About report

For the second time now, the ING Bank Śląski S.A. Group has compiled the annual report in line with the best global practices of integrated reporting. To help readers use the interactive tools, we prepared a user guide with key features. We encourage you to watch a short animated video before reading the report.

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The harmonious development of our core activity, i.e. retail and corporate banking, enables us to increase our balance sheet in a consistent and profitable manner and consolidate our market position in the Polish banking sector. The primary source of our growth is the gradual increase in the number of clients for whom we are the primary bank. We develop our relations with them, and we want to be a relevant partner to them. We try not only to meet our client’s expectations, but also to be a step ahead of them.

In 2017, invariably and consistently as for over 11 years now, we considerably increased our lending and deposit portfolios. At the same time, we managed to maintain the good quality assets and sustain solid capital and liquidity positions.

Higher number of clients and business volumes

In 2017, we kept the high growth rate for clients. Throughout the year, the Bank’s client base went up by 267,000 versus 262,000 the year before. As at the end of December 2017, the number of clients was 4.59 million and it was broken down into the following segments:

  • 53 million retail clients, including:
    • 18 million individual clients (up by 233,000 clients throughout the year),
    • 354,000 entrepreneurs (up by 28,000 clients throughout the year),
  • 55,000 corporate clients (mid and big companies, and capital groups; up by 7,000 clients).

The constantly growing number of clients is the result of the activities pursued by us to foster long-term relationships with clients. These relationships are based on the trusted brand, transparent and flexible product offer and a continuously developed modern distribution and customer service system.

In 2017, the lending growth rate maintained at a high level and settled at 12.5% y/y. At the same time, the volume of loans in the Polish banking sector went up 3.8% y/y. We recorded a higher than the sector increase in both the retail and corporate segments. The volume of retail loans at our bank went up by 18.6% y/y. The volume of corporate loans went up 8.4% y/y.

 

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Credit volumes (million)

Credit volumes (million)

Credit volumes (million)

 

Our past accomplishments prove our persistence in supporting the development of the Polish economy. Since 2008, our credit balance has been uninterruptedly above the sector average. Over 2008-2017, we grew 2.3 times faster in retail loans and 1.9 faster in corporate loans than the market.

The faster growth rate of loans over deposits caused the LTD ratio go up from 81.5% as at 2016 yearend to 83.8% as at 2017 yearend (during 2017 it picked up to 87.8% in Q3). This was the fourth consecutive  year in which we recorded that ratio increase, while for the sector this ratio has been falling down uninterruptedly since 2011. Despite opposite trends, for our bank, the ratio in question proves to be very safe and still below the sector average.

 

Loan to deposit ratio (%)

1based on NBP data

More and more clients perceive ING Bank Śląski S.A. as their primary bank in everyday banking. Thanks to this, the balance of deposits accumulated in current and savings accounts shows constant and stable growth. They are a key element of financing the Bank’s operations. As at 2017 yearend, current and savings accounts represented 95.0% of household deposits and 88.5% of institutional clients deposits. The average for the sector is 60.6% and 66.8% respectively.6,8%.

 

The growing number of current and savings accounts in the deposits structure (%)

1based on NBP data

Market position consolidation

As at 2017 yearend, we ranked fifth in the market, with an approximately 6.8% share in terms of assets.

In 2017, we raised our market shares in retail and corporate loans to the record-high levels (up to 5.8% and 10.7% respectively). Excluding FX mortgage loans from the retail loan portfolio, the market share as at 2017 yearend arrived at 7.0% versus 6.4% as at 2016 yearend.

In the client deposit area, our market share in the corporate segment went up to 8.8%, while in the retail segment it hovered around 9.1%.

1based on NBP data

1based on NBP data

1based on NBP data

1based on NBP data

High quality of assets

The high growth rate of the receivables from customers does not impair the portfolio quality. The share of impaired loans is clearly lower than the sector average. As at 2017 yearend, the share of impaired loans was 2.8% versus 5.9% in the sector. It is also visible in segment data. As at 2017 yearend, the share of impaired loans for the corporate banking segment was 3.5% versus 5.6% in the sector, and for the retail banking segment 1.9% and 6.1% respectively.

 

Share of impaired loans (%)

1based on NBP data

 

In the retail segment, it is driven both by better quality of the mortgage portfolio (0.8% versus 2.8% in the sector), but also of other retail loans (5.1% and 10.9% respectively).

Performance improvement

As an organisation, we strive after improving our performance on an ongoing basis. We optimise and automate our operations so as to be able to attend to more and more clients with our relatively stable over time resources. As at 2017 yearend, the number of clients per employee was 575. As at 2016 yearend, this ratio closed with 542, which means an improvement of 6.1% y/y. However, the value of commercial balances (total deposits and loans) per FTE improved by 10.3% y/y up to PLN 24.3 million.

