Strategy execution in 2023

Bearing in mind the priorities defined in the strategic pillar „Customer”, we carried out intensive work on the development of the functionality of digital service channels, with particular emphasis on mobile banking for retail customers. In 2023, we introduced a number of new solutions in electronic banking Pekao24, PeoPay and PeoPay Kids. On the Pekao24 website and the PeoPay application implementations included:

new functionalities of PeoPay and P24 applications:

• the process of selling a housing account for children 13+ in the Parent Panel,
• process „I don’t remember my Pin” on the PeoPay login screen, thanks to which the customer can regain access to the application himself,
• possibility to redirect the customer in the service process by the Bank’s employee to PeoPay application or Pekao24 service – to any screen in the application or service including purchasing processes,
• new currency exchange platform,
• registration and withdrawal of marketing objection,
• execution of the Sorbnet instant transfer,
• implementation of a split payment with a future date – open and hidden split payment,
• transfer between own accounts of a natural person and a sole proprietorship,

PeoPay and P24 process improvements:

• improvements in complaint processes,
• providing new landing pages for applications for co-financing a nursery, family care capital, and a trusted profile,

development of functionalities for companies in PeoPay and P24:

• providing the ability to update company data from the PeoPay and Pekao24 level,
• application for an auxiliary account in PLN and foreign currencies for JDG corporate clients,
• launching the Portal Akceptanta in Pekao24 for companies leasing terminals, which enables handling of payments and settlements of payment transactions,
• notifications for corporate clients, integration of Pekao24 with the Accounting with Żubr service, application for a debit card for companies,

options to increase security:

• possibility of verifying the identity of a Bank employee in the PeoPay application and the Peako24 service during a telephone conversation,
• device counter allowing PeoPay to be installed on up to three devices,

PeoPay Kids application development:

• personalization of PeoPay KIDS application – adding new skins, educational module, demo version of the application,

personalization and ergonomics of PeoPay and P24:

• personalization of Pekao24 – possibility to hide account balances,
• new card images,
• simplifying navigation in Pekao24,
• new version of offer section,
• possibility to set application background and avatars in PeoPay.

The number of active mobile customers in relation to the current accounts number was 60% at the end of 2023, +3 p.p. compared to December 2022), which brings the Bank closer to achieving the strategic aspiration of at least 62% in 2024. In addition, the sale of cash loans in remote channels (measured by the share in the number of products sold) increased and at the end of 2023 amounted to 83% compared to 78% in the previous year. Bank Pekao also continued to implement a new CRM system, which is the first such comprehensive CRM implementation in the public cloud in Polish banking sector. With the support of a real-time data processing platform, advanced analytics and cloud solutions, Omnibank CRM provides customers with the most relevant offers and messages.

The Bank also continued the multi-dimensional development of services for corporate clients. We have implemented a modern currency exchange platform, Kantor Pekao24, which provides corporate clients with broader opportunities and greater convenience in making currency exchange transactions. The system provides users with, among others: shortened quotation and transaction registration time, a wide range of currency pairs and full access to transaction history. The platform is easy and intuitive to use thanks to its modern design and the ability to personalize the desktop. To meet the stationary needs of our customers, we have expanded our presence on the local market. We have provided companies with new operational tools, e.g. the ability for companies and corporate clients to make cash deposits at post offices. In addition, we have implemented a modern CRM system to service corporate clients.

In 2023, we consistently carried out activities aimed at strengthening our position in the highest profitable segments, i.e. consumer finance, micro-enterprises, SMEs and MID enterprises.

The goal in the area of current accounts acquisition of individual clients set out in the Strategy at the level of min. 400 thousand CAs annually was achieved. In 2023, we opened 583 thousand accounts for individual customers and this is the best result of the acquisition of accounts for individual customers, the sales dynamics amounted to 5% y/y. New customers account for 72% of account sales, and over 127 thousand were created for selfies, which is an increase of 27% y/y. We also achieved very good acquisition results among young customers aged up to 26, we opened 204 thousand for young people, which constitutes 35% of total accounts.

The very good acquisition results in 2023 were primarily influenced by: the marketing campaign of Konto Przekorzystne combined with an attractive interest rate on Konto Oszczędnościowe and the television campaign „Lato pełne swobody” of the holiday package – Konto Przekorzystne with a free gold card for the account. We successfully launched subsequent editions of online account opening promotions, under which customers could receive a bonus of up to PLN 200 for opening an account and actively using a debit card.

Bank Pekao focuses on young people and consistently implements many new products for people aged up to 26. We focus on two areas – the development of the offer and marketing activities aimed at young people. We have introduced, among others, a new communication platform „Jak nie teraz to kiedy …” presenting young people with safe, modern and comprehensive financial solutions that will make it easier to realize their passions, goals and dreams. We develop passions for young people. After implementing the passions of traveling and gaming in 2022, in 2023 we implemented the passions of music, also being the Strategic Partner of the concert: Jimek&Goście: Historia Polskiego HIP-HOP’u Rozdział 2, which took place at the Śląski Stadium in Chorzów.

