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					                                                                                                                                                                                Banks
              BRE Bank Securities
                                                                                                                                                    BRE Bank Securities
15 September 2010                                                         Update


                         Banks
                         Poland
                                                                          Banks
                                                                          Valuations Are Neutral, Selection Is Key
FY'10E P/E*                                                  16.9x At the industry's FY10 P/E of 16.9x and FY11 P/E of 13.7x, Polish
                                                                          banks are trading at their long-term average levels. Moreover,
FY'10E P/BV*                                                 1.86x uncertainties as to the scale and durability of the current economic
WIG Banki Index                                                                     a
                                                             6 252 revival suggest of neutral approach to the sector. In our opinion,
                                                                   improving costs     risk and declining loan-loss provisions will matter
*average                                                                  more for the earnings momentum in 2011 than the rate at which the
                                                                          interest margin is improving or the scale of the concomitant increase
                                                                          in interest income. In consequence, we prefer PKO BP (Accumulate)
                                                                          over Pekao (Reduce), and Handlowy (Accumulate) over ING BSK
                                                             Upside/      (Hold), as they are both relatively cheaper and offer a higher dividend
                  Price (PLN)* 9MTP (PLN)                  downside       yield. Among banks with the lowest Tier 1 ratios and the most
BZ WBK                  215.40      215.9                        0.2      extensive FX-denominated mortgage portfolios, but also future M&A
                                                                          potential, we prefer Getin Holding over Millennium and Kredyt Bank
Getin                      10.11                10.4                2.9
                                                                          (all rated as Hold). Getin’s term deposits have the longest average
Handlowy                   80.25                87.0                8.4   maturity, which should lead to a faster increase in deposit margin in
ING BSK                   800.00                 815                1.9   the environment of increasing interest rates. Finally, given
Kredyt Bank                15.49                15.2               -1.9   Santander’s plan to take over BZ WBK (Hold), we expect the price of
Millennium                   4.73               4.60               -2.7   the stock to move in a lateral trend, converging to the price in the
                                                                          tender offer.
Pekao                     159.50              145.0               -9.1
PKO BP                     40.90                45.7              11.7 Interest margin to Stabilize in 2011 Despite Interest Rate Hikes
                                                                          Despite the three interest rate hikes we are expecting next year (from
* closing prices as of September 14th, 2010
                                                                          3.50% to 4.25%), which should facilitate improvements in the profitability of
                                                                          deposits, we only expect the industry's net interest margin to show Y/Y
                             9MTP                               Rating    stability in 2011. The following forces will push in this direction: a pressure
BZ WBK                          215.9                             Hold    on loan margins, a declining return on bond portfolios and a narrowing
Getin                            10.4                             Hold    spread between market rates and reference rates. We expect the greatest
Handlowy                         87.0                    Accumulate       improvement in net interest margin at Getin Holding and Millennium, driven
ING BSK                          815                              Hold    by higher returns on both current and term deposits. On the other hand, we
                                                                          expect the margin to shrink the most for BZ WBK and Handlowy due to a
Kredyt Bank                      15.2                             Hold
                                                                          pressure on corporate loan margins.
Millennium                       4.60                             Hold
Pekao                           145.0                         Reduce Cost of Risk To Go Down Steadily, Most Quickly in Corporate Segment
PKO BP                           45.7                    Accumulate We assume that the quality of corporate loans will no longer deteriorate, the
                                                                          quality of consumer loans will plateau in 2011, and the quality of mortgages
                                                                          will suffer as the portfolio ages. These forecasts suggest a 27-35bps y/y
                                                                          reduction in the industry's costs of risk in 2010-2012. We expect the fastest
                                                                          rate of decline in provisions at Handlowy and BZ WBK, the slowest at ING
WIG-Banki vs. WIG & WIG20                                                 BSK, Getin Holding and Millennium.
 6700
                                                                          FY 2011-2012 Profits Will Undershoot Market Consensus
                                                                          The aggregate profit for the eight banks in our coverage universe will
                                                                          increase by 30% y/y in 2010, 15% y/y in 2011 and 21% y/y in 2012. While
 6200                                                                     our expectations for 2010 are very much in line with the current consensus
                                                                          forecast, our projections for 2011 and 2012 undershoot it by 7% and 5%,
                                                                          respectively.
 5700




 5200
                                                                                                        FY10F          FY11F         FY10F          FY11F         FY10F          FY11F
                                                                                                           P/E            P/E         P/BV           P/BV          ROE            ROE
                          WIG Banki        WIG 20         WIG
                                                                          BZ WBK                          16.9           15.0          2.39           2.16          14.9           15.1
 4700
   09-09-11          10-01-07            10-05-05           10-08-31      Getin Holding                   17.7           14.3          1.69           1.51          10.0           11.1
                                                                          Handlowy                        14.6           11.8          1.61           1.52          11.3           13.3
                                                                          ING BSK                         13.5           12.3          1.83           1.66          14.6           14.2
Iza Rokicka                                                               Kredyt Bank                     21.2           13.4          1.48           1.33           7.3           10.4
(48 22) 697 47 37                                                         Millennium                      19.6           14.6          1.40           1.28           8.3            9.1
Iza.Rokicka@dibre.com.pl                                                  Pekao                           16.2           14.4          2.06           1.93          13.4           13.8
www.dibre.com.pl                                                          PKO BP                          15.9           14.1          2.38           2.15          15.3           16.0
                                                                          Average                         16.9           13.7          1.86           1.69          11.9           12.9
BREFebruary 2010 not rule out offering brokerage services to an issuer of securities being the subject of a recommendation. Information concerning a conflict of interest arising in
19 Bank Securities does
connection with issuing a recommendation (should such a conflict exist) is located on the final page of this report.
        BRE Bank Securities                                                       Banks
          BRE Bank Securities


                       Contents

      Valuation
             Current Multiples
             Historical Multiples
             Impact of BZ WBK Divestment On Polish Bank Valuations
             Residual Income Valuation
             Ratings Summary

      Net Interest Margin
             Interest Rates
             Deposit Margins
             Loan Margins
             Net Interest Margin and Net Interest Income

      Costs of Risk
             Loan Quality After Q2 2010 as the Starting Point for Our Forecasts
             Loan Quality Forecast by Segment
             Loan Quality Predictions For Our Banks
             Costs of Risk, Loan-Loss Provisions

      Net Income Projections

      H2 2010 Earnings Outlook

      Appendix: Bank Tax
             Bank Tax In Europe
             Implications for Polish Banks

      Appendix: Deposit and Loan Growth Projections

      The Banks:
             BZ WBK
             Getin Holding
             Handlowy
             ING BSK
             Kredyt Bank
             Millennium
             Pekao
             PKO BP




15 September 2010                                                                         2
          BRE Bank Securities                                                                                         Banks
            BRE Bank Securities


                               Valuation
                 Current Multiples
                               Average Sector FY2010E P/E Of 16.9x To Decrease To 13.7x In FY2011
                               The prospective 2010 and 2011 P/E averages for the Polish bank sector are 16.9x and 13.7x
                               respectively. Of the banks in our coverage universe, ING BSK is trading at the highest, 22%
                               discount to the 2010 P/E average, and Handlowy seems the most attractive on the projected
                               2011 ratio (a 16% discount). In turn, Kredyt Bank is trading at a 29% premium on 2010 price-
                               to-earnings, and Millennium and Pekao are valued at respective premiums of 7% and 6% on
                               2011 ratios.

Comparison of Polish bank multiples
                                     P/E                                P/BV                            ROE
                      2009      2010F      2011F      2012F   2009   2010F   2011F    2012F   2009   2010F    2011F   2012F
 BZ WBK                17.8       16.9      15.0       12.8   2.66    2.39     2.16    1.94   16.3    14.9     15.1    16.0
 Getin Holding         26.0       17.7      14.3       10.1   1.88    1.69     1.51    1.32    7.4    10.0     11.1    13.9
 Handlowy              20.8       14.6      11.8        9.8   1.69    1.61     1.52    1.43    8.5    11.3     13.3    15.0
 ING BSK               17.5       13.5      12.3       10.9   2.13    1.83     1.66    1.50   13.1    14.6     14.2    14.5
 Kredyt Bank               -      21.2      13.4        9.6   1.63    1.48     1.33    1.17    1.3     7.3     10.4    13.0
 Millennium                -      19.6      14.6       10.0   1.44    1.40     1.28    1.16    0.1     8.3      9.1    12.2
 Pekao                 17.3       16.2      14.4       12.3   2.29    2.06     1.93    1.80   14.1    13.4     13.8    15.1
 PKO BP                19.9       15.9      14.1       11.7   2.50    2.38     2.15    1.91   13.4    15.3     16.0    17.2
 Average               19.9       16.9      13.7       10.9   2.03    1.86     1.69    1.53    9.3    11.9     12.9    14.6


 Premium (discount) to average (%)
 BZ WBK                 -13         -1          11       20    37       34      33       32    97       30       20      11
 Getin Holding           40          5           5       -8     -8     -10      -12     -16    -22     -17      -15      -5
 Handlowy                 5        -15          -16     -11    -18     -15      -11      -7     -9      -6        4       3
 ING BSK                -14        -22          -12       0     6       -1       -2      -2    50       27       12      -1
 Kredyt Bank               -        29           -3     -14    -22     -23      -24     -26    -87     -42      -21     -12
 Millennium                -        18           7      -10    -32     -27      -27     -27    -99     -33      -32     -19
 Pekao                  -15         -5           6       15    15       13      17       21    64       15        8       4
 PKO BP                   0         -7           3        9    28       34      32       30    55       34       29      21
Source: Banks, BRE Bank Securities. Bloomberg




15 September 2010                                                                                                             3
                               BRE Bank Securities                                                                                                                                                                                                                    Banks
                                 BRE Bank Securities


2010E ROE vs. 2010E P/BV                                                                                                                              2011E ROE vs. 2011E P/BV
                   2.6
                                                                                                             PKO                                2.2
                   2.4                                                                                                                                                                                                                                PKO
                                                                                             BZW                                                                                                                                 BZW
                                                                                                                                                2.0
                   2.2
  2010E P/BV (x)




                                                                               PEO                                                                                                                              PEO




                                                                                                                               2011E P/BV (x)
                   2.0                                                                                                                          1.8
                                                                                                                                                                                                                                   BSK
                   1.8
                                             KRB                                          BSK                                                   1.6
                   1.6                                                                                                                                                                    KRB                           BHW
                                MIL                                  BHW
                                                                                                                                                1.4
                   1.4                                                            y = 0.1103x + 0.5441
                                             GTN                                                                                                                     GTN                        MIL                              y = 0.1315x – 0.0029
                   1.2                                                                    R 2 = 0.7931                                          1.2                                                                                   R 2 = 0.8273

                   1.0                                                                                                                          1.0
                         6.0           8.0         10.0              12.0                 14.0                16.0                                    7.0                  9.0              11.0               13.0                 15.0               17.0
                                                   2010E ROE (%)                                                                                                                            2011E ROE (%)

Source: Banks, BRE Bank Securities. Bloomberg



                                      Historical Multiples
                                                    Current P/E In Line With Long-Term Average
                                                    The 12-month forward price-to-earnings ratio for Poland’s banking-sector index WIG Banki is
                                                    15.2x, which is just 1% less than the long-term market average, 78% over the 8.5x low
                                                    achieved in February 2009, and 25% below the high of 20.1x recorded in June 2007.
                                                    The average 12-month forward price-to-book ratio looks more attractive at 1.93x, that it 24%
                                                    below the long-term average. Moreover, even though the current P/BV is 123% higher than in
                                                    February 2009 (0.86x), it is still a whopping 54% lower than in June 2007 (4.15x). Moving on to
                                                    returns on equity, the 12-month forward average ROE is 13.5%, which is 23% below the long-
                                                    term average of 17.6%, 9% above the December 2008 low of 12.5%, and 38% below the
                                                    December 2007 high of 22.0%.
                                                    Since current valuations do not allow for a clear-cut verdict of “too cheap” or “too expensive”
                                                    for the bank sector, we give it a neutral investment rating.

                                                    Long-term P/E and P/BV averages for WIG Banki index
                                                     22.0                                                                                                                                                                                                       4.3
                                                                                                                                                                                                               Av g. P/E of 15.2x
                                                     20.0                                                                                                                                                                                                       3.8

                                                     18.0                                                                                                                                                                                                       3.3

                                                     16.0                                                                                                                                                                                                       2.8

                                                     14.0                                                                                                                                                                                                       2.3

                                                     12.0                                                                                                                                                                                                       1.8
                                                                                                                        Av g. P/BV of 2.5x
                                                     10.0                                                                                                                                                                                                       1.3

                                                      8.0                                                                                                                                                                                                       0.8
                                                            Jan-05

                                                                      May-05

                                                                                 Sep-05

                                                                                           Jan-06

                                                                                                    May-06

                                                                                                               Sep-06

                                                                                                                           Jan-07

                                                                                                                                                  May-07

                                                                                                                                                            Sep-07

                                                                                                                                                                       Jan-08

                                                                                                                                                                                 May-08

                                                                                                                                                                                            Sep-08

                                                                                                                                                                                                      Jan-09

                                                                                                                                                                                                               May-09

                                                                                                                                                                                                                        Sep-09

                                                                                                                                                                                                                                    Jan-10

                                                                                                                                                                                                                                             May-10

                                                                                                                                                                                                                                                       Sep-10




                                                                                P/E (lef t axis)                                                                                                 Av g. 2005-2010 P/E (lef t axis)
                                                                                P/BV (right axis)                                                                                                Av g. 2005-2010 P/BV (right axis)

                                                    Source: Banks, BRE Bank Securities. Bloomberg




                                      Impact of BZ WBK Divestment On Polish Bank Valuations
                                                    BZ WBK Sold For 2.80x 2009 P/BV and 18.7x 2009 P/E, Marking A 16% Premium
                                                    The Allied Irish Bank (AIB) is selling its 70.36% controlling stake in BZ WBK to Santander for
                                                    PLN 11,666 million. The Spaniards will take AIB’s holdings over through a 100% tender offer.
                                                    The implied per-share price that Santander is paying for the Polish bank is PLN 226.90,
                                                    representing a 16% premium to the market price (19% relative to the three-month price
                                                    average, and 16% over the six-month average), and a 24% premium to our fair-value estimate
                                                    (PLN 183). Further, the price-to-book values implied by the transaction figure to 2.80x in 2009
                                                    and 2.57x in 2010, which is 44% ahead of the sector average. The implied price-to-earnings
                                                    ratios for the acquisition are 18.7x 2009 earnings and 17.8x projected 2010 earnings,
                                                    representing an 8% discount and a 5% premium to the respective sector averages.




15 September 2010                                                                                                                                                                                                                                                             4
          BRE Bank Securities                                                                                        Banks
            BRE Bank Securities


                             Change of Ownership to Drive BZ WBK Shares to PLN 226.90
                             Keeping in mind the time value of money, we expect BZ WBK stock to converge to the planned
                             tender-offer price of PLN 226.9. We would recommend that the minority shareholders tender
                             their shares in the tender-offer announced by Santander.
                             BZ WBK’s stock value could come under pressure if Santander is denied any of the requisite
                             permits from market regulators, or if the 100% tender offer should not occur for some reason.
                             However, the likelihood of any of these scenarios is small in our view.

                             Lost Bid On BZ WBK Means 4.6% Dividend Yield For PKO BP Shareholders
                             The loss of BZ WBK to Santander can prove beneficial for the shareholders of PKO BP. Since
                             PKO BP was considered one of the front-runners of the competition until the every end, its
                             stock price up to the announcement of Santander’s victory probably factored in the potential
                             risks related to the acquisition process and the resulting merger. Moreover, PKO BP’s
                             shareholders had resolved that if the bank does not complete an acquisition in Poland by
                             December 10th, it is going to pay dividends in the amount of PLN 1.90 per share (with the date
                             of record set for October 23rd, and the payout slated for December 20th, 2010). At the current
                             share price, the dividend yield looks quite attractive at 4.6%.

                             Upside Implications For Getin Holding, Millennium, Kredyt Bank, As
                             Prospective Acquisition Targets…
                             BZ WBK’s selling price has indirect positive implications for Getin Holding, Millennium, and
                             Kredyt Bank, the three firms under our coverage that, we feel, are the most likely to be
                             eventually put up for sale. Considering the amount of interest attracted by BZ WBK, we can
                             assume that similar divestments in the future will also be popular among domestic as well as
                             international investors.

                             … Cannot Be Priced In Due To Risks
                             The control premium that Santander is expected to pay for BZ WBK (10%, including to minority
                             shareholders) cannot be considered a value-enhancing factor for Getin, Millennium, or Kredyt
                             Bank, since their potential divestments remain in the realm of conjectures. Moreover, no one
                             can say with certainty that the high implied 2009 P/BV ratio of 2.80x in case of the BZ WBK
                             deal will serve as a benchmark for all similar transactions in the future, especially given
                             BZ WBK’s relatively better financial standing:
                                 •    BZ WBK had the highest market share in assets at 4.8% at 30 June 2010,
                                 •    BZ WBK has the lowest loans to deposits ratio at 83.1%,
                                 •    BZ WBK has the strongest capital base, with a Tier 1 ratio of 13.1%,
                                 •    BZ WBK has the lowest share of FX-denominated mortgages in the loan portfolio
                                      (12.6%),
                                 •    BZ WBK had the second-lowest (after Getin) costs to income ratio of 48.3% at 30
                                      June 2010,
                                 •    BZ WBK had substantially higher ROA and ROE ratios of 1.80% and 16.0% at 30
                                      June 2010.

Selected bank ratios at 30 June 2010
                                                                                        Getin
 (%)                                                                   BZ WBK                   Kredyt Bank     Millennium
                                                                                      Holding
 Asset market share                                                         4.8           3.7            3.7           4.1
 Loans / Deposits                                                          83.1          91.9          104.9         110.5
 CAR (%)                                                                   13.7           9.5           12.3          14.0
 Tier 1 capital ratio (%)                                                  13.1           9.5            8.6          11.6
 FCY mortgages / Total loans                                               12.6          47.3           36.8          53.2
 Costs / Income                                                            48.3          35.6           57.3          63.3
 ROE                                                                       16.0          10.9            5.5           8.1
 ROA                                                                       1.80          1.11           0.36          0.60
Source: Banks, BRE Bank Securities




15 September 2010                                                                                                             5
                   BRE Bank Securities                                                                                           Banks
                     BRE Bank Securities


                           Residual Income Valuation
                                      Residual Income Valuation Model
                                      In the residual income valuation (RIV) model, we add the present value of excess return on
                                      equity (throughout the forecast horizon of 2010-2019, after which PV is replaced by terminal
                                      value) to the current equity value.
                                      Terminal value beyond the forecast period is calculated based on the following assumptions:
                                           •    Risk-free rate = 5.5% (based on 10Y T-bond yields).
                                           •    Risk premium = 5.0%.
                                           •    Fundamental beta = 1.0x, except in case of Getin Holding and Kredyt Bank where it is
                                                raised to 1.1x to account for the two banks’ lowest Tier 1 ratios (currently below 10%)
                                                in our coverage universe.
                                           •    Consequently, COE is assumed at 10.5% for all banks except Getin Holding and
                                                Kredyt Bank, for which the ratio is 11%.
                                           •    Sustainable returns on equity range between 12.2% and 17.2%, i.e. the levels
                                                forecasted for 2012.
                                           •    Sustainable earnings growth is 4.0%.
                                           •    Target dividend payout ratios (as calculated using the formula: 1-(g/ROE)) range
                                                between 67.1% and 76.8%.
                                      The valuation of BZ WBK is increased by an acquisition premium, estimated at 10%.

RIV Summary
                                                                  Getin                            Kredyt
 (PLN m)                                           BZ WBK               Handlowy      ING BSK                Millennium     Pekao     PKO BP
                                                                Holding                             Bank
 Risk-free rate (%)                                      5.5        5.5       5.5          5.5        5.5           5.5        5.5           5.5
 Equity risk premium (%)                                 5.0        5.0       5.0          5.0        5.0           5.0        5.0           5.0
 Beta (x)                                                1.0        1.1       1.0          1.0        1.1           1.0        1.0           1.0
 Cost of Equity (%)                                     10.5       11.0      10.5         10.5       11.0          10.5       10.5          10.5


 Sustainable ROE (%)                                    16.0       13.9        15.0       14.5        13.0         12.2       15.1          17.2
 Terminal earnings growth (%)                            4.0        4.0         4.0        4.0         4.0          4.0        4.0           4.0
 Target payout ratio (%)                                75.0       71.2        73.3       72.5        69.2         67.1       73.5          76.8


 Equity as at 31 December 2009                         5 928      3 830       6 199      4 884       2 589        2 787     18 288        20 429
 Stock-offering proceeds                                   0          0           0          0           0        1 038          0             0
 2010 dividend                                          -292          0        -493          0           0            0       -761             0
 YTD excess of comprehensive income over net
                                                         11          21          76         27          65           -6        175             213
 income
 PV of excess return (2010F-2012F)                    3 244       1 258       1 974      2 095         417          491      7 419        13 105
 PV of terminal value excess return                   4 469       1 768       2 741      2 844         756          812      9 616        19 290
 Fair value                                          13 361       6 877      10 499      9 850       3 827        5 123     34 737        53 037


 Number of shares (millions)                             73         712         131         13         272        1 213        262         1 250
 Fair value per share (PLN)                             183        9.65        80.4        757        14.1         4.22        132          42.4
 Premium (%)                                             10           0           0          0           0            0          0             0
 9M target price                                       215.9      10.40        87.0        815        15.2         4.60        145          45.7
Source: Banks, BRE Bank Securities, Bloomberg




        15 September 2010                                                                                                                  6
        BRE Bank Securities                                                                                     Banks
          BRE Bank Securities


             Ratings Summary
                    Sector Rating: Neutral; Selection Is Key
                    Determined using the RIV model, only PKO BP and Handlowy demonstrate sufficient upside
                    potential to mandate an accumulate rating. The downside risk in Pekao is considerable enough
                    to prompt a reduce rating, and the differences between the market values and the fair values
                    of the other stocks are so small that our ratings on them must be neutral.

                    Ratings Summary
                                                                                           Upside-
                     PLN                           9M Target Price   Current Price       Downside             Rating
                                                                                          Potential
                     BZ WBK                                  215.9         215.40               0.2            Hold
                     Getin Holding                           10.40          10.11               2.9            Hold
                     Handlowy                                 87.0          80.25               8.4       Accumulate
                     ING BSK                                   815         800.00               1.9            Hold
                     Kredyt Bank                              15.2          15.49              -1.9            Hold
                     Millennium                               4.60           4.73              -2.7            Hold
                     Pekao                                     145         159.50              -9.1          Reduce
                     PKO BP                                   45.7          40.90             11.7        Accumulate
                    Source: BRE Bank Securities. Bloomberg


                    We Would Pick PKO BP Over Pekao
                    Even after a 7.3% appreciation in the last six months (12 ppts more than in case of Pekao),
                    PKO BP still offers greater value to its shareholders. PKO BP is trading at a 2% discount to
                    Pekao based on projected 2010 earnings, and a 5% discount on 2012F ratios, meanwhile, we
                    believe that it deserves a premium. PKO BP’s earnings are expected to grow at faster rates
                    (+39% Y/Y in 2010 and +13% Y/Y in 2011) than Pekao’s (+7% Y/Y in 2010 and +12% Y/Y in
                    2011) thanks to a greater sensitivity of deposit margins to market interest rates resulting from a
                    higher share of retail savings in total deposits (34% vs. 28% in Q2 2010). Moreover, the bank
                    has greater capacity to reduce its NPL ratio, and hence also costs of risk. Finally, we expect
                    PKO BP to pay dividend in December 2010 (PLN 1.90 per share), and offer a more attractive
                    yield (4.6%) than Pekao’s 2011 estimated yield of 3.7%.

                    Handlowy Over ING BSK
                    Judging based on balance-sheet liquidity, we prefer Handlowy over ING BSK. Handlowy is
                    currently trading at an 8% premium to ING BSK on 2010F P/E, but this premium turns into a
                    4% discount in 2011, and a 10% discount in 2012. Although, ING BSK is expected to grow its
                    2011 net interest income by 13%, compared to a forecasted flat result in case of Handlowy,
                    the earnings growth achieved next year will be driven mainly by reductions in loan loss
                    provisions. With that in mind, we expect the 2011 costs of risk of Handlowy to fall at a much
                    more impressive rate (by 108 bps to 120 bps) than in case of ING BSK (a 7 bp decrease to 49
                    bps). Finally, we predict upward revisions in the consensus estimates for Handlowy’s net profit,
                    which are 13% and 16% respectively lower than our forecasts for 2011 and 2012.

                    Getin Holding Over Millennium and Kredyt Bank
                    Among the banks in our coverage that have the largest portfolios of FX-denominated
                    mortgages (Millennium – 53%, Getin Holding – 47%, Kredyt Bank – 37%), the lowest Tier 1
                    ratios (Kredyt Bank – 8.6%, Getin Noble Bank – 9.5%, Millennium – 11.6%), but also offer
                    M&A potential in the future, we prefer Getin Holding over Millennium and Kredyt Bank.
                    Granted, Getin has the lowest CAR (a fact which, we think, will prevent it from growing assets
                    at the rates seen in the past), but we expect it to deliver the strongest net interest income
                    growth in 2011 (+24% Y/Y vs. +13% for Millennium and +7% for Kredyt Bank). We believe that
                    Getin will benefit from a more favorable composition of term deposits which will maximize
                    deposit-margin growth amid rising interest rates. As many as 52% of Getin’s term deposits
                    have maturities over 3 months (compared to 24% for Millennium and 20% for Kredyt Bank),
                    which means that the bank will be renewing its deposit base with a lag to others.




