary Visa Debit FX, which is available in the Mastercard and VISA systems. The Revolutionary Card is a modern multi-currency debit card with a guarantee of the lowest exchange rates. The card is issued to a PLN account, but foreign currency accounts may also be linked to it. When making a transaction in a foreign currency, the system automatically recognizes the currency of the transaction and charges the respective foreign currency account without performing a currency conversion. If the required amount is not available in the account or the transaction is in a currency that the customer does not have, the whole amount gets converted from the PLN account. In such a situation, the holder of a multi-currency card does not incur any additional costs charged by the bank and the currency conversion is carried out directly at the exchange rate applied by Visa or Mastercard.

In 2021, in cooperation with PZU, the Bank introduced the "Comfort Package" to its offer, which is one of the few combinations of banking and insurance products available on the market with such a wide range of protection. The "Comfort Package" provides customers with, among others, the possibility of instant payments and insurance of online shopping transactions, assistance in the event of a breakdown at home, insurance of personal belongings.

In the interest of environmental protection, the bank developed its lending activity by promoting electronic processes, transferring after-sales processes to electronic channels and introducing solutions that significantly reduce the quantum of documents printed in its branches.

In 2021, sales through electronic channels achieved a record high of PLN 1.8 billion, up 79% compared to 2020. In Q4 2021, as much as 67% of Bank Pekao’s cash loans were granted through electronic channels. This was possible owing to the introduction of new solutions and the expanded availability of one-click offering for customers. As part of the development of the bank’s remote processes, an innovative one-click consolidation loan process was launched, enabling customers to easily transfer loans from other banks completely online. The bank also introduced the option of granting a one-click loan by a consultant and relationship manager during a telephone call with the customer.

Since June 2021, the open banking service has also been employed in the process of granting cash loans, speeding up the lending and decision-making processes based on online access to the history of accounts held with other banks.

In 2021, on an ongoing basis, the bank kept adjusting its offering of housing loans to the changing market situation while consistently optimizing its loan granting and aftersales service processes. The most significant activities included the deployment of the mortgage loan application assessment process across the branch network and the launch of the Platform for Partners, which was made available to selected intermediaries under a pilot project. The new platform centralizes mortgage lending processes and enables the remote submission of loan applications to the bank. It supports users by providing pre-contractual assistance and an explanation form for the customer.

Bank Pekao introduced a mortgage loan with a periodically fixed interest rate indexed to a foreign currency. Its customers may (in compliance with Recommendation S) change the interest rate formula from a variable to a periodically fixed interest rate (for 60 months). Concerned about the environment, the bank also extended its offer of housing loans by promoting ecological solutions.

In the business client segment, in 2021, the functionalities of a new lending workflow were implemented in the form of a decision-making bot, which enables the completion of the whole transaction, including the disbursement of funds, in less than an hour. The credit decision is made fully automatically, and the risk assessment is carried out by a system of multi-threaded decision-making rules that do not require the participation of credit analysts. The application may be submitted remotely or over the telephone without the need to visit a branch.

The automation of renewals and the centralization of services translated into an increase in the volume of renewable limits processed, and thus into an improved focus of the sales network on acquiring new transactions.

Since December 2021, Bank Pekao’s business customers issuing invoices with deferred payment terms for their goods or services have been offered the option to take advantage of a factoring product. The product enables the customers to receive their cash faster, after invoicing the counterparty, rather than on the date of payment.

In 2021, Bank Pekao’s offering was expanded with new products: travel insurance and assistance insurance as part of the bundle of services for the Mega Beneficial Account. In the area of bundled insurance products, offerings were harmonized – as a result, insurance for a cash loan may be purchased on the same terms, regardless of the sales channel. Sales of insurance for cash loans via the call center were also launched. Moreover, customers were offered the option to purchase motor insurance with a special discount through electronic channels.

