BANK HANDLOWY W WARSZAWIE S.A. 1Q 29 consolidated financial results -1-
Macroeconomic situation in 1Q 29 Deep drop in industrial output in January and February, albeit business confidence indicators suggest improvement 54 52 5 48 46 44 42 4 38 Jan- Mar- May- Jul- Sep- Nov- Jan-9 Mar-9 PMI Index Industrial output YoY (Right Axis) 25 2 15 1 5-5 -1-15 -2 Massive weakening of the PLN on the back of higher risk aversion and fears of instability in the Central Europe 4. 3. 2. 1.. -1. -2. -3. -4. Jan Feb Collapse in foreign trade flows due to weaker external demand Mar Apr May Jun Exports YoY Jul Aug Sep Oct Imports YoY Nov Dec Jan 9 MPC cut rates by 125bps to 3.75% in 1Q 29 Feb 9 12. 115. 11. 15. 1. 95. 6.5 6. 5.5 5. 4.5 4. 3.5 3. 2.5 2. Jan- Mar- May- Jul- Sep- Nov- Jan- 9 Mar- 9 1/Jan/9 3/Jan/9 28/Feb/9 29/Mar/9 27/Apr/9 CPI YoY NBP reference rate EURPLN EURRON EURCZK Sources: Citi Handlowy, GUS, NBP. -2-
P&L lines impact on net income 1Q 29 vs. 1Q 2 /PLN MM/ 25 2 68 41 15 92 37 75 1 18 5 NET INCOME 1Q2 Interests Fees Treasury Expenses Net impairment Loans 57 Net impairment FX Options 26 tax 46 NET INCOME 1Q29 21% 25% 61% 9% 75 mln (1Q9/1Q) Net interest income (1Q9/1Q) Fees result (1Q9/1Q) Treasury result (1Q9/1Q) Expenses and depreciation (1Q9/1Q) Net impairment losses loans -3-
FX Options impact on profit before tax 4 35 1Q 2 4 35 1Q 29 3 FX Options (PLN 2 MM) 3 FX Options (PLN 162 MM) 25 2 15 2 25 2 15 15 1 229 227 1 228 57 5 5 67 Profit before tax 1Q2 excl. FX Options Net impairment losses Profit before tax 1Q2 Profit before tax 1Q29 excl. FX Options Treasury Net impairment losses Profit before tax 1Q29 4 35 4Q 2 pro forma FX Options (PLN 259 MM) 3 25 2 15 34 259 1 5 Profit before tax 4Q2 excl. FX Options Treasury -4-45 Profit before tax 4Q2
Stable Bank s position Strong capital base (CAR) High liquidity (Loans/Deposits) 14% 12% 11.% 11.6% 12.3% 12.1% 13.2% 11.2%* 6% 62% 69% 71% 7% 73% 1% 8% 1.8% 1.8% 11.5% 1.8% 8% 1% 96% 99% 13% 19% 111% 6% 12% 1Q ' 2Q ' 3Q ' 4Q ' 1Q '9 1Q ' 2Q ' 3Q ' 4Q ' 1Q '9 Citi Handlow y Banking sector Min. requirement * not including 2 net income Citi Handlow y Banking sector PLN B 6 5 4 3 2 1 High and stable level of equity 5.8 5.2 5.6 5.6 5.6 1Q ' 2Q ' 3Q ' 4Q ' 1Q '9 Citi Handlowy The Bank's solvency and liquidity ratios are regularly monitored and they are well above the regulatory minimums. As at the end of 1Q 29 Citi Handlowy loans to deposits ratio amounted to.73, one of the lowest in the market. Citi Handlowy maintains stable capital base Source: Citi Handlowy, NBP -5-
Major factors impacting 1Q 29 net result vs. 1Q 2 Net interest income and net interest margin 27% (1Q9/1Q) Deposits cost non-financial sector 5% (1Q9/1Q) AFS portfolio income Market share* 1Q 4Q 1Q9 4.5% 4.4% 5.6% /PLN MM/ 45 4.2% 4 35 Net interest result Net interest margin 4.% 3.8% 3.6% 3 3.4% 25 2 3.2% 3.% 2.8% 15 1Q 7 2Q 7 3Q 7 4Q 7 1Q 2Q 3Q 4Q 1Q 9 2.6% *Source: Bank s estimates -6-
Major factors impacting 1Q 29 net result vs. 1Q 2 Fees & commissions result 42% 33% 36% Market share* (1Q9/1Q) Investment and insurance products (1Q9/1Q) Brokerage fees (1Q9/1Q) Custody services 1Q 4Q 1Q9 5.7% 5.2% 4.2% /mld zł/ Mutual funds net inflow (market) /mld zł/ WSE turnover (market) 15 1 14 5 12 1 8-5 6-1 4 2-15 1Q 7 2Q 7 3Q 7 4Q 7 1Q 2Q 3Q 4Q 1Q 9 1Q 7 2Q 7 3Q 7 4Q 7 1Q 2Q 3Q 4Q 1Q 9 *Source: Bank s estimates -7-
Treasury result details Treasury 1Q 2 1Q 29 I/D (mln zł) 151.1 59.5 (91.6) Customer activity Customer activity result Proprietary management Proprietary management result FX Options (PLN 259 MM) 2Q 6 3Q 6 4Q 6 1Q 7 2Q 7 3Q 7 4Q 7 1Q 2Q 3Q 4Q 1Q 9 (15 MM) 2Q 6 3Q 6 4Q 6 1Q 7 2Q 7 3Q 7 4Q 7 1Q 2Q 3Q 4Q 1Q 9 Scale on charts is incomparable -8-
