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3rd Quarter Results

12th Nov 2008 13:24

RNS Number : 0124I

Bank Pekao SA

12 November 2008

BANK

POLSKA KASA OPIEKI

SPOLKA AKCYJNA

Interim financial statements

of Bank Pekao S.A. Group

for the third quarter of 2008

prepared according to

International Financial Reporting Standards

Selected financial statements translated into EUR

		in PLN ths		in EUR ths
	Position	3 Quarters of 2008	3 Quarters of 2007	3 Quarters of 2008	3 Quarters of 2007
I.	Net interest income	3 400 019	1 856 507	992 793	484 551
II.	Net fee and commission income	1 788 788	1 650 083	522 320	430 674
III.	Operating profit	3 379 355	1 847 201	986 759	482 122
IV.	Profit before income tax	3 472 115	1 962 311	1 013 845	512 166
V.	Net profit (loss)	2 818 798	1 598 987	823 079	417 338
VI.	Net profit (loss) attributable to equity holders of the Company	2 808 628	1 595 656	820 109	416 469
VII.	Net profit (loss) attributable to minority interest	10 170	3 331	2 970	869
VIII.	Net cash from operating activities	(1 090 485)	5 351 505	(318 418)	1 396 749
IX.	Net cash used in investing activities	(861 556)	(3 346 274)	(251 571)	(873 382)
X.	Net cash from financing activities	(2 713 524)	(1 472 010)	(792 339)	(384 196)
XI.	Net increase / decrease in cash and cash equivalents	(4 665 565)	533 221	(1 362 328)	139 171
XII.	Total assets	127 102 471	75 759 922	37 292 043	20 055 572
XIII.	Amounts due to the Central Bank	1 267 550	1 546 890	371 901	409 501
XIV.	Amounts due to other banks	14 640 718	6 624 885	4 295 607	1 753 775
XV.	Amounts due to customers	86 660 600	55 987 623	25 426 342	14 821 343
XVI.	Minority interest	86 317	16 364	25 326	4 332
XVII.	Equity attributable to the Company's equity holders	15 079 626	8 684 374	4 424 383	2 298 974
XVIII.	Share capital	262 213	167 103	76 934	44 236
XIX.	Number of shares	262 212 629	167 103 098	262 212 629	167 103 098
XX.	Book value per share (in PLN/EUR)	57,51	51,97	16,87	13,76
XXI.	Diluted book value per share (in PLN/EUR)	57,47	51,91	16,86	13,74
XXII.	Earnings per 1 ordinary share (in PLN/EUR)	10,71	9,55	3,13	2,49
XXIII.	Diluted earnings per 1 ordinary share (in PLN/EUR)	10,71	9,54	3,13	2,49
XXIV.	Paid dividend per share (in PLN/EUR)	9,60	9,00	2,54	2,31
XXV.	Capital adequacy ratio	11,08	13,73	x	x
XXVI.	Risk weighted assets (*)	101 877 461	45 210 625	29 890 990	11 968 398
XXVII.	Core funds (Tier I)	11 292 776	6 208 488	3 313 316	1 643 544
XXVIII.	Supplementary funds (Tier II)	-	-	-	-
(*) Data as at 30th September 2008 are disclosed in accordance with the Resolution 1/2007 of Banking Supervisory Commission Basel II.

Content

1 Summary

2 Accounting principles adopted in the preparation of the quarterly report

3 Consolidated financial information - prepared in a comparable basis

4 Financial statements

5 Additional information

5.1 The Group

5.2 Results achieved in three quarters of 2008 and factors which influenced these results

5.2.1 Results of the Group

5.2.2 The structure of the net profit

5.2.3 Achievements of Bank Pekao S.A.

5.2.4 Achievements of subsidiaries

5.3 Segment reporting

5.4 Adjustments for provisions, deferred tax provision and assets

5.5 Write-offs for revaluation of assets

5.6 Information on contingent assets and liabilities

5.7 Post balance sheet events

5.8 Seasonality or cyclical nature of the Bank's activity

5.9 The sale of non-performing receivables

5.10 Issuance, redemption and repayment of debt securities

5.11 Dividend paid

5.12 Effects of changes in the Group's structure

5.13 The position of the Management Board regarding the possibility of achieving previously published forecasts

5.14 Information regarding shareholders owning at least 5% of the total number of votes at the General Meeting of Bank Pekao S.A.