Within the framework of its collaboration with PZU, the bank’s clients in over 170 branches (up by over 50% compared to 2020) may open the Mega Beneficial Account, and the number of the bank’s customers acquired through PZU branches increased by 47% compared to the previous year. Moreover, as part of the pilot project, a new distribution channel was launched – PZU Tied Agents – and a new product combining the insurance and banking offerings called the “pharmacy card with an account”.

Bank Pekao continued to promote remote service channels. In 2021, customers purchasing investment products were offered preferential pricing terms.

In Q3 2021, the bank enabled its clients to remotely sign an agreement for accepting and transferring orders regarding participation units in mutual funds, updating the questionnaire, expressing consent for a durable carrier and the possibility of remote opening of an investment account through the PeoPay mobile application.

In Q4 2021, in the Pekao24 and PeoPay systems, retail customers were offered the option of purchasing a new product called Term Deposit with a Fund, with an attractive interest rate on the deposit and the simultaneous purchase of participation units in one of the 5 Pekao TFI funds tailored to their investing preferences.

In December 2021, a promotional campaign for new customers on the Savings Account was relaunched (2.5% for 6 months up to PLN 20 thousand). The campaign is targeted at customers who actively use remote channels to handle their banking products. Every new customer may set up a promotional Savings Account along with a Mega Beneficial Account or World Premium Account solely through a remote channel such as Pekao24 or PeoPay.

Pekao TFI

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 portal.

As at 31 December 2021, the net asset value of Pekao TFI’s mutual funds (including Employee Capital Schemes) totaled PLN 20.3 billion, up by PLN 0.9 billion or 4.8% compared to the end of December 2020.

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. However, the percentage of international customers in the overall number of the bank’s customers is low.

In March 2021, the Bank updated its “More than a bank” strategy (announced in 2020). The principal direction of the bank’s development did not change. Certain modifications were introduced only to some indicators describing the pursuit of the strategy until the end of 2022. The key assumptions of the strategy were maintained, namely:

  • building lasting relationships with customers;
  • consistent digitization and personalization of services;
  • use of state-of-the-art technologies in improving the efficiency of the organization;
  • balancing the loan portfolio and reducing the cost of risk.

In practice, this means that Alior Bank’s objective is to combine the functions of a traditional bank with those of highly personalized digital bank in order to provide its customers with a completely new experience. The strategy update also assumes the development of a broad range of products and activities in the environmental area. In this manner, Alior Bank responds to the challenges posed by climate change and implements the postulate of social responsibility, continuing to support the green transition and the gradual expansion of its green product offering with both its current and prospective customers in mind.

At the end of Q3 2021, Alior Bank was the 8th largest bank in Poland in terms of the value of its assets.

New products and services

In 2021, Alior Bank continued its endeavors aimed at increasing the availability of its online services, but also deployed solutions to improve the safety of customers’ visits to its branches.

Since 2021, customers have been offered the option to remotely book meetings at Alior Bank’s own branches via the Booksy app. This means that retail customers and micro-entrepreneurs may conveniently plan their appointments in the bank’s branches located in 100 cities across Poland.

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).

Work was continued on streamlining the process of applying for credit products (the bundling of loans and current account overdrafts or credit cards with a consolidation loan) and a savings and checking account. The cash loan offering was made more appealing by developing new price options and enabling a completely online-based process with a digital signature.

Moreover, customers may tokenize their card before its physical delivery. This enables them to make payments using Google Pay and Apple Pay wallets.

By adding promotional offers with a periodically fixed interest rate, Alior Bank increased the attractiveness of its mortgage loan product.

With a view to acquiring young customers, in 2021 a new Junior Account offering was introduced for children aged 13 and above. This process is already available in the bank’s branches. In the near future, the products designed for the youngest customers will also be available from the mobile app and online.

Alior Bank also expanded its services for customers with savings and checking accounts. The option to submit new 300+ and 500+ applications directly from the electronic banking platform was added. Also, the Mastercard loyalty program “Priceless Moments” was implemented.