15 September 2010                                                                                                        7
          BRE Bank Securities                                                                                                                                                           Banks
            BRE Bank Securities


Net Interest Margin
               Interest Rates
                             First Rate Hike Expected In Q1 2011
                             The macroeconomic analysts of BRE Bank expect the Polish central bank to start tightening
                             monetary policy in 4Q 2010 in the wake of inflation deviations from target exceeding the 3.5%
                             cap. In their baseline scenario, the NBP reference rate increases from the current 3.5% to
                             4.0% at 2010 year-end, and to 5.0% by the end of 2011.
                             For the purposes of our financial forecasts for banks, we decided to adopt a less optimistic
                             economic scenario for Poland. In our scenario, the first hike in the reference rate (by 25 bps to
                             3.75%) takes place in Q1 2011, followed by two more 25 bp hikes in 2011 and 2012.

Interest rate projections
 %                                                         2004          2005         2006             2007            2008             2009          2010F           2011F            2012F
 Reference rate (at year-end)                              6.50           4.50         4.00            5.00            5.00              3.50           3.50            4.25             4.75
 Reverence rate (average)                                  5.78           5.34         4.06            4.40            5.72              3.77           3.50            3.96             4.50
  y/y change                                               0.10          -0.44        -1.28            0.34            1.32             -1.95          -0.27            0.46             0.54

 3M WIBOR (average)                                        6.11           5.19         4.13            4.63            6.26              4.32              3.82               4.16      4.70
  y/y change                                               0.51          -0.92        -1.06            0.51            1.63             -1.94             -0.50               0.34      0.54

 Spread (average)                                          0.33          -0.15          0.07           0.23            0.54             0.55              0.32                0.20      0.20
Source: BRE Bank Securities. Bloomberg

                             Consequently, we assume that the average 3M WIBOR rate will be 3.82% in 2010 (vs. 3.88%
                             YTD; -50 bps Y/Y), 4.16% in 2011 (+34 bps Y/Y), and 4.70% in 2012 (+54 bps Y/Y).



               Deposit Margins
                             Still In Negative Territory, But Off The Lows
                             Margins earned on customer deposits have been on the rise since the beginning of 2010,
                             expanding from a negative 0.47% in January to a negative 0.24% in July. The sole factor that
                             facilitated this improvement are retail term deposits, the margins on which increased 37 bps
                             from -0.81% in January to -0.44% in July. Corporate term deposits continue to generate
                             positive margins even after a 11 bp decline to 0.14% since January. Margins on current
                             accounts, both retail and corporate, have shrunk by 40 and 59 bps respectively following a 40
                             bp drop in 3M WIBOR during the seven months ended 30 July.

                             Deposit spreads (outstanding deposits)*
                                5.0%                                                                                                                                            8.0%

                                4.0%                                                                                                                                            7.0%

                                3.0%                                                                                                                                            6.0%

                                2.0%                                                                                                                                            5.0%

                                1.0%                                                                                                                                            4.0%

                                0.0%                                                                                                                                            3.0%

                              -1.0%                                                                                                                                             2.0%

                              -2.0%                                                                                                                                             1.0%
                                         1Q'07


                                                   2Q'07


                                                              3Q'07


                                                                      4Q'07


                                                                              1Q'08


                                                                                      2Q'08


                                                                                               3Q'08


                                                                                                       4Q'08


                                                                                                               1Q'09


                                                                                                                        2Q'09


                                                                                                                                3Q'09


                                                                                                                                          4Q'09


                                                                                                                                                  1Q'10


                                                                                                                                                             2Q'10


                                                                                                                                                                     Jul-10




                                                 Retail current accounts (lef t axis)                                      Retail term deposits (lef t axis)
                                                 Corporate current accounts (lef t axis)                                   Corporate term deposits (lef t axis)
                                                 Total (lef t axis)                                                        3M WIBOR (av erage, righ axis)

                             Source: NBP, Bloomberg, BRE Bank Securities; *Relative to 3M WIBOR


                             Stronger Growth Will Be Triggered By Interest Rate Hikes
                             In our scenario of no rate hikes in 2010, deposit margins are expected to improve slightly in the
                             second half of the year as high-yielding savings products mature, facilitating an expansion in
                             retail term-deposit spreads.
                             A marked improvement in deposit margins will be spurred by the interest-rate hikes predicted



15 September 2010                                                                                                                                                                               8
        BRE Bank Securities                                                                                                                                                                        Banks
          BRE Bank Securities


                    for Q1 2011. Assuming that banks do not offer their customers higher returns on current
                    accounts, these accounts will be the main driver behind the margin growth.
                    Margins on term deposits will also benefit from market rate hikes, although the growth will be
                    shared between banks and their customers. This prediction may not apply to Millennium and
                    Getin Holding, whose deposit margins will be rising relative to very low bases recorded in late
                    2008 / early 2009. As a result, these two banks will be reporting faster-than-average margin
                    expansion in 2010 and 2011.

                    Term- and current deposit bases in H1 2010
                        100


                         80
                                      52                       53                   55                    56                  60
                                                                                                                                                  66
                         60                                                                                                                                           77
                                                                                                                                                                                           87


                         40

                                      48                       47                   45                    44
                         20                                                                                                   40
                                                                                                                                                  34
                                                                                                                                                                      23
                                                                                                                                                                                           13
                          0
                                  Pekao                 Handlowy                PKO BP                   BZ WBK     Kredy t Bank                ING BSK            Millennium             Getin
                                                                                                                                                                                         Holding
                                                   Current Deposits                                                         Term Deposits (incl. sav ings accounts)

                    Source: Banks, BRE Bank Securities


                    Margin Leaders: Getin & Millennium; The Laggards: ING BSK & Kredyt Bank
                    Again, we predict that the fastest growth in deposit margins going forward will be reported by
                    Getin and Millennium, followed by PKO BP, Handlowy, and Pekao, which have the highest
                    shares of current deposits in their deposit bases. The slowest margin expansion is expected of
                    ING BSK and Kredyt Bank, who have the highest shares of term deposits (after excluding
                    Getin and Millennium) in their deposit bases.



             Loan Margins
                    Softer Growth In Margins On All Major Loan Products Since Q2 2010
                    Margins earned by banks on loan products were an upward curve throughout 2009 and the
                    first quarter of 2010, followed by a slowdown in momentum in Q2 2010. The shift in case of
                    mortgages and corporate loans occurred in April after YTD expansion by 23 bps to 3.1% and
                    by 29 bps to 2.8% respectively. Since May, there has been a 7 bp narrowing in case of
                    mortgage loans and a 18 bp shrinkage in case of corporate loans. The uptrend in consumer
                    loans lasted until June, resulting in YTD growth by 97 bps to 12.3% (the longer period of
                    growth was probably partly owed to decreasing interest rates, since most consumer loans
                    carry fixed rather than variable rates of interest). The downward shift in July was a staggering
                    38 bps relative to the preceding month.

                    Loan spreads (new business)*
                     14.0%                                                                                                                                                                7.0%

                     12.0%                                                                                                                                                                6.0%

                     10.0%                                                                                                                                                                5.0%

                      8.0%                                                                                                                                                                4.0%

                      6.0%                                                                                                                                                                3.0%

                      4.0%                                                                                                                                                                2.0%

                      2.0%                                                                                                                                                                1.0%

                      0.0%                                                                                                                                                                0.0%
                              1Q'07


                                           2Q'07


                                                       3Q'07


                                                                    4Q'07


                                                                            1Q'08


                                                                                         2Q'08


                                                                                                 3Q'08


                                                                                                            4Q'08


                                                                                                                    1Q'09


                                                                                                                                2Q'09


                                                                                                                                        3Q'09


                                                                                                                                                   4Q'09


                                                                                                                                                           1Q'10


                                                                                                                                                                       2Q'10


                                                                                                                                                                                Jul-10




                                                        Mortgages (lef t axis)                                                 Consumer loans (lef t axis)
                                                        Corporate loans (lef t axis)                                           3M WIBOR (right axis)

                    Source: NBP, Bloomberg, BRE Bank Securities; *Relative to 3M WIBOR




15 September 2010                                                                                                                                                                                          9
        BRE Bank Securities                                                                                                         Banks
          BRE Bank Securities


                    The margin trends observed in new loans are expected to start impacting existing loans with a
                    1-2 quarter lag.

                    Margins To Shrink Most In Corporate Loans
                    We expect loan margins to continue on a downward trend at least through to the end of 2011.
                    In case of retail loans (mortgages and consumer credit), only new business is expected to
                    have a negative impact on the existing loan base. In case of retail loans, the negative impact
                    will come from new sales as well as existing balances which will be refinanced at lower
                    margins.
                    Margin developments in the corporate lending business are expected to mirror the trends
                    observed in financing of municipalities where, because of a large supply of credit, margins are
                    down from 1.5-2.0% in 2009 to 0.5-0.6% today. As demand for corporate credit remains low,
                    business loans decreased by 0.8% between January and July, and their overall balance is not
                    expected to edge up more than 0.6% by December. In 2011, we predict that banks will be
                    gradually reducing margins to attract more corporate business (which we think will grow 8% vs.
                    2010).

                    BZ WBK, Handlowy, Face Most Pressure
                    Looking at the composition of their loan portfolios, BZ WBK and Handlowy seem to be the
                    most prone to downward margin pressure because of large portfolios of corporate loans. In
                    case of Pekao, although the overall pace of loan-margin contraction is expected to be the
                    same as for BZ WBK and Handlowy, margins on interest-earnings assets will decrease at a
                    slower rate thanks to a more favorable asset structure.
                    The banks that will be hurt least by the downward margin pressure are Millennium and Getin
                    Holding, whose portfolios include substantial shares of retail loans.

                    Gross loan compositions (H1 2010)
                        100                       5                                           1               3
                                 19                                  19
                                                 24
                         80                                                       45
                                 13                       48
                                                                     22                      54
                                                 11                                                          65            70
                         60
                                                                     12
                                                                                  19
                         40
                                 68                                                          21
                                                 61                                                           9
                                                          52         47
                         20                                                       35                                       24
                                                                                             25              24
                                                                                                                            7
                          0
                                                                                                             Millennium
                                 BZ WBK




                                                                      ING BSK




                                                                                  PKO BP
                                                 Pekao




                                                                                                                          Holding
                                                          Handlowy




                                                                                            Kredyt
                                                                                             Bank




                                                                                                                           Getin

                                          Corporate      Consumer Loans         Mortgages            Other

                    Source: Banks, BRE Bank Securities




             Net Interest Margin and Net Interest Income
                    Stabilization In 2011 Followed By Upturn In 2012
                    To sum up our margin projections for the eight banks in our coverage, we expect their average
                    net interest margin to increase 39 bps in 2010, remain flat throughout 2011, and rebound by 12
                    bps in 2012.

                    NIM Leaders: Millennium, Getin; The Laggards: BZ WBK, Handlowy, Kredyt
                    Bank
                    The 2010-2012 net interest margin is expected to follow the strongest upward momentum at
                    Getin and Millennium, based on aggressive assumptions with respect to term-deposit margins
                    and low downward pressure on loan margins.
                    In turn, Kredyt Bank and Handlowy will most likely report the slowest NIM growth in 2010. In
                    case of Kredyt Bank, the reason is the expiring high-margin credit portfolio built by the former
                    subsidiary śagiel. In case of Handlowy, deposit margins are expected to decrease on a small
                    share of retail deposits, and falling interest rates. In 2011, we expect the strongest NIM
                    shrinkage from BZ WBK and Handlowy, due to downward pressure on corporate-loan margins.




15 September 2010                                                                                                                           10
          BRE Bank Securities                                                                                              Banks
            BRE Bank Securities


NIM forecasts
                                              NIM (%)                                       Y/Y change (ppts)
                        2008          2009     2010F    2011F      2012F       2008       2009     2010F      2011F       2012F
 BZ WBK                  3.31          2.80     3.24      2.99       2.97      -0.15      -0.51       0.43      -0.25      -0.02
 Getin Holding           4.07          2.94     3.36      3.62       3.86       0.45      -1.13       0.42       0.27       0.23
 Handlowy                3.35          3.75     3.88      3.77       3.93       0.14       0.40       0.12      -0.10       0.16
 ING BSK                 2.06          2.19     2.66      2.71       2.74      -0.03       0.13       0.47       0.05       0.03
 Kredyt Bank             3.22          2.73     2.71      2.66       2.64      -0.31      -0.49      -0.02      -0.05      -0.02
 Millennium              2.41          1.30     1.99      2.12       2.35      -0.72      -1.11       0.69       0.13       0.23
 Pekao                   3.52          2.90     3.11      3.17       3.29       0.69      -0.63       0.22       0.06       0.12
 PKO BP                  5.04          3.47     3.95      3.89       4.04       0.61      -1.57       0.48      -0.06       0.14
 Weighted
 average                 3.60          2.88     3.26      3.27       3.39       0.27      -0.72       0.39      0.00       0.12
Source: Banks, BRE Bank Securities



                             Net Interest Income To Recover In 2012 After 2011 Slowdown
                             We expect the eight banks in our coverage to grow their net interest income by an average
                             18% in 2010. After a slowdown to 6% in 2011, the year-on-year pace will pick up to an
                             estimated 11% in 2012.

Net Interest Income Forecasts
                                 Net Interest Income (PLN m)                                 Y/Y change (%)
                        2008        2009       2010F    2011F      2012F       2008       2009     2010F    2011F         2012F
 BZ WBK                 1 635         1 563    1 789     1 740     1 866         27          -4        14         -3          7
 Getin Holding          1 018           978    1 305     1 615     1 911         81          -4        34         24         18
 Handlowy               1 366         1 505    1 504     1 551     1 715         13          10         0          3         11
 ING BSK                1 253         1 417    1 607     1 676     1 756         20          13        13          4          5
 Kredyt Bank            1 060         1 061    1 121     1 196     1 258         22           0         6          7          5
 Millennium               935           599      902     1 021     1 237         21         -36        51         13         21
 PKO BP                 6 127         5 051    6 434     6 846     7 738         32         -18        27          6         13
 Pekao                  4 509         3 802    4 143     4 360     4 696         66         -16         9          5          8
 Total                17 903         15 976   18 807    20 006    22 176         37         -11        18          6         11
Source: Banks, BRE Bank Securities




Cost of Risk
                 Loan Quality After Q2 2010 as the Starting Point for Our Forecasts
                             Starting Point
                             The starting point for our forecasts of the costs of risk of the individual banks is their last
                             reported ratio of non-performing loans to gross loans (NPL ratio), the structure of their loan
                             portfolio broken down into the three main segments and the NPL coverage ratio (the ratio of
                             provisions to NPLs).
                             In our opinion, the current (i.e. the last reported) NPL ratio is not very informative as far as the
                             future costs of risk are concerned. For our forecasts, the more important datum is the rate at
                             which this ratio deteriorates or improves relative to the sector’s average. The factors of critical
                             importance for the future levels of this ratio include the structure of the loan portfolio broken
                             down into the main segments and loan quality within these individual segments. For the
                             purposes of this analysis, we have broken down the banks’ loan portfolios into corporate and
                             retail loans, the latter further divided into mortgages and consumer loans (defined as non-
                             mortgage loans).




15 September 2010                                                                                                                   11
                  BRE Bank Securities                                                                                                                                                                                                                                                            Banks
                    BRE Bank Securities


H1 2010: NPL ratio (left chart) and NPL coverage ratio* (right chart) (%)
 20
                                                                                                                                      75
                                                                                                                                                    76.1              74.6
 16                                                                                                         17.5                                                                      73.0
                                                                                                                                      60                                                                66.1             65.0
 12                                                                                                                                                                                                                                        57.9
                                                                                                                                      45                                                                                                                     53.1

  8                                                                                                                                                                                                                                                                                    41.3
                                                                               9.2             9.4                                    30
                                                           8.5
                                             7.1
  4                  5.9          6.3
                                                                                                                                      15
        4.0
  0                                                                                                                                    0




                                                                                                                                                                                                                                                                 Millennium
                     Millennium




                                                                                                                                                     Pekao




                                                                                                                                                                                      Holding
                                             Pekao




                                                                           Holding




                                                                                                                                                                       ING BSK




                                                                                                                                                                                                                                             BZ WBK




                                                                                                                                                                                                                                                                                        PKO BP
        ING BSK




                                  BZ WBK




                                                           PKO BP




                                                                                                                                                                                                                          Handlowy
                                                                                                                Handlowy
                                                                                              Kredyt




                                                                                                                                                                                                       Kredyt
                                                                                                                                                                                                        Bank
                                                                                               Bank




                                                                                                                                                                                       Getin
                                                                            Getin
Source: Banks, BRE Bank Securities, *Coverage of NPLs with provisions

                                           Moreover, we believe that the higher the current NPL coverage ratio, the better the current
                                           NPL portfolio is provisioned for, which entails a lower pressure on the future costs of risk. On
                                           the other hand, if this ratio is below the peer average, this might suggest that the bank will not
                                           only add provisions for new NPLs, but for existing ones as well.
                                           Nonetheless, it needs to be stressed that there is no single "correct" value of the coverage
                                           ratio. It depends not only on the structure of the loan portfolio and collateral quality, but also on
                                           the precise definition of a non-performing loan.
                                           In our opinion, this matters when the coverage ratio is assessed for PKO BP. It is the lowest
                                           for all the banks in our coverage universe at 41.3%, compared to peer average of 68.3%. In
                                           Q2 2009, the Bank decided to considerably tighten its definition of a non-performing loan (it
                                           decided to include loans to G-rated entities into this category), which led to a surge in the NPL
                                           ratio, and a decline in the NPL coverage ratio. Were we to define NPLs to include only loans
                                           90 days or more past due, PKO BP's NPL ratio would figure to 3.9% (vs. 8.5% reported) and
                                           its coverage ratio to ca. 88.9% (vs. 41.3%).

                     Loan Quality Forecast by Segment
                                           Corporate Loans: The Worst Is Now Over
                                           In the corporate segment, the NPL ratio increased significantly in 2009, by 50bps, reaching
                                           11.5%, due to the considerable economic slowdown, but also the big depreciation of the zloty
                                           vs. EUR and USD. In the initial seven months of 2010, the NPL ratio continued to increase,
                                           reaching 12.4% at the end of July.

                                           Corporate loans: NPL ratio (%)
                                            16.0

                                            14.0
                                                                                                                                                                                                                                                      12.2              12.2           12.4
                                                                                                                                                                                    11.5                                 11.2            11.4
                                            12.0                                                                                                                                                10.9        11.0
                                                                                              10.1        9.8
                                                                                9.7                                        9.6         9.6              9.7           9.7
                                            10.0                    8.9
                                                     8.4
                                             8.0

                                             6.0

                                             4.0

                                             2.0

                                             0.0
                                                       Mar-09




                                                                                                                                                                                                                                Mar-10
                                                                      Apr-09

                                                                                     May-09


                                                                                                 Jun-09


                                                                                                            Jul-09

                                                                                                                             Aug-09


                                                                                                                                           Sep-09


                                                                                                                                                             Oct-09




                                                                                                                                                                                       Dec-09


                                                                                                                                                                                                   Jan-10

                                                                                                                                                                                                                Feb-10




                                                                                                                                                                                                                                            Apr-10

                                                                                                                                                                                                                                                        May-10


                                                                                                                                                                                                                                                                              Jun-10


                                                                                                                                                                                                                                                                                                 Jul-10
                                                                                                                                                                           Nov-09




                                                                                                                                       Total                                        Large Businesses                                             SME

                                           Source: NBP, BRE Bank Securities

                                           In our opinion, this ratio is now about to peak. While we expect it to increase further by the end
                                           of the year (by 16 bps to 12.5% at the end of the year), this growth will be merely a
                                           consequence of the reduction in performing loans being greater than the reduction in non-
                                           performing loans. We expect the ratio to systematically decrease throughout 2011 (by 100bps
                                           y/y to 11.5% at the end of the year) and 2012 (by 200bps y/y to 9.5% at the end of the year),
                                           as the financial condition of companies improves.




15 September 2010                                                                                                                                                                                                                                                                                         12
        BRE Bank Securities                                                                                                                                                                                                                                                 Banks
          BRE Bank Securities


                    Consumer Loans: Stabilization Not Before 2011
                    Within retail loans, the rate at which the quality of consumer finance loans deteriorated was
                    much faster than that for mortgages. We estimate that the NPL ratio for consumer finance
                    loans increased by ca. 650bps to 13.1% at the end of 2009. In the initial seven months of
                    2010, the ratio deteriorated further, reaching 16.2% at the end of July (+312bps vs. the start of
                    the year). In our opinion, the factor that had the greatest impact on this ratio was the situation
                    in the labor market and the problem of clients who took out too many loans.

                    Consumer finance loans: NPL ratio (%)
                     18.0

                     16.0
                                                                                                                                                                                                                                                                       16.2
                                                                                                                                                                                                                                              15.6          15.8
                     14.0                                                                                                                                                                                                     15.3
                                                                                                                                                                                                                14.8
                                                                                                                                                                                                 14.5
                                                                                                                                                                                 13.8
                     12.0                                                                                                                                         13.1
                                                                                                                                                   12.3
                                                                                                                                    11.8
                                                                                                                      11.3
                     10.0                                                              10.7           10.9
                                                             10.0       10.0
                                              9.6
                      8.0      9.1

                      6.0

                      4.0

                      2.0

                      0.0
                               Mar-09




                                                                                                                                                                                                                    Mar-10
                                              Apr-09

                                                             May-09


                                                                            Jun-09


                                                                                           Jul-09

                                                                                                          Aug-09


                                                                                                                         Sep-09


                                                                                                                                        Oct-09




                                                                                                                                                                      Dec-09


                                                                                                                                                                                     Jan-10

                                                                                                                                                                                                     Feb-10




                                                                                                                                                                                                                                   Apr-10

                                                                                                                                                                                                                                                  May-10


                                                                                                                                                                                                                                                             Jun-10


                                                                                                                                                                                                                                                                        Jul-10
                                                                                                                                                       Nov-09
                    Source: NBP, BRE Bank Securities

                    We assume that the quality of consumer loans will continue to deteriorate in the second half of
                    2010, though at a slightly slower rate than in H1. We expect the NPL ratio to reach 17.6% at
                    the end of 2010 (+138bps vs. July 2010), and remain there throughout 2011. The ratio will not
                    improve until 2012, when we forecast a 100bps y/y decline to 16.6%.

                    Mortgage Loans: The Portfolio is Aging Steadily
                    Mortgage loans remain the category of loans with highest quality in absolute and statistical
                    terms (the lowest NPL ratio), as well as in terms of the observed changes (loan quality
                    deteriorates the slowest). We estimate that in 2009 the NPL ratio increased by 68bps to 1.5%
                    at the end of the year. In the initial seven months of 2010, the NPLratio increased by 19bps to
                    1.7% at the end of July.

                    Mortgage loans: NPL ratio (%)
                     3.5

                     3.0

                     2.5

                     2.0
                                                                                                                                                                                                                                            1.6            1.6        1.7
                                                                                                                                                                                                              1.5            1.6
                                                       1.4                                                                                       1.4            1.5            1.4             1.5
                                        1.4                                          1.3            1.3            1.3            1.4
                     1.5 1.2                                          1.3

                     1.0

                     0.5

                     0.0
                            Mar-09




                                                                                                                                                                                                                Mar-10
                                          Apr-09

                                                         May-09


                                                                        Jun-09


                                                                                       Jul-09


                                                                                                      Aug-09

                                                                                                                     Sep-09


                                                                                                                                    Oct-09




                                                                                                                                                                  Dec-09

                                                                                                                                                                                 Jan-10


                                                                                                                                                                                                 Feb-10




                                                                                                                                                                                                                               Apr-10

                                                                                                                                                                                                                                              May-10


                                                                                                                                                                                                                                                             Jun-10


                                                                                                                                                                                                                                                                        Jul-10
                                                                                                                                                   Nov-09




                                                                                                                   Total                           PLN                                        CHF                             Other FX

                    Source: NBP, BRE Bank Securities

                    Given that the portfolio of mortgage loans in the Polish banking sector is relatively young (with
                    69% of it added within the past 3.5 years, i.e. since 2007), and that international experience
                    shows that the risk of default for long-term loans peaks 5-7 years after initiation, we expect the
                    quality of Polish mortgages to gradually decline as the portfolio ages.