5.15 The Issuer's shares held by the Management and Supervisory Board Members

5.16 Pending litigations

5.17 Assessment of the financial credibility of Bank Pekao S.A.

5.18 Transactions of related entities

5.19 Enclosing agreement between UniCredit S.p.A. and Ministry of the State Treasury

5.20 Factors which will affect the results of at least the next quarter

1. Summary

In order to provide better comparability, the financial statements in respect of three quarters of 2007 (hereafter referred to as "combined data" or "combined result") are presented as a "combination" of the financial results of the Bank Pekao Group and Pekao285, i.e. that part of Bank BPH S.A. merged with Bank Pekao S.A. through the division of Bank BPH S.A. as registered on November 29, 2007".

In three quarters of 2008 Bank Pekao S.A. Group is reporting net profit attributable to equity holders of PLN 2,808.6 million, i.e. PLN 52.6 million (1.9%) higher than combined result in three quarters of 2007, with positive contribution of results of the third quarter of 2008 with the net profit amounting to PLN 841.3 million i.e. PLN 11.5 million (1.4%) higher than net profit reported for second quarter of 2008.

The positive results of three quarters of 2008 were achieved in the environment where, since the beginning of the year, market conditions remained under pressure of the difficult situation in the international financial markets and Warsaw Stock Exchange. As a result, further decrease of valuation of mutual funds assets was observed, accompanied by continued redemptions of mutual funds units. Growth of financial result was supported by commercial activity, thanks to which the decrease of commissions related to investment products was partially compensated for by the growth in net interest income. At the same time operating costs were kept under control (despite the integration cost incurred) and cost of risk has substantially decreased.

Results achieved in this period are confirming high profitability of Pekao Group measured by return on average equity (ROE), which in three quarters of 2008 stood at 24.3%. The strength of the capital structure of Bank Pekao S.A. Group is reflected by capital adequacy ratio at the level of 11.1% after three quarters of 2008, that allows for further sound and stable development of the Group's activity.

The Bank continued its policy of offering only PLN mortgage loans. Thanks to this consistent credit risk policy, the Bank is not exposed to exchange rate risks, with portfolio of old mortgage loans denominated in foreign currencies constituting only 6.3% of total loans.

In three quarters of 2008, the Group's total income amounted to PLN 6,377.2 million, PLN 36.1 million (0.6%) higher than combined income in three quarters of 2007.

Growth in net interest income by PLN 286.8 million (9.0%) allowed to partially compensate for the decrease in net fee and commission income.

The Group's net fee and commission income in three quarters of 2008 decreased by PLN 493,8 million (21,6%) in comparison to combined net fee and commission income in three quarters of 2007, affected by the decrease in commission on investment products. As a result of significant decline in demand, lower sales of mutual funds translated into lower up-front fees while the decrease of mutual funds assets under management additionally impacted management commissions. Moreover, lower activity on Warsaw Stock Exchange caused a decrease of fee and commission related to brokerage fee.

Total overhead costs (including depreciation) in three quarters of 2008 amounted to PLN 2,838.5 million, i.e. were higher in comparison with the combined costs in three quarters of 2007 by PLN 68.5 million (2.5%), i.e. significantly below the inflation rate.

In three quarters of 2008, impairment losses on loans and advances amounted to PLN 159.4 million and were PLN 125.1 million (44.0%) lower than the combined result for three quarters of 2007, thanks to effective credit risk management. At the end of September 2008, the ratio of impaired receivables to total receivables amounted to 5.9% compared to 7.7% at the end of 2007. The ratio decreased due to the increased volume of total loans and a reduced volume of impaired loans, also as a result of sale of non-performing receivables transaction completed in September 2008.

