In 2018 net interest income amounted to PLN 9 353 million, i.e. PLN 747 million higher than in the previous year. The higher net interest income y/y was determined mainly by an increase in income on financing granted to Customers, in effect, both by the increase in the volume and net interest margin.
Interest income (in PLN million)
Interest expense (in PLN million)
Interest income1 amounted to PLN 11 594 million and was PLN 675 million higher than in the previous year, mainly in effect of:
- an increase in financing granted to Customers of PLN 671 million y/y – related to the increase in the average volume of amounts due in respect of loans of PLN 8.3 billion and amounts due in respect of leases of PLN 1.6 billion, with a change in their structure (an increase in the share of consumer loans and lease receivables offset by a decrease in foreign currency housing loans), with unchanged levels of market interest rates for PLN, CHF and EUR;
- higher income on derivative hedges (+PLN 33 million y/y), mainly in effect of an increase in the volume and average interest on CIRS hedges;
- a drop in other revenues of PLN 44 million y/y, resulting from the drop in interest income on the mandatory reserve of PLN 61 million in connection with the introduction of a new interest rate on those funds by the Monetary Policy Council as of the beginning of 2018 (reduction from 1.35% to 0.50%).
Average interest rates and interest margin (in %)
Interest expense amounted to PLN 2 241 million and were PLN 72 million lower than in 2017. The lower level of interest expense was mainly the effect of a reduction in the costs of the deposit base of PLN 67 million y/y, resulting from the change in their term structure in favour of current deposits, whose share increased by 6 p.p. y/y to approx. 62% of the amounts due to Customers;
The net interest margin increased by approx. 0.1 p.p. y/y to 3.4% as at the end of 2018. As at the end of 2018 the average interest rate on PKO Bank Polski Group SA loans was 4.7%, and the average interest rate on total deposits was 0.7%, compared with 4.5% and 0.8% respectively as at the end of 2017.
1 To ensure data comparability interest income was adjusted: income from non-Treasury bonds, which are recognized in income from debt securities in the Financial Statements were transferred to income from loans and advances to Customers.