Idea Bank: positive results despite economic slowdown

  •  Q3 2020 was another period (and on a consolidated basis, the fifth quarter) in which Idea Bank recorded a profit at both consolidated level (PLN 5.2 million) and individual level (PLN 1.3 million).
  • The cumulative positive result since the breakthrough in this respect in Q3 2019 was PLN 54.3 million at consolidated level.
  • Q3 of a challenging 2020 confirmed Idea Bank’s high capacity to absorb interest rate cuts achieved due to a steady reduction in financing costs.
  • The application of credit risk management appropriate for crisis situations enabled a PLN 32m decrease in write-downs quarter-on-quarter.
  • LCR at the end of Q3 2012 was 138%.
  • The Bank submitted a new Recovery Plan to the Polish Financial Supervision Authority.

For over a year now, Idea Bank has been constantly generating positive financial results. This unquestionable success has been achieved thanks to the implementation of a comprehensive restructuring programme covering practically every aspect of the Bank's operations. Parallel to the already very advanced recovery process, Idea Bank has in recent months prepared another iteration of the Recovery Plan, which is a detailed description of the measures that Idea Bank intends to take in order to permanently rebuild its capital position and effectively manage the market niche in which the Bank specialises – the micro, small and medium-sized enterprises sector.

Idea Bank’s results in Q3 2020 prove that the Bank is well prepared to manage the difficult business situation, i.e. the protracted coronavirus pandemic. Despite a fall in economic activity and the persisting restrictions on social and economic relations that have a particularly serious effect on the smallest businesses, the Bank ended Q3 in the black. This is due to three factors: the earlier slimming down of Idea Bank, a rational credit risk management model and a decrease in financing costs.

“The growing wave of infections in Poland naturally focuses our attention on ensuring continuity of services and the safety of clients and employees." stresses Jerzy Pruski, acting President of the Idea Bank Management Board. “At present, as many as 95% of head office employees are working remotely and the branch network has developed alternative emergency solutions which ensure that all branches are operating regardless of the state of the employees' health. We have introduced numerous non-standard solutions, including providing clients with free masks at branches, and Covid-19 tests for any of our employees who may have been in contact with the virus are reimbursed by the Bank in justified cases." adds Mr Pruski.

From a business perspective, Q3 2020 is primarily a time to develop and test solutions in response to the rapidly changing environment. In this difficult period, the right risk policy and the pace at which support is provided to clients who have had to face the rigors of the pandemic are of key importance. In both these areas, Idea Bank acted quickly and with precision, which translated into write-downs falling by PLN 32 million.

“In risk assessment, we do not give in to emotions, but we rely on models that take into account, among other things, loan maturity." explains Piotr Miałkowski, Management Board Vice-President for Financial Affairs. “Our assessment of the situation is also influenced by the scale of the support we have provided to our Clients ourselves in the form of credit holidays, and thanks to our participation in the Polish Development Fund’s Financial Shield based on public funds. Our NPL coverage ratio, which is such an important indicator in troubled times, is today at a level significantly higher than the market average.” concludes Piotr Miałkowski.  

“Idea Bank’s strategic goal continues to be sustainable rebuilding of capital ratios." stresses acting President Jerzy Pruski. “The Recovery Plan provided to the Polish Financial Supervision Authority in mid-October is, on the one hand, an in-depth analysis of the Bank’s current situation in a market context and, on the other, a description of specific measures which, if implemented, will permanently put Idea Bank straight. In total, over 180 pages, which I and the other Management Board Members and the management sign with both hands." says Jerzy Pruski.