At the end of September 2008, total volume of liabilities to Group's customers (including customer deposits, structured certificates of deposits and repo and sell-buy-back transactions) amounted to PLN 87,267.7 million and was PLN 3,926.7 million lower (4.3%) than at the end of 2007. Total volume of deposits of retail customers and structured certificates of deposits was PLN 3,160.5 million higher than at the end of 2007 reaching the level of PLN 41,644.1 million, despite negative impact of PLN appreciation. Total volume of deposits of Group's corporate customers incl. repo and sell buy back transactions amounted to PLN 45,623.5 million, decreasing since the beginning of the year by ca. PLN 3.1 billion due to deposits of budgetary sector institutions and by ca. PLN 4,0 billion due to decreasing cashflows of corporate entities.

The volume of loans of Group's clients as at the end of September 2008 amounted to PLN 77,404.3 million, increasing by PLN 4,527.1 million since the beginning of the year thanks to both retail and corporate segments (excluding impact of the transaction of sale of non-performing receivables portfolio completed in September 2008, decreasing the volume of gross loans for the amount of ca PLN 955 million). Total volume of retail loans amounted to PLN 24,713.0 million and volume of corporate loans amounted to PLN 52,691,3 million at the end of September.

2 Accounting principles adopted in the preparation of the quarterly report

The interim consolidated report of the Capital Group of Bank Pekao S.A. and the stand alone report of Bank Pekao S.A. were prepared in compliance with International Financial Reporting Standards (IFRS), published by the International Accounting Standards Board.

The presented report meets the requirements of International Accounting Standard 34 relating to interim financial reports and of the Decree of the Council of Ministers dated October 19, 2005 on current and periodic information submitted by the issuers of securities.

The consolidated interim financial statements of the Group and enclosed interim financial statements of the Bank have been prepared in accordance with the accounting principles applied for the purpose of asset and liabilities valuation and measurement of financial results, as disclosed in the consolidated financial statements of the Capital Group of Bank Pekao S.A. and the standalone financial statement of Bank Pekao S.A. ended as at December 31, 2007 and published on March 21, 2008.

In the interim report no changes were made to accounting principles in relation to accounting principles described in the reports mentioned above.

Data presented in the interim consolidated financial statements have been prepared in a manner assuring their comparability, with the exception of historical data relating to spin-off transactions made between Bank Pekao S.A. and Bank BPH S.A., realized by a transfer of the part of BPH S.A. property in the form of an organized part of the enterprise to Bank Pekao S.A.

For illustrative purposes financial information presented in the chapters 3 and 5 of this report have been prepared on a comparative basis. In order to achieve comparability the historical information regarding the income statement for three quarters of 2007 and the balance sheet statement as at September 30, 2007 have been restated by combining the income statement and balance sheet items of Pekao Group and Pekao285.

3 Consolidated financial information - prepared in a comparable basis

The tables below present financial information prepared on a comparable basis. In order to achieve comparability the historical information regarding the income statement for three quarters of 2007 and the balance sheet statement as at September 30, 2007 have been restated by combining the income statement and balance sheet items of Pekao Group and Pekao285. Such combined data has been adjusted by the elimination of transactions made between Bank Pekao and Pekao285 during that period.

The combined financial information has been prepared for illustrative purposes only as it includes results of Pekao285 that were generated as part of Bank BPH operations. Accordingly it does not purport to be indicative of what the operating results or financial position would have been had Pekao285 operations been integrated with Bank Pekao during that period. The combined financial information for three quarters of 2007 does not reflect the strategy and organizational structure under which Pekao285 has been operating as a part of Bank Pekao since its merger.

QUARTERLY FINANCIAL REPORT

CONSOLIDATED INCOME STATEMENT - combined data (in '000 PLN)	3 Quarters 2008 period from 08-01-01 to 08-09-30	3 Quarters 2007 period from 07-01-01 to 07-09-30

