Integrated Report 2020

Segmentation

Corporate Banking offers a wide variety of financial services to large and medium-sized enterprises as well as to local government entities with an annual turnover equal to or exceeding PLN 40 million, or in the case of whom the Bank’s exposure is equal to or greater than PLN 12 million, as well as to entities operating as part of multinational capital groups.

Corporate Banking Customers are classified into 4 key groups:

  • Polish corporations with an annual income between PLN 40 million and PLN 600 million (or between PLN 60 million and PLN 600 million in the case of business entities related to agricultural production) or with a credit exposure greater than or equal to PLN 12 million (or PLN 25 million for business entities related to agricultural production);
  • international Customers (companies operating in international capital groups);
  • large Polish corporations (listed, with annual turnover of more than PLN 600 million and an investment banking potential);
  • public sector and financial institutions.

Additionally, an Agro sub-segment and a Non-agro sub-segment function within the aforesaid groups.

Distibution channels

Corporate Banking conducts operations based on stable Customer relations, special emphasis is placed on the high standard and quality of provided services, as well as on the competence of the sales network and product specialists.

Corporate Banking services were provided in 2020 by 9 Regional Corporate Banking Centres located in: Warsaw (two), Łódź, Gdańsk, Poznań, Wrocław, Katowice, Kraków and Lublin. As part of the Regional Corporate Banking Centres, there are 25 Corporate Banking Centres located in the largest business centres in Poland, thus ensuring a wide geographical and sector coverage. Within these branches, consultants provide services to corporate Clients locally. After-sales services for the Clients of the Corporate Banking segment are also carried out via the Enterprise Service Telephone Center and online banking system.

STRATEGIC PILLAR MAIN ACHIEVEMENTS
GROWTH
  • Total revenue growth y/y despite an unprecedented economic freeze in 2020 related to the COVID-19 pandemic
  • Very good gross result
  • y/y increase in cash management income, including in particular commission income
  • Development of activities in the area of financing and servicing of trade transactions: y/y increase in the volume of guarantees and letters of credit, increase in the bank’s income from this product group
SIMPLICITY
  • Business and operational activities with extensive use of a secure remote working formula, online and mobile banking channels and remote Customer service tools
QUALITY
  • Cooperation based on relations with clients – Advisors and Product Specialists available locally
  • Further development of Customer service processes in a dedicated unit of the Business Service Centre (Customer Service central) – a wide range of Customer support and after-sales services, an incentive system based, among others, on the criterion of Customer service quality, development of tools supporting Customer service
  • Customer Service teams 100% fit for remote working
  • Procedures and processes to enable effective remote Customer service in the new reality of COVID-19
  • Further development of the Trade Finance Business Desk – a dedicated team handling trade finance transactions on an ongoing basis
DIGITALISATION
  • Development of Internet banking Business Pl@net:
    • launching the first version of the new internet banking service for SME and Corporate Banking Customers: application adjusted to different resolutions (RWD), credit module, MVP for Self Service zone, authorization module for applications and agreements, Masscollect module, built in cooperation with our Customers in the new UX/UI and open architecture based on microservices
    • a new authorization/authentication method – a mobile token made available from the GOmobile Biznes application
  • Further digitalisation of processes in the area of commercial transaction handling – implementation of a guarantee text generator
  • Implementation of a fully remote Customer onboarding process based on the electronic signature, without the necessity for the Customer to visit the Bank and using paper documents. In the second half of 2020, inclusion of clients who are non-residents or Polish residents represented by foreigners
  • Implementation of electronic signature functionality to sign most documents

Product offer

Corporate Customers may use numerous financing and transactional banking products relying on the expert support of the BNP Paribas Group.