15 September 2010                                                                                                                                                                                                                                                                   13
                BRE Bank Securities                                                                                                                                                                                                                                                              Banks
                  BRE Bank Securities


                                           Quarterly mortgage sales vs. outstanding portfolio
                                            18                                                                                                                                                                                                                                                        300
                                            16
                                                                                                                                                                                                                                                                                                      250
                                            14
                                            12                                                                                                                                                                                                                                                        200
                                            10
                                                                                                                                                                                                                                                                                                      150
                                             8

                                             6                                                                                                                                                                                                                                                        100
                                             4
                                                                                                                                                                                                                                                                                                      50
                                             2
                                             0                                                                                                                                                                                                                                                        0
                                                      4Q 02


                                                                      2Q 03


                                                                                      4Q 03


                                                                                                       2Q 04


                                                                                                                       4Q 04


                                                                                                                                        2Q 05


                                                                                                                                                  4Q 05


                                                                                                                                                                  2Q 06


                                                                                                                                                                              4Q 06


                                                                                                                                                                                           2Q 07


                                                                                                                                                                                                           4Q 07


                                                                                                                                                                                                                       2Q 08


                                                                                                                                                                                                                                       4Q 08


                                                                                                                                                                                                                                                       2Q 09


                                                                                                                                                                                                                                                                       4Q 09


                                                                                                                                                                                                                                                                                       2Q10
                                                                                              Mortgage portf olio (PLN bn, right axis)                                                Mortgage sales (PLN bn, lef t axis)

                                           Source: ZBP, NBP, BRE Bank Securities

                                           We predict that the NPL ratio in mortgages will increase 21 bps to 1.9% by the end of 2010,
                                           followed by further increases by 35 bps (to 2.2%) in 2011 and 20 bps (to 2.4%) in 2012.
                                           Even though the high quality of the overall Polish mortgagee portfolio is expected to be
                                           maintained over the next 2-3 years, costs of risk will vary between the different banks
                                           depending on how aggressively they lent to homebuyers during the 2007-2008 real-estate
                                           boom. This is confirmed by the home-loan performance report of the credit information bureau
                                           BIK, which shows that default rates increase the fastest for loans granted in 2008 and 2007 (as
                                           illustrated in the diagrams below by the slope of the curve). Loans originated in 2009 and 2010
                                           displayed the best performance at 30 June 2010.


Trends in ratios of over-1-month overdue loan payments
                                             zloty loans                                                                                                                                                           FX loans
 3.0                                                                                                                                            3.0

 2.5                                                                                                                                            2.5

 2.0                                                                                                                                            2.0

 1.5                                                                                                                                            1.5

 1.0                                                                                                                                            1.0

 0.5                                                                                                                                            0.5

 0.0                                                                                                                                            0.0
        1Q'08


                  2Q'08


                           3Q'08


                                   4Q'08


                                              1Q'09


                                                              2Q'09


                                                                              3Q'09


                                                                                               4Q'09


                                                                                                               1Q'10


                                                                                                                                2Q'10




                                                                                                                                                          1Q'08


                                                                                                                                                                          2Q'08


                                                                                                                                                                                       3Q'08


                                                                                                                                                                                                   4Q'08


                                                                                                                                                                                                                   1Q'09


                                                                                                                                                                                                                               2Q'09


                                                                                                                                                                                                                                               3Q'09


                                                                                                                                                                                                                                                               4Q'09


                                                                                                                                                                                                                                                                               1Q'10


                                                                                                                                                                                                                                                                                              2Q'10


       2005               2006             2007                   2008                         2009                            2010                       2005                        2006                     2007                    2008                     2009                          2010

Source: BIK, BRE Bank Securities

                                           We identified the banks that face the greatest upward pressure on costs of risk in the wake of
                                           aggressive mortgage sales in the 2007-2008 period by checking their market shares in the
                                           mortgage sales volumes at the time, to see if they exceeded their natural market shares
                                           measured based on assets. And so, we found that Getin Holding, Millennium, Kredyt Bank
                                           outgrew their natural market shares considerably, with sales-to-assets-market-share ratios at
                                           3.3x, 2.8x, and 2.6x respectively, well ahead of the 1.4x average. At the other end of the
                                           spectrum are Handlowy (which did not offer mortgages at all at the time), Pekao (0.4x), and
                                           ING BSK (0.6x).




15 September 2010                                                                                                                                                                                                                                                                                           14
          BRE Bank Securities                                                                                                                 Banks
            BRE Bank Securities


                             Market share in mortgage sales volumes (%)
                               70                                                                                  4.4                 4.2
                                                                              3.87               4.4
                                                            3.2               3.06                                                     6.5
                               60         2.9                                                    4.5               5.9
                                          0.0               2.4               7.28                                 4.3                 6.6
                                          4.0               5.1                                 11.5
                               50         5.1               5.4               7.75
                                                                                                                   13.5               12.3
                               40         10.9                                                  10.0
                                                            13.7             12.68                                 2.2                 4.1
                                          7.0                                                                      8.4                 8.5
                               30                                                               10.3
                                                            6.5               6.53
                                                                                                 5.6
                               20
                                          28.9                               25.62                                 29.3               27.9
                                                            25.1
                               10                                                               20.6

                                0
                                          2005              2006              2007              2008               2009              1H 2010
                                                   PKO BP      Pekao      Millennium    Getin Holding    Kredy t Bank      ING BSK        BZ WBK

                             Source: ZBP, banks, BRE Bank Securities


                             The Conclusion: Predicting A Pickup In 2011, And A Rebound In 2012
                             Summing up, we expect the NPL ratio to amount to 8.6% at year-end 2010 after a 106 bp
                             increase vs. 2009 and a 22 bp increase from July 2010. In 2011, the ratio is expected to
                             decline 13 bps to 8.5% thanks to the improved quality of corporate loans. For 2012, we predict
                             a more marked, 67 bp drop to 7.8%, owed to the improving performance of corporate accounts
                             as well as consumer finance debt.

NPL trends in the Polish bank sector
                                                                   2005     2006       2007      2008     2009*     2010F       2011F        2012F
 NPLs (PLN m)                                                      29.8     24.7       23.0      27.6      50.5       61.9        66.8         68.3
   corporate                                                       18.1      13.6      12.0      14.1      25.6          25.9    25.8          23.4
   retail                                                          10.8      10.4      10.5      13.0      24.9          34.1    39.0          42.8
     home loans                                                     n/a       n/a       n/a       n/a       3.2           4.9     6.6           8.3
     consumer loans                                                 n/a       n/a       n/a       n/a      15.3          21.0    23.2          24.8
   other                                                            1.0       0.6       0.5       0.4       0.0           1.9     2.0           2.1

 Y/Y change in NPLs (%)                                             -18       -17        -7         20       83         23            8          2
   corporate                                                        -24       -24       -12         17       81          1           -1         -9
   retail                                                            -1        -4         1         24       91         37           14         10
     home loans                                                     n/a       n/a       n/a        n/a      n/a         53           68         70
     consumer loans                                                 n/a       n/a       n/a        n/a      n/a         38           24         18
   other                                                            -36       -36       -24         -9      -91      4 539            3          6

 NPL ratio (%)                                                     10.4       7.0       5.1        4.4      7.6           8.6     8.5           7.8
  corporate                                                        15.1      10.0       7.2        6.5     11.5          12.5    11.5           9.5
  retail                                                            7.9       5.7       4.1        3.6      6.0           7.3     7.6           7.4
    home loans                                                      n/a       n/a       n/a        n/a      1.5           1.9     2.2           2.4
    consumer loans                                                  n/a       n/a       n/a        n/a     13.1          17.6    17.6          16.6
  other                                                             3.3       1.9       1.5        1.2      1.5           4.5     4.5           4.5

 Y/Y pct. change in NPL ratio                                      -3.7      -3.4      -1.9       -0.6       3.1          1.1     -0.1         -0.7
   corporate                                                       -5.4      -5.1      -2.9       -0.6       5.0          1.0     -1.0         -2.0
   retail                                                          -2.0      -2.2      -1.5       -0.6       2.4          1.3      0.3         -0.2
     home loans                                                     n/a       n/a       n/a        n/a       n/a          0.4      0.4          0.2
     consumer loans                                                 n/a       n/a       n/a        n/a       n/a          4.5      0.0         -1.0
   other                                                           -1.9      -1.3      -0.5       -0.3       0.3          3.0      0.0          0.0
Source: NBP, BRE Bank Securities *March 2009 marked a change in the approach to NPL reporting




15 September 2010                                                                                                                                     15
          BRE Bank Securities                                                                                          Banks
            BRE Bank Securities


               Loan Quality Predictions For Our Banks
                             We made predictions about the NPL ratios for the banks in our coverage universe based on
                             the expected future quality of the different types of credit, and on each bank’s portfolio
                             composition.

                             Good Quality Outlook For Handlowy and BZ WBK
                             We expect the biggest improvement in NPL ratios from Handlowy (a 107 bp decrease to
                             17.4% in 2011 and a 207 bp drop to 15.3% in 2012) and BZ WBK (a 28 bp decline to 6.7% in
                             2011 and a 112 bp drop to 5.5% in 2012). Both banks have the largest shares (after Pekao) of
                             corporate loans in their portfolios, moreover, both experienced a stronger-than-average drop in
                             loan quality (notwithstanding Getin Holding and Kredyt Bank with their problems with
                             consumer credit), and so are expected to see a stronger-than-average improvement once the
                             trend shifts.
                             We believe the NPL ratio for Pekao will decrease at a slower-than-average rate in spite of a
                             large corporate-loan portfolio (the NPL ratio is expected to decrease 13 bps to 7.2% in 2011,
                             and by 46 bps to 6.7% in 2012). The bank experienced relatively slow deterioration in loan
                             quality in 2008 and 2009 thanks to more conservative sales in the preceding years, and,
                             accordingly, it will probably see a relatively slow improvement in the future.

                             Bleaker Outlook For Getin Holding, Millennium, and Kredyt Bank
                             We expect the NPL burden of Getin Holding to remain the greatest in the sector over the next
                             two years, with the NPL ratio increasing 120 bps to 12.5% in 2011 (after soaring 354 bps in
                             2010) and a further 44 bps to 12.9% in 2012. This stems from the bank’s aggressive sales
                             policy as well as a riskier borrower profile (including high-margin borrowers).
                             For Millennium, we predict an NPL ratio increase by 39 bps to 6.7% in 2011, followed by
                             stabilization in 2012. In case of Kredyt Bank, the ratio is expected to increase 37 bps to 10.6%
                             in 2011, and decline by 16 bps to 10.5% in 2012, based on aggressive 2007-2008 sales.

Summary of NPL ratio projections
                                            NPL ratio (%)                                 Y/Y change (ppts)
                        2008        2009       2010F      2011F   2012F      2008       2009     2010F      2011F     2012F
 BZ WBK                   2.9         5.5         6.9       6.7     5.5        0.1       2.6        1.4       -0.3      -1.1
 Getin Holding            4.5         7.7        11.3      12.5    12.9       -1.2       3.2        3.5        1.2       0.4
 Handlowy                12.2        16.7        18.4      17.4    15.3        0.0       4.4        1.8       -1.1      -2.1
 ING BSK                  1.9         3.7         4.1       4.0     3.5       -1.1       1.8        0.4       -0.1      -0.6
 Kredyt Bank              4.9         8.6        10.3      10.6    10.5       -1.7       3.7        1.7        0.4      -0.2
 Millennium               3.4         5.8         6.3       6.7     6.7        0.0       2.5        0.4        0.4       0.0
 Pekao                    5.5         6.8         7.3       7.2     6.7       -2.3       1.3        0.5       -0.1      -0.5
 PKO BP                   4.4         8.1         9.1       8.9     8.1        0.6       3.7        0.9       -0.2      -0.8
 Weighted
 average                  4.6         7.3         8.4       8.4     7.8       -0.9       2.7        1.1        0.0      -0.6
 Sector average           4.4         7.6         8.6       8.5     7.8       -0.6       3.1        1.1       -0.1      -0.7
Source: Banks, NBP, BRE Bank Securities


               Cost of Risk, Loan-Loss Provisions
                             COR To Decrease Most At Handlowy & Getin, Least At ING BSK, Millennium &
                             Pekao
                             NPL ratios determine the cost of risk for banks. For the eight banks under our coverage, we
                             predict a decrease in the average cost of risk from 161 bps in 2009 to 134 bps in 2010, 99 bps
                             in 2011, and 70 bps in 2012. The expected leaders in COR reduction will be Getin Holding (a
                             cumulative 2010-2012 drop by 172 bps) and Handlowy (-173 bps). In turn, costs of risk will
                             decrease the slowest at ING BSK (21 bps), Pekao (27 bps), and Millennium (29 bps).




15 September 2010                                                                                                               16
          BRE Bank Securities                                                                                        Banks
            BRE Bank Securities


Summary of cost-of-risk projections
                                        Costs of risk (bps)                             Y/Y change (bps)
                        2008         2009     2010F       2011F   2012F     2008      2009     2010F     2011F      2012F
 BZ WBK                   123         138       134         79       46      122         15        -4       -55        -33
 Getin Holding            228         349       408        287      237      110        121        60      -122        -50
 Handlowy                 116         422       228        120       55      162        306      -194      -108        -65
 ING BSK                   31         108        56         49       35      101         77       -52        -7        -13
 Kredyt Bank               50         304       164        126       79      110        254      -140       -38        -47
 Millennium                48         129        69         57       42       12         81       -60       -13        -15
 Pekao                     35          66        66         54       36       -3         32        -1       -12        -18
 PKO BP                   127         154       138        106       75      119         27       -16       -32        -31
 Weighted
 average                   88         161       134         99       70       77         73       -27        -35       -29
Source: Banks, BRE Bank Securities


                             Provisions To Decrease Most At Handlowy & BZ WBK, Least At ING BSK, Getin
                             & Millennium
                             Cost-of-risk forecasts lead us to projections concerning loan-loss provisions. On average, the
                             provisions of the eight banks under our coverage are expected to decrease 18% in 2010, 23%
                             in 2011, and 21% in 2012. The greatest cumulative reduction in the 2010-2012 period is
                             expected of Handlowy (a 72% drop) and BZ WBK (a 60% drop), and the smallest reductions
                             will be reported by ING BSK (a 20% decrease), Getin (a 27% decrease), and Millennium (a
                             29% decrease).

Summary of loan-loss provision projections
                                Loan-Loss Provisions (PLN m)                             Y/Y change (%)
                         2008       2009    2010F      2011F      2012F     2008      2009     2010F    2011F       2012F
 BZ WBK                   365        481       467        291        186       -        32         -3      -38         -36
 Getin Holding            379        842     1 191        961        875     264       122         41      -19          -9
 Handlowy                 153        546       268        145         75    -391       257        -51      -46         -48
 ING BSK                   66        304       179        173        142    -164       364        -41       -3         -18
 Kredyt Bank              108        803       437        355        239    -227       642        -46      -19         -33
 Millennium               135        436       245        217        174     103       223        -44      -11         -20
 Pekao                    263        535       539        475        349      37       103          1      -12         -27
 PKO BP                 1 130      1 681     1 670      1 378      1 073       -        49         -1      -17         -22
 Total                  1 206        3 412     2 786     2 143    1 692         -      183        -18       -23        -21
Source: Banks, BRE Bank Securities




15 September 2010                                                                                                             17
           BRE Bank Securities                                                                                           Banks
             BRE Bank Securities


Net Income Projections
                             Net Income To Grow 30% In 2010, 15% In 2011, 21% In 2012
                             After a 28% drop in 2009, the aggregate net income of the eight banks in our coverage is
                             expected to increase 30% this year. Following a slowdown to 15% in 2011, earnings growth is
                             expected to accelerate to 21% in 2012.

Summary of net income projections
                                       Net income (PLN m)                                  Y/Y change (%)
                         2008         2009     2010F    2011F       2012F     2008      2009     2010F    2011F         2012F
 BZ WBK                   855          886        934     1 048      1 231     -10         4         5       12            18
 Getin Holding            509          276        406       502        711     -19       -46        47       24            42
 Handlowy                 600          504        716       890      1 065     -27       -16        42       24            20
 ING BSK                  445          595        770       847        957     -29        34        29       10            13
 Kredyt Bank              325           35        199       314        440     -17       -89       475       58            40
 Millennium               413            1        286       393        574     -11      -100         -       37            46
 Pekao                  3 528        2 412      2 584     2 897      3 392      64       -32         7       12            17
 PKO BP                 3 121        2 306      3 213     3 627      4 353       7       -26        39       13            20
 Total                  9 796        7 015       9 107   10 518     12 725        9       -28           30        15         21
Source: Banks, BRE Bank Securities


                             Our 2011-2012 Forecasts Not As Upbeat As Consensus Estimates
                             Our aggregate income estimates are 3% higher than the analysts’ consensus for 2010, but 7%
                             and 5% lower respectively than the market forecasts for 2011 and 2012. These differences are
                             most likely driven by from less optimistic expectations with respect to net interest margin
                             and/or more pessimistic expectations with respect to reductions in loan-loss provisions.
                             Note that our 2011 and 2012 estimates for Handlowy are substantially (13% and 16%) higher
                             than the consensus forecasts which have probably underestimated the bank’s potential for
                             improvement in the NPL ratio, and hence in provisions. Conversely, our net-income forecasts
                             for Getin Holding and BZ WBK are between 12% and 18% lower than the consensus
                             estimates. This is probably a result of our more conservative assumptions with respect to net
                             interest margin development at BZ WBK, and cost-of-risk reductions at Getin Holding.

Net income: Our forecasts vs. market consensus
                               2010          Difference                2011          Difference              2012          Difference
 (PLN m)                    Our Consensus                           Our Consensus                         Our Consensus
                       Estimate     Estimate        (%)        Estimate     Estimate        (%)      Estimate     Estimate        (%)
 BZ WBK                     934          947         -1           1 048        1 186        -12         1 231        1 391        -12
 Getin Holding              406          394          3             502          614        -18           711          829        -14
 Handlowy                   716          657          9             890          785         13         1 065          921         16
 ING BSK                    770          732          5             847          828          2           957          975         -2
 Kredyt Bank                199          175         14             314          327         -4           440          347         27
 Millennium                 286          259         10             393          442        -11           574          584         -2
 Pekao                    2 584        2 578          0           2 897        3 054         -5         3 392        3 515         -3
 PKO BP                   3 213        3 097          4           3 627        4 014        -10         4 353        4 770         -9
 Total                     9 107             8 839         3      10 518      11 250            -7     12 725       13 331         -5
Source: Banks, BRE Bank Securities, Bloomberg




15 September 2010                                                                                                                 18
        BRE Bank Securities                                                                                                              Banks
          BRE Bank Securities


H2 2010 Earnings Outlook
                    Banks Achieved 48% Of Our FY2010 Net Income Estimate In H1
                    The eight banks in our coverage delivered 48% of our aggregate full-year net-income estimate
                    in the first half of 2010, compared to 47% in the same period a year ago.
                    Considered individually, Getin Holding and BZ WBK reported the highest delivery rates of 53%
                    and 52% respectively. In the second half of the year, Getin is expected to recognize smaller
                    one-time gains (an estimated PLN 108m) than the PLN 130m posted in H1. In case of
                    BZ WBK, the first-half profits are typically stronger thanks to dividends paid by Aviva in the
                    second quarter.
                    Kredyt Bank achieved only 37% of our full-year net income forecast in H1 2010, but it is
                    expected to make up for this in the second half by reducing loan-loss provisions by 17%.

                    First-half earnings vs. full-year forecasts (%)
                      Kredy t Bank                                                  37
                                                 12
                                                                                                      47
                          PKO BP
                                                                                                            50
                                                                                                      47
                             Pekao
                                                                                                           49
                                                                                                       48
                              Total
                                                                                                      47
                                                                                                       48
                         ING BSK
                                                                                                 44
                                                                                                       48
                        Millennium

                                                                                                           49
                        Handlowy
                                                                   23
                                                                                                                52
                          BZ WBK
                                                                                            43
                                                                                                                 53
                     Getin Holding
                                                                                                                                    66

                                      0         10            20               30         40                    50             60          70
                                                                        2009             2010

                    Source: Banks, BRE Bank Securities


                    Predicting 9% H/H Growth and 28% Y/Y Growth In H2 2010
                    Based on our full-year forecasts, we expect to see the greatest improvement in the second-half
                    earnings of Kredyt Bank (a 70% increase), PKO BP (+14%) and Pekao (+11%). In turn, a drop
                    in net income relative to H1 2010 is expected of Getin Holding (-11%) and BZ WBK (-7%).

                    Summary of H2 2010 net-income estimates
                     (PLN m)                    2H 2010F                1H 2010          H/H (%)                     2H 2009        Y/Y (%)
                     BZ WBK                           450                   484               -7                         509            -12
                     Getin Holding                    191                   215              -11                          93            106
                     Handlowy                         366                   349                5                         387             -5
                     ING BSK                          401                   369                9                         332             21
                     Kredyt Bank                      125                    74               70                          31            310
                     Millennium                       148                   138                8                         -20              -
                     Pekao                          1 362                 1 222               11                       1 232             11
                     PKO BP                         1 711                 1 502               14                       1 155             48
                     Total                            4 755               4 353                  9                     3 718               28
                    Source: Banks, BRE Bank Securities




15 September 2010                                                                                                                                19
           BRE Bank Securities                                                                                                 Banks
             BRE Bank Securities


Appendix: Bank Tax
                  Bank Tax In Europe
                              Hungary
                              In June 2010, the Hungarian parliament passed a law that imposed a tax in the amount of
                              0.5% of assets for all banks with assets exceeding HUF 50bn, and 0.15% for smaller banks.
                              The rates of taxation are set for 2010 and 2011, and their values in later years are to be
                              determined at a later time.

                              Sweden
                              The bank tax in Sweden, introduced in 2009, is calculated based on liabilities. The levy has
                              been set at 0.18% through to the end of 2011, and 0.36% as of 2012. Starting in 2012, each
                              component of a bank's net assets will be assigned risk weights.

                              UK
                              The bank-tax plan for the UK (which will be also be adopted by Germany and France) is to levy
                              taxes on all banks and building societies with assets of GBP 20bn or more. The tax will be
                              charged against assets adjusted for Tier 1 capital and retail deposits. A lower rate will be
                              applicable to long-term wholesale funding. The levy is to be set at 0.04% for funding with
                              maturity of up to one year, and 0.02% for longer-maturity funding, in the initial year (2011),
                              rising to 0.07% and 0.035% respectively in 2012.

                              Germany
                              The German levy (proposed in June 2010) is structured similarly to the UK solution. The tax
                              base is defined as assets minus “liable capital” (it is not clear whether this includes Tier 2 as
                              well as Tier 1 capital) and deposits (other than from financial institutions). The levy will be
                              0.02% for banks with a base up to EUR 10bn, 0.03% for banks with a base of EUR 10bn to
                              EUR 100bn, and 0.04% for banks with a base over EUR 100bn. The plans also provides for a
                              second tax base – off-balance sheet derivatives – to be taxed at a rate of 0.00015%. The
                              annual tax charge cannot exceed 15% of a bank’s profits for the previous year. Loss-
                              generating banks will not be exempt, paying a minimum levy of 5% of their “regular annual
                              contribution”.

Bank-tax comparison
                                         Hungary            Sweden                 UK                       Germany
                                                                               Liabilities less
                                                                                                  Liabilities less Off-balance sheet
 Tax base                                 Total assets     Total liabilities    insured retail
                                                                                                  total deposits          derivatives
                                                                                     deposits
 Main tax rate (%)                               0,500             0,036                 0,070            0,040          0,00015
 Consolidated/Standalone data              Standalone        Standalone         Consolidated               Standalone
 Levy cap                                           No                No                    No           Yes, 15% of annual profits
 Is the tax a deductible expense?                  Yes               Yes                    No                 No
 Existing or proposed legislation?             In force          In force                 Draft               Draft
 In force as of                               2H 2010               2009                  2011                2011
                                                           15 years (until
 In force until                         Probably 2012                          Undetermined                           Undetermined
                                                                   2025)
Source: BRE Bank Securities



                  Implications for Polish Banks
                              Government Wants Bank Tax
                              Polish Prime Minister Donald Tusk announced plans to introduce some form of a bank tax.
                              Details are still to be announced. According to press reports, the tax will be based on the
                              system already in place in the UK, and it will not be levied on transactions or sales volumes.
                              Mr. Tusk wants the new levy to be “safe for bank customers, not too burdensome for the
                              banks, and a guaranteed source of revenues for the budget.”

                              New Tax May Reduce Bank profits By 1-2%
                              Making the most of what little information was provided by the Polish government, we made an
                              attempt at assessing the potential impact of the bank tax on the 2011-2012 profits of banks.
                              Using the UK tax-base model, and assuming a 0.07% levy on total taxable assets, we
                              concluded that the tax may reduce the earnings of the eight banks under our coverage by an
                              average 1.7% in 2011 and 1.5% in 2012. The least affected banks would be PKO BP (facing



15 September 2010                                                                                                                       20
           BRE Bank Securities                                                                                                    Banks
             BRE Bank Securities


                                an average charge of 0.9% against 2011 and 2012 profits), Getin Holding (1.0%), and BZ WBK
                                (1.5%), In turn, the impact would be the strongest for Kredyt Bank (4.6%), Millennium (3.2%),
                                and ING BSK (2.1%).