Net interest income	3 400 019	3 174 340
Net fee and commission income	1 788 788	2 282 587
Other income	752 225	884 140
Gain on sale of discontinued operations	436 172	-
Total income	6 377 204	6 341 067
Overhead costs	(2 838 459)	(2 770 027)
Net operating income	3 538 745	3 571 040
Net impairment losses on financial assets and net provisions for guarantees and commitments	(159 390)	(284 476)
Share of profit (loss) of associates and joint venture entities valued at the equity method	92 760	115 110
Profit before income tax	3 472 115	3 401 674
Income tax expense from	(569 909)	(637 843)
Income tax expense on gain on sale of discontinued operations	(83 408)	-
Net profit	2 818 798	2 763 831

1. Attributable to equity holders of the Company	2 808 628	2 755 965
2. Attributable to minority interest	10 170	7 866

	CONSOLIDATED BALANCE SHEET - combined data (in PLN '000)	30.09.2008	31.12.2007	30.09.2007
ASSETS
	Cash and amounts due from Central Bank	6 949 990	5 121 210	4 597 074
	Debt securities eligible for rediscounting at the Central Bank	967	1 108	24 385
	Loans and advances to banks	11 081 814	16 960 034	13 595 946
	Financial assets as held for trading	4 752 721	3 165 113	3 223 692
	Derivative financial instruments	1 748 163	1 922 958	2 249 049
	Other financial instruments at fair value through profit or loss	3 981 712	3 777 729	11 784 655
	Loans and advances to customers	71 483 443	66 658 037	66 624 442
	Net investment in the finance lease	3 273 895	3 043 768	2 865 096
	Derivatives used for hedging	50 993	40 672	79 496
	Investment securities	18 542 270	17 620 419	17 730 732
	1. Available for sale	17 652 264	17 033 529	17 211 546
	2. Held to maturity	890 006	586 890	519 186
	Assets of disposal group classifield as held for sale	105 269	65 068	8 158
	Investments in associated undertakings	352 673	388 169	317 284
	Intangible assets	677 937	688 559	662 976
	Tangible fixed assets	1 890 172	2 021 052	2 025 003
	Investment property	56 289	58 559	60 659
	Income taxes	452 149	421 486	364 106
	1. Current tax assets	4 077	2 493	5 167
	2. Deferred income tax assets	448 072	418 993	358 939
	Other assets	1 702 014	2 142 210	1 260 362
TOTAL ASSETS		127 102 471	124 096 151	127 473 115

LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
	Amounts due to the Central Bank	1 267 550	1 485 921	1 546 890
	Amounts due to other banks	14 640 718	8 456 191	10 516 204
	Financial liabilities as held for trading	1 076 677	491 382	437 843
	Derivative financial instruments	1 810 087	1 661 282	1 901 272
	Amounts due to customers	86 660 600	89 944 078	92 808 231
	Derivatives used for hedging	38 607	28 965	65 046
	Debt securities in issue	3 498 510	3 716 778	3 390 208
	Liabilities directly associated with assets classified as held for sale	-	55 291	-
	Current income tax liabilities	349 096	53 169	49 178
	Provisions for deferred income tax	1 991	324	295
	Provisions	358 101	379 828	329 545
	Other liabilities	2 234 591	3 075 647	2 582 636
Total liabilities		111 936 528	109 348 856	113 627 348

Shareholders' equity
Capital and reserves attributable to the Company's equity holders		15 079 626	14 666 788	13 770 297
	Share capital	262 213	261 867	261 867
	Other capital and reserves	12 071 996	12 393 624	10 896 646
	Prior and current year profits	2 745 417	2 011 297	2 611 784
Minority interest		86 317	80 507	75 470
Total Shareholders' equity		15 165 943	14 747 295	13 845 767
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY		127 102 471	124 096 151	127 473 115

Quarterly individual financial report - combined data

INCOME STATEMENT - combined data (in '000 PLN)		3 Quarters 2008 period from 08-01-01 to 08-09-30	3 Quarters 2007 period from 07-01-01 to 07-09-30

	Net interest income	3 107 450	2 930 053
	Net fee and commission income	1 581 557	1 956 801
	Other income	1 249 257	1 121 781
	Overhead costs	-2 572 728	-2 528 280
	Net operating income	3 365 536	3 480 355
	Net impairment losses on financial assets and net provisions for guarantees and commitments	-133 244	-229 174
	Profit before income tax	3 232 292	3 251 181
	Income tax expense	-531 347	-582 906
	Net profit	2 700 945	2 668 275

