January 31, 2019 / 3:24 PM / 18 days ago

Poland's Pekao sees profit rise in 2019 despite tight market

FILE PHOTO: UniCredit's Polish unit Bank Pekao logo is seen on their branch in Warsaw, Poland September 7, 2016. REUTERS/Kacper Pempel

WARSAW (Reuters) - Poland’s second biggest state-controlled lender Bank Pekao aims to increase net profit this year despite rising market competition Chief Financial Officer Tomasz Kubiak said.

In 2018 Pekao booked net profit of around 2.2 billion zloty (450.09 million pounds), according to the average of analysts’ estimates, published by the bank. The bank will release its 2018 financial report in February.

“Generally we have an ambition to ... increase our profit by double-digits, or a high single-digit,” Kubiak told Reuters, adding this excluded one-offs such as the cost of a voluntary redundancy programme.

He said the bank is focused on internal transformation and upgrading its IT systems to be better prepared to win clients in a very competitive market, where only 5-6 of the biggest banks will survive.

Kubiak also said Pekao plans to increase its dividends in future years, after the regulator KNF issued a recommendation for the bank to pay out only 75 percent of 2018 net profit as dividend, compared to the lender’s previous expectation of 90-100 percent.

Looking to compensate shareholders for the shortfall, which hit shares, Kubiak said it would raise dividend in future years.

“Earlier we had assumed 90-100 percent in 2018, then 60-80 percent for the following year, then 50-75 percent and finally 50 percent in coming years. Now we want to pay out dividend closer to the upper end of those ranges,” he said.

Kubiak ruled out a share buy-back to compensate investors for 2018’s lower dividend. Kubiak also said no decision regarding an extra dividend was taken, too.

Reporting by Marcin Goclowski; Editing by Alexandra Hudson

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