Major factors impacting 1Q 29 net result vs. 1Q 2 Net impairment losses* 1Q 2 4Q 29 1Q 29 (2.2) (94.3) (95.7) 4 /PLN MM/ Net impairment losses* (1) (6) (11) (16) 1Q 7 2Q 7 3Q 7 4Q 7 1Q 2Q 3Q 4Q 1Q 9 Net impairment losses growth is the effect of deterioration customers financial situation resulting from general slowdown in the economy and on exports markets within the Corporate Banking Sector In Retail Banking increase of net impairment losses was caused by growth of cash loans and credit cards portfolio and as well as increase of delinquent receivables share *excl. FX Options -9-
Expenses under control /PLN MM/ 45 4 35 3 25 411 219 (9%) (7%) 374 25 Cost / Income 1Q 1Q9 GCG 76% 71% CMB 52% 55% Total 63% 63% Corporate: lower staff expenses and decrease of marketing spending 2 15 1 5 191 (12%) 169 Retail: decrease of expenses as a result of optimization process in the scope of employment and lower marketing expenses. It was partially compensated by higher technological expenses and one-offs in branch network optimization 1Q2 1Q29 Corporate Bank (CMB) Retail Bank (GCG) -1-
Balance sheet structure - Assets 37.4 42.6 45.3 Loans nonfinancial sector Financial sector AFS Trading portfolio Other assets /PLN MM/ 13,9 13,9 13,3 3,2 3,7 8,1 1,8 13,2 6,6 7,9 1,3 5,3 4,1 6,3 4,7 31.3. 31.12. 31.3. Changes 1Q9/1Q 1Q9/4Q 5% % (61%) (14%) 67% 22% 94% 3% 15% (25)% Total Total 21% 6% Major changes - Assets Increase of debt securities AFS by 22% (1Q9/4Q) Increase of financial assets held for trading by 3% (1Q9/4Q) 73% Loans / deposits ratio -11-
Balance sheet structure - Liabilities Deposits nonfinancial sector Deposits financial sector Equity Trading portfolio Other liabilities /PLN MM/ 45.3 42.6 37.4 19, 19,9 21,4 1, 7,9 3,6 5,6 5,6 5,8 7,6 6,8 4,4 2,3 2,3 3,1 31.3. 31.12. 31.3.9 Changes 1Q9/1Q 1Q9/4Q (11%) (5%) 177% 27% (3%) % 73% 12% Total Total 21% 6% Major changes - Liabilities Increase of financial liabilities held for trading by 12% (1Q9/4Q) Increase of deposits from financial sector by 27% (1Q9/4Q) 11.2% (1Q9) Capital Adequacy Ratio -12-
Loans Non-financial sector loans 9 8 7 6 5 4 3 2 1 Corporate loans 31.12. 31.3.9 Gross loans non-financial sector Currency structure 9% 12% 16% 88% 84% 6 5 4 3 2 1 Retail loans 31.12. 31.3.9 PLN FX Market 1Q29/4Q2 Market 1Q29/1Q2 36% 64% 1Q29/4Q2 Market* 1Q29/1Q2 Changes % 4% Changes % 3% Corporate loans: including public sector and local government institutions -13- *excl. mortgage
Deposits Non-financial sector deposits 14 Corporate deposits Deposits non-banking sector Currency structure 8 Retail deposits 12 1 8 6 17% 79% 21% 83% 6 4 4 2 2 31.12. 31.3.9 31.12. 31.3.9 Current Term PLN FX Current Term Changes 1Q29/4Q2 Market 1Q29/1Q2 Market Changes 1Q29/4Q2 Market 1Q29/1Q2 Current (3%) (7%) 11% Current 9% 12% Term (8%) 11% 89% Term (16%) 7% Total (7%) % Total (1%) 9% Corporate deposits including public sector and local government institutions Source: Bank s estimates, data pro-forma, in PLN billion -14-
Spreads on deposits Spreads on deposits * 7% 6% 5% 4% 3% 2% 1% % 1Q 2 2Q 2 3Q 2 4Q 2 1Q 29 Citi Handlowy Banking sector WIBOR 1M (quarterly average) * calculated as WIBOR 1M (annualized interests costs on PLN deposits of non-financial sector / average volume of the deposits) Source: Citi Handlowy, NBP. -15-
Economic outlook Moderate economic acceleration possible only in late 29 Decrease in fixed investment 3. 2. 1.. -1. -2. -3. -4. -5. -6. GDP change YoY 1Q'9 2Q'9 3Q'9 4Q'9 Poland Euro area US Lower labour demand likely to push the unemployment rate higher. -1. -2. -3. -4. -5. -6. -7. -8. -9. -1. 1Q'9 2Q'9 3Q'9 4Q'9 Fixed Investment YoY Possible further interest rate reductions towards 3% 22. 2. 18. 16. F F 6.5 6. 5.5 5. 4.5 F 14. 4. 12. 3.5 1. 8. 1Q' 4Q' 3Q'1 2Q'2 1Q'3 4Q'3 3Q'4 2Q'5 1Q'6 4Q'6 3Q'7 Unemployment (%) 2Q' 1Q'9 4Q'9 3Q'1 3. 2.5 Jan- Mar- May- Jul- Sep- Nov- CPI YoY Jan-9 Mar-9 May-9 Jul-9 NBP reference rate Sep-9 Nov-9 Sources: Citi Handlowy, GUS, NBP. -16-
Summary Proper long term strategy of the Citi Handlowy for the crisis as well Stability and liquidity Apogee of the FX Options behind us Success of the strategy in deposits scope -17-