BALANCE SHEET (in PLN '000) - combined data		30.09.2008	31.12.2007	30.09.2007
ASSETS
	Cash and amounts due from Central Bank	6 918 823	5 082 829	4 577 508
	Debt securities eligible for rediscounting at the Central Bank	967	1 108	24 385
	Loans and advances to banks	12 219 621	17 551 065	13 455 496
	Financial assets held for trading	4 840 136	2 828 802	2 891 030
	Derivative financial instruments	1 758 289	1 917 960	2 192 151
	Other financial instruments at fair value through profit or loss	3 981 665	3 777 679	11 784 601
	Loans and advances to customers	67 951 478	63 955 254	64 377 939
	Derivatives used for hedging	50 993	40 672	79 496
	Investment securities	18 543 049	17 715 886	17 835 532
	1. Available for sale	17 653 043	17 128 996	17 316 346
	2. Held to maturity	890 006	586 890	519 186
	Non-current assets held for sale	95 526	514	2 518
	Shares in subsidiaries	1 631 876	1 631 694	1 621 742
	Shares in associates	56 717	56 530	51 129
	Intangible assets	655 108	668 183	639 192
	Tangible fixed assets	1 774 707	1 908 424	1 915 870
	Investment property	53 631	55 730	58 132
	Income taxes	372 286	349 412	309 526
	1. Current tax assets	-	-	-
	2. Deferred income tax assets	372 286	349 412	309 526
	Other assets	1 729 831	2 026 814	1 019 915
TOTAL ASSETS		122 634 703	119 568 556	122 836 162

LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
	Amounts due to the Central Bank	1 267 550	1 485 921	1 546 890
	Amounts due to other banks	12 362 709	6 884 279	8 703 915
	Financial liabilities held for trading	1 076 677	491 382	437 843
	Derivative financial instruments	1 836 469	1 683 306	1 861 502
	Amounts due to customers	86 353 589	89 160 124	91 922 258
	Derivatives used for hedging	38 607	29 083	65 046
	Debt securities in issue	2 276 670	2 097 070	2 034 586
	Current income tax liabilities	275 509	51 793	43 656
	Provisions for deferred income tax	-	-	-
	Provisions	357 356	374 998	325 385
	Other liabilities	2 095 160	2 932 216	2 353 569
Total liabilities		107 940 296	105 190 172	109 294 650

Shareholders' equity
	Share capital	262 213	261 867	261 867
	Profit for the year and retained earnings	2 700 945	2 006 600	2 668 275
	Other capital and reserves	11 731 249	12 109 917	10 611 371
TOTAL SHAREHOLDERS' EQUITY		14 694 407	14 378 384	13 541 512
TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES		122 634 703	119 568 556	122 836 162

4 Financial statements

Quarterly financial statements
	III Quarter 2008			3 Quarters 2008			III Quarter 2007			3 Quarters 2007
	period from 08-07-01 to 08-09-30			period from 08-01-01 to 08-09-30			period from 07-07-01 to 07-09-30			period from 07-01-01 to 07-09-30

CONSOLIDATED INCOME STATEMENT (in '000 PLN)	Continuing operations	Discontinued operations	Total	Continuing operations	Discontinued operations	Total	Continuing operations	Discontinued operations	Total	Continuing operations	Discontinued operations	Total

