Poland's Bank Pekao first-quarter net profit surges 60%

GDANSK (Reuters) - Pekao's first-quarter net profit rose 60% to 1.45 billion zlotys ($349.7 million), underpinned by an improvement in its net interest income, with no unusual events encumbering the earnings, the Polish bank said on Thursday.

The quarterly numbers came in above analysts' expectations of 1.30 billion zlotys.

Net interest income for the period rose 34% to 2.77 billion zlotys.

"We entered 2023 with very good results, growing volumes and record account sales. Of course, we and the entire banking sector face challenges related to the economic slowdown, but I think that we will once again prove our flexibility to meet customer needs and business resilience," CEO Leszek Skiba said in a statement.

"Traditionally, we attach great importance to the diversification of the business model, the quality of the portfolio and the strength of our balance sheet. Proof of our strong capital position are plans to share profits with shareholders," he added.

The bank's management recommended a dividend payment of 3.65 zlotys per share from 2022 net profit.

At the end of March, the group's total capital ratio (TCR) was at 17.5% with Tier1 amounting to 15.7%.

Net interest margin in the first quarter rose to 4.15% from 4.13% in the prior quarter, and 3.44% in the first quarter of 2022.

Standard costs of risk for the period fell to 30 bp from 39 bp in the fourth quarter of 2022.

The bank said cost of credit risk is at a low level, close to the one achieved last year. In the following months, however, Pekao expects moderate growth in the cost of credit risk.

($1 = 4.1462 zlotys)

(Reporting by Adrianna Ebert; Editing by Jacqueline Wong and Sherry Jacob-Phillips)