We expect the Polish banks to post weak numbers for 1Q13, with bottom line declining by 8.5% q/q and 16.1% y/y on average. A continuous decline in interbank rates and meagre loan growth is expected to lead to a substantial drop in the average net interest margin to 2.88% (down 24bp q/q and 47bp y/y) in 1Q13. Trading gains on the sale of AFS portfolio should continue to partially offset weakness in core revenues, especially at BHW, and PEO. We do not expect any major deterioration in cost of risk thus net provisioning at Polish banks looks set to decline in 1Q13 versus 4Q12. We expect bottom lines to be supported by seasonally lower costs, helped by the effects of cost restructuring (BHW) and reduced staff numbers (MIL, PEO and PKO).
We expect PKO to post weak net income of PLN 705m in 1Q13 on the back of further top-line margin pressure, seasonality in fee income and elevated cost of risk.
We forecast to post net income of PLN 657m in 1Q13, with strong margin pressure, although the outcome should also be supported by trading income and strong cost containment.
We expect Bank Handlowy to show a decent set of results (PLN 230m) in 1Q13, supported by above-average trading income, the effects of cost restructuring and strong asset quality.
We forecast to post strong net income of PLN 318m in 1Q13, although the mix could be somewhat disappointing with strong pressure on net interest margin offset by lower net provisioning in the corporate portfolio.
We expect BSK to report net income of PLN 224m in 1Q13, with visible margin pressure being offset by trading gains on the AFS portfolio (some PLN 48m). However, we would view positively any signs of cost savings at BSK.
Bank Millennium should post fairly decent results (PLN 109m) in 1Q13, with relatively minor pressure on the top line and cost containment.