Bank-tax impact simulation
                     Adjusted assets Adjusted assets                    Theoretical tax   Theoretical tax   Tax as % of     Tax as % of
 (PLN m)
                             (2010)*         (2011)*                      value (2011)      value (2012)    profit (2011)   profit (2012)
 BZ WBK                       23 684          24 773                                 17                17             1.6             1.4
 Getin Holding                 7 713           8 405                                  5                 6             1.1             0.8
 Handlowy                     27 147          28 656                                 19                20             2.1             1.9
 ING BSK                      26 252          26 928                                 18                19             2.2             2.0
 Kredyt Bank                  24 164          24 452                                 17                17             5.4             3.9
 Millennium                   20 589          22 074                                 14                15             3.7             2.7
 Pekao                        72 471          74 018                                 51                52             1.8             1.5
 PKO BP                       50 616          54 306                                 35                38             1.0             0.9
 Total                          252 635               263 612                      177               185             1.7             1.5
Source: BRE Bank Securities; *Total assets – equity – retail deposits


                                We Ignore The Bank Tax In Our Earnings Forecasts
                                Since we do know the details of how the potential bank tax would be levied, we do not take it
                                into account in our earnings forecasts or valuations. We think it is safe to assume that the
                                banks will want to transfer a portion of the additional tax burden (if it is introduced) onto their
                                customers. The simplest way to do this would be to raise fees and commissions. We would
                                further expect banks to attempt to minimize the charges through balance-sheet management
                                (possibly through end-of-year adjustments, since the tax rules are expected to be announced
                                toward the end of the year). As a result of such measures, the actual impact of the new tax on
                                bank earnings and valuations could be lesser than would be implied by the nominal levy.
                                Note further that Polish banks are already paying a balance-sheet-based levy to the Bank
                                Guarantee Fund (BFG), equivalent to 0.045% of their risk-weighted assets (the rate is in force
                                since 2009). In 2010, the aggregate contribution under the BFG levy made by the eight banks
                                in our coverage universe will approximate PLN 180m. Considering the level of deposits that
                                require BGF guarantees is to be raised from EUR 50,000 to EUR 100,000 as of 2011, it is
                                possible that the BFG levy will also be raised. A combination of such a raise and the
                                introduction of the tax bank would be a very radical move on the part of the Polish government
                                and market regulators.




15 September 2010                                                                                                                           21
          BRE Bank Securities                                                              Banks
            BRE Bank Securities


Appendix: Deposit and loan growth projections

Polish banking sector: Deposit and loan growth projections
 (PLN billions)                    2005   2006   2007        2008   2009   2010F   2011F   2012F
 Total deposits                     375    427    487         584    647     706     768     845
  Y/Y change (%)                     10     14     14          20     11       9       9      10
  corporate                         100    126    144         151    166     172     181     191
    Y/Y change (%)                   17     26     14           5     10       3       5       6
  retail                            218    237    261         328    377     409     448     497
    Y/Y change (%)                    5      9     10          26     15       8      10      11
  other                              56     64     82         105    104     125     140     157
    Y/Y change (%)                   20     13     29          28     -1      20      12      12


 Total loans                       285    352     454        620    665      716     784     870
  Y/Y change (%)                    12     23      29         37      7        8       9      11
  corporate                        119    136     168        216    207      207     224     246
    Y/Y change (%)                   3     14      23         29     -4        0       8      10
  retail                           136    183     253        367    411      467     516     578
    Y/Y change (%)                  24     34      38         45     12       14      11      12
    home loans                      50     78     117        193    215      261     298     340
      Y/Y change (%)                41     54      50         65     12       21      14      14
      PLN loans                     18     28      52         59     75       96     124     158
         Y/Y change (%)             18     53      86         12     28       27      30      27
      FX loans                      32     50      64        134    140      165     173     182
         Y/Y change (%)             58     55      30        108      4       18       5       5
    other retail                    86    105     136        174    196      206     219     238
      Y/Y change (%)                16     23      30         28     12        5       6       9
  other                             30     33      32         37     47       42      44      46
    Y/Y change (%)                   2      9      -1         15     26      -10       3       6
Source: NBP, BRE Bank Securities




15 September 2010                                                                                  22
                                                                                                                                                                                     BZ WBK
            BRE Bank Securities
                                                                                                                                                           BRE Bank Securities
15 September 2010                                                            Update


                           Banks
                           Poland                                            BZ WBK                                                                                           Hold
                                                                             BZWB.WA; BZW.PW                                                                                 (Reiterated)

Current price                                     PLN 215.40
Target price                                      PLN 215.90                 Santander Gets BZ WBK
Market cap                                        PLN 15.7bn
                                                       We are reiterating our Hold rating for BZ WBK while increasing our
Free float                                        PLN 4.7bn
                                                       price target to PLN 215.9 per share, i.e. to the price Santander is going
Avg daily trading volume (3M) PLN 39.1m                to pay in its tender offer for 100% of the Bank's stock (PLN 226.9)
                                                       discounted over 6 months. Let us point out that our valuation includes
Shareholder Structure                                  a 10% premium without which the price target would figure to PLN
AIB                                            70.4% 197.0 per share. As time elapses, the price of the stock will converge
Others                                         29.6% towards the PLN 226.90 level until the tender offer, which we expect in
                                                       late Q1 or early Q2 2011. In our opinion, minority shareholders should
Company Profile                                        take advantage of the tender offer, because price paid will be much
BZ WBK is Poland’s fifth biggest bank asset-wise, with higher than our fundamental valuation of the Bank.
a ca. 5% market share. Its products are directed for
both retail and corporate clients. The high share of                         Santander Offers PLN 226.9 Per Share, i.e. FY09 P/BV of 2.8
corporate loans in the overall portfolio is partly a                         Santander announced it was going to buy AIB’s controlling stake in BZ WBK
consequence of the importance of loans to real-estate                        (70.36%) for PLN 11,666m (ca. EUR 2,938m). The transaction will take the
developers. In deposits, the retail segment dominates.                       form of a tender offer for all the shares, in which AIB will sell its stake. The
The Bank has below-average loans/deposits and cost/                          value of the transaction implies that Santander will pay PLN 226.90 per
income ratios, and a satisfactory capital adequacy
ratio. At present, it is preparing for the transfer of
                                                                             share, which in turn entails FY09 and FY10 P/BV multiples of 2.80 and 2.57,
ownership from AIB to Santander.                                             44% above the Polish banks’ average.
                                                                             Our PLN 1048m Profit Forecast Is 12% Below Market Consensus
                                                                             Based on our assumptions with regard to the growth of the Polish banking
                                                                             industry and assuming that the Bank will retain its current business model,
                                                                             we expect its net profit to increase by 12% in 2011, reaching PLN 1048m.
                                                                             For 2012, we forecast growth of 18% y/y and a bottom line of PLN 1231m.
                                                                             Since we seem to be forecasting a higher pressure on interest margin than
                                                                             the current consensus estimate (driven by the narrowing margins on
                                                                             corporate loans), our current profit forecasts for 2011-2012 undershoot the
                                                                             consensus by 12%.
                                                                             Our Valuation Factors in a 10% Premium
                                                                             Our current fundamental valuation of the Bank points to a 9M price target of
                                                                             PLN 197.0 per share. As we expect Santander's tender offer to take place,
                                                                             we have factored in a 10% premium the Spanish bank will pay to minority
Important dates                                                              shareholders as well.
09.11: Q3’10 report


BZ WBK vs. WIG
220
PLN

202                                                                         (PLN m)                                      2008             2009          2010F            2011F           2012F
                                                                            Interest income                             1 635            1 563           1 789            1 740           1 866
                                                                            Income f. banking oper.                     3 190            3 239           3 465            3 438           3 626
184
                                                                            Operating income*                           1 576            1 644           1 774            1 676           1 800
                                                                            Net income                                    855              886             934            1 048           1 231
166
                                                                            Interest margin (%)                          3.31             2.80            3.24             2.99            2.97
                                                                            Costs / Income (%)                           51.2             49.7            49.1             51.5            50.6
148
                                                                            ROE (%)                                      18.4             16.3            14.9             15.1            16.0
                                           BZ WBK           WIG             EPS (PLN)                                   11.72            12.13           12.78            14.34           16.85
130                                                                         BVPS (PLN)                                  68.15            81.12           90.05            99.92          111.03
 09-09-11            10-01-04            10-04-29            10-08-22
                                                                            DPS (PLN)**                                  0.00             4.00            4.47             5.74            7.58
Iza Rokicka                                                                 P/E (x)                                      18.4             17.8            16.9             15.0            12.8
(48 22) 697 47 37                                                           P/BV (x)                                     3.16             2.66            2.39             2.16            1.94
Iza.Rokicka@dibre.com.pl                                                    Dividend yield (%)                            0.0              1.9             2.1              2.7             3.5
www.dibre.com.pl                                                             * before provisions; **dividends for the year, paid out the next year
BRE Bank Securities does not rule out offering brokerage services to an issuer of securities being the subject of a recommendation. Information concerning a conflict of interest arising in
3 March 2010
connection with issuing a recommendation (should such a conflict exist) is located on the final page of this report.
                      BRE Bank Securities                                                                                                            BZ WBK
                        BRE Bank Securities


BZ WBK: Residual Income Valuation
 (PLN m)                                   2010F      2011F    2012F     2013F       2014F         2015F     2016F     2017F    2018F     2019F         +        FV
 Net income                                   934      1 048    1 231     1 385       1 538         1 684     1 819     1 946    2 063     2 146
   Y/Y change (%)                             5.4       12.2     17.5      12.5        11.0           9.5       8.0       7.0      6.0       4.0       4.0
 Equity                                     6 581      7 302    8 114     8 945       9 800        10 660    11 505    12 322   13 093    13 781
 Dividend payout ratio (%)                   35.0       40.0     45.0      49.3        53.6          57.8      62.1      66.4     70.7      75.0      75.0


 ROE (%)                                       14.9     15.1   15.97          16.2    16.4            16.5     16.4      16.3      16.2     16.0      16.0
 COE (%)                                       10.5     10.5    10.5          10.5    10.5            10.5     10.5      10.5      10.5     10.5      10.5

 Excess return (%)                             4.4      4.6      5.5          5.7      5.9            6.0      5.9        5.8      5.7      5.5       5.5
 Residual income                               278      319      422          490      554            611      656        696      730      736    11 342

 Discount factor                               0.97     0.88     0.79         0.72    0.65            0.59     0.53      0.48      0.44     0.39      0.39
 PV of residual income                          268      280      335          352     360             359      349       335       318      290     4 469


 Equity as at 31 December 2009                                                                                                                                5 928
 2010 dividend                                                                                                                                                 -292
 YTD excess of comprehensive income over net income                                                                                                              11
 PV of residual income (2010F-2012F)                                                                                                                            883
 PV of residual income (2013F-2019F)                                                                                                                          2 362
 PV of terminal value                                                                                                                                         4 469
 Fair value                                                                                                                                                  13 361
 Number of shares (millions)                                                                                                                                   73.1
 Fair value per share (PLN)                                                                                                                                     183
 9M target price ex. acquisition premium (PLN)                                                                                                                197,0
 Acquisition premium (%)                                                                                                                                         10
 9M target price incl. acquisition premium (PLN)                                                                                                              215,9

 Current price (PLN)                                                                                                                                          215.4
 Upside potential (%)                                                                                                                                           0.2
Source: BZ WBK, BRE Bank Securities



BZ WBK: Sensitivity Analysis
                                         Sustainable ROE                                                                            Cost of Equity
                             -2.0ppt -1.0ppt         - +1.0ppt +2.0ppt                                                +2.0ppt   +1.0ppt        - -1.0ppt     -2.0ppt
                              14.0% 15.0%       16.0% 17.0% 18.0%                                                      12.5%     11.5%    10.5%    9.5%        8.5%
              -2.0ppt 2.0%        176   186       197      207          218                        -2.0ppt   2.0%        147       169      197       232       277
  LT growth




                                                                                       LT growth




              -1.0ppt 3.0%        181   193       205      217          229                        -1.0ppt   3.0%        150       174      205       245       300
                   - 4.0%         188   202       216      230          244                              -   4.0%        154       181      216       264       334
              +1.0ppt 5.0%        197   214       231      248          264                        +1.0ppt   5.0%        158       189      231       291       386
              +2.0ppt 6.0%        211   232       253      273          294                        +2.0ppt   6.0%        164       200      253       334       481
Source: BRE Bank Securities




              15 September 2010                                                                                                                                 24
          BRE Bank Securities                                                             BZ WBK
            BRE Bank Securities


BZ WBK: Income Statement
 (PLN m)                                       2007    2008     2009    2010F    2011F      2012F
 Net interest income                          1 287   1 635    1 563     1 789    1 740      1 866
 Fee income                                   1 545   1 374    1 315    1 340    1 370       1 414
 Trading income                                 109     181      361      336      328         345
 Revenue from banking operations              2 941   3 190    3 239    3 465    3 438       3 626
 Other net operating income                      14      40       27       17       18          19
 Non-interest income                          1 668   1 595    1 703    1 693    1 716       1 778
 Total income                                 2 955   3 230    3 266    3 482    3 456       3 645
 Payroll expenses                              -843     -896     -889     -915     -959       -992
 D&A expenses                                  -135     -107     -123     -128     -134       -141
 Other administrative expenses                 -582     -651     -609     -665     -687       -711
 Total costs                                 -1 559   -1 655   -1 622   -1 708   -1 780     -1 845
 Pre-provision income                         1 395    1 576    1 644    1 774    1 676      1 800
 Provisions                                      -4     -365     -481     -467     -291       -186
 Share in results of subsidiaries                 0       -1        0        1        1          1
 Pre-tax income                               1 391    1 211    1 163    1 308    1 386      1 615
 Tax                                           -281     -256     -223     -306     -264       -309
 Minority interests                            -156      -99      -54      -68      -74        -75
 Net income                                     955      855      886      934    1 048      1 231
 Retained earnings                              736      855      594      607      629        677
Source: BZ WBK, BRE Bank Securities


BZ WBK: Annual rates of return on key income lines
 (%)                                          2007     2008     2009    2010F    2011F      2012F
 Net interest income                            25       27       -4       14        -3         7
 Non-interest income                            25       -4        7        -1        1         4
 Total income                                   25        9        1         7       -1         5
 Total costs                                    21        6       -2         5        4         4
 Pre-provision income                           29       13        4         8       -6         7
 Net income                                     26      -10        4         5      12         18
Source: BZ WBK, BRE Bank Securities


BZ WBK: Key P&L Ratios
 (%)                                          2007     2008     2009    2010F    2011F      2012F
 NIM (total assets)                           3.46     3.31     2.80      3.24     2.99       2.97
 NIM (interest-earnings assets)               3.61     3.42     2.89      3.33     3.07       3.05
 Spread                                       3.28     2.91     2.45      2.98     2.66       2.59
 Non-interest income / Total income           56.5     49.4     52.1      48.6     49.6       48.8
 Costs / Income                               52.8     51.2     49.7      49.1     51.5       50.6
 Costs / Assets                               4.19     3.35     2.91      3.09     3.06       2.94
 Cost of risk                                 0.02     1.23     1.38      1.34     0.79       0.46
 Effective tax rate                           20.2     21.2     19.2      23.4     19.1       19.1
 ROE                                          23.0     18.4     16.3      14.9     15.1       16.0
 ROA                                          2.57     1.73     1.59      1.69     1.80       1.96
Source: BZ WBK, BRE Bank Securities




15 September 2010                                                                                    25
          BRE Bank Securities                                                             BZ WBK
            BRE Bank Securities


BZ WBK: Balance Sheet
 (PLN m)                                       2007     2008     2009   2010F    2011F      2012F
 Cash and central bank balances               2 206    3 178    2 661    1 465    1 338        982
 Financial-sector receivables                 2 577    1 365      663    1 995    2 135      3 083
 Loans                                       23 950   35 137   34 571   35 295   38 432     42 796
 Debt securities                             11 051   16 141   14 648   16 113   16 596     17 094
 Shares                                          13       72       82       82       84         87
 Fixed assets                                   543      637      596      537      510        535
 Intangible assets                              115      174      182      163      163        168
 Other assets                                   863      728      663      773      787        803
 Total assets                                41 319   57 433   54 065   56 423   60 046     65 548

 Financial-sector payables                    4 484    5 338    5 350    5 350    5 617      5 898
 Deposits                                    29 766   42 811   41 223   41 861   44 601     49 110
 Securities outstanding                         355      222       33       53       53         53
 Subordinated loans                               0        0        0      400      400        400
 Other                                        2 373    4 089    1 531    2 179    2 073      1 973
 Total liabilities                           36 977   52 461   48 137   49 842   52 744     57 434

 Equity                                       4 342    4 973    5 928    6 581    7 302      8 114
 Total liabilities & equity                  41 319   57 433   54 065   56 423   60 046     65 548
Source: BZ WBK, BRE Bank Securities


BZ WBK: Annual rates of return on key balance-sheet items
 (%)                                          2007      2008    2009    2010F    2011F      2012F
 Loans                                          36        47      -2        2        9         11
 Total assets                                   25        39      -6        4        6          9
 Deposits                                       17        44      -4        2        7         10
 Equity                                         10        15      19       11       11         11
Source: BZ WBK, BRE Bank Securities


BZ WBK: Key Balance-Sheet Ratios
 (%)                                           2007     2008    2009    2010F    2011F      2012F
 NPL ratio                                      2.8      2.9      5.5      6.9      6.8        6.0
 NPL coverage ratio                            84.6     85.7     58.2     60.5     67.5       75.4
 Loans / Assets                                58.0     61.2     63.9     62.6     64.0       65.3
 Deposits / Assets                             72.0     74.5     76.2     74.2     74.3       74.9
 Loans / Deposits                              80.5     82.1     83.9     84.3     86.2       87.1
 Equity / Assets                               10.5      8.7     11.0     11.7     12.2       12.4
 CAR                                           13.3     10.7     12.9     14.6     14.8       14.8
 Tier 1 ratio                                  13.3     10.1     12.2     13.0     13.4       13.5
Source: BZ WBK, BRE Bank Securities




15 September 2010                                                                                    26
                                                                                                                                                                               BZ WBK
            BRE Bank Securities
                                                                                                                                                      BRE Bank Securities
15 September 2010                                                         Update


                          Banks
                          Poland                                          Getin Holding                                                                                  Hold
                                                                          GETI.WA; GTN.PW                                                                              (Reiterated)

Current price                                   PLN 10.11
Target price                                    PLN 10.40                 Costs of Risk Will Remain High
Market cap                                      PLN 7.2bn
                                                               We are reiterating our Hold rating for Getin Holding, while increasing
Free float                                      PLN 3.2bn
                                                               our 9M target price from PLN 10.34 per share to PLN 10.40 per share.
Avg daily trading volume (3M)                   PLN 15.3m      At the current valuation (FY10 P/E of 17.7 and FY11 P/E of 14.3), which
                                                               is 5% ahead of peer average, the balance of risks seems poised. On
Shareholder Structure                                          the one hand, GH has the biggest potential for an improvement in its
Leszek Czarnecki                                         55.7% deposit margin, and therefore also its interest margin. On the other
Pioneer FIO                                               7.6% hand, we believe the quality of its loan portfolio will continue to
                                                               underperform all the other banks we cover, which will keep the costs
Others                                                   36.7% of risk significantly above the sector average and over 200bps in the
Sector outlook                                                 long term.
Getin Holding is a group of financial companies with a                    Greatest Potential for Interest Margin Rebound
focus on Poland but operations in Russia, Ukraine,                        We forecast that Getin Holding's interest margin will increase by a
Belarus and Romania as well. The holding’s main                           staggering 50bps between 2010 and 2012, the fastest growth for all the
asset is a 94% stake in Getin Noble Bank, which was
                                                                          banks in our coverage universe. On the one hand, we expect the Bank to
created by the merger of Getin Bank (a retail oriented
bank with a focus on mortgages and cash loans) and                        feel a relatively small pressure on its interest margins as it has the highest
Noble Bank (private banking, financial brokerage                          share of retail loans in total loans (93%). On the other hand, it is best
services). In addition, Getin Holding has a 100% share                    positioned to improve its deposit margin, given that 54% of its deposits have
in the insurer TU Europa, which specializes in                            maturity over 3 months, which means they will be renewed with a delay vs.
bancassurance. The third important asset is a leasing                     the other banks.
company in Russia. GH enjoys the greatest cost
flexibility of all the listed banks, as well as the lowest                Long-Term Costs of Risk Above 200bps
cost/income ratio.
                                                                          We expect the quality of loans to deteriorate further, especially in the case
                                                                          of mortgages and consumer loans. In our opinion, in the long term the costs
                                                                          of risk will not go down below 200-250bps from 420bps recorded in H1
                                                                          2010. Note that Getin's share of new mortgages in 2007-2008 was 3.3
                                                                          times bigger than its natural market share. Since the quality of loans
                                                                          extended in that period is deteriorating the fastest, we expect the segment
                                                                          to incur costs of risk much ahead of the market average.

                                                                          Earnings Forecasted to Undershoot FY 2011-12 Consensus by 14-18%
Important dates                                                           According to our forecasts, Getin's will report FY 2010 profit 42% higher
12.11: Q3’10 report                                                       than last year (only PLN 216m after adjustment). In 2011 and 2012, we
                                                                          expect its profit to increase by 24% and 42% y/y, respectively (to PLN 502m
                                                                          and PLN 711m). Let us point out that our forecasts are significantly below
                                                                          market expectations (by 18% for 2011 and 14% for 2012).
Getin Holding vs. WIG
11.5
PLN

10.7
                                                                         (PLN m)                                      2008            2009          2010F          2011F           2012F
                                                                         Interest income                             1 018             978           1 305          1 615           1 911
                                                                         Income f. banking oper.                     2 030           2 094           2 456          2 751           3 087
 9.9
                                                                         Operating income*                           1 080           1 200           1 640          1 662           1 874
                                                                         Net income                                    509             276             406            502             711
 9.1
                                                                         Interest margin (%)                          4.07            2.94            3.36            3.62               3.86
                                                                         Costs / Income (%)                           42.2            41.8            36.8            39.7               39.6
 8.3                                                                     ROE (%)                                      15.2             7.4            10.0            11.1               13.9
                                            Getin        WIG             EPS (PLN)                                    0.72            0.39            0.57            0.70               1.00
 7.5                                                                     BVPS (PLN)                                   5.06            5.38            5.97            6.68               7.68
 09-09-11            10-01-04           10-04-29           10-08-22      DPS (PLN)**                                  0.00            0.00            0.00            0.00               0.00
Iza Rokicka                                                              P/E (x)                                      14.1            26.0            17.7            14.3               10.1
(48 22) 697 47 37                                                        P/BV (x)                                     2.00            1.88            1.69            1.51               1.32
Iza.Rokicka@dibre.com.pl                                                 Dividend yield (%)                            0.0             0.0             0.0             0.0                0.0
www.dibre.com.pl                                                           * before provisions; **dividends for the year, paid out the next year
10 Bank Securities
BREMarch 2010 does not rule out offering brokerage services to an issuer of securities being the subject of a recommendation. Information concerning a conflict of interest arising in
connection with issuing a recommendation (should such a conflict exist) is located on the final page of this report.
                      BRE Bank Securities                                                                                                   Getin Holding
                        BRE Bank Securities


Getin Holding: Residual Income Valuation
 (PLN m)                                     2010F    2011F    2012F     2013F     2014F          2015F    2016F     2017F    2018F     2019F         +        FV
 Net income                                     406      502      711       886     1 050          1 198    1 325     1 425    1 504     1 564
   Y/Y change (%)                              47.1     23.7     41.6      24.6      18.6           14.1     10.6       7.6      5.5       4.0       4.0
 Equity                                       4 256    4 758    5 469     6 355     7 315          8 300    9 259    10 145   10 923    11 569
 Dividend payout ratio (%)                      0.0      0.0      0.0      10.2      20.4           30.5     40.7      50.9     61.1      71.2      71.2


 ROE (%)                                       10.0     11.1      13.9      15.0    15.4            15.3     15.1      14.7      14.3     13.9      13.9
 COE (%)                                       11.0     11.0      11.0      11.0    11.0            11.0     11.0      11.0      11.0     11.0      11.0

 Excess return (%)                             -1.0      0.1      2.9       4.0      4.4            4.4      4.1        3.7      3.3      2.9        2.9
 Residual income                                -39        7      149       236      299            340      360        359      346      327      4 680

 Discount factor                               0.97     0.87      0.78      0.71    0.64            0.57     0.52      0.47      0.42     0.38      0.38
 PV of residual income                          -37        6       117       167     190             195      186       167       145      124     1 768


 Equity as at 31 December 2009                                                                                                                              3 830
 2010 dividend                                                                                                                                                  0
 YTD excess of comprehensive income over net income                                                                                                            21
 PV of residual income (2010F-2012F)                                                                                                                           85
 PV of residual income (2013F-2019F)                                                                                                                        1 173
 PV of terminal value                                                                                                                                       1 768
 Fair value                                                                                                                                                 6 877
 Number of shares (millions)                                                                                                                                712.4
 Fair value per share (PLN)                                                                                                                                  9.65
 Target price (9M) (PLN)                                                                                                                                     10,4

 Current price (PLN)                                                                                                                                        10.11
 Upside potential (%)                                                                                                                                         2.9
Source: Getin Holding, BRE Bank Securities



Getin Holding: Sensitivity Analysis
                                         Sustainable ROE                                                                          Cost of Equity
                             -2.0ppt -1.0ppt         - +1.0ppt +2.0ppt                                              +2.0ppt   +1.0ppt        - -1.0ppt     -2.0ppt
                              11.9% 12.9%       13.9% 14.9% 15.9%                                                    13.0%     12.0%    11.0% 10.0%          9.0%
              -2.0ppt 2.0%        8.3    9.0      9.8      10.5      11.3                        -2.0ppt   2.0%         7.0       8.2      9.8     11.8      14.3
  LT growth




