Annual Report 2019 Annual Report 2019 1 Annual Report 2019 Annual Report 2019 Ladies and Gentlemen This year, Bank Handlowy w Warsza- wie S.A. (operating under the brand Citi Handlowy) celebrates its 150th anniversary. We are the oldest bank in Poland, providing banking services continually since 1870 to develop Po- lish enterprise and support innova- tion. By delivering financial solutions Sławomir S. Sikora to our clients, we support their am- Chairman of the Board bitions and help them carry out their plans. With our support, they can For our Group, the year 2019 was a time of rapid spread their wings and implement growth of both business volumes and revenues. As assumed in the strategy we adopted at the begin- their inventive concepts. Together ning of the year, this growth was mainly driven by with our business partners, we are client business, in particular in Institutional Bank- ing. Once more, as a result of our achievements, we successful in addressing the needs of won the trust of institutional and individual clients, the times in order to change the eco- as well as investors. nomy, the environment and social life Last year, Poland’s economy grew by 4.1 percent. However, in the second half of the year, some signs in a positive way. Therefore, those 150 of a slowdown emerged in connection with rising years, during which history and the tensions on trade between the United States and China. Uncertainty concerning foreign markets activities of Citi Handlowy have been adversely affected the willingness of Polish compa- inextricably interwoven, were a time nies to invest, with a secondary effect on domestic of building and progress for both Po- demand. At the same time, low unemployment help- ed maintain the high growth of wages, but at the land’s economy and society. In giving expense of pushing inflation higher. Some of our you this report, I am proud that I can clients were supported by continuously high con- sumption. invoke that meaningful anniversary In such a macroeconomic and political environ- and the heritage that inspires us and ment, we achieved a double-digit increase in motivates us to boldly look into the loans in Institutional Banking, mainly fueled by the growing loan portfolio of global clients and future and take up new challenges to the largest Polish companies, and our all-time enable our client to continue their de- high in this area. We reinforced our leading posi- tion in global banking. The year 2019 was our third velopment. in a row with double-digit growth in the assets of our globally-operating clients. Institutional Institutional Revenue ROE clients loan volumes clients growth growth FX volumes 9,6% +11% +9% +3% excl. one-off events YoY YoY YoY Annual Report 2019 In 2019, the Group recorded a net profit of PLN 480 our clients can initiate that process from any place million. Revenues rose by 3 percent, to PLN 2.2 bil- and the automated income and identity verification lion. Return on Equity (ROE) was at 7.2% and 9.6% process has considerably reduced the waiting time excluding one-off events, while Citi Handlowy’s ROA for credit approval. amounted to 0.9 percent compared to 0.7 percent We also increased our focus on cooperation with in the banking sector. companies from the so-called new economy. As Citi Handlowy is still the first bank of choice for part of the Silicon project, we offer solutions to Polish and international financial institutions. The tech start-ups to support their growth and enable year 2019 saw new records in terms of assets them to build strong innovative companies, able to covered by securitizations. We used our vast conquer the whole world. experience in this market to complete securi- The economic slowdown in the second half of the tization transactions totaling PLN 4.5 billion, year was not without an impact on the business which accounted for 80 percent of all such tran- environment of our bank. After 10 years of positive sactions finalized in the Polish market through- experience with our risk management model, which out the year. One such transaction involved the let us keep our costs of risk significantly below the record-high sales of leasing securities by a leading average market level throughout the last decade, Polish leasing company to a securitization special our impairment charges grew in 2019. Our model purpose entity (SSPE), amounting to PLN 2.5 bil- allows for such a situation within such a time frame- lion. The experience of Citi Handlowy in arranging work. such financing and our local expertise combined In pursuance of the strategy of our Group, which with global know-how make us a professional and assumes that Citi Handlowy’s leading position in the reliable partner for such transactions, both in terms corporate services market will be used to build an of obtaining financing and releasing the capital. attractive proposal for both corporate clients and The advantages of Citi Handlowy, such as its global their individual customers, we started cooperation scope supported by local expertise and solutions with BP in December 2019 to launch a co-branded adapted to Polish legal requirements (e.g. split pay- credit card, which Citi Handlowy has been offering ment), translated into high business dynamics. Its to its clients since February 2020. BP Citibank cards position as a partner of international corporations, give users unique benefits, including no annual fee, which offers global solutions, is confirmed by an in- cash back when buying fuel and special promotions crease in FX turnovers and international fund trans- at BP filling stations, the Citi Specials discount pro- fers. gram, and access to exclusive presales of tickets to Citi Handlowy was also successful in developing pri- concerts by top stars. vate banking. The results of the survey conducted The development of Citi Handlowy’s business by Euromoney, in which the Bank took first place was coupled with a transformation of our orga- in as many as 9 categories, confirm my own belief nizational culture. With the changing needs of that we have the best private banking offer in Po- our employees in mind, and following our new land. The number of customers of this business line approach to ensuring effective work conditions, increased by 57 percent vs. the prior year period we implemented our People Strategy initiative. thanks to, i.e. our support of customers in making The team assigned to that task includes the most investments in global shares and bond markets as committed representatives of our organization. well as offering investments in foreign bonds via Together with them, we have been implementing the Citi FX Stocks investment platform. changes to make how long and where we work The Bank supported the development of its clients more flexible, to strengthen our intergenerational not only by offering them financial solutions tailor- dialog, to promote a culture of diversity in our te- ed to their individual needs but also by investing in ams and find new paths of development, including innovative technologies. We have built a system to within the structures of Citi Handlowy. We are also serve our clients remotely – now they have our bank- aware that all the credit for the success of our Gro- ing services within reach. As the first bank in Po- up goes to our employees, so we promote a culture land, last year Citi Handlowy launched an entirely of mutual recognition and gratitude for everyday remote and automated process for credit card ap- achievements and accomplishments. plications based on biometric solutions. With this, Pursuant to the mission of Citi Handlowy, we sup- 2019 Annual Report 2019 Cit Handlowy, as the first bank in Poland, launched an entirely remote and automated process for credit card applications based on biometric solutions. With this, our clients can initiate that process from any place and the automated income and identity verification process has considerably reduced the waiting time for credit approval. port both economic and social aspects of growth our clients’ plans and help them if they are affect- and progress. Our activities to build a society that ed by this pandemic-related situation, which is so both is inclusive and accepts diversity and other unprecedented in Poland. initiatives that enable local communities to develop With this annual report of our Group for 2019, I wish are broadly covered in the “Non-financial Report,” to express my thanks and respect to the Members which is an integral part of our annual report. The of the Supervisory Board for their work and support positive impact of our activities on the community of our activities. I also want to thank our sharehold- is confirmed by many awards granted to Citi Han- ers and clients for their loyalty and trust, which help dlowy in 2019. us feel ready to take up new challenges and future By the end of 2019, Citi Handlowy was listed in the joint development and progress. RESPECT Index, started by the Warsaw Stock Ex- change (WSE) in 2009. Citi Handlowy was one of a few listed companies rewarded in this way since the Best regards, first edition. As of September 2019, socially respon- sible companies have been listed on the WSE in a new index, WIG-ESG, which replaced the RESPECT Index from January 2020. In addition, Citi Handlo- wy has been a member of the Super Ethical Com- panies Forum for two years. This prestigious group includes companies that have won the “Ethical Sławomir S. Sikora Company” award at least three times. Citi Handlowy President of the Management Board has been recognized for the most complex and Banku Handlowego w Warszawie S.A.