Bank Handlowy sees growing interest in loans, wants to pay high dividend

Bank Handlowy, the Warsaw-listed unit of Citigroup, sees a growing interest in loans among the corporate clients and counts on this trend continuing. The bank is working on a new strategy, which involves earmarking 100 percent of profits for dividend, depending on financial market regulator KNF approval, the company's representatives told a press conference.

"Even though the year on year numbers are not yet showing a loan trend reversal, as we have a 7 percent drop there, we do see a bigger activity among our corporate clients when looking at the quarterly dynamics. This was a second quarter in a row when we saw growth, and we are counting on this trend continuing and growing in the future," bank's CEO Elzbieta Czetwertynska said.

The value of debt owed by customers amounted to PLN 21.2 billion (EUR 5 bln) at the end of June 2024, which is a growth of 4 percent quarter on quarter, and a decline of 7 percent year on year.

The loans in the retail segment grew 4 percent year on year and 2 percent quarter on quarter. The bank said that mortgage loan sales grew three times in the first half of 2024.

"In the retail banking credit volume we are keeping dynamics which are slightly higher than the whole market, mainly because of the continuing mortgage loans renewal," Czetwertynska said.

Patrycjusz Wojcik, the bank's CFO, said that the bank is currently working on a strategy for years 2025 to 2027. He stated that the bank's intention is continuing the dividend policy and sharing the profits with the shareholders.

"Our dividend policy is sharing the profits with our shareholders, and we assume that, when we will have the possibility of paying 100 percent of the profit in dividends, this will be our intention as well," Wojcik said.

"We are well positioned for potential capital requirements growth stemming from regulation, and we have a framework agreement signed which we can use and increase our capital base depending on needs," he added.

In accordance with the strategy published in December 2021, the bank assumed a continuation of allocating most of its profit for dividend payment, with it amounting to no less than 75 percent of the profits, considering KNF's position.

The CEO said that the bank will publish its new strategy in December, and it is currently assumed that it will involve the bank's retail segment as well.

In 2021, the bank's strategic investor announced a decision to exit the retail operations in 14 countries, including Poland. The bank's current strategy assumes the segment will operate within the bank's structure.

Bank Handlowy's net profit in the second quarter of 2024 dropped to PLN 394.1 million (EUR 92.1 mln), but it would amount to PLN 549 million (EUR 128.3 mln) while excluding the additional impairment. The bank recognised a PLN 180 mln (EUR 42.1 mln) impairment related to the retail banking segment, which will impacted the bank's financial results in Q2.

Wojcik pointed out a positive trend in all important business lines.

"The interest result is in a growing trend, despite the mortgage moratorium, the commission result is the highest in years, and we have an excellent quarter when it comes to treasury operations," Wojcik said.

The bank's fees and commissions result amounted to PLN 147.8 million (EUR 34.6 mln) in Q2, up 4 percent year on year and 2 percent quarter on quarter. It was the highest commission result in the last three years.

The total costs amounted to PLN 354.9 million (EUR 83 mln) in Q2, up 4 percent year on year. The CFO said that the operational costs in the first half of the year were impacted by higher labour costs, connected with higher salary costs (plus 9 percent year on year).

He informed, that the dissolution of the reserves in the second quarter was connected with the sale of the non-performing portfolio in the retail banking segment.

seb/ mik/ nl/