Bank PKO BP will vote on a dividend at the AGM to be held on April 18. Last year, PKO BP presented in its strategy a policy of a 20-40% payout ratio. Management recently appears to be guiding market expectations towards a 40% payout ratio (from previous year's earnings) in 2006 versus a 66% payout (PLN 1 per share) last year. The bank’s management has indicated that it will need capital for its plans to expand abroad. PKO BP is currently bidding for Serbian Vojvodjanska banka and Croatian Splitska banka. Nonetheless, given the bank's high solvency ratio of 16.93%, we are forecasting the bank to pay PLN 1.17 per share (equating to a 67% payout ratio). We believe a high dividend payout is sustainable in the medium term and would expect a negative trading impact if its cut this year. The foreign expansion plans of the bank are not viewed favourably, given limited synergy, implementation risk, and the possibility the bank could overpay for assets.