In 2023, new sales of financing for Business segment customers amounted to PLN 2.3 billion and were higher by almost +26% y/y. The dynamic increase in new sales of bank loans in the business segment in 2023 by almost +48% y/y to the level of PLN 1.2 billion was supported by the implementation of the risk assessment path, which allows for quick calculation of the available limit and quick disbursement of a loan or revolving limit, changes in the pre-approved offer, implementation of a loan to maintain financial liquidity by agricultural producers, making the credit process available to intermediaries and marketing activities supporting the development of relationships with customers.

In 2023, sales of housing loans amounted to over PLN 10.4 billion – at a record level as in 2021.

In 2023, we strengthened our market position and took second place in the banking sector in terms of the volume of mortgage loan sales throughout 2023, and in August, thanks to the quick implementation of Bezpieczny Kredyt 2%, we achieved first place.We were one of the first banks to introduce “Bezpieczny Kredyt 2%” as part of the government program „Pierwsze mieszkanie”. The loan was very popular among customers, who submitted over 51,000 loan applications to the Bank by the end of 2023, which constitutes 50% of all applications received in the entire banking sector. The total volume of contracts signed at the Bank at the end of the year was PLN 7.2 billion.

Thanks to effective business activities aimed at strengthening the existing and building new competitive advantages in the SME segment, we have consistently strengthened the Bank’s position on this market. We offer our clients a wide, comprehensive range of products and services such as bank loans, leasing, factoring, arranging issues of debt securities and other specialized forms of financing. We expand our offer with new product and functional solutions. In 2023, among others:

• As part of cooperation with the Agency for Restructuring and Modernization of Agriculture, we have introduced two new loans to our offer: liquidity and purchase loans,
• We have introduced the application thanks to which we automated internal processes related to acquisition and parameterization of products for new customers,
• We have launched a fully automatic dealing module access management process. We enabled corporate and MID customers to change credit card and charge limits. We have significantly improved navigation through basic functionalities of the PekaoBiznes24 self-service zone.

We have maintained a high level of new customer acquisition, in the SME segment we acquired over 3 thousand customers and over 700 new customers in the MID segment.

In 2023, the value of new loans sold (excluding renewals) in the SME segment reached PLN 6.9 billion, maintaining the high level from the previous quarters and 2022. In the MID segment, the value of new loans sold amounted to PLN 14.0 billion.

In the corporate banking segment our approach to growth is focused on development of modern, digital tools supporting the work of our analysts and relationship managers. We pursue this aim by automating their work and providing them with market data, which increases their advisory competences and facilitates establishing long-term business relationships. We are significantly involved in projects related to a responsible approach to running business. We are also developing international banking and we actively support foreign expansion of our clients.

In 2023, we significantly improved the income of the corporate banking segment. Entire Division generated revenues that were 11% higher than a year ago, and we developed most significantly by cooperating with strategic clients, where our revenues increased by 14% y/y. We improved both credit and non-credit income.

One of the strategic directions defined in the „Efficiency” pillar is the acceleration of digitalization and migration of processes to remote channels, which includes not only retail banking customers, and the development of the PeoPay mobile application (as mentioned in the „Customer” pillar section), but also digital services for corporate customers. We have continued to develop the self-service zone for corporate clients in the PekaoBiznes24 electronic banking, providing the possibility of submitting the disposition enabling the remote delivery of wide-ranging documents and the signing of contracts and annexes. Applications submitted using this disposition are processed using automation, including elements of artificial intelligence. We have also enabled customers remote submitting of applications in the field of Treasury. We were also developing PeoBIZ – a mobile application for companies with access to the PekaoBiznes24 electronic banking system.

The development of remote distribution channels was accompanied by improvement in the effectiveness of the Bank’s branch network. In 2023, the Bank reduced its branch network by 23 units. At the end of the year, the branch network consisted of 493 own branches and 81 partner branches.

We have increased the level of robotization and automation in the Bank’s operations, and we have also increased the efficiency of credit processes. We implement processes related to the optimization and increasing the use of analytical tools in credit processes in every customer segment. In 2023, the completed project implementations translated into improved efficiency of credit processes and shortened time for issuing a credit decision, among others: in the retail customer segment and in the enterprise segment.

We care about maintaining a safe risk profile in a changing market environment. Throughout 2023, the cost of risk amounted to 0.31% while maintaining a high level of NPL coverage. At the same time, a significant capital surplus above the regulatory minimum was maintained, i.e. the Tier I ratio reached 15.2%. Bank Pekao became the leader of the EU-wide stress test conducted by the European Banking Authority (EBA) and proved to be most resistant to stress factors among the 70 banks participating in the test.

In June 2021, the Bank adopted and announced the ESG strategy for 2021-2024, defining the goals connected to caring for the natural environment, supporting the development of the economy and society, and the bank’s sustainable development. The effects of its implementation were presented in the non-financial report for 2023. In particular, the Bank is even more involved in the energy and ecological transformation of Poland and environmental protection, including active participation in the development of renewable energy sources (RES) sector in Poland, offering and organizing the issue of sustainable development bonds (ESG). Our activities were appreciated by the market and in the fourth quarter of 2023 we launched the first international issue of green bonds with a nominal value of EUR 500 million. In November 2023, we published the Sustainable Finance Framework, a document specifying to which areas funds from bonds issued by the bank may be allocated. The defined categories: renewable energy, ecological construction, energy efficiency and access to basic services.