                                                                                     LT growth




              -1.0ppt 3.0%        8.4    9.2     10.1      10.9      11.8                        -1.0ppt   3.0%         7.0       8.3     10.1     12.3      15.3
                   - 4.0%         8.5    9.4     10.4      11.4      12.4                              -   4.0%         7.0       8.5     10.4     13.0      16.7
              +1.0ppt 5.0%        8.6    9.8     10.9      12.1      13.3                        +1.0ppt   5.0%         7.1       8.7     10.9     14.0      18.7
              +2.0ppt 6.0%        8.8   10.2     11.6      13.1      14.5                        +2.0ppt   6.0%         7.2       9.0     11.6     15.6      22.2
Source: BRE Bank Securities




              15 September 2010                                                                                                                               28
          BRE Bank Securities                                                           Getin Holding
            BRE Bank Securities


Getin Holding: Income Statement
 (PLN m)                                        2007         2008   2009    2010F    2011F      2012F
 Net interest income                             561        1 018    978     1 305    1 615      1 911
 Fee income                                      257          242     443     455       462        470
 Trading income                                  260          298     224     188       138        154
 Revenue from banking operations                 258          472     450     508       536        552
 Other net operating income                    1 336        2 030   2 094   2 456     2 751      3 087
 Non-interest income                             153         -164     -33     140         8         13
 Total income                                    928          848   1 084   1 291     1 144      1 190
 Payroll expenses                              1 489        1 866   2 061   2 596     2 759      3 100
 D&A expenses                                   -277         -346    -363    -403      -474       -533
 Other administrative expenses                   -38          -48     -63     -67       -73        -79
 Total costs                                    -272         -393    -435    -486      -549       -615
 Pre-provision income                           -586         -787    -861    -956    -1 096     -1 227
 Provisions                                      903        1 080   1 200   1 640     1 662      1 874
 Share in results of subsidiaries               -104         -379    -842   -1 191    -961        -875
 Pre-tax income                                    4            0      -1        0       0           0
 Tax                                             802          701     358      449     701         999
 Minority interests                             -134         -140     -21       -4    -140        -200
 Net income                                      -42          -52     -60      -39     -59         -88
 Retained earnings                               626          509     276      406     502         711
 Net interest income                             626         509     276      406      502        711
Source: Getin Holding, BRE Bank Securities


Getin Holding: Annual rates of return on key income lines
 (%)                                            2007        2008    2009    2010F    2011F      2012F
 Net interest income                              54          81      -4       34        24        18
 Non-interest income                             188          -9      28       19       -11         4
 Total income                                    117          25      10       26         6        12
 Total costs                                      49          34      10       11        15        12
 Pre-provision income                            207          20      11       37         1        13
 Net income                                      291         -19     -46       47        24        42
Source: Getin Holding, BRE Bank Securities


Getin Holding: Key P&L Ratios
 (%)                                            2007        2008    2009    2010F    2011F      2012F
 NIM (total assets)                             3.66        4.07    2.94      3.36     3.62       3.86
 NIM (interest-earnings assets)                 3.95        4.38    3.14      3.58     3.84       4.07
 Spread                                         3.34        3.28    2.31      3.10     3.37       3.57
 Non-interest income / Total income             62.3        45.5    52.6      49.7     41.5       38.4
 Costs / Income                                 39.4        42.2    41.8      36.8     39.7       39.6
 Costs / Assets                                 3.82        3.14    2.59      2.46     2.46       2.48
 Cost of risk                                   1.18        2.28    3.49      4.08     2.87       2.37
 Effective tax rate                             16.7        20.0     6.0       1.0     20.0       20.0
 ROE                                            24.3        15.2     7.4      10.0     11.1       13.9
 ROA                                            4.08        2.03    0.83      1.04     1.13       1.43
Source: Getin Holding, BRE Bank Securities




15 September 2010                                                                                        29
          BRE Bank Securities                                                            Getin Holding
            BRE Bank Securities


Getin Holding: Balance Sheet
 (PLN m)                                        2007      2008       2009   2010F    2011F      2012F
 Cash and central bank balances                  263       632        935    1 043    1 164      1 287
 Financial-sector receivables                  3 690     3 199      1 762    3 645    4 852      5 979
 Loans                                        11 444    21 876     26 382   31 935   35 085     38 802
 Debt securities                               1 879     3 435      4 106    3 079    3 233      3 395
 Shares                                           13        12         18       18       18         18
 Fixed assets                                    160       201        167      209      226        237
 Intangible assets                               132       206        216      238      250        262
 Other assets                                  1 422     1 464      1 974    2 047    2 125      2 171
 Total assets                                 19 004    31 025     35 560   42 214   46 953     52 151

 Financial-sector payables                     1 198     1 452        822      411      444        466
 Deposits                                     10 406    20 052     28 241   34 756   38 794     42 894
 Securities outstanding                        3 272     2 764      1 221      977    1 172      1 406
 Subordinated loans                                0         0          0        0        0          0
 Other                                         1 023     3 162      1 446    1 815    1 785      1 915
 Total liabilities                            15 899    27 430     31 731   37 958   42 195     46 682

 Equity                                        3 105     3 594      3 830    4 256    4 758      5 469
 Total liabilities & equity                   19 004    31 025     35 560   42 214   46 953     52 151
Source: Getin Holding, BRE Bank Securities


Getin Holding: Annual rates of return on key balance-sheet items
 (%)                                            2007     2008       2009    2010F    2011F       2012F
 Loans                                            84       91         21       21       10          11
 Total assets                                     63       63         15       19       11          11
 Deposits                                         58       93         41       23       12          11
 Equity                                           51       16          7       11       12          15
Source: Getin Holding, BRE Bank Securities


Getin Holding: Key Balance-Sheet Ratios
 (%)                                            2007      2008      2009    2010F    2011F       2012F
 NPL ratio                                        5.7      4.5        7.7     11.3     12.5        12.9
 NPL coverage ratio                              89.5     88.4       76.5     72.0     78.0        83.0
 Loans / Assets                                  60.2     70.5       74.2     75.7     74.7        74.4
 Deposits / Assets                               54.8     64.6       79.4     82.3     82.6        82.2
 Loans / Deposits                               110.0    109.1       93.4     91.9     90.4        90.5
 Equity / Assets                                 16.3     11.6       10.8     10.1     10.1        10.5
 CAR                                             12.1     12.2       11.1     10.2     10.7        11.3
 Tier 1 ratio                                    12.1     12.2       11.1     10.2     10.7        11.3
Source: Getin Holding, BRE Bank Securities




15 September 2010                                                                                         30
                                                                                                                                                                      Bank Handlowy
            BRE Bank Securities
                                                                                                                                                      BRE Bank Securities
15 September 2010                                                         Update


                          Banks
                          Poland                                          Handlowy Accumulate
                                                                          BAHA.WA; BHW.PW                                                                          (Downgraded)

Current price                                   PLN 80.25
Target price                                    PLN 87.00                 Greatest Drop in Provisions
Market cap                                      PLN 10.5bn      Although we are lowering our rating for Bank Handlowy to
                                                                Accumulate, we are reiterating our relatively positive outlook on the
Free float                                      PLN 2.6bn       stock, and we are setting a 9M price target of PLN 87.0 per share (vs.
Avg daily trading volume (3M)                   PLN 8.4m        PLN 87.1 per share previously). In our opinion, Handlowy may be one
                                                                of the first banks in Poland to see a surge in the quality of its loan
                                                                portfolio and a reduction in provisions, which the current consensus
Shareholder Structure                                           forecast and market price seem not to have discounted yet. The Bank
Citigroup                                                 75.0% is trading at an FY10 P/E of 14.6 and an FY11 P/E of 11.8, i.e. with a
                                                                15-16% discount to peer average. In addition, the stock offers a high
Others                                                    25.0% dividend yield (4.8%).

Company Profile                                                           Expected Pressure on Margins, Flat Interest Income in 2011
Handlowy is Poland's eight biggest bank with a 3.5%                       We expect that following an improvement in interest margin to 3.9% in
share of assets. It focuses on big, international                         2010, it will fall by 10bps y/y in 2011. Although we expect the deposit
corporations, which is reflected by the fact that both                    margin on current deposits to improve as market interest rates go up, we
deposits and loans are dominated by the corporate                         also expect that the pressure on margins on the asset side will prevail. In
segment. In retail, the Bank focuses on cards and
                                                                          our opinion, the Bank will not only see a considerable pressure on its loan
services for wealthy individuals. With a capital
adequacy ratio above 17%, its capital base is among                       margins (given the 52% share of corporate loans in its portfolio, which is
the strongest for Polish listed banks. Its target for 2012                11bps higher than the peer average), but also a considerable drop in the
is a ROE above 18%, a ROA of no less than 2.5% and                        margin earned on its portfolio of debt securities. Our conservative
a cost/income ratio below 50%.                                            assumptions entail an FY 2011 interest income which is flat year-on-year,

                                                                          Considerable Improvement in Asset Quality
                                                                          After the share of impaired loans increased by 444bps y/y in 2009 and the
                                                                          Bank wrote off 4% of its loans, Handlowy seems to have the greatest
                                                                          potential as far as the 2011-2012 declines in impaired loans and costs of
                                                                          risk are concerned. This follows from our assumption that the quality of
                                                                          corporate loans will increase the fastest, followed by consumer loans. We
                                                                          expect the costs of risk to fall from 229bps to 55bps in 2012.

Important dates                                                           Our Forecast is 9-16% Ahead of Consensus
09.11: Q3’10 report                                                       Despite our conservative assumptions as far as interest margin is
                                                                          concerned, our profit forecasts for 2010-2012 exceed market consensus by
                                                                          9-16%. In our opinion, the market fails to fully price in the upside potential
                                                                          for loan quality and the ensuing decline in the costs of risk.
Handlowy vs. WIG
 82
PLN

 77


                                                                         (PLN m)                                     2008            2009          2010F           2011F           2012F
 72
                                                                         Interest income                            1 366           1 505           1 504           1 551           1 715
                                                                         Income f. banking oper.                    2 313           2 418           2 542           2 672           2 888
 67                                                                      Operating income*                            910           1 201           1 174           1 257           1 407
                                                                         Net income                                   600             504             716             890           1 065
 62                                                                      Interest margin (%)                         3.35            3.75            3.88            3.77            3.93
                                        Handlowy         WIG             Costs / Income (%)                          62.2            53.5            54.2            53.6            51.9
 57                                                                      ROE (%)                                     10.7             8.5            11.3            13.3            15.0
09-09-11            10-01-04            10-04-29           10-08-22      EPS (PLN)                                   4.60            3.86            5.48            6.81            8.15
                                                                         BVPS (PLN)                                 43.06           47.45           49.74           52.71           56.10
Iza Rokicka                                                              DPS (PLN)**                                 0.00            3.77            3.83            4.77            5.71
(48 22) 697 47 37                                                        P/E (x)                                     17.5            20.8            14.6            11.8             9.8
Iza.Rokicka@dibre.com.pl                                                 P/BV (x)                                    1.86            1.69            1.61            1.52            1.43
www.dibre.com.pl                                                         Dividend yield (%)                           0.0             4.7             4.8             5.9             7.1
                                                                          * before provisions; **dividends for the year, paid out the next year
19 Bank Securities
BREMarch 2010 does not rule out offering brokerage services to an issuer of securities being the subject of a recommendation. Information concerning a conflict of interest arising in
connection with issuing a recommendation (should such a conflict exist) is located on the final page of this report.
                      BRE Bank Securities                                                                                                                  Handlowy
                        BRE Bank Securities


Handlowy: Residual Income Valuation
 (PLN m)                                   2010F        2011F        2012F       2013F       2014F          2015F    2016F      2017F    2018F    2019F         +        FV
 Net income                                      716          890    1 065        1 133      1 200          1 265     1 328     1 390    1 450     1 508
   Y/Y change (%)                               41.9         24.3     19.7          6.4        5.8            5.4       5.0       4.6      4.3       4.0       4.0
 Equity                                        6 499        6 887    7 330        7 718      8 118          8 532     8 957     9 392    9 836    10 288
 Dividend payout ratio (%)                      70.0         70.0     70.0         70.5       70.9           71.4      71.9      72.4     72.8      73.3      73.3


 ROE (%)                                        11.3         13.3        15.0         15.1    15.1            15.2     15.2      15.1      15.1     15.0      15.0
 COE (%)                                        10.5         10.5        10.5         10.5    10.5            10.5     10.5      10.5      10.5     10.5      10.5

 Excess return (%)                               0.8         2.8         4.5          4.6      4.7            4.7      4.7        4.7      4.6      4.5        4.5
 Residual income                                  50         187         319          344      369            391      411        427      441      452      6 957

 Discount factor                                0.97         0.88        0.79         0.72    0.65            0.59     0.53      0.48      0.44     0.39      0.39
 PV of residual income                            48          164         253          247     239             230      218       205       192      178     2 741


 Equity as at 31 December 2009                                                                                                                                        6 199
 2010 dividend                                                                                                                                                         -493
 YTD excess of comprehensive income over net income                                                                                                                      76
 PV of residual income (2010F-2012F)                                                                                                                                    465
 PV of residual income (2013F-2019F)                                                                                                                                  1 510
 PV of terminal value                                                                                                                                                 2 741
 Fair value                                                                                                                                                          10 499
 Number of shares (millions)                                                                                                                                          130.7
 Fair value per share (PLN)                                                                                                                                            80.4
 Target price (9M) (PLN)                                                                                                                                               87,0

 Current price (PLN)                                                                                                                                                  80.25
 Upside potential (%)                                                                                                                                                   8.4
Source: Handlowy, BRE Bank Securities



Handlowy: Sensitivity Analysis
                                         Sustainable ROE                                                                                    Cost of Equity
                             -2.0ppt -1.0ppt          - +1.0ppt +2.0ppt                                                       +2.0ppt   +1.0ppt        - -1.0ppt     -2.0ppt
                              13.0% 14.0%        15.0% 16.0% 17.0%                                                             12.5%     11.5%    10.5%    9.5%        8.5%
              -2.0ppt 2.0%        73     77            81           85          89                         -2.0ppt   2.0%         62        70       81        93       110
  LT growth




                                                                                               LT growth




              -1.0ppt 3.0%        74     79            83           88          92                         -1.0ppt   3.0%         63        72       83        98       118
                   - 4.0%         76     81            87           92          97                               -   4.0%         64        74       87       104       129
              +1.0ppt 5.0%        78     85            91           98          104                        +1.0ppt   5.0%         65        76       91       113       146
              +2.0ppt 6.0%        82     90            98       106             114                        +2.0ppt   6.0%         67        80       98       127       178
Source: BRE Bank Securities




              15 September 2010                                                                                                                                         32
          BRE Bank Securities                                                              Handlowy
            BRE Bank Securities


Handlowy: Income Statement
 (PLN m)                                       2007     2008     2009    2010F    2011F        2012F
 Net interest income                          1 204    1 366    1 505     1 504    1 551        1 715
 Fee income                                     737      619      556      636      700          733
 Trading income                                 506      328      357      402      421          440
 Revenue from banking operations              2 447    2 313    2 418    2 542    2 672        2 888
 Other net operating income                      66       93      161       19       37           38
 Non-interest income                          1 308    1 040    1 074    1 058    1 158        1 211
 Total income                                 2 513    2 405    2 580    2 561    2 709        2 926
 Payroll expenses                               -704     -697     -646     -673     -709         -748
 D&A expenses                                   -109      -97      -79      -65      -67          -69
 Other administrative expenses                  -709     -702     -654     -649     -675         -702
 Total costs                                  -1 523   -1 496   -1 379   -1 387   -1 451       -1 519
 Pre-provision income                            990      910    1 201    1 174    1 257        1 407
 Provisions                                       53     -153     -546     -268     -145          -75
 Share in results of subsidiaries                 -9        3        0        0        0            0
 Pre-tax income                                1 034      759      655      906    1 112        1 331
 Tax                                            -210     -159     -151     -190     -222         -266
 Minority interests                                0        0        0        0        0            0
 Net income                                      824      600      504      716      890        1 065
 Retained earnings                               204      600       12      215      267          319
Source: Handlowy, BRE Bank Securities


Handlowy: Annual rates of return on key income lines
 (%)                                           2007     2008     2009    2010F    2011F        2012F
 Net interest income                             17       13       10         0       3           11
 Non-interest income                              2      -21        3        -2       9            5
 Total income                                     9       -4        7        -1       6            8
 Total costs                                      1       -2       -8         1       5            5
 Pre-provision income                            24       -8       32        -2       7           12
 Net income                                      25      -27      -16       42       24           20
Source: Handlowy, BRE Bank Securities


Handlowy: Key P&L Ratios
 (%)                                           2007     2008     2009    2010F    2011F        2012F
 NIM (total assets)                             3.22    3.35     3.75      3.88     3.77         3.93
 NIM (interest-earnings assets)                 3.49    3.60     4.05      4.21     4.08         4.24
 Spread                                         2.77    2.63     3.45      3.75     3.54         3.58
 Non-interest income / Total income             52.1    43.2     41.6      41.3     42.7         41.4
 Costs / Income                                 60.6    62.2     53.5      54.2     53.6         51.9
 Costs / Assets                                 4.07    3.67     3.44      3.58     3.53         3.48
 Cost of risk                                  -0.46    1.16     4.22      2.29     1.20         0.55
 Effective tax rate                             20.3    20.9     23.0      21.0     20.0         20.0
 ROE                                            15.0    10.7      8.5      11.3     13.3         15.0
 ROA                                            2.20    1.47     1.26      1.84     2.16         2.44
Source: Handlowy, BRE Bank Securities




15 September 2010                                                                                       33
          BRE Bank Securities                                                              Handlowy
            BRE Bank Securities


Handlowy: Balance Sheet
 (PLN m)                                       2007      2008     2009   2010F    2011F       2012F
 Cash and central bank balances               3 322     3 531    4 113    1 040      760         460
 Financial-sector receivables                 8 719     3 696    4 803    3 878    5 084       6 368
 Loans                                       12 487    13 886   11 975   11 458   12 743      14 495
 Debt securities                             11 603    18 700   13 687   20 531   20 531      20 531
 Shares                                          80        68       81       81       81          81
 Fixed assets                                   613       572      505      480      494         509
 Intangible assets                               38        37       37       33       31          32
 Other assets                                 2 047     2 061    2 432    2 479    2 532       2 566
 Total assets                                38 908    42 550   37 633   39 981   42 257      45 043

 Financial-sector payables                    7 085     7 922    5 716    6 001    6 302       6 617
 Deposits                                    19 811    19 935   20 572   20 803   21 726      23 022
 Securities outstanding                           0         0        0        0        0           0
 Subordinated loans                               0         0        0        0        0           0
 Other                                        6 408     9 067    5 146    6 677    7 343       8 074
 Total liabilities                           33 305    36 925   31 434   33 482   35 370      37 713

 Equity                                       5 603     5 626    6 199    6 499    6 887       7 330
 Total liabilities & equity                  38 908    42 550   37 633   39 981   42 257      45 043
Source: Handlowy, BRE Bank Securities


Handlowy: Annual rates of return on key balance-sheet items
 (%)                                           2007     2008     2009    2010F    2011F        2012F
 Loans                                           22       11      -14        -4      11           14
 Total assets                                     8        9      -12         6       6            7
 Deposits                                         5        1        3         1       4            6
 Equity                                           3        0       10         5       6            6
Source: Handlowy, BRE Bank Securities


Handlowy: Key Balance-Sheet Ratios
 (%)                                           2007      2008    2009    2010F    2011F        2012F
 NPL ratio                                      12.3     12.2     16.7     18.4     17.4        15.3
 NPL coverage ratio                             80.5     74.3     64.4     65.5     68.5        72.0
 Loans / Assets                                 32.1     32.6     31.8     28.7     30.2        32.2
 Deposits / Assets                              50.9     46.9     54.7     52.0     51.4        51.1
 Loans / Deposits                               63.0     69.7     58.2     55.1     58.7        63.0
 Equity / Assets                                14.4     13.2     16.5     16.3     16.3        16.3
 CAR                                            12.9     12.1     16.7     15.8     15.5        15.2
 Tier 1 ratio                                   12.9     12.1     16.7     15.8     15.5        15.2
Source: Handlowy, BRE Bank Securities




15 September 2010                                                                                      34
                                                                                                                                                                             ING BSK
            BRE Bank Securities
                                                                                                                                                    BRE Bank Securities
15 September 2010                                                        Update


                          Banks
                          Poland                                         ING BSK                                                                                       Hold
                                                                         SLAS.WA; BSK.PW                                                                              (Resumed)

Current price                                     PLN 800.00
Target price                                      PLN 815.00             Cheapest Bank, and for a Reason
Market cap                                            PLN 10.4bn
                                                                 We are resuming coverage of ING BSK with a Hold rating and a 9-
Free float                                              PLN 2.6bn
                                                                 month price target of PLN 815.0 per share. Although the Bank is
Avg daily trading volume (3M)                           PLN 5.7m trading at a discount to peers on P/E, the discount shrinks from 22%
                                                                 for 2010 to 12% for 2011. We expect the Bank to show the slowest
                                                                 profit growth in 2011-2012, as it has relatively little room to reduce its
Shareholder Structure
                                                                 loan-loss provisions. In addition, in our forecasts we take into
ING BANK N.V.                                              75.0% consideration the fact that in an environment of rising interest rates
                                                                 the Bank's bond portfolio will keep the growth of its deposit margin
Others                                                     25.0%
                                                                 below market average, Therefore, in our opinion the current price of
Company Profile                                                  the stock is close to its fair value.
ING Bank Śląski is Poland’s fifth biggest bank asset-
wise, with a ca. 5.5% market share. The Bank has a                       Margin Will Not Increase as Fast in 2011 as in 2010
broad product range directed to both retail and                          In our opinion, the Bank's interest margin will not improve as fast in 2011 as
corporate clients. It has the lowest loans/deposits ratio                it has this year. While we expect ING to continue increasing its loans/
among listed banks (under 70%). Surplus liquidity is                     deposits ratio, as a result of which the share of loans in its assets will be
located in debt securities, primarily treasury bonds. In                 increasing at the expense of debt securities, we also expect a pressure on
deposits, retail savings predominate, in loans,                          corporate loan margins, which will reduce the margin on interest—bearing
corporate loans, although the Bank is gradually
                                                                         assets. On the other hand, even though we expect the deposit margin to
increasing its market shares in retail loans.
                                                                         improve, the upside potential here is below market average, due to the way
                                                                         the Bank invests its surplus liquidity. In an environment of rising interest
                                                                         rates, ING's deposit margin is increasing with a delay of one or two quarters
                                                                         vs. its peers, and this growth is more limited in scale.
                                                                         Loan Portfolio Quality Will Remain High
                                                                         We believe ING BSK will keep the quality of its loan portfolio high, and its
                                                                         costs of risk will remain below the industry’s average. Unfortunately, this
                                                                         means that the improvement in the costs of risk will be below sector
                                                                         average: by 21bps between 2010 and 2012 (from 56bps to 35bps),
                                                                         compared to an average decline by 64bps in the industry.
Important dates
                                                                         Below-Average Profit Growth
10.11: Q3 2010 report
16.02: Q4’10 report                                                      We expect that the below-average improvement in provisions will result in
31.03: FY 2010 report                                                    below-average earnings growth. The bottom line will improve by 10% y/y in
                                                                         2011, reaching PLN 847m, and by 13% y/y in 2012, reaching PLN 957m.