The basic products and services offered to corporate Customers are:

current, payroll, fiduciary, escrow accounts, cash management (deposits and withdrawals in a closed form), payments (domestic, foreign, mass), Cash Pool, balance consolidation, debit, charge, credit and micropayment cards;

investment account, progressive account, term deposits, including negotiated ones;

current operations (revolving credits, multi-purpose credit line), investment financing (investment loans, loans from the funds of the European Investment Bank, Green Energy investment loans), financing for agro sector companies (including, among others, purchase credits, preferential credits);

bank guarantees, e-Guarantees, documentary credits, documentary collection, export financing; export and import documentary credits, discounting of credits, debt financing and nostro and loro guarantees, VAT refund financing;

BiznesPl@net, GOmobile Biznes, FX Pl@net, BNP Paribas Connect Host to Host, MultiCash, Connexis – a global e-banking solution within the BNP Paribas Group;

financing acquisitions, high capital expenditure as well as structured bilateral or syndicated loans of PLN 20-200 million;

financing office, retail and warehouse space;

provided by specialists, including merger and acquisition advisory support, project funding, capital markets and debt securities;

including spot and forward transactions made by the Bank’s dealers or via the FX Pl@net and Dealer electronic currency platforms;

offered in cooperation with BNP Paribas Faktoring Sp. z o.o.;

i.a. leasing of machinery and equipment, technological lines, means of transport, real estate offered in cooperation with BNP Paribas Leasing Solutions;

organising the issue of municipal bonds, forfeiting and dedicated cash management solutions.

Business line development in 2020

In the first quarter of 2020 the Bank’s Corporate Banking business was concentrated mainly on dynamic business development. The development strategy was implemented, which assumes:

  • acquisition and prompt acquisition of new Customers, as a basis for further development of cooperation,
  • development of Customer transactionality and increase in the number of products used by Customers (cross-sell of individual product lines),
  • acquiring and servicing companies with international operations,
  • building the position of a leading bank in foreign trade and specialized finance (trade finance / specialized finance, global trade solutions).

The first quarter of 2020 in the Corporate Banking area ended with excellent sales results and a high 12% y/y growth rate of income.

In March 2020, due to the spread of the COVID-19 epidemic, the Bank focused on the rapid implementation of a number of measures to ensure the operational efficiency and safety of Customers and employees in this situation. These actions included, among others:

  • a smooth transition to remote work for most employees,
  • introduction of split-teams in Corporate Banking Centres,
  • development of the self-service zone in BiznesPl@net Internet banking,
  • development of remote channels for accepting / signing documentation,
  • Customer support with frequent contact and dedicated online information programs on changes in the law and the possibility for the Bank’s Customers to take advantage of government assistance programs.

The Bank’s activity focused primarily on supporting Customers within the framework of government aid programs addressed to Polish enterprises:

(under the Anti-Crisis Shield 1.0): non-refundable subsidy up to 75%, program value amounting to PLN 100 billion, possibility to apply for financing through BiznesPl@net online banking. In total, this form of support was used by nearly 900 clients of the Corporate Banking segment, all of whom received a subsidy of over PLN 1.4 billion;

which provides guarantees for medium and large companies affected by the COVID-19 pandemic.

In addition, the Group offered its Customers the so-called credit moratoria – a possibility to defer payment of principal or capital-interest instalments on all credit products, as well as on leasing and factoring products offered by other BNP Group companies operating in Poland.

In the second half of 2020, the Bank’s activity in the area of ​​Corporate Banking focused on returning to new business under the conditions allowed by the restrictions and remote working. Business activities produced very good sales results in new loan production, which in the second half of 2020 was 108% higher than in the first six months of the year. As a result, new loan sales reached 2019 levels throughout 2020.

In the last quarter of 2020 the Bank continued a series of popular information, education and business conferences aimed at supporting small and medium-sized enterprises and corporations in foreign expansion – the so-called Foreign Trade Programme (PHZ). The main theme of the PHZ is to share knowledge about foreign markets, their specifics and to support Polish entrepreneurs and show positive examples of foreign expansion into new markets. The 2020 PHZ meetings concerned the German market and markets in the Far East, while the last conference was devoted to the British market and the subject of Brexit. All conferences were conducted in the form of webinars and met with very high interest from clients.