 

Number of clients per employee

 

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Commercial balance per FTE

Commercial balance per FTE

Commercial balance per FTE

In 2017, our return on equity (ROE) settled at 12.6%, or up by 0.9 p.p. from 2016. At the same time the opposite was observed for the average on the market – ROE in the sector went down by 0.7 p.p. to 7.1%. This decrease can be partially attributed to a big one-off deal in the sector in 2016 – the sale of Visa Europe shares (income of PLN 2.5 billion in the sector, out of which PLN 189.6 million for the Bank). Our ROE adjusted for one-offs was 12.5% in 2017 vs. 10.3% in 2016 (up by 2.2 p.p.).

We continue to work on our cost effectiveness. It enabled the Bank to improve its C/I ratio by 3.9 p.p. vis-à-vis 2016 to 44.6% in 2017. The figure is lower (better) than the average in the sector (51.5%). It has been a significant improvement over the last five years – in 2013 the sector’s C/I ratio was lower (better) than the Bank’s (53.1% and 56.1% respectively).

 

Cost to income ratio (%)

 

Return on equity (%)

1based on PFSA data

The leading player in digital technologies and innovative solutions

Cutting-edge electronic banking offer

After several years of work, we completed the project of implementing new online and mobile banking of ING Bank Śląski S.A. Our clients were offered a state-of-the-art system, the development whereof at each stage took account of clients’ opinions, preferences and current ways of using devices and the Internet. New ING banking combines innovation and understanding of customer experience and needs.
Szymon Mitoraj
Director of Agile Centre – Digital Transformation

We offer our clients modern bespoke products and services. We offer access to intuitive online and mobile banking. In 2017, over 99% of client transfers were made in direct channels (online). In 2017, 66% of cash loans for individual clients and entrepreneurs were sold online.

Our individual clients show higher than the market average willingness to use mobile banking solutions. They clearly make more transactions via mobile application than the average. Such conclusions may be drawn from the analysis of the peer group of 11 banks that sent in their data for PRNews reports on the number of transactions made in the mobile banking application. In the market formed by those 11 banks, ING Bank Śląski S.A. holds a 14.7%-share in the number of individual clients, 22.3%-share in the number of mobile banking users* and 31.2%-share in the number of financial transactions made in the mobile application. It means that as at the end of 2017, 20.8% of our individual clients were active users of the mobile application (13.7% on the average in the peer group) and made on average over 58 transactions within 2017 (nearly 43 on average in the peer group).

 

Clients activity in mobile banking – Bank’s share(%)2

1users that log into the bank via mobile device at least once a month (lite, RWD, application);
2based on the PRNews reports for 11 banks that sent in their data on the number of transactions made in the mobile banking application.

We offer our clients modern payment solutions, e.g. BLIK. In 2017, they made nearly 2.1 million transactions online with the use of that payment system – or nearly seven times more than the year before. This growth rate is much higher than in other 8 banks that offer BLIK. Throughout 2016, out of all online BLIK transactions, our clients made just 6.7% of transactions. In Q1 2017, their share went up to 7.6% and to arrive at 12.1% in Q4.

Cutting-edge solutions in methods of work

The Bank wants to offer its clients cutting-edge and bespoke solutions so it also needs to transform internally. That is why, we implemented new methods of work both in the retail and corporate parts of our business.

The first significant change is the implementation of Agile – a way of working taken from the IT sector. We did this as the first financial institution in Poland. In the retail banking segment, Agile took effect at the beginning of 2017, while in the corporate segment since mid-2017. Agile is a way of working based on greater freedom and flexibility in defining the priorities and departing from stiff divisions into IT and business teams. It shortens time to market and enables faster reaction to the changing needs of clients and the market. We have already implemented first solutions which were developed in the Agile model of work. These are e.g.: mobile authorisation in mobile banking, multi-currency card or remote account opening for corporate clients. For more information about Agile, please refer to the Chapter „Way of working” under „Agile”.

The second significant change is the application of the in-house PACE methodology – the process that supports innovations in ING Group. It assumes work in small, independent and interdisciplinary scrums. PACE is based on direct bank-client cooperation to eliminate projects that do not respond to actual clients’ needs. It enables elimination of erroneous assumptions at each stage of works – from a vision to a prototype – and implementation of relevant solutions only.

Awards and distinctions

Our daily efforts in offering attractive products to our clients, attention to high service quality, sustainability actions and practices as well as outstanding commercial and financial results have been honoured with numerous awards and distinctions. Below please find selected 2017 awards. The full list is available at this website.

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