ING BSK vs. WIG
830
PLN

778

                                                                        (PLN m)                                     2008            2009          2010F           2011F          2012F
726                                                                     Interest income                            1 253           1 417           1 607           1 676          1 756
                                                                        Income f. banking oper.                    2 060           2 488           2 652           2 770          2 896
674                                                                     Operating income*                            580             991           1 096           1 186          1 290
                                                                        Net income                                   445             595             770             847            957
622                                                                     Interest margin (%)                         2.06           2.19            2.66            2.71            2.74
                                        ING BSK          WIG            Costs / Income (%)                          72.2           60.0            59.1            57.6            55.9
                                                                        ROE (%)                                     11.1           13.1            14.6            14.2            14.5
570
 09-09-11           10-01-04           10-04-29            10-08-22     EPS (PLN)                                  34.24          45.74           59.17           65.13           73.57
                                                                        BVPS (PLN)                                324.53         375.43          436.65          481.08          531.85
Iza Rokicka                                                             DPS (PLN)**                                 0.00           0.00           20.71           22.80           25.75
(48 22) 697 47 37                                                       P/E (x)                                     23.4           17.5            13.5            12.3            10.9
Iza.Rokicka@dibre.com.pl                                                P/BV (x)                                    2.47           2.13            1.83            1.66            1.50
www.dibre.com.pl                                                        Dividend yield (%)                           0.0            0.0             2.6             2.8             3.2
                                                                          * before provisions; **dividends for the year, paid out the next year
19 Bank Securities does
BREFebruary 2010 not rule out offering brokerage services to an issuer of securities being the subject of a recommendation. Information concerning a conflict of interest arising in
connection with issuing a recommendation (should such a conflict exist) is located on the final page of this report.
                      BRE Bank Securities                                                                                                           ING BSK
                        BRE Bank Securities


ING BSK: Residual Income Valuation
 (PLN m)                                   2010F      2011F    2012F      2013F       2014F          2015F    2016F     2017F    2018F     2019F         +        FV
 Net income                                   770        847      957      1 069       1 184          1 299    1 412     1 521    1 623     1 688
   Y/Y change (%)                            29.4       10.1     13.0       11.7        10.7            9.7      8.7       7.7      6.7       4.0       4.0
 Equity                                     5 681      6 259    6 919      7 654       8 406          9 164    9 912    10 637   11 320    11 919
 Dividend payout ratio (%)                   35.0       35.0     35.0       40.4        45.7           51.1     56.4      61.8     67.1      72.5      72.5


 ROE (%)                                       14.6     14.2      14.5         14.7    14.7            14.8     14.8      14.8      14.8     14.5      14.5
 COE (%)                                       10.5     10.5      10.5         10.5    10.5            10.5     10.5      10.5      10.5     10.5      10.5

 Excess return (%)                             4.1      3.7       4.0          4.2      4.2            4.3      4.3        4.3      4.3      4.0        4.0
 Residual income                               215      221       266          305      341            377      411        443      471      469      7 217

 Discount factor                               0.97     0.88      0.79         0.72    0.65            0.59     0.53      0.48      0.44     0.39      0.39
 PV of residual income                          208      193       211          218     221             221      218       213       205      185     2 844


 Equity as at 31 December 2009                                                                                                                                 4 884
 2010 dividend                                                                                                                                                     0
 YTD excess of comprehensive income over net income                                                                                                               27
 PV of residual income (2010F-2012F)                                                                                                                             612
 PV of residual income (2013F-2019F)                                                                                                                           1 482
 PV of terminal value                                                                                                                                          2 844
 Fair value                                                                                                                                                    9 850
 Number of shares (millions)                                                                                                                                    13.0
 Fair value per share (PLN)                                                                                                                                      757
 Target price (9M) (PLN)                                                                                                                                         815

 Current price (PLN)                                                                                                                                          800.00
 Upside potential (%)                                                                                                                                            1.9
Source: ING BSK, BRE Bank Securities



ING BSK: Sensitivity Analysis
                                         Sustainable ROE                                                                             Cost of Equity
                             -2.0ppt -1.0ppt         - +1.0ppt +2.0ppt                                                 +2.0ppt   +1.0ppt        - -1.0ppt     -2.0ppt
                              12.5% 13.5%       14.5% 15.5% 16.5%                                                       12.5%     11.5%    10.5%    9.5%        8.5%
              -2.0ppt 2.0%        660   710       755      800           850                        -2.0ppt   2.0%        560       645      755       890     1 075
  LT growth




                                                                                        LT growth




              -1.0ppt 3.0%        675   725       780      835           890                        -1.0ppt   3.0%        565       660      780       940     1 155
                   - 4.0%         690   755       815      880           940                              -   4.0%        575       680      815      1 005    1 275
              +1.0ppt 5.0%        715   790       865      940      1 015                           +1.0ppt   5.0%        585       705      865      1 095    1 460
              +2.0ppt 6.0%        750   845       935     1 025     1 115                           +2.0ppt   6.0%        600       735      935      1 245    1 800
Source: BRE Bank Securities




              15 September 2010                                                                                                                                  36
          BRE Bank Securities                                                              ING BSK
            BRE Bank Securities


ING BSK: Income Statement
 (PLN m)                                       2007     2008     2009    2010F    2011F       2012F
 Net interest income                          1 048    1 253    1 417     1 607    1 676       1 756
 Fee income                                     899      890      964      973    1 018       1 061
 Trading income                                  62      -82      107       72       76          79
 Revenue from banking operations              2 009    2 060    2 488    2 652    2 770       2 896
 Other net operating income                      12       27      -10       26       28          29
 Non-interest income                            973      835    1 062    1 071    1 121       1 170
 Total income                                 2 021    2 087    2 478    2 679    2 798       2 926
 Payroll expenses                               -700     -783     -717     -750     -774        -791
 D&A expenses                                   -155     -134     -124     -119     -123        -126
 Other administrative expenses                  -525     -591     -647     -714     -716        -719
 Total costs                                  -1 381   -1 507   -1 488   -1 583   -1 612      -1 636
 Pre-provision income                            640      580      991    1 096    1 186       1 290
 Provisions                                      103      -66     -304     -179     -173        -142
 Share in results of subsidiaries                 44       48       52       39       46          49
 Pre-tax income                                  787      563      738      956    1 059       1 196
 Tax                                            -150     -118     -143     -186     -212        -239
 Minority interests                               -6        0        0        0        0           0
 Net income                                      631      445      595      770      847         957
 Retained earnings                               479      445      595      500      551         622
Source: ING BSK, BRE Bank Securities


ING BSK: Annual rates of return on key income lines
 (%)                                           2007     2008     2009    2010F    2011F       2012F
 Net interest income                             12       20       13       13        4           5
 Non-interest income                             17      -14       27        1        5           4
 Total income                                    14        3       19        8        4           5
 Total costs                                     13        9       -1        6        2           1
 Pre-provision income                            17       -9       71       11        8           9
 Net income                                       7      -29       34       29       10          13
Source: ING BSK, BRE Bank Securities


ING BSK: Key P&L Ratios
 (%)                                           2007     2008     2009    2010F    2011F       2012F
 NIM (total assets)                             2.09    2.06     2.19      2.66     2.71        2.74
 NIM (interest-earnings assets)                 2.14    2.11     2.24      2.73     2.78        2.81
 Spread                                         1.93    1.87     2.05      2.52     2.52        2.49
 Non-interest income / Total income             48.1    40.0     42.8      40.0     40.1        40.0
 Costs / Income                                 68.3    72.2     60.0      59.1     57.6        55.9
 Costs / Assets                                 2.75    2.48     2.30      2.62     2.61        2.55
 Cost of risk                                  -0.70    0.31     1.08      0.56     0.49        0.35
 Effective tax rate                             19.1    20.9     19.4      19.5     20.0        20.0
 ROE                                            16.6    11.1     13.1      14.6     14.2        14.5
 ROA                                            1.26    0.73     0.92      1.27     1.37        1.49
Source: ING BSK, BRE Bank Securities




15 September 2010                                                                                      37
          BRE Bank Securities                                                              ING BSK
            BRE Bank Securities


ING BSK: Balance Sheet
 (PLN m)                                       2007      2008     2009   2010F    2011F      2012F
 Cash and central bank balances               1 842     1 370    2 657    1 394    1 187        987
 Financial-sector receivables                15 184     7 787    1 184    1 819    1 846      1 921
 Loans                                       16 379    25 743   30 593   33 245   37 669     42 934
 Debt securities                             17 296    33 180   24 001   23 000   20 500     18 000
 Shares                                          97       107      116      139      143        147
 Fixed assets                                   533       544      549      549      560        571
 Intangible assets                               95        92      104      107      110        112
 Other assets                                   585       787      681      700      712        724
 Total assets                                52 011    69 610   59 883   60 952   62 725     65 396

 Financial-sector payables                    1 810    11 993    3 974    4 172    4 256      4 256
 Deposits                                    44 502    47 067   47 585   46 457   47 461     49 360
 Securities outstanding                       1 215     5 147    2 192    3 069    3 130      3 193
 Subordinated loans                               0         0        0        0        0          0
 Other                                          645     1 182    1 249    1 573    1 620      1 668
 Total liabilities                           48 172    65 388   54 999   55 271   56 466     58 477

 Equity                                       3 839     4 222    4 884    5 681    6 259      6 919
 Total liabilities & equity                  52 011    69 610   59 883   60 952   62 725     65 396
Source: ING BSK, BRE Bank Securities


ING BSK: Annual rates of return on key balance-sheet items
 (%)                                           2007     2008     2009    2010F    2011F       2012F
 Loans                                           26       57       19         9      13          14
 Total assets                                     7       34      -14         2       3           4
 Deposits                                        15        6        1        -2       2           4
 Equity                                           2       10       16       16       10          11
Source: ING BSK, BRE Bank Securities


ING BSK: Key Balance-Sheet Ratios
 (%)                                           2007      2008    2009    2010F    2011F       2012F
 NPL ratio                                       3.0      1.9      3.7      4.2      4.0        3.5
 NPL coverage ratio                            110.5    100.0     75.7     75.0     79.0       90.0
 Loans / Assets                                 31.5     37.0     51.1     54.5     60.1       65.7
 Deposits / Assets                              85.6     67.6     79.5     76.2     75.7       75.5
 Loans / Deposits                               36.8     54.7     64.3     71.6     79.4       87.0
 Equity / Assets                                 7.4      6.1      8.2      9.3     10.0       10.6
 CAR                                            13.1     10.4     12.0     11.5     11.7       11.8
 Tier 1 ratio                                   13.1     10.4     12.0     11.5     11.7       11.8
Source: ING BSK, BRE Bank Securities




15 September 2010                                                                                     38
                                                                                                                                                                        Kredyt Bank
            BRE Bank Securities
                                                                                                                                                    BRE Bank Securities
15 September 2010                                                        Update


                          Banks
                          Poland                                         Kredyt Bank                                                                                   Hold
                                                                         BKRE.WA; KRB.PW                                                                             (Reiterated)

Current price                                  PLN 15.49
Target price                                   PLN 15.20                 Profits Still Out Of Steam
Market cap                                     PLN 4.2bn
                                                              We are reiterating a hold rating on Kredyt Bank, while reducing our
Free float                                     PLN 0.5bn
                                                              price target by 1% to PLN 15.20. In spite of successful cost-cutting
Avg daily trading volume (3M)                  PLN 1.3m       measures which brought the cost/income ratio down to 57.3% in
                                                              H1 2010 from 67.5% in 2008, the bank’s income growth has failed to
                                                              gather momentum. Fee income, which was expected to become the
Shareholder Structure
                                                              main profit driver, has been a particular disappointment. KRB is
KBC Bank                                                80.0% trading on a FY2010E P/E of 21.2x (29% over sector average), which
Pioneer                                                  7.4%
                                                              drops to 13.4x (3% below average) based on projected 2011 earnings.
KBC Securities                                                   4.3%
KBC Insurance                                                    2.9%
                                                                         Interest margins set to shrink in 2011
                                                                         We expect a downturn in KRB’s margins in 2011, followed by a stabilization
Others                                                           5.4%
                                                                         at 2.6-2.7% in 2012. Any improvement in deposit margins fueled by market
                                                                         rate hikes will be more than offset by downward pressure on credit margins.
Company profile                                                          In Kredyt Bank’s case, the pressure comes not only from new, relatively
Kredyt Bank is the number-seven bank in Poland with
                                                                         less profitable sales, but also from the continuing expiration of the high-
a market share of ca. 3.5%. Its asset base is made up                    margin loan portfolio of ex-subsidiary śagiel (we expect this portfolio to stop
primarily of retail loans and deposits, with mortgage                    contributing to KRB’s interest income around Q2-Q3 2011).
loans (of which 70% are foreign-currency loans)
accounting for over one half of the loan portfolio.                      Risky mortgage portfolio
Toward the end of 2008, the bank launched a cost-                        By writing down 12.7% of its net consumer loans (representing 77% of the
cutting exercise which has resulted in a reduction in                    annual loan-loss reserves) in 2009, KRB minimized the risks entailed in the
the cost/income ratio below 60%. Other recent                            consumer business, and this is expected to contribute to a reduction in 2010
developments included the divestment of the                              costs of risk by 140 bps to 164 bps. However, the bank’s exposure to bad
consumer-finance operation śagiel. Kredyt Bank relies                    mortgage debt remains considerable, which stems from the fact that its
on the support of its owner KBC, which provides it with
                                                                         average share in the market for mortgage loans in the years 2007-2008 was
access to subordinated debt as well as credit lines.
                                                                         2.6 times its “natural” level. Since the loans extended during those years are
                                                                         deteriorating at the fastest rate, Kredyt Bank may incur higher-than-average
                                                                         costs of risk in its mortgage business going forward.
Important dates
10.11 - Q3 2010 report                                                   Earnings outlook
10.02 - Q4 2010 report                                                   We expect Kredyt Bank to generate a net income of PLN 199m in 2010,
25.02 - FY2010 report                                                    PLN 314m in 2011 (a 58% y/y increase), and PLN 440m in 2012 (+40%
                                                                         y/y). Note that our FY2010 and FY2012 forecasts are 14% and 27% higher
                                                                         than the respective consensus estimates, and the FY2011 bottom-line
                                                                         estimate is 4% lower than the forecast average.
Kredyt Bank vs. WIG
 16
PLN

 15
                                                                        (PLN m)                                     2008            2009          2010F          2011F           2012F
                                                                        Interest income                            1 060           1 061           1 121          1 196           1 258
 14
                                                                        Income f/banking oper.                     1 586           1 530           1 572          1 670           1 761
                                                                        Operating income*                            531             848             690            744             784
 13                                                                     Net income                                   325              35             199            314             440
                                                                        Interest margin (%)                          3.22           2.73            2.71           2.66            2.64
 12                                                                     Costs / Income (%)                           67.5           54.7            57.3           56.5            56.5
                                       Kredyt Bank        WIG           ROE (%)                                      13.2            1.3             7.3           10.4            13.0
 11                                                                     EPS (PLN)                                    1.20           0.13            0.73           1.16            1.62
09-09-11            10-01-04           10-04-29            10-08-22     BVPS (PLN)                                   9.74           9.53           10.50          11.66           13.28
                                                                        DPS (PLN)                                    0.00           0.00            0.00           0.00            0.00
                                                                        P/E (x)                                      13.0          121.8            21.2           13.4             9.6
Iza Rokicka
                                                                        P/BV (x)                                     1.59           1.63            1.48           1.33            1.17
(48 22) 697 47 37
                                                                        Dividend yield (%)                            0.0            0.0             0.0            0.0             0.0
iza.rokicka@dibre.com.pl
www.dibre.com.pl                                                          *before provisions **dividends on the profits from the given year, paid out the following year


12 Bank Securities does
BREFebruary 2010 not rule out offering brokerage services to an issuer of securities being the subject of a recommendation. Information concerning a conflict of interest arising in
connection with issuing a recommendation (should such a conflict exist) is located on the final page of this report.
                      BRE Bank Securities                                                                                                      Kredyt Bank
                        BRE Bank Securities


Kredyt Bank: Residual Income Valuation
 (PLN m)                                    2010F      2011F    2012F     2013F     2014F          2015F    2016F      2017F     2018F    2019F         +        FV
 Net income                                    199        314      440       519       598            675      748        814       870      905
   Y/Y change (%)                            475.4       57.9     40.2      17.8      15.3           12.8     10.8        8.8       6.8      4.0       4.0
 Equity                                      2 853      3 167    3 607     4 126     4 673          5 230    5 778      6 296     6 763    7 151
 Dividend payout ratio (%)                     0.0        0.0      0.0       9.9      19.8           29.7     39.6       49.5      59.3     69.2      69.2


 ROE (%)                                        7.3      10.4      13.0      13.4    13.6            13.6     13.6      13.5       13.3    13.0       13.0
 COE (%)                                       11.0      11.0      11.0      11.0    11.0            11.0     11.0      11.0       11.0    11.0       11.0

 Excess return (%)                              -3.7     -0.6       2.0       2.4     2.6            2.6      2.6        2.5       2.3      2.0        2.0
 Residual income                               -100       -17        68        94     115            131      143        151       152      140      2 001

 Discount factor                               0.97      0.87      0.78      0.71    0.64            0.57     0.52      0.47       0.42    0.38       0.38
 PV of residual income                          -97       -15        53        66      73              75       74        70         64      53        756


 Equity as at 31 December 2009                                                                                                                                2 589
 2010 dividend                                                                                                                                                    0
 YTD excess of comprehensive income over net income                                                                                                              65
 PV of residual income (2010F-2012F)                                                                                                                            -58
 PV of residual income (2013F-2019F)                                                                                                                            475
 PV of terminal value                                                                                                                                           756
 Fair value                                                                                                                                                   3 827
 Number of shares (millions)                                                                                                                                  271.7
 Fair value per share (PLN)                                                                                                                                    14.1
 Target price (9M) (PLN)                                                                                                                                       15,2

 Current price (PLN)                                                                                                                                          15.49
 Upside potential (%)                                                                                                                                          -1.9
Source: Kredyt Bank, BRE Bank Securities



Kredyt Bank: Sensitivity Analysis
                                           Sustainable ROE                                                                          Cost of Equity
                             -2.0ppt -1.0ppt         - +1.0ppt +2.0ppt                                               +2.0ppt    +1.0ppt        - -1.0ppt     -2.0ppt
                              11.0% 12.0%       13.0% 14.0% 15.0%                                                     13.0%      12.0%    11.0% 10.0%          9.0%
              -2.0ppt 2.0%     12.1    13.3       14.5      15.8      17.0                        -2.0ppt   2.0%       10.3       12.2     14.5      17.5      21.4
  LT growth




                                                                                      LT growth




              -1.0ppt 3.0%     12.0    13.4       14.8      16.2      17.6                        -1.0ppt   3.0%       10.2       12.3     14.8      18.2      22.7
                   - 4.0%      12.0    13.6       15.2      16.8      18.4                              -   4.0%       10.2       12.4     15.2      19.1      24.5
              +1.0ppt 5.0%     12.0    13.9       15.8      17.7      19.6                        +1.0ppt   5.0%       10.1       12.5     15.8      20.3      27.2
              +2.0ppt 6.0%     11.9    14.3       16.6      18.8      21.1                        +2.0ppt   6.0%       10.1       12.8     16.6      22.2      31.7
Source: BRE Bank Securities




              15 September 2010                                                                                                                                 40
          BRE Bank Securities                                                             Kredyt Bank
            BRE Bank Securities


Kredyt Bank: Income Statement
 (PLN m)                                       2007        2008     2009    2010F    2011F      2012F
 Net interest income                            871       1 060    1 061     1 121    1 196      1 258
 Fee income                                      310        293      304      322      340         363
 Trading income                                  181        233      165      129      133         139
 Revenue from banking operations               1 362      1 586    1 530    1 572    1 670       1 761
 Other net operating income                       28         50      341       44       42          41
 Non-interest income                             519        576      810      495      515         543
 Total income                                  1 390      1 636    1 871    1 615    1 712       1 802
 Payroll expenses                               -490        -536     -454    -413     -436        -461
 D&A expenses                                   -111        -104     -115    -103     -106        -109
 Other administrative expenses                  -374        -465     -455    -410     -426        -447
 Total costs                                    -975      -1 105   -1 023    -926     -968      -1 018
 Pre-provision income                            415         531      848     690      744         784
 Provisions                                       85        -108     -803    -437     -354        -236
 Share in results of subsidiaries                  2          -2        2       2        2           3
 Pre-tax income                                  502         421       47     255      393         551
 Tax                                            -111         -96      -12     -56      -79        -110
 Minority interests                                0           0        0       0        0           0
 Net income                                      391         325       35     199      314         440
 Retained earnings                               249         325       35     199      314         440
Source: Kredyt Bank, BRE Bank Securities


Kredyt Bank: Annual rates of return on key income lines
 (%)                                           2007        2008     2009    2010F    2011F      2012F
 Net interest income                             12          22        0         6       7          5
 Non-interest income                             18          11       41       -39       4          5
 Total income                                    14          18       14       -14       6          5
 Total costs                                      5          13       -7       -10       5          5
 Pre-provision income                            43          28       60       -19       8          5
 Net income                                     -17         -17      -89      475       58         40
Source: Kredyt Bank, BRE Bank Securities


Kredyt Bank: Key P&L Ratios
 (%)                                           2007        2008     2009    2010F    2011F      2012F
 NIM (total assets)                             3.53       3.22     2.73      2.71     2.66       2.64
 NIM (interest-earnings assets)                 3.68       3.32     2.80      2.77     2.72       2.69
 Spread                                         3.38       2.90     2.50      2.58     2.50       2.43
 Non-interest income / Total income             37.3       35.2     43.3      30.6     30.1       30.2
 Costs / Income                                 70.1       67.5     54.7      57.3     56.5       56.5
 Costs / Assets                                 3.95       3.35     2.63      2.24     2.15       2.14
 Cost of risk                                  -0.60       0.50     3.04      1.64     1.26       0.79
 Effective tax rate                             22.2       22.8     25.9      22.0     20.0       20.0
 ROE                                            17.9       13.2      1.3       7.3     10.4       13.0
 ROA                                            1.58       0.99     0.09      0.48     0.70       0.92
Source: Kredyt Bank, BRE Bank Securities




15 September 2010                                                                                        41
          BRE Bank Securities                                                           Kredyt Bank
            BRE Bank Securities


Kredyt Bank: Balance Sheet
 (PLN m)                                        2007     2008      2009   2010F    2011F      2012F
 Cash and central bank balances                  612      828     1 175    1 076      882        645
 Financial-sector receivables                  2 454      339       188    2 261    3 920      5 431
 Loans                                        16 622   26 733    26 054   27 220   28 763     30 970
 Debt securities                               6 442    9 859    10 696   12 301   11 686     11 102
 Shares                                           12       10        12       14       14         14
 Fixed assets                                    396      422       354      283      288        294
 Intangible assets                                67       61        51       41       42         43
 Other assets                                    522      479       547      578      595        610
 Total assets                                 27 128   38 731    39 077   43 774   46 191     49 109

 Financial-sector payables                     6 403   13 238    12 403   12 031   11 670     11 320
 Deposits                                     17 089   20 275    22 469   26 906   29 386     32 228
 Securities outstanding                           50        9         0        0        0          0
 Subordinated loans                              394      280       806      870      870        870
 Other                                           916    2 283       810    1 114    1 099      1 084
 Total liabilities                            24 852   36 085    36 488   40 921   43 025     45 502

 Equity                                        2 276    2 646     2 589    2 853    3 167      3 607
 Total liabilities & equity                   27 128   38 731    39 077   43 774   46 191     49 109
Source: Kredyt Bank, BRE Bank Securities


Kredyt Bank: Annual rates of return on key balance-sheet items
 (%)                                           2007      2008     2009    2010F    2011F      2012F
 Loans                                           44        61       -3        4        6          8
 Total assets                                    22        43        1       12        6          6
 Deposits                                        10        19       11       20        9         10
 Equity                                           9        16       -2       10       11         14
Source: Kredyt Bank, BRE Bank Securities


Kredyt Bank: Key Balance-Sheet Ratios
 (%)                                            2007     2008     2009    2010F    2011F      2012F
 NPL ratio                                       6.5       4.9      8.6     10.3     10.6       10.5
 NPL coverage ratio                             73.0      68.7     66.3     66.0     70.5       73.1
 Loans / Assets                                 61.3      69.0     66.7     62.2     62.3       63.1
 Deposits / Assets                              63.0      52.3     57.5     61.5     63.6       65.6
 Loans / Deposits                               97.3     131.9    116.0    101.2     97.9       96.1
 Equity / Assets                                 8.4       6.8      6.6      6.5      6.9        7.3
 CAR                                             9.7       8.8     11.8     11.6     11.5       11.6
 Tier 1 ratio                                    9.3       7.3      8.8      8.7      8.7        9.0
Source: Kredyt Bank, BRE Bank Securities




15 September 2010                                                                                      42
                                                                                                                                                                                  Millennium
            BRE Bank Securities
                                                                                                                                                           BRE Bank Securities
15 September 2010                                                            Update


                           Banks
                           Poland                                            Millennium                                                                                       Hold
                                                                             BIGW.WA; MIL.PW                                                                                  (Resumed)

Current price                                    PLN 4.73
Target price                                     PLN 4.60                    Margin Upside Priced In
Market cap                                       PLN 5.7bn
                                                                We are resuming coverage of Millennium with a hold rating and a nine-
Free float                                       PLN 2.0bn
                                                                month price target of PLN 4.60. In our view, the bank’s P/E ratios of
Avg daily trading volume (3M)                    PLN 4.3m       19.6x expected 2010 earnings and 14.6x forecasted 2011 earnings
                                                                (18% and 7% higher respectively than sector averages) already factor
                                                                in the expected expansion in interest margins. We consider Getin
Shareholder Structure
                                                                Holding, with its longer term-deposit periods, a more compelling story
Banco Comercial Portugues                                 65.5% in terms of deposit margin expansion on the back of rising interest
AVIVA OFE                                                  7.9% rates.
Others                                                            26.6%
                                                                             Strong prospects in deposit margins
Company Profile                                                              Aside from Getin Holding, Millennium is the best-positioned of the banks in
                                                                             our coverage universe to capitalize on higher interest rates. As market rates
Millennium is Poland’s number-six bank with a market                         increase, they are expected to drive margins on demand deposits, and bring
share of ca. 4%. The bank is focused primarily on retail
customers, but is has plans to expand in the SME
                                                                             margins on term deposits back into the positive territory. Further, with the
segment in the future. About 65% of its loan portfolio                       ratio of retail loans to total loans at 73%, Millennium is relatively resistant to
are mortgage loans, of which 80% are nominated in                            downward pressure on loan margins.
foreign currencies. Millennium’s financial targets for
FY2012 include a ROE of 15%, a cost/income ratio Slow improvement in costs of risk
below 60%, and a capital adequacy ratio over 11%.        After a decrease by 60 bps to 69 bps in 2010, Millennium’s costs of risk are
                                                                             expected to decline at a slower-than-average rate in the next two years. We
                                                                             predict that they will reach a level of 42 bps in 2012. Millennium’s share in
                                                                             the market for mortgage loans in the years 2007-2008 was 2.8x its “natural”
Important Dates                                                              level, and, since the loans extended during those years are deteriorating at
26.10 - Q3 2010 report                                                       the fastest rate, the bank may incur higher-than-average costs of risk in its
                                                                             mortgage business going forward. However, our provision forecasts for the
                                                                             bank are on the optimistic side, predicting an uptick in the coverage ratio by
                                                                             a mere 3 ppts, from 53% in Q2 2010 to 56% in 2012.
                                                                             Earnings outlook
                                                                             We expect Millennium to generate a net income of PLN 286m in 2010,
                                                                             PLN 393m in 2011 (a 37% y/y increase), and PLN 574m in 2012 (46% y/y).
                                                                             Our estimates are 10% higher than the analysts’ consensus for 2010, 11%
                                                                             lower than the 2011 consensus, and in line with the forecast average for
                                                                             2012.


