The Bank has identified the following factors which can affect its financial results within the next several months:
- the scale of demand for banking services and the customer ability to repay their financial obligations on time largely depends on their financial condition. In addition to the national macroeconomic situation, the economic standing of many customer groups also depends on economic policies. Both the slowdown of growth of the Polish economy and change of the legal framework in which businesses operate may adversely affect the financial situation of selected customers of our Bank,
- progressing consolidation and restructuring processes in the banking sector,
- growth of banking services offered by non-regulated entities,
- interest rate policies of the Polish Monetary Policy Committee,
- regulatory changes.
Furthermore, the Bank notices some trends that can provide development opportunities as well as others that will be a challenge for the entire sector.
Opportunities
- Continued economic growth and increasing wealth of the society (including aspirations) ensuring demand for financial services (including loan products which are key for Alior Bank).
- High confidence placed in banks as compared to other players in the financial sector (especially FinTechs and technology companies).
- Regulatory changes related to open banking (PSD2) providing new opportunities for access to customers and development of offering by easier integration of third-party solutions.
- Development of new technologies to enable increased profitability.
- Growing penetration of online access, mobile devices and – as a result – digital banking in Poland.
- Progressing consolidation and restructuring processes in the banking sector.
Threats
- Risk of sudden downturn in the business cycle and deteriorated economic situation (on the national and/or global scale), translating, among other things, into lower quality of the loan portfolio.
- Deteriorated situation in the banking sector as a result of regulatory changes (especially those that increase the cost of doing business and limiting the scale of revenues), disruptions (e.g. bankruptcy of institutions) or higher costs (e.g. due to payments to the Banking Guarantee Fund (BFG).
- More fierce competition in the financial services market due to: i) consolidation of the banking sector, ii) development of new financial institutions (FinTechs), iii) perspective of the development of financial services by global technology companies, and iv) effects of PSD2 regulations coming into force.
- Limited readiness of most customer segments to change their main banking relationship. Low loyalty of customers from younger age segments.
- Continued work pay pressure, especially in the IT area, which makes it more difficult to comply with the projected costs and to reduce employee turnover.
- Risks involving cybersecurity of Polish banking sector actors, including coordinated action.