18.09.2019

Idea Bank improves results

  • Idea Bank has been consistently limiting costs and rebuilding its business and sales model to become a lean bank for SMEs
  • In Q2 2019, the Bank reported a profit at both consolidated level – of PLN 1 million – and at standalone level – of PLN 41 million (in Q1 2019, these results were both negative and were PLN 81 million and PLN 76 million respectively)
  • TCR solvency ratio is gradually restored - at Idea Bank Group it has reached 2.11%, and at the Bank itself: 3.48%
  • Idea Bank maintains a strong liquidity position while deposit costs are falling
  • The due diligence process related to the search for an investor is continuing

 

The first half of 2019 was a period of exceptionally dynamic changes for Idea Bank. The Bank’s results in Q2 2019 differ significantly from those reported in Q1. This process is clearly seen in, e.g. financing costs, which at the beginning of the year were very high and then, thanks to the measures taken, were greatly reduced and continue falling. In the period from April to June 2019, costs were kept under tight control despite the one-off costs of restructuring measures of PLN 35 million.

Idea Bank is focused on implementing a programme with the strategic aim of achieving sustainable profitability and restoring its capital ratios. The effects of this programme can already be seen in the quarterly rise of 25 bps in TCR ratio in the case of the Bank and of 36 bps across the Idea Bank Group. Significant changes introduced to the risk management policy have also already brought results, e.g. a fall in the cost of risk for new loans.

The profit generated is the outcome of, e.g. a rise in interest income, a fall in operating costs and a reduction in risk costs.” stressed the President of Idea Bank, Jerzy Pruski. “The short period in which we have managed to improve results is extremely important. It supports the theory that the current management personnel knows the Bank well, they know its strengths and how to steer the institution through its current problems.” he added.

As previously announced, since mid-June 2019 Idea Bank has been restructuring employment and making sweeping changes in the area of sales. The aim of these changes is to reduce costs by restructuring and simplifying the business model and setting up a new, lean outlet chain. Other elements of the plan include a significant reduction in financing costs, reduction and stabilisation of risk costs and a reduction in balance sheet total. The Bank has also initiated an extended due diligence process with a private equity fund that is potentially interested in acquiring Idea Bank shares.

In addition to very significant savings from lower financing costs, these changes are expected to bring about a considerable reduction in the Bank’s operating costs of around PLN 100 million per year.

The Bank’s organisational structure has undergone comprehensive restructuring by, inter alia, the number of units directly reporting to the Management Board being cut by over half. This reflects the Bank’s target business model. Projects already being implemented and those planned in the IT area, including new mobile banking that Idea Bank is planning to make available to its customers in 2020, also correspond to this model.

Despite these sweeping changes, the Bank’s operating risk profile remains stable. The restructuring process is going according to plan.” says Jerzy Pruski. “Our target business and sales model is based on a lean structure that to a great extent uses simplified automatic processes. We are creating a foundation for a good business, at the same time gradually restoring the Bank’s credibility.” concluded the Idea Bank President.