Millennium vs. WIG
 5.2
PLN
                                                                           (PLN m)                                       2008             2009          2010F            2011F           2012F
4.86
                                                                           Interest income                                935              599             902            1 021           1 237
                                                                           Income f/banking oper.                       1 827            1 434           1 662            1 824           2 076
4.52                                                                       Operating income*                              656              431             603              709             892
                                                                           Net income                                     413                1             286              393             574
4.18                                                                       Interest margin (%)                            2.41            1.30             1.99            2.12                2.35
                                                                           Costs / Income (%)                             64.5            70.4             63.8            61.3                57.2
3.84                                                                       ROE (%)                                        15.5             0.1              8.3             9.1                12.2
                                         Millennium         WIG
                                                                           EPS (PLN)                                      0.49            0.00             0.24            0.32                0.47
                                                                           BVPS (PLN)                                     3.31            3.28             3.38            3.71                4.08
 3.5
 09-09-11            10-01-04            10-04-29            10-08-22      DPS (PLN)                                      0.00            0.00             0.00            0.10                0.14
                                                                           P/E (x)                                         9.7               -             19.6            14.6                10.0
Iza Rokicka
                                                                           P/BV (x)                                       1.43            1.44             1.40            1.28                1.16
(48 22) 697 47 37
                                                                           Dividend yield (%)                              0.0             0.0              0.0             2.1                 3.0
Iza.Rokicka@dibre.com.pl
www.dibre.com.pl                                                             * before provisions; ** dividends on profits for the given year, paid out the following year


27 Bank 2010
BREApril Securities does not rule out offering brokerage services to an issuer of securities being the subject of a recommendation. Information concerning a conflict of interest arising in
connection with issuing a recommendation (should such a conflict exist) is located on the final page of this report.
                      BRE Bank Securities                                                                                                                Millennium
                        BRE Bank Securities


Millennium: Residual Income Valuation
 (PLN m)                                    2010F      2011F      2012F       2013F       2014F          2015F    2016F      2017F     2018F    2019F          +        FV
 Net income                                    286        393        574         676         755            813      859        902       942      980
   Y/Y change (%)                              n/m       37.4       46.1        17.7        11.7            7.7      5.7        5.0       4.5      4.0       4.0
 Equity                                      4 105      4 499      4 955       5 459       5 975          6 481    6 967      7 429     7 862    8 260
 Dividend payout ratio (%)                      0.0      30.0       30.0        35.3        40.6           45.9     51.2       56.5      61.8     67.1      67.1


 ROE (%)                                         8.3      9.1         12.2         13.0    13.2            13.1     12.8      12.5       12.3    12.2       12.2
 COE (%)                                        10.5     10.5         10.5         10.5    10.5            10.5     10.5      10.5       10.5    10.5       10.5

 Excess return (%)                              -2.2     -1.4          1.7         2.5      2.7            2.6      2.3        2.0       1.8      1.7        1.7
 Residual income                                 -76      -58           78         130      155            159      153        147       140      134      2 062

 Discount factor                                0.97     0.88         0.79         0.72    0.65            0.59     0.53      0.48       0.44    0.39       0.39
 PV of residual income                           -73      -51           62           93     101              94       81        70         61      53        812


 Equity as at 31 December 2009                                                                                                                                        2 787
 2010 stock-offering proceeds                                                                                                                                         1 038
 2010 dividend                                                                                                                                                            0
 YTD excess of comprehensive income over net income                                                                                                                      -6
 PV of residual income (2010F-2012F)                                                                                                                                    -62
 PV of residual income (2013F-2019F)                                                                                                                                    553
 PV of terminal value                                                                                                                                                   812
 Fair value                                                                                                                                                           5 123
 Number of shares (millions)                                                                                                                                          1 213
 Fair value per share (PLN)                                                                                                                                            4,22
 Target price (9M) (PLN)                                                                                                                                               4.60

 Current price (PLN)                                                                                                                                                   4.73
 Upside potential (%)                                                                                                                                                  -2.7
Source: Millennium, BRE Bank Securities



Millennium: Sensitivity Analysis
                                          Sustainable ROE                                                                                 Cost of Equity
                             -2.0ppt -1.0ppt          - +1.0ppt +2.0ppt                                                    +2.0ppt    +1.0ppt        - -1.0ppt     -2.0ppt
                              10.2% 11.2%        12.2% 13.2% 14.2%                                                          12.5%      11.5%    10.5%    9.5%        8.5%
              -2.0ppt 2.0%        3.7     4.0      4.4          4.7          5.1                        -2.0ppt   2.0%         3.2        3.7     4.4        5.2        6.3
  LT growth




                                                                                            LT growth




              -1.0ppt 3.0%        3.7     4.1      4.4          4.8          5.2                        -1.0ppt   3.0%         3.2        3.7     4.4        5.4        6.7
                   - 4.0%         3.6     4.1      4.6          5.0          5.5                              -   4.0%         3.1        3.8     4.6        5.6        7.2
              +1.0ppt 5.0%        3.6     4.1      4.7          5.2          5.8                        +1.0ppt   5.0%         3.1        3.8     4.7        6.0        8.0
              +2.0ppt 6.0%        3.5     4.2      4.9          5.6          6.3                        +2.0ppt   6.0%         3.1        3.8     4.9        6.6        9.6
Source: BRE Bank Securities




              15 September 2010                                                                                                                                        44
          BRE Bank Securities                                                                Millennium
            BRE Bank Securities


Millennium: Income Statement
 (PLN m)                                        2007      2008     2009    2010F    2011F         2012F
 Net interest income                             772       935      599      902     1 021         1 237
 Fee income                                      543       472      494      561      590            614
 Trading income                                  333       421      342      199      213            225
 Revenue from banking operations               1 648     1 827    1 434    1 662    1 824          2 076
 Other net operating income                       61        21       20        6        6              7
 Non-interest income                             938       913      855      765      809            847
 Total income                                  1 709     1 848    1 454    1 668    1 830          2 083
 Payroll expenses                                -539      -609     -471     -513     -552          -589
 D&A expenses                                     -88       -73      -80      -76      -80           -84
 Other administrative expenses                   -431      -510     -472     -475     -489          -518
 Total costs                                   -1 058    -1 192   -1 023   -1 064   -1 121        -1 191
 Pre-provision income                             651       656      431      603      709           892
 Provisions                                       -67      -135     -436     -245     -217          -174
 Share in results of subsidiaries                   0         0        7        0        0             0
 Pre-tax income                                   585       521        2      359      491           718
 Tax                                             -123      -108        0      -73      -98          -144
 Minority interests                                 0         0        0        0        0             0
 Net income                                       462       413        1      286      393           574
 Retained earnings                                300       413        1      286      275           402
Source: Millennium, BRE Bank Securities


Millennium: Annual rates of return on key income lines
 (%)                                            2007      2008     2009    2010F    2011F         2012F
 Net interest income                              20        21      -36        51      13            21
 Non-interest income                              52        -3       -6       -11       6             5
 Total income                                     36         8      -21        15      10            14
 Total costs                                      23        13      -14         4       5             6
 Pre-provision income                             62         1      -34        40      17            26
 Net income                                       58       -11     -100         -      37            46
Source: Millennium, BRE Bank Securities


Millennium: Key P&L Ratios
 (%)                                            2007      2008     2009    2010F    2011F         2012F
 NIM (total assets)                             2.79      2.41     1.30      1.99     2.12          2.35
 NIM (interest-earnings assets)                 2.91      2.47     1.33      2.03     2.16          2.39
 Spread                                         2.69      2.13     1.04      1.79     1.86          2.07
 Non-interest income / Total income             54.9      49.4     58.8      45.9     44.2          40.6
 Costs / Income                                 61.9      64.5     70.4      63.8     61.3          57.2
 Costs / Assets                                 3.83      3.07     2.22      2.34     2.33          2.26
 Cost of risk                                   0.36      0.48     1.29      0.69     0.57          0.42
 Effective tax rate                             21.0      20.8     20.3      20.3     20.0          20.0
 ROE                                            19.5      15.5      0.1       8.3      9.1          12.2
 ROA                                            1.67      1.06     0.00      0.63     0.82          1.09
Source: Millennium, BRE Bank Securities




15 September 2010                                                                                          45
          BRE Bank Securities                                                               Millennium
            BRE Bank Securities


Millennium: Balance Sheet
 (PLN m)                                        2007      2008     2009   2010F    2011F         2012F
 Cash and central bank balances                1 257     1 803    2 191    1 373    1 146           851
 Financial-sector receivables                  1 053     1 580      696      749    1 011         1 586
 Loans                                        22 056    33 809   33 694   36 955   39 729        43 587
 Debt securities                               5 029     9 194    7 196    6 000    7 500         8 000
 Shares                                            5         5       12       12       13            13
 Fixed assets                                    337       385      347      243      255           268
 Intangible assets                                18        22       23       14       14            15
 Other assets                                    774       317      756      602      625           649
 Total assets                                 30 530    47 115   44 914   45 948   50 293        54 969

 Financial-sector payables                     2 569     3 061    4 909    3 927    4 320         4 320
 Deposits                                     22 527    33 204   33 901   34 336   38 216        42 535
 Securities outstanding                        1 418     5 327    1 707    2 000    2 000         1 900
 Subordinated loans                              826       961      946      915      595           595
 Other                                           671     1 747      663      664      664           664
 Total liabilities                            28 010    44 300   42 126   41 842   45 795        50 014

 Equity                                        2 520     2 815    2 787    4 105    4 499         4 955
 Total liabilities & equity                   30 530    47 115   44 914   45 948   50 293        54 969
Source: Millennium, BRE Bank Securities


Millennium: Annual rates of return on key balance-sheet items
 (%)                                           2007      2008     2009    2010F    2011F         2012F
 Loans                                           47        53        0       10        8            10
 Total assets                                    24        54       -5        2        9             9
 Deposits                                        29        47        2        1       11            11
 Equity                                          14        12       -1       47       10            10
Source: Millennium, BRE Bank Securities


Millennium: Key Balance-Sheet Ratios
 (%)                                            2007      2008    2009    2010F    2011F         2012F
 NPL ratio                                       3.4       3.4      5.8      6.3      6.7           6.7
 NPL coverage ratio                             79.5      64.4     54.4     54.0     55.0          56.0
 Loans / Assets                                 72.2      71.8     75.0     80.4     79.0          79.3
 Deposits / Assets                              73.8      70.5     75.5     74.7     76.0          77.4
 Loans / Deposits                               97.9     101.8     99.4    107.6    104.0         102.5
 Equity / Assets                                 8.3       6.0      6.2      8.9      8.9           9.0
 CAR                                            13.7      10.2     11.3     13.7     13.2          13.1
 Tier 1 ratio                                   10.2       7.9      8.9     11.7     11.5          11.5
Source: Millennium, BRE Bank Securities




15 September 2010                                                                                         46
                                                                                                                                                                                        Pekao
            BRE Bank Securities
                                                                                                                                                           BRE Bank Securities
15 September 2010                                                            Update


                           Banks
                           Poland                                            Pekao                                                                                Reduce
                                                                             BAPE.WA; PEO.PW                                                                             (Downgraded)

Current price                                       PLN 159.50
Target price                                        PLN 145.00               Relatively Overpriced
Market cap                                          PLN 41.8bn
                                                                   We are downgrading Pekao to reduce, with a new price target of
Free float                                          PLN 17.1bn
                                                                   PLN 145.0. The bank has strong fundamentals and offers an attractive
Avg daily trading volume (3M)                       PLN 151.7m     dividend yield of 3.7%, but it is trading at fairly demanding forward
                                                                   P/E levels of 14.4x projected FY2011 earnings, and 12.3x FY2012
Shareholder Structure                                              earnings, showing premiums of 6% and 15% respectively to average
UniCredit                                                    59.2% sector multiples. By way of comparison, rival PKO BP offers more
                                                                   value to shareholders, trading on lower multiples while facing stronger
Others                                                       40.8% earnings growth in 2011 and 2012, and planning a dividend payout still
                                                                   this year expected to provide a yield of 4.6%.

Company Profile                                                              Interest margins continue to widen
Pekao is the number-two bank in Poland with a market                         Pekao is among the banks that face the strongest downward pressure on
share of ca. 12%. The bank has built the largest                             margins due to a large share of corporate borrowers in the loan portfolio,
portfolio of corporate loans and deposits, the second                        however, we expect its interest margins to continue on an upward trend up
largest retail-deposit base, and the fourth largest retail-                  to and throughout 2012. These expectations are based on the growth
loan portfolio. It is also the sector leader in financial                    potential of the bank’s deposit margins stemming from a high ratio of
strength with a Tier1 ratio close to 18%. Pekao plans                        demand deposits to total deposits, which is the highest of all the banks in
to allocate its capital surplus to organic growth as well                    our coverage universe (at 48% vs. a 38% average), making Pekao perfectly
as acquisitions. Pekao’s subsidiary Ukrainian bank
OJSC UniCredit accounts for about 4% of the total
                                                                             positioned to capitalize on rising market interest rates. We predict that an
loan portfolio.                                                              interest-margin expansion by 6 bps in 2011 and 12 bps in 2012 will translate
                                                                             into annual interest-income growth by 5% and 8% respectively.

                                                                             Costs of risk remain below average, but so does delta
Important dates                                                              Pekao is expected to maintain a high-quality loan portfolio going forward,
                                                                             with below-average costs of risk. On the downside, this means a below-
10.11 - Q3 2010 report
                                                                             average potential to reduce provisions, which is going to hamper profit
                                                                             growth. We predict that costs of risk will edge down 29 bps from 66 bps in
                                                                             2010 to 36 bps in 2012, with loan-loss provisions decreasing 35% by 2012.

                                                                             Earnings outlook
                                                                             We expect Pekao to generate a net income of PLN 2,897m in 2011 after a
                                                                             12% year-on-year increase, and our estimate is 5% lower than the analysts’
                                                                             consensus. In 2012, we expect net earnings to show stronger, 17% year-
                                                                             on-year expansion.


Pekao vs. WIG
185
PLN                                                                         (PLN m)                                      2008             2009          2010F            2011F           2012F
175                                                                         Interest income                             4 509            3 802           4 143            4 360           4 696
                                                                            Income f/banking oper.                      7 686            7 063           7 260            7 666           8 215
                                                                            Operating income*                           4 480            3 467           3 675            3 982           4 462
165
                                                                            Net income                                  3 528            2 412           2 584            2 897           3 392
                                                                            Interest margin (%)                          3.52             2.90            3.11             3.17            3.29
155
                                                                            Costs / Income (%)                           45.9             51.4            49.8             48.5            46.2
                                                                            ROE (%)                                      23.0             14.1            13.4             13.8            15.1
145
                                                                            EPS (PLN)                                   13.46             9.20            9.85            11.04           12.93
                                           Pekao         WIG
                                                                            BVPS (PLN)                                  60.82            69.71           77.33            82.46           88.77
135                                                                         DPS (PLN)                                    0.00             2.90            5.91             6.63            7.76
 09-09-11            10-01-04            10-04-29           10-08-22
                                                                            P/E (x)                                      11.9             17.3            16.2             14.4            12.3
Iza Rokicka                                                                 P/BV (x)                                     2.62             2.29            2.06             1.93            1.80
(48 22) 697 47 37                                                           Dividend yield (%)                            0.0              1.8             3.7              4.2             4.9
Iza.Rokicka@dibre.com.pl                                                     *before provisions; **dividends for the year, paid out the next year
www.dibre.com.pl
BRE Bank Securities does not rule out offering brokerage services to an issuer of securities being the subject of a recommendation. Information concerning a conflict of interest arising in
5 March 2010
connection with issuing a recommendation (should such a conflict exist) is located on the final page of this report.
                      BRE Bank Securities                                                                                                             Pekao
                        BRE Bank Securities


Pekao: Residual Income Valuation
 (PLN m)                                   2010F      2011F    2012F     2013F       2014F         2015F     2016F     2017F    2018F     2019F         +        FV
 Net income                                 2 584      2 897    3 392     3 752       4 074         4 343     4 586     4 797    4 994     5 192
   Y/Y change (%)                             7.1       12.1     17.1      10.6         8.6           6.6       5.6       4.6      4.1       4.0       4.0
 Equity                                    20 287     21 633   23 287    25 003      26 754        28 495    30 224    31 916   33 568    35 185
 Dividend payout ratio (%)                   60.0       60.0     60.0      61.9        63.9          65.8      67.7      69.7     71.6      73.5      73.5


 ROE (%)                                       13.4     13.8     15.1         15.5     15.7           15.7     15.6      15.4      15.3     15.1      15.1
 COE (%)                                       10.5     10.5     10.5         10.5     10.5           10.5     10.5      10.5      10.5     10.5      10.5

 Excess return (%)                             2.9      3.3       4.6       5.0         5.3           5.2       5.1       4.9      4.8       4.6      4.6
 Residual income                               560      698     1 035     1 218       1 359         1 444     1 506     1 537    1 558     1 584   24 402

 Discount factor                               0.97     0.88     0.79         0.72     0.65           0.59     0.53      0.48      0.44     0.39      0.39
 PV of residual income                          542      611      820          873      882            848      800       739       678      624     9 616


 Equity as at 31 December 2009                                                                                                                               18 288
 2010 dividend                                                                                                                                                 -761
 YTD excess of comprehensive income over net income                                                                                                             175
 PV of residual income (2010F-2012F)                                                                                                                          1 973
 PV of residual income (2013F-2019F)                                                                                                                          5 446
 PV of terminal value                                                                                                                                         9 616
 Fair value                                                                                                                                                  34 737
 Number of shares (millions)                                                                                                                                  262.3
 Fair value per share (PLN)                                                                                                                                     132
 Target price (9M) (PLN)                                                                                                                                        145

 Current price (PLN)                                                                                                                                         159.50
 Upside potential (%)                                                                                                                                          -9.1
Source: Pekao, BRE Bank Securities



Pekao: Sensitivity Analysis
                                         Sustainable ROE                                                                            Cost of Equity
                             -2.0ppt -1.0ppt         - +1.0ppt +2.0ppt                                                +2.0ppt   +1.0ppt        - -1.0ppt     -2.0ppt
                              13.1% 14.1%       15.1% 16.1% 17.1%                                                      12.5%     11.5%    10.5%    9.5%        8.5%
              -2.0ppt 2.0%        120   125       130      140          145                        -2.0ppt   2.0%        100       115      130       155       180
  LT growth




                                                                                       LT growth




              -1.0ppt 3.0%        120   130       135      145          155                        -1.0ppt   3.0%        100       120      135       160       195
                   - 4.0%         125   135       145      150          160                              -   4.0%        105       120      145       170       215
              +1.0ppt 5.0%        130   140       150      160          175                        +1.0ppt   5.0%        105       125      150       190       245
              +2.0ppt 6.0%        135   150       165      175          190                        +2.0ppt   6.0%        110       130      165       210       300
Source: BRE Bank Securities




              15 September 2010                                                                                                                                 48
          BRE Bank Securities                                                              Pekao
            BRE Bank Securities


Pekao: Income Statement
 (PLN m)                                        2007    2008     2009    2010F    2011F     2012F
 Net interest income                           2 715   4 509    3 802     4 143    4 360     4 696
 Fee income                                    2 204   2 342    2 289    2 404    2 573     2 737
 Trading income                                  390     835      972      712      733       782
 Revenue from banking operations               5 309   7 686    7 063    7 260    7 666     8 215
 Other net operating income                       89     596       77       64       64        82
 Non-interest income                           2 683   3 773    3 337    3 180    3 371     3 602
 Total income                                  5 398   8 282    7 140    7 324    7 730     8 297
 Payroll expenses                             -1 410   -1 875   -1 856   -1 909   -1 970    -2 025
 D&A expenses                                   -339     -414     -439     -403     -412      -420
 Other administrative expenses                -1 004   -1 513   -1 378   -1 336   -1 367    -1 391
 Total costs                                  -2 754   -3 802   -3 673   -3 649   -3 748    -3 835
 Pre-provision income                          2 644    4 480    3 467    3 675    3 982     4 462
 Provisions                                     -192     -263     -535     -539     -475      -349
 Share in results of subsidiaries                153      128       65       78       81        83
 Pre-tax income                                2 605    4 346    2 997    3 214    3 588     4 196
 Tax                                            -443     -805     -576     -620     -682      -797
 Minority interests                               -7      -13      -10      -10       -9        -7
 Net income                                    2 155    3 528    2 412    2 584    2 897     3 392
 Retained earnings                              -358    3 528    1 651    1 034    1 159     1 357
Source: Pekao, BRE Bank Securities


Pekao: Annual rates of return on key income lines
 (%)                                           2007     2008     2009    2010F    2011F     2012F
 Net interest income                             14       66      -16         9       5         8
 Non-interest income                             17       41      -12        -5       6         7
 Total income                                    15       53      -14         3       6         7
 Total costs                                     17       38       -3        -1       3         2
 Pre-provision income                            13       69      -23         6       8        12
 Net income                                      21       64      -32         7      12        17
Source: Pekao, BRE Bank Securities


Pekao: Key P&L Ratios
 (%)                                           2007     2008     2009    2010F    2011F     2012F
 NIM (total assets)                            2.83     3.52     2.90      3.11     3.17      3.29
 NIM (interest-earnings assets)                3.01     3.77     3.05      3.22     3.27      3.39
 Spread                                        2.74     3.46     2.77      2.92     2.92      2.97
 Non-interest income / Total income            49.7     45.6     46.7      43.4     43.6      43.4
 Costs / Income                                51.0     45.9     51.4      49.8     48.5      46.2
 Costs / Assets                                2.87     2.97     2.80      2.74     2.73      2.69
 Cost of risk                                  0.38     0.35     0.66      0.66     0.54      0.36
 Effective tax rate                            17.0     18.5     19.2      19.3     19.0      19.0
 ROE                                           18.3     23.0     14.1      13.4     13.8      15.1
 ROA                                           2.25     2.76     1.84      1.94     2.11      2.38
Source: Pekao, BRE Bank Securities




15 September 2010                                                                                    49
          BRE Bank Securities                                                                   Pekao
            BRE Bank Securities


Pekao: Balance Sheet
 (PLN m)                                        2007      2008       2009    2010F     2011F     2012F
 Cash and central bank balances                5 122     9 934      9 620     4 998     3 569     2 142
 Financial-sector receivables                 16 960     7 909      7 203     9 053     5 842     2 675
 Loans                                        69 702    82 515     79 484    84 591    91 268   100 734
 Debt securities                              24 563    22 586     29 830    32 813    34 453    36 176
 Shares                                          388       309        240       204       210       216
 Fixed assets                                  2 021     1 906      1 822     1 731     1 679     1 679
 Intangible assets                               634       691        654       589       571       571
 Other assets                                  4 706     6 090      1 763     1 695     1 695     1 695
 Total assets                                124 096   131 941    130 616   135 674   139 288   145 889

 Financial-sector payables                     9 942    14 993      8 479     8 734     8 996     8 996
 Deposits                                     89 944    90 889     97 250    99 957   101 985   107 096
 Securities outstanding                        4 208     7 616      3 624     3 443     3 271     3 107
 Subordinated loans                                0         0          0         0         0         0
 Other                                         5 335     2 495      2 975     3 253     3 403     3 403
 Total liabilities                           109 429   115 993    112 328   115 387   117 654   122 602

 Equity                                       14 667    15 947     18 288    20 287    21 633    23 287
 Total liabilities & equity                  124 096   131 941    130 616   135 674   139 288   145 889
Source: Pekao, BRE Bank Securities


Pekao: Annual rates of return on key balance-sheet items
 (%)                                           2007        2008     2009     2010F     2011F     2012F
 Loans                                          113          18       -4         6         8        10
 Total assets                                    83           6       -1         4         3         5
 Deposits                                        74           1        7         3         2         5
 Equity                                          65           9       15        11         7         8
Source: Pekao, BRE Bank Securities


Pekao: Key Balance-Sheet Ratios
 (%)                                            2007       2008      2009    2010F     2011F     2012F
 NPL ratio                                       7.3        5.2       6.4       7.3       7.2       6.7
 NPL coverage ratio                             85.2       88.2      78.7      73.0      75.6      78.2
 Loans / Assets                                 56.2       62.5      60.9      62.3      65.5      69.0
 Deposits / Assets                              72.5       68.9      74.5      73.7      73.2      73.4
 Loans / Deposits                               77.5       90.8      81.7      84.6      89.5      94.1
 Equity / Assets                                11.8       12.1      14.0      15.0      15.5      16.0
 CAR                                            12.2       12.3      16.3      17.6      17.5      17.4
 Tier 1 ratio                                   12.2       12.3      16.3      17.6      17.5      17.4
Source: Pekao, BRE Bank Securities




15 September 2010                                                                                         50
                                                                                                                                                                               PKO BP
            BRE Bank Securities
                                                                                                                                                     BRE Bank Securities
15 September 2010                                                         Update


                          Banks
                          Poland                                          PKO BP                                                            Accumulate
                                                                          PKOB.WA; PKO.PW                                                                              (Upgraded)

Current price                                   PLN 40.90
Target price                                    PLN 45.70                 Handsome Dividend Coming In December
Market cap                                      PLN 51.1bn
                                                               We are upgrading PKO BP to accumulate with a nine-month price
Free float                                      PLN 24.9bn
                                                               target of PLN 45.70. Based on our conservative earnings forecasts of
Avg daily trading volume (3M)                   PLN 177.9m     PLN 3.6bn in 2011 and PLN 4.4bn in 2012, the bank is trading on
                                                               forward P/E ratios of 14.1x and 11.7x respectively, showing premiums
Shareholder Structure                                          of 3% and 9% to the respective sector averages, but at the same time
State Treasury                                           41.0% offering a discount to rival Pekao. Last but not least, now that we
BGK                                                      10.2% know that PKO BP has lost the bid on BZ WBK to Santander, we
                                                               expect it to pay a generous dividend (DY at 4.6%) this coming
Other                                                    48.8% December.

