Alior Bank's CoR seen below 0.8 pct in coming quarters, FX loan reserves not set to rise

"We are consistently implementing our strategy. We are still the leader in the consumer finance market and are already seeing the first benefits of our refreshed brand. We are entering new segments, thereby rejuvenating our target group," the bank's CEO Piotr Zabski told the conference.

"Compared to previous periods, our costs are under tight control and predictable; there are no longer the spikes we saw in previous periods. We are generating very high profitability, our capital position is very solid, and large surpluses allow us to calmly think about implementing our growth strategy," he added.

The net profit of the Alior Bank group in the second quarter of 2025 increased to PLN 640.2 million (EUR 149.5 mln) from PLN 585.9 million (EUR 136.8 mln) in the prior year period.

After the first half of 2025, the group's net profit amounted to PLN 1.12 billion (EUR 261.5 mln) against PLN 1.16 billion (EUR 270.9 mln) a year earlier. The decline in net profit was due to, among other things, a PLN 45 million (EUR 10.5 mln) increase in BFG contribution costs.

The bank's results exceeded market expectations, mainly due to lower risk costs.

The risk cost ratio in the second quarter fell to 0.2 percent from 0.74 percent in the first quarter.

Alior reported that the decline in risk costs was due to the recognition of a profit on the sale of the NPL portfolio. The recognised profit on this sale amounted to approximately PLN 100 million (EUR 23.5 mln).

"In terms of risk costs broken down by segment, we have a positive result for individual customers, as most of the portfolio we sold was to individual customers. The smaller package consisted of microloans, hence the smaller impact on the corporate customer segment," said bank's deputy CEO Marcin Ciszewski.

The risk cost ratio for the first half of 2025 was 0.47 percent. Excluding the profit from the sale, this ratio would have reached 0.75 percent.

The bank said that it currently does not identify any risks that could significantly negatively affect the CoR level and, assuming no significant macroeconomic changes in the coming years, Alior expects risk costs not to exceed 0.8 percent.

"We do not currently see any events in the performing portfolio or in the first or second basket portfolio, so we assume that risk costs, excluding the impact of one-off events, should not exceed 0.8 percent in the coming quarters," said Ciszewski.

In the second quarter, the bank recognised PLN 44 million (EUR 10.3 mln) in legal risk costs for foreign currency mortgage loans.

"This is not a change that would signal that something bad is happening or that our portfolio is deteriorating. Rather, it is a change resulting from the fact that, in our case, we have received several more lawsuits," said Alior's deputy CEO Zdzislaw Wojtera.

"We have also changed our modelling approach to better reflect the reality of our portfolio, and in consultation with the auditor, we have created a provision of this amount. I do not expect this item to grow in the coming periods," he added.

Total costs amounted to PLN 549.6 million (EUR 128.3 mln) and were 2 percent lower than the consensus of PLN 561.1 million (EUR 131 mln). Total costs increased by 6.9 percent year on year.

Operating costs adjusted for the BFG contribution amounted to PLN 539 million (EUR 125.9 mln), increasing by 5 percent year on year and decreasing by 0.5 percent quarter on quarter.

"We expect that costs will remain under such cost discipline in the coming quarters. I do not expect them to exceed a few percent increase, looking at the second half of the year," said Wojtera.

The net interest margin fell to 5.74 percent from 5.88 percent in the first quarter.

"We estimate the impact of a 100-basis point decrease in interest rates at PLN 100 million," said deputy CEO Wojtera.

In the second quarter of 2025, sales of housing loans amounted to over PLN 1.3 billion (EUR 303.6 mln), up by 93 percent year on year.

In the first quarter, sales amounted to PLN 1 billion (EUR 234 million). The real estate loan portfolio reached PLN 21.6 billion (EUR 5 mln), and its share reached 32.3 percent gross in the bank's entire portfolio.

In the sales structure in the first half of 2025, the share of fixed-rate loans reached a level close to 90 percent.

In the second quarter, the bank additionally established a PLN 18 million (EUR 4.2 mln) provision related to disputes arising from the so-called free loan sanctions.

The CEO announced that the bank is winning the vast majority of court cases related to these matters.

seb/ han/ ao/