In 2020 further digitalisation and process optimisation activities were continued:

  • a new version of the Biznes Pl@net system was implemented and functionalities were of remote addition of new system users by the administrator, on the client’s side, and several electronic product applications were introduced;
  • a fully remote Customer onboarding process based on the electronic signature was implemented which does not require a face-to-face meeting with a Bank employee or the use of paper documents. The above solution is our response to the clients’ expectations related to the pandemic. We believe that the solution is consistent with our motto „Bank of Green Changes”;
  • the possibility of signing most of the documents with an electronic signature has been introduced, including using the Autenti platform;
  • the automation of after-sales processes was gradually implemented and tools supporting employees were developed.

Bank guarantees and letters of credit

Bank offers fast and comprehensive services related to guarantees and letters of credit, based on dedicated IT solutions.

In 2020, at the request of Corporate Banking Customers, the Bank:

  • issued 5,839 bank guarantees, with a total value of PLN 3,296 million,
  • opened 1,350 import letters of credit with a total value of PLN 680.2 million and handled 408 export letters of credit with a total value of PLN 685.4 million issued by other banks for those Customers.

Commercial volumes

As at 31 December 2020, deposits from Corporate Banking Customers amounted to PLN 23,267,474 thousand and were lower by PLN 1,809,641 thousand (by 7%) than at the end of 2019. The share of current accounts in the portfolio structure increased (by 35 p.p., up to 93%), while the share of term deposits and overnight deposits decreased compared to December 2019 (by 13 p.p., down to 6% and by 21 p.p., down to 1% respectively).

The net value of the Corporate Banking segment’s net loan and advances portfolio on a consolidated basis amounted to PLN 22,122,328 thousand as at 31 December 2020, i.e. 4% below the end of 2019.

Deposits and loans – Corporate Banking*

in PLN ‘000 31.12.2020 31.12.2019 change y/y
in PLN ‘000 %
Current accounts 21,685,411 14,708,158 6,977,253 47%
Savings accounts 1 40,131 (40,130) (100%)
Term deposits 1,455,836 4,816,244 (3,360,408) (70%)
Overnight deposits 126,226 5,512,583 (5,386,357) (98%)
Accounts and deposits 23,267,474 25,077,115 (1,809,641) (7%)
Investment loans 13,764,266 12,512,879 1,251,386 10%
Overdrafts 6,036,725 7,928,093 (1,891,368) (24%)
Leasing receivables 1,985,018 2,436,026 (451,008) (19%)
Factoring 334,945 189,394 145,551 77%
Other loans 1,375 2,831 (1,456) (51%)
Loans and advances (net) 22,122,328 23,069,224 (946,895) (4%)
* The value of deposits and loans in selected segments is based on data from the management information systems as they provide more detailed product information. For the sake of comparability, the data as at 31 December 2019 were presented in accordance with the segmentation for 2020.
The value of deposits excludes balances of some credit institutions which are considered interbank deposits in management reporting, whereas in financial reporting they are recognized as customer deposits. In addition, the balances exclude accrued interest before maturity.

Gross profit of Corporate Banking segment

The Corporate Banking segment generated in 2020 a gross profit of PLN 542,411 thousand (compared to PLN 587,737 thousand in 2019, down by 8%).

The net banking income of Corporate Banking segment amounted to PLN 1,092,555 thousand and was higher by PLN 13,810 thousand or 1% than in 2019. This result accounted for 23.2% of the Group’s result on banking activity in the analyzed period.

Gross profit of Corporate Banking segment*

in PLN ‘000

12 months ended 31.12.2020 12 months ended 31.12.2019 change y/y
in PLN ‘000 %
Interest income 569 678 593 204 (23 525) (4%)
Fee and commission income 285 997 253 248 32 749 13%
Trading and other income 236 879 232 292 4 587 2%
Income on banking activity 1 092 555 1 078 744 13 810 1%
Net impairment losses (68 331) (51 986) (16 345) 31%
Operating expenses and amortisation and depreciation (261 585) (271 432) 9 847 (4%)
Expense allocation (124 395) (77 858) (46 537) 60%
Operating result 638 243 677 468 (39 225) (6%)
Tax on financial institutions (95 832) (89 731) (6 101) 7%
Gross profit of the segment 542 411 587 737 (45 326) (8%)
* Information based on the segmentation note included in the Consolidated report of BNP Paribas Bank Polska S.A. Capital Group for the period ended 31 December 2020.

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