                                                                          2011 margin decline forecast based on conservative assumptions
Company Profile                                                           We are forecasting a slight decline in 2011 interest margins below this
                                                                          year’s 4.0% level, but note that these forecasts are based on conservative
PKO BP is the number-one bank in Poland with a mar-                       assumptions with respect to the profitability of PKO BP's debt portfolio. We
ket share of ca. 14%. It has accumulated the largest
portfolio of retail loans and deposits, and the second-
                                                                          believe that the expected downward pressure on loan margins will be more
largest portfolio of corporate loans and deposits. The                    than offset by expanding deposit margins fueled by higher market interest
banks boasts a healthy balance sheet and solid capital                    rates. Our conservative forecasts assuming a 6bp year-on-year decline in
adequacy ratios. PKO BP is a 99.5% owner of Ukrain-                       interest margins in 2011, followed by a 14bp increase in 2012, translate into
ian bank Kredobank, which is responsible for about 1%                     projected interest-income growth by 6% in 2011 and 13% in 2012.
of its assets. The bank’s financial targets for FY2012
include a net income over PLN 4 billion, a ROE ahead Improving coverage ratio
of 16%, and a cost/income ratio below 45%.              We expect PKO BP’s loan-loss provisions to decline by an estimated 1% in
                                                                          H2 2010, and accelerate the rate of their downward movement to 17% y/y in
                                                                          2011 and 22% y/y in 2012. As a result, costs of risk are expected to drop
Important dates
                                                                          from 146 bps in H1 2010 to 75 bps in 2012. Again, these are conservative
                                                                          projections. Consequently, the coverage ratio will display the second-fastest
08.11 - Q3 2010
23.10 - conditional dividend record date
                                                                          rate of growth in the sector, rising from 41.3% in 2Q 2010 to 61.0% in 2012,
        (DPS at PLN 1.90)                                                 accompanied by a decline in the NPL ratio from 8.5% to 8.1%.
20.12 - conditional dividend payout
                                                                          Earnings outlook
                                                                          We expect PKO BP to turn a profit of PLN 3.2bn in 2010, and PLN 3.6bn in
                                                                          2011 after 13% y/y growth, but we must point out that these estimates are
                                                                          based on conservative assumptions with respect to future interest margins
                                                                          and costs of risk, which place them 10% below average analysts’ estimates.


PKO BP vs. WIG
 45
PLN
                                                                         (PLN m)                                     2008            2009          2010F          2011F           2012F
 41                                                                      Interest income                            6 127           5 051           6 434          6 846           7 738
                                                                         Income f/banking oper.                     9 097           8 607           9 911         10 359          11 379
 37                                                                      Operating income*                          5 092           4 624           5 737          5 907           6 508
                                                                         Net income                                 3 121           2 306           3 213          3 627           4 353
 33                                                                      Interest margin (%)                         5.04            3.47            3.95           3.89            4.04
                                                                         Costs / Income (%)                          45.8            47.9            42.9           43.6            43.0
 29
                                                                         ROE (%)                                     24.1            13.4            15.3           16.0            17.2
                                        PKO BP          WIG
                                                                         EPS (PLN)                                   3.12            2.06            2.57           2.90            3.48
                                                                         BVPS (PLN)                                 13.95           16.34           17.18          19.06           21.38
 25
09-09-11            10-01-04            10-04-29           10-08-22      DPS (PLN)                                   1.00            1.90            1.03           1.16            1.39
                                                                         P/E (x)                                     13.1            19.9            15.9           14.1            11.7
Iza Rokicka
                                                                         P/BV (x)                                    2.93            2.50            2.38           2.15            1.91
(48 22) 697 47 37
                                                                         Dividend yield (%)                           2.4             4.6             2.5            2.8             3.4
Iza.Rokicka@dibre.com.pl
www.dibre.com.pl                                                          *before provisions; **dividends for the year, paid out the next year

15 Bank Securities does
BRESeptember 2010 not rule out offering brokerage services to an issuer of securities being the subject of a recommendation. Information concerning a conflict of interest arising in
connection with issuing a recommendation (should such a conflict exist) is located on the final page of this report.
                      BRE Bank Securities                                                                                                            PKO BP
                        BRE Bank Securities


PKO BP: Residual Income Valuation
 (PLN m)                                   2010F       2011F     2012F     2013F     2014F         2015F     2016F     2017F    2018F     2019F         +       FV
 Net income                                 3 213       3 627     4 353     4 909     5 487         6 078     6 672     7 257    7 821     8 133
   Y/Y change (%)                            39.4        12.9      20.0      12.8      11.8          10.8       9.8       8.8      7.8       4.0      4.0
 Equity                                    21 480      23 821    26 724    29 892    33 157        36 464    39 746    42 932   45 944    48 483
 Dividend payout ratio (%)                   40.0        40.0      40.0      45.3      50.5          55.8      61.0      66.3     71.5      76.8     76.8


 ROE (%)                                        15.3      16.0      17.2      17.3     17.4           17.5     17.5      17.6      17.6     17.2     17.2
 COE (%)                                        10.5      10.5      10.5      10.5     10.5           10.5     10.5      10.5      10.5     10.5     10.5

 Excess return (%)                               4.8       5.5      6.7       6.8       6.9           7.0       7.0       7.1      7.1       6.7      6.7
 Residual income                               1 014     1 250    1 701     1 939     2 179         2 425     2 673     2 919    3 158     3 179   48 954

 Discount factor                                0.97      0.88     0.79      0.72      0.65          0.59      0.53      0.48     0.44      0.39     0.39
 PV of residual income                           981     1 094    1 348     1 390     1 414         1 424     1 421     1 404    1 375     1 252   19 290


 Equity as at 31 December 2009                                                                                                                              20 429
 2010 dividend                                                                                                                                                   0
 YTD excess of comprehensive income over net income                                                                                                            213
 PV of residual income (2010F-2012F)                                                                                                                         3 424
 PV of residual income (2013F-2019F)                                                                                                                         9 682
 PV of terminal value                                                                                                                                       19 290
 Fair value                                                                                                                                                 53 037
 Number of shares (millions)                                                                                                                                 1 250
 Fair value per share (PLN)                                                                                                                                  42.43
 Target price (9M) (PLN)                                                                                                                                      45,7

 Current price (PLN)                                                                                                                                          40.90
 Upside potential (%)                                                                                                                                          11.7
Source: PKO BP, BRE Bank Securities




PKO BP: Sensitivity Analysis
                                         Sustainable ROE                                                                            Cost of Equity
                             -2.0ppt -1.0ppt          - +1.0ppt +2.0ppt                                               +2.0ppt   +1.0ppt        - -1.0ppt    -2.0ppt
                              15.2% 16.2%        17.2% 18.2% 19.2%                                                     12.5%     11.5%    10.5%    9.5%       8.5%
              -2.0ppt 2.0%     37.3    39.3       41.3       43.3      45.3                        -2.0ppt   2.0%       31.3      35.8      41.3     48.3      57.6
  LT growth




                                                                                       LT growth




              -1.0ppt 3.0%     38.7    40.9       43.2       45.5      47.8                        -1.0ppt   3.0%       32.1      37.0      43.2     51.4      62.6
                   - 4.0%      40.4    43.1       45.7       48.4      51.0                              -   4.0%       33.0      38.5      45.7     55.6      70.0
              +1.0ppt 5.0%     42.9    46.0       49.2       52.3      55.5                        +1.0ppt   5.0%       34.2      40.5      49.2     61.7      81.5
              +2.0ppt 6.0%     46.4    50.3       54.2       58.0      61.9                        +2.0ppt   6.0%       35.7      43.3      54.2     71.3     102.2
Source: BRE Bank Securities




              15 September 2010                                                                                                                                52
          BRE Bank Securities                                                              PKO BP
            BRE Bank Securities


PKO BP: Income Statement
 (PLN m)                                       2007     2008     2009    2010F    2011F      2012F
 Net interest income                          4 647    6 127    5 051     6 434    6 846      7 738
 Fee income                                   2 332    2 412    2 583     3 076    3 099      3 237
 Trading income                                 466      558      973       400      413        405
 Revenue from banking operations              7 445    9 097    8 607     9 911   10 359     11 379
 Other net operating income                     258      292      261       141      105         47
 Non-interest income                          3 056    3 261    3 817     3 617    3 618      3 688
 Total income                                 7 702    9 388    8 868    10 051   10 464     11 426
 Payroll expenses                             -2 289   -2 429   -2 308   -2 384   -2 525     -2 758
 D&A expenses                                   -382     -430     -469     -488     -522       -559
 Other administrative expenses                -1 370   -1 437   -1 467   -1 442   -1 510     -1 601
 Total costs                                  -4 041   -4 296   -4 244   -4 314   -4 557     -4 918
 Pre-provision income                          3 662    5 092    4 624    5 737    5 907      6 508
 Provisions                                      -57   -1 130   -1 681   -1 670   -1 378     -1 073
 Share in results of subsidiaries                  4       16        0       -5        0          0
 Pre-tax income                                3 609    3 977    2 943    4 063    4 529      5 436
 Tax                                            -668     -838     -631     -853     -906     -1 087
 Minority interests                              -38      -19       -6        4        4          5
 Net income                                    2 904    3 121    2 306    3 213    3 627      4 353
 Retained earnings                             1 814    2 121      -69    1 928    2 176      2 612
Source: PKO BP, BRE Bank Securities


PKO BP: Annual rates of return on key income lines
 (%)                                           2007     2008     2009    2010F    2011F      2012F
 Net interest income                             21       32      -18       27        6         13
 Non-interest income                              1        7       17        -5       0          2
 Total income                                    12       22       -6       13        4          9
 Total costs                                     -2        6       -1         2       6          8
 Pre-provision income                            34       39       -9       24        3         10
 Net income                                      34        7      -26       39       13         20
Source: PKO BP, BRE Bank Securities


PKO BP: Key P&L Ratios
 (%)                                           2007     2008     2009    2010F    2011F      2012F
 NIM (total assets)                            4.43     5.04     3.47      3.95     3.89       4.04
 NIM (interest-earnings assets)                4.65     5.29     3.62      4.11     4.04       4.17
 Spread                                        4.47     5.06     3.31      3.81     3.72       3.80
 Non-interest income / Total income            39.7     34.7     43.0      36.0     34.6       32.3
 Costs / Income                                52.5     45.8     47.9      42.9     43.6       43.0
 Costs / Assets                                3.85     3.53     2.92      2.65     2.59       2.57
 Cost of risk                                  0.08     1.27     1.54      1.38     1.06       0.75
 Effective tax rate                            18.5     21.1     21.5      21.0     20.0       20.0
 ROE                                           26.4     24.1     13.4      15.3     16.0       17.2
 ROA                                           2.77     2.57     1.58      1.97     2.06       2.27
Source: PKO BP, BRE Bank Securities




15 September 2010                                                                                     53
          BRE Bank Securities                                                                    PKO BP
            BRE Bank Securities


PKO BP: Balance Sheet
 (PLN m)                                       2007       2008        2009    2010F     2011F      2012F
 Cash and central bank balances               4 683      5 837       7 094     4 658     3 591      3 145
 Financial-sector receivables                 5 261      3 364       2 023     5 097     7 963     10 020
 Loans                                       76 417    101 108     116 573   124 746   135 393    149 900
 Debt securities                             16 790     18 264      24 557    28 241    29 653     31 135
 Shares                                         179        247         229       224       220        215
 Fixed assets                                 2 820      2 965       2 778     2 694     2 614      2 535
 Intangible assets                              949      1 188       1 308     1 373     1 442      1 514
 Other assets                                 1 438      1 663       1 918     1 930     1 980      2 031
 Total assets                               108 538    134 636     156 479   168 963   182 853    200 496

 Financial-sector payables                    4 704      6 991       5 153     6 441     6 763      7 101
 Deposits                                    86 580    102 939     125 073   133 084   143 635    157 272
 Securities outstanding                       1 459      6 362       1 834     3 617     4 160      4 784
 Subordinated loans                           1 615      1 619       1 612     1 611     1 611      1 611
 Other                                        2 259      2 773       2 379     2 730     2 864      3 005
 Total liabilities                           96 617    120 684     136 050   147 483   159 032    173 772

 Equity                                      11 921     13 952      20 429    21 480    23 821     26 724
 Total liabilities & equity                 108 538    134 636     156 479   168 963   182 853    200 496
Source: PKO BP, BRE Bank Securities


PKO BP: Annual rates of return on key balance-sheet items
 (%)                                           2007      2008        2009     2010F     2011F      2012F
 Loans                                           30        32          15         7         9         11
 Total assets                                     7        24          16         8         8         10
 Deposits                                         4        19          22         6         8          9
 Equity                                          18        17          46         5        11         12
Source: PKO BP, BRE Bank Securities


PKO BP: Key Balance-Sheet Ratios
 (%)                                           2007       2008        2009    2010F     2011F      2012F
 NPL ratio                                       3.8         4.4       8.1       9.1       8.9        8.1
 NPL coverage ratio                             79.9        63.9      40.2      45.0      53.0       61.0
 Loans / Assets                                 70.4        75.1      74.5      73.8      74.0       74.8
 Deposits / Assets                              79.8        76.5      79.9      78.8      78.6       78.4
 Loans / Deposits                               88.3        98.2      93.2      93.7      94.3       95.3
 Equity / Assets                                11.0        10.4      13.1      12.7      13.0       13.3
 CAR                                            12.0        11.3      14.7      12.9      13.0       13.0
 Tier 1 ratio                                   10.2         9.9      13.3      11.8      11.9       12.0
Source: PKO BP, BRE Bank Securities




15 September 2010                                                                                           54
                                                                                                                       PKO BP
        BRE Bank Securities


                                             Michał Marczak tel. (+48 22) 697 47 38
                                             Managing Director
                                             Head of Research
                                             michal.marczak@dibre.com.pl
                                             Strategy, Telco, Mining, Metals, Media




  Research Department:                                                Sales and Trading:

                                                                      Piotr Dudziński tel. (+48 22) 697 48 22
  Kamil Kliszcz tel. (+48 22) 697 47 06                               Director
  kamil.kliszcz@dibre.com.pl                                          piotr.dudzinski@dibre.com.pl
  Fuels, Chemicals, Energy, Retail
                                                                      Marzena Łempicka-Wilim tel. (+48 22) 697 48 95
  Piotr Grzybowski tel. (+48 22) 697 47 17                            Deputy Director
  piotr.grzybowski@dibre.com.pl                                       marzena.lempicka@dibre.com.pl
  IT, Media
                                                                      Traders:
  Maciej Stokłosa tel. (+48 22) 697 47 41
  maciej.stoklosa@dibre.com.pl                                        Emil Onyszczuk tel. (+48 22) 697 49 63
  Construction, Real-Estate Developers                                emil.onyszczuk@dibre.com.pl

  Jakub Szkopek tel. (+48 22) 697 47 40                               Grzegorz Stępien tel. (+48 22) 697 48 62
  jakub.szkopek@dibre.com.pl                                          grzegorz.stepien@dibre.com.pl
  Manufacturers
                                                                      Tomasz Dudź tel. (+48 22) 697 49 68
  Iza Rokicka tel. (+48 22) 697 47 37                                 tomasz.dudz@dibre.com.pl
  iza.rokicka@dibre.com.pl
  Banks                                                               Michał Jakubowski tel. (+48 22) 697 47 44
                                                                      michal.jakubowski@dibre.com.pl

                                                                      Tomasz Jakubiec tel. (+48 22) 697 47 31
                                                                      tomasz.jakubiec@dibre.com.pl

                                                                      Grzegorz Strublewski tel. (+48 22) 697 48 76
                                                                      grzegorz.strublewski@dibre.com.pl

                                                                      Michał Stępkowski tel. (+48 22) 697 48 25
                                                                      michal.stepkowski@dibre.com.pl

                                                                      Foreign Markets Unit:

                                                                      Adam Prokop tel. (+48 22) 697 48 46
                                                                      Foreign Markets Manager
                                                                      adam.prokop@dibre.com.pl

                                                                      Michał RoŜmiej tel. (+48 22) 697 48 64
                                                                      michal.rozmiej@dibre.com.pl

                                                                      Jakub Słotkowicz tel. (+48 22) 697 48 64
                                                                      jakub.slotkowicz@dibre.com.pl

                                                                      Jacek Wrześniewski tel. (+48 22) 697 49 85
                                                                      jacek.wrzesniewski@dibre.com.pl

                                                                      "Private Broker"

                                                                      Jarosław Banasiak tel. (+48 22) 697 48 70
                                                                      Manager, "Private Broker" Team
                                                                      jaroslaw.banasiak@dibre.com.pl

                                                                      Jacek Szczepański tel. (+48 22) 697 48 26
                                                                      Director, Active Sales
                                                                      jacek.szczepanski@dibre.com.pl


                                                                      Dom Inwestycyjny
                                                                      BRE Banku S.A.
                                                                      ul. Wspólna 47/49
                                                                      00-950 Warszawa
                                                                      www.dibre.com.pl

15 September 2010
                                                                                                                                            PKO BP
         BRE Bank Securities


List of abbreviations and ratios contained in the report:
EV – net debt + market value
EBIT – Earnings Before Interest and Taxes
EBITDA – EBIT + Depreciation and Amortisation
P/CE – price to earnings with amortisation
MC/S – market capitalisation to sales
EBIT/EV – operating profit to economic value
P/E – (Price/Earnings) – price divided by annual net profit per share
ROE – (Return on Equity) – annual net profit divided by average equity
P/BV – (Price/Book Value) – price divided by book value per share
Net debt – credits + debt papers + interest bearing loans – cash and cash equivalents
EBITDA margin – EBITDA/Sales

Recommendations of BRE Bank Securities
A recommendation is valid for a period of 6-9 months, unless a subsequent recommendation is issued within this period. Expected
returns from individual recommendations are as follows:
BUY – we expect that the rate of return from an investment will be at least 15%
ACCUMULATE – we expect that the rate of return from an investment will range from 5% to 15%
HOLD – we expect that the rate of return from an investment will range from –5% to +5%
REDUCE – we expect that the rate of return from an investment will range from -5% to -15%
SELL – we expect that an investment will bear a loss greater than 15%
Recommendations are updated at least once every nine months.

This document has been created and published by BRE Bank Securities S.A. The present report expresses the knowledge as well as opinions
of the authors on day the report was prepared. The opinions and estimates contained herein constitute our best judgement at this date and
time, and are subject to change without notice. The present report was prepared with due care and attention, observing principles of methodo-
logical correctness and objectivity, on the basis of sources available to the public, which BRE Bank Securities S.A. considers reliable, including
information published by issuers, shares of which are subject to recommendations. However, BRE Bank Securities S.A., in no case, guaran-
tees the accuracy and completeness of the report, in particular should sources on the basis of which the report was prepared prove to be inac-
curate, incomplete or not fully consistent with the facts. BRE Bank Securities S.A. bears no responsibility for investment decisions taken on the
basis of the present report or for any damages incurred as a result of investment decisions taken on the basis of the present report.

This document does not constitute an offer or invitation to subscribe for or purchase any financial instruments and neither this document nor
anything contained herein shall form the basis of any contract or commitment whatsoever. It is being furnished to you solely for your informa-
tion and may not be reproduced or redistributed to any other person. This document nor any copy hereof is not to be distributed directly or
indirectly in the United States, Australia, Canada or Japan.

Recommendations are based on essential data from the entire history of a company being the subject of a recommendation, with particular
emphasis on the period since the previous recommendation. Investing in shares is connected with a number of risks including, but not limited
to, the macroeconomic situation of the country, changes in legal regulations as well as changes on commodity markets. Full elimination of
these risks is virtually impossible.

It is possible that BRE Bank Securities S.A. renders, will render or in the past has rendered services for companies and other entities men-
tioned in the present report.

The present report was not transferred to the issuer prior to its publication.
BRE Bank Securities S.A. receives remuneration from BZ WBK, Handlowy, ING BSK, Kredyt Bank, Millennium, Pekao, PKO BP, for services
rendered.
BRE Bank Securities S.A. acts as market maker for PKO BP.
BRE Bank Securities S.A. has a business relationship with Pekao SA.

BRE Bank Securities S.A., its shareholders and employees may hold long or short positions in the issuer's shares or other financial instru-
ments related to the issuer's shares. BRE Bank Securities S.A., its affiliates and/or clients may conduct or may have conducted transactions
for their own account or for account of another with respect to the financial instruments mentioned in this report or related investments before
the recipient has received this report.

Copying or publishing the present report, in full or in part, or disseminating in any way information contained in the present report requires the
prior written agreement of BRE Bank Securities S.A.

Recommendations are addressed to all Clients of BRE Bank Securities S.A. This report is not for distribution to third parties.
The activity of BRE Bank Securities S.A. is subject to the supervision of the Polish Financial Supervision Commission.

Individuals who did not participate in the preparation of this recommendation, but had or could have had access to the recommendation prior
to its publication, are employees of BRE Bank Securities S.A. authorised to access the premises in which recommendations are prepared,
other than the analysts mentioned as the authors of the present recommendation.

Strong and weak points of valuation methods used in recommendations:
DCF – acknowledged as the most methodologically correct method of valuation; it is based in discounting financial flows generated by a com-
pany; its weak point is the significant susceptibility to a change of forecast assumptions in the model.
Comparative – based on a comparison of valuation multipliers of companies from a given sector; simple in construction, reflects the current
state of the market; weak points include substantial variability (fluctuations together with market indices) as well as difficulty in the selection of
the group of comparable companies.




15 September 2010
                                                                                          PKO BP
         BRE Bank Securities

Previous ratings issued for BZ WBK
Rating                         Hold   Accumulate         Hold
Rating date             2010-01-19    2010-03-03   2010-04-07
Price on rating day         190.00        180.00       216.50
WIG on rating day         41256.40      39635.50     43562.01


Previous ratings issued for Getin Holding
Rating                         Buy          Hold         Hold      Reduce         Hold
Rating date             2010-01-19    2010-03-05   2010-03-10   2010-04-07   2010-05-06
Price on rating day           8.80          9.65         9.69        11.37        10.19
WIG on rating day         41256.40      39885.37     40585.00     43562.01     41287.90



Previous ratings issued for Handlowy
Rating                         Buy          Buy    Accumulate         Buy
Rating date             2010-01-19    2010-03-19   2010-04-07   2010-06-02
Price on rating day          73.55         76.00        83.90        75.00
WIG on rating day         41256.40      41741.91     43562.01     40931.54



Previous ratings issued for ING BSK
Rating                  Accumulate    Accumulate         Hold   Suspended
Rating date             2010-01-19    2010-02-19   2010-04-07   2010-08-04
Price on rating day         739.00        663.50       766.00       821.00
WIG on rating day         41256.40      38586.52     43562.01     43412.75


Previous ratings issued for Kredyt Bank
Rating                  Accumulate    Accumulate         Hold
Rating date             2010-01-19    2010-02-12   2010-04-07
Price on rating day          14.10         13.85        14.60
WIG on rating day         41256.40      37322.52     43562.01


Previous ratings issued for Millennium
Rating                         Hold   Accumulate         Hold   Accumulate   Suspended
Rating date             2010-01-19    2010-02-11   2010-04-07   2010-04-27   2010-08-04
Price on rating day           4.49          3.90         4.45         4.84         4.68
WIG on rating day         41256.40      37786.61     43562.01     43664.78     43412.75


Previous ratings issued for Pekao
Rating                         Hold         Hold
Rating date             2010-01-19    2010-03-05
Price on rating day         176.00        165.50
WIG on rating day         41256.40      39885.37


Previous ratings issued for PKO BP
Rating                         Hold         Hold
Rating date             2010-01-19    2010-03-17
Price on rating day          38.90         39.07
WIG on rating day         41256.40      41653.11




15 September 2010

				
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