Using state-of-the-art technologies, the bank secures the transfer and storage of personal documents on a durable medium based on blockchain technology.

In the spirit of the ECO philosophy, the bank gradually expands the roster of products for which agreements do not need to be signed in hardcopy form (the exchange of documents is done via e-mail) and develops a portfolio of products based on virtual services (virtual card and BLIK Contactless). In 2021, Alior Bank introduced a new “Plan Biznes” account for business customers with an attractive bundle of free benefits, tailored to the receiving company’s needs. For customers in the micro, SME and large enterprise segment, a company debit card MasterCard with Plus was offered (additional benefits associated with the card: temporary promotions, discounts and rebates at partner establishments). The next step was the preparation and roll-out of PZU medical insurance products, which were made available at the beginning of 2022.

The development of the credit offering targeted at business customers investing in green energy sources was continued. In H2 2021, an offering to fund renewable energy projects was made available to professional electricity generators. Alior supports the green transition of its customers with products such as the EKOFIRMA Loan (for the purchase and installation of photovoltaic panels) or the loan for the purchase of a car fitted with an electric or hybrid engine.

Since the beginning of 2021, the bank has been intensifying its endeavors aimed at acquiring new customers. It offers the customers of other banks reduced fees and margins on revolving loans, mortgage-secured loans and factoring financing. A promotional offering was prepared for micro and small enterprises with the preparation fee for an overdraft reduced to 0%.

Also, last year, the range of remote payment methods was expanded – all cards issued to business customers were fitted with a contactless payment feature for Apple Pay, Google Pay, Garmin Pay, Fitbit Pay and SwatchPAY!. The card may also be tokenized before its physical delivery (meaning that the card may be connected to the Google Pay or Apple Pay virtual wallet without having to wait for its physical arrival), and the remote customer service functionality was extended with the Autenti signature option for larger amounts (even up to PLN 600 thousand) and also for changing the form of financing.

Business customers were offered a broad range of aftersales instruction options as part of the BusinessPro system (including the issuance of certificates confirming the closing of accounts and deposits, the issuance of bank opinions on the account balance and deposits, the instruction to prepare documentation for people with special needs, the instruction to change the password to execute treasury transactions).

The bank continues to work on the deployment of a new electronic banking platform for business customers, accessible both online and through a mobile app.

Alior TFI

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

Bank Pekao

Distribution channels

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 2021, the bank had 650 own branches and 1,475 own ATMs.

Online and mobile banking

In 2021, 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-of-the-art digital services.

In Q4 2021, all the bank’s customers were offered the use of the latest version of the PeoPay app. The PeoPay 4.0 app was developed in collaboration with the bank’s customers who tested the digital solution. Its interface provides a very convenient access to accounts and products, but above all facilitates daily mobile banking operations. The PeoPay mobile application offers a number of innovative solutions, such as:

  • executing a loan agreement under a “one click” process without leaving home – 30 seconds after an agreement is accepted – or at a bank branch;
  • approving transfers and payments using finger or face biometrics;
  • broad range of payment methods: Google Pay, Apple Pay, BLIK, Garmin Pay, Fitbit Pay;
  • payment for online shopping in the phone without the need to log into online banking;
  • availability of the messaging module for communication with the bank;
  • automation of recurring payments using the Qlips service (interbank service supported by the National Clearing House and the Polish Bank Association);
  • automatic payments for motorway tolls using the Autopay service;
  • purchase of public transport tickets;
  • full access to brokerage services, including online quotes and stock exchange orders.

