Bank Pekao – 2Q07 earnings above expectations but revenues weaker

Net earnings came in at PLN 539.2m for 2Q07, up 7.4% q/q and 20.9% y/y, above both our expectation of PLN 525.5m and the consensus estimate of PLN 523m (with a range of PLN 505m – PLN 534m, according to PAP). The results came higher-than-expected on the core revenue lines with total (55 EUR, -1,30%) banking income 3.1% ahead of our expectations, but this positive development was somehow offset by higher-than-expected operating costs. Net provisioning came in line with expectations. Some of the difference may have come from the impact of the first-time consolidation of the bank’s Ukrainian subsidiary on the profit and loss statement, following the acquisition of Unicredit Ukraine and HVB Ukraine. We expect some positive impact from the results today, however given the recent market speculations concerning shortcoming signing of the agreement between UniCredit and GE (39 USD, 0,21%), this story could be rather in focus of the market.