In June 2020, the bank released the PeoPay KIDS app developed specifically for children aged between 6 and 13. The app lets children learn in an easy and accessible manner how to save up and manage their money. Children may also obtain their own PeoPay KIDS payment card to let them make purchases in stores and withdraw cash – the transaction limit on the card is set by the parent. The app also enables the user to perform simple operations, such as transfers from the Mega Beneficial Account or top-ups of pre-paid phone cards. PeoPay KIDS is linked to the parent panel in the PeoPay app and Pekao24 online banking. All transactions require a parent’s authorization. In Q4 2021, customers who had set up their PeoPay KIDS app were offered a variety of attractive promotions, such as: “5.00% on your savings account My Sweetie with PeoPay KIDS” and “Your child’s first pocket money to the PeoPay KIDS account,” which benefits of up to PLN 100 in cash. As at the end of September 2021, the youngest customers held nearly 65 thousand PeoPay KIDS accounts and 90 thousand virtual piggy banks in which they amassed over PLN 34 million. Children using PeoPay KIDS cards made nearly 2.5 million transactions for a total amount of PLN 26 million.

The bank keeps developing its Pekao24 and PeoPay services with self-service processes, enabling customers to submit applications for a housing loan, student loan, cash loan, account or card on their own without leaving home, including an application for a complete early repayment of a mortgage loan or cash loan, for the issuance a certificate of outstanding debt, a bank opinion or documents for the establishment of a mortgage.

The PekaoID digital identity and trusted profile services were also expanded, enabling remote confirmation of the identity of retail customers. Following integration with the eIDAS National Node, the numbers of PekaoID activations have surged. As at the end of 2021, the number of PekaoID customers was 1.5 million.

Since November 2021, customers have been offered the option to submit an application for the forgiveness of the PFR 2.0 Financial Shield aid via the Pekao24 electronic banking system.

In December 2021, Bank Pekao was getting ready to roll out the option to submit applications for the Family Care Capital benefit and the 500+ benefit. Since 4 January 2022, both these options have been available.

Alior Bank

Distribution network

At yearend 2021, Alior Bank had 600 outlets (173 traditional branches, 7 private banking branches, 13 Corporate Banking Centers and 407 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 had 55 branches in Romania.

By the end of 2021, Alior Bank upgraded its 69 branches to the new format. The distinguishing features of these facilities include their innovative design and the use of modern technologies. The role of branches is primarily to provide customers with convenience and privacy and to ensure the comfort of work for bankers (e.g. quiet space for customers to familiarize themselves with banking applications).

Alior Bank’s traditional branches are located throughout Poland, in particular in cities with more than 50 thousand residents, offering the full range of the bank’s products and services. In turn, partner centers are located in smaller towns and in selected locations in Poland’s major cities, offering a broad range of services and deposit and credit products for retail and business customers.

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 on-line process and offers services of a currency exchange office.

Online and mobile banking

In accordance with the strategic priorities, Alior Bank focuses on optimization of the existing and introduction of new solutions in online and mobile banking.

In 2021, Alior Bank launched the “My Matters” self-service module on the Alior Online platform. Now customers may submit instructions on their own rather than visit a branch or contact the call center (for instance, to change personal data, obtain a bank opinion on the costs of credit products, obtain reimbursement of costs after an early repayment of a loan, report complaints). By developing the module, Alior Bank intends to usher in additional automated services.

Alior Bank also focused on delivering additional financial and non-financial services through its banking applications (both mobile and online) to provide customers with more than just a banking app. This makes it easier for customers to deal with their everyday matters, having suggestions for the best solutions at their fingertips, with the freedom of choice and availability at any time through the mobile app.

In 2020-2021, a number of non-financial services were added to the mobile app, including:

  • moBilet (functionality enabling the purchase of a public transport ticket and the payment of parking fees),
  • AutoPay (automatic collection of motorway tolls),
  • motor third party liability/motor own damage insurance with LINK4,
  • PZU Wojażer travel insurance,
  • BIK alerts and BIK reports.

Moreover, customers sporting the latest models of Huawei smartphones may now also use the Alior Mobile app. Thereby, the application is currently available to users of all major systems, including iOS and Android.