Interest income	2 061 453	-	2 061 453	6 086 664	-	6 086 664	1 122 255	-	1 122 255	3 177 740	-	3 177 740
Interest expense	(926 576)	-	(926 576)	(2 686 532)	(113)	(2 686 645)	(478 760)	(789)	(479 549)	(1 318 965)	(2 268)	(1 321 233)
Net interest income	1 134 877	-	1 134 877	3 400 132	(113)	3 400 019	643 495	(789)	642 706	1 858 775	(2 268)	1 856 507
Fee and commission income	687 536	-	687 536	2 175 563	556	2 176 119	610 973	11 543	622 516	1 823 288	43 579	1 866 867
Fee and commission expense	(128 335)	-	(128 335)	(387 219)	(112)	(387 331)	(79 939)	(1 016)	(80 955)	(212 994)	(3 790)	(216 784)
Net fee and commission income	559 201	-	559 201	1 788 344	444	1 788 788	531 034	10 527	541 561	1 610 294	39 789	1 650 083
Dividend income	-	-	-	5 240	-	5 240	65	54	119	2 060	120	2 180
Result on financial instruments at fair value	48 467	-	48 467	41 651	(30)	41 621	5 786	(292)	5 494	50 213	384	50 597
Result on investment securities	4 524	-	4 524	85 265	-	85 265	5 545	-	5 545	16 707	-	16 707
Foreign exchange result	113 883	-	113 883	387 467	-	387 467	82 800	-	82 800	220 451	-	220 451
Other operating income	185 215	-	185 215	315 487	1	315 488	53 852	4	53 856	116 700	4	116 704
Other operating expenses	(36 186)	-	(36 186)	(82 757)	(99)	(82 856)	(17 006)	(4)	(17 010)	(48 804)	(4)	(48 808)
Net other operating income	149 029	-	149 029	232 730	(98)	232 632	36 846	-	36 846	67 896	-	67 896
Gain on sale of discontinued operations	-	-	-	-	436 172	436 172	-	-	-	-	-	-
Net impairment losses on financial assets and net provisions for guarantees and commitments	(37 576)	-	(37 576)	(159 390)	-	(159 390)	(40 233)	-	(40 233)	(132 572)	-	(132 572)
Overhead costs	(944 824)	-	(944 824)	(2 837 816)	(643)	(2 838 459)	(638 853)	(4 651)	(643 504)	(1 871 104)	(13 544)	(1 884 648)
Operating profit	1 027 581	-	1 027 581	2 943 623	435 732	3 379 355	626 485	4 849	631 334	1 822 720	24 481	1 847 201
Share of profit (loss) of associates and joint venture entities valued at the equity method	24 562	-	24 562	92 760	-	92 760	36 821	-	36 821	115 110	-	115 110
Profit before income tax	1 052 143	-	1 052 143	3 036 383	435 732	3 472 115	663 306	4 849	668 155	1 937 830	24 481	1 962 311
Income tax expense	(207 404)	-	(207 404)	(569 965)	56	(569 909)	(111 501)	(872)	(112 373)	(358 333)	(4 991)	(363 324)
Income tax expense on gain on sale of discontinued operations	-	-	-	-	(83 408)	(83 408)	-	-	-	-	-	-
Net profit	844 739	-	844 739	2 466 418	352 380	2 818 798	551 805	3 977	555 782	1 579 497	19 490	1 598 987

1. Attributable to equity holders of the Company	841 365	-	841 365	2 456 248	352 380	2 808 628	550 433	3 977	554 410	1 576 166	19 490	1 595 656
2. Attributable to minority interest	3 374	-	3 374	10 170	-	10 170	1 372	-	1 372	3 331	-	3 331


Earnings per share (in PLN per share)
- basic for the period				9,38	1,34	10,71				9,43	0,12	9,55
- diluted for the period				9,36	1,34	10,71				9,42	0,12	9,54

	CONSOLIDATED BALANCE SHEET (in PLN '000)	30.09.2008	31.12.2007	30.09.2007
ASSETS
	Cash and amounts due from Central Bank	6 949 990	5 121 210	3 894 012
	Debt securities eligible for rediscounting at the Central Bank	967	1 108	2 055
	Loans and advances to banks	11 081 814	16 960 034	10 886 924
	Financial assets as held for trading	4 752 721	3 165 113	2 400 852
	Derivative financial instruments	1 748 163	1 922 958	641 153
	Other financial instruments at fair value through profit or loss	3 981 712	3 777 729	1 493 452
	Loans and advances to customers	71 483 443	66 658 037	35 056 118
	Net investment in the finance lease	3 273 895	3 043 768	1 199 196
	Derivatives used for hedging	50 993	40 672	-
	Investment securities	18 542 270	17 620 419	16 478 658
	1. Available for sale	17 652 264	17 033 529	15 959 472
	2. Held to maturity	890 006	586 890	519 186
	Assets of disposal group classifield as held for sale	105 269	65 068	1 382
	Investments in associated undertakings	352 673	388 169	239 432
	Intangible assets	677 937	688 559	604 559
	Tangible fixed assets	1 890 172	2 021 052	1 463 184
	Investment property	56 289	58 559	60 659
	Income taxes	452 149	421 486	292 332
	1. Current tax assets	4 077	2 493	5 167
	2. Deferred income tax assets	448 072	418 993	287 165
	Other assets	1 702 014	2 142 210	1 045 954
TOTAL ASSETS		127 102 471	124 096 151	75 759 922

LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
	Amounts due to the Central Bank	1 267 550	1 485 921	1 546 890
	Amounts due to other banks	14 640 718	8 456 191	6 624 885
	Financial liabilities as held for trading	1 076 677	491 382	437 843
	Derivative financial instruments	1 810 087	1 661 282	600 084
	Amounts due to customers	86 660 600	89 944 078	55 987 623
	Derivatives used for hedging	38 607	28 965	-
	Debt securities in issue	3 498 510	3 716 778	41 803
	Liabilities directly associated with assets classified as held for sale	-	55 291	-
	Current income tax liabilities	349 096	53 169	50 612
	Provisions for deferred income tax	1 991	324	295
	Provisions	358 101	379 828	223 319
	Other liabilities	2 234 591	3 075 647	1 545 830
Total liabilities		111 936 528	109 348 856	67 059 184

Shareholders' equity
Capital and reserves attributable to the Company's equity holders		15 079 626	14 666 788	8 684 374
	Share capital	262 213	261 867	167 103
	Other capital and reserves	12 071 996	12 393 624	7 065 795
	Prior and current year profits	2 745 417	2 011 297	1 451 476
Minority interest		86 317	80 507	16 364
Total Shareholders' equity		15 165 943	14 747 295	8 700 738
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY		127 102 471	124 096 151	75 759 922

Capital adequacy ratio		11,08	12,12	13,73
Book value		15 079 626	14 666 788	8 684 374
Number of shares		262 212 629	261 866 657	167 103 098
Book value per share ( in PLN per share)		57,51	56,01	51,97
Diluted numebr of shares		262 408 794	262 061 017	167 292 458
Diluted book value per share (in PLN per share)		57,47	55,97	51,91


CONSOLIDATED STATEMENT OF CHANGES	2008	2007	2007
IN SHAREHOLDERS' EQUITY (in PLN '000)	period from 08-01-01 to 08-09-30	period from 07-01-01 to 07-12-31	period from 07-01-01 to 07-09-30
Shareholders equity at the beginning of the period	14 747 295	8 892 627	8 892 627
a) adjustment related to IFRS/IAS introduction	-	-	-
b) change of consolidation method	-	-	-
c) adjustment due to fundamental errors	-	-	-
Adjusted shareholders equity at the beginning of the period	14 747 295	8 892 627	8 892 627
1. Share capital at the beginning of the period	261 867	166 808	166 808
a) Increase	346	95 059	295
- new shares issue	346	95 059	295
b) Decrease	-	-	-
- redemptions	-	-	-
1. Share capital at the end of the period	262 213	261 867	167 103
2. Earnings from previous years at the beginning of the period	2 011 297	1 680 938	1 680 938
a) Increase	-	-	-
- undistributed profits of prior period	-	-	-
- other	-	-	-
b) Decrease	(2 074 508)	(1 825 119)	(1 825 119)
- appropriation to general banking risk fund	-	(100 000)	(100 000)
- appropriation to other reserve capital	(554 597)	(158 756)	(158 757)
- appropriation to reserve capital	(35 030)	(27 856)	(27 856)
- dividend	(1 484 884)	(1 503 928)	(1 503 928)
- other	3	(34 579)	(34 578)
2. Earnings from previous years at the end of the period	(63 211)	(144 181)	(144 181)
3. Other capital and reserves at the beginning of the period	12 393 624	7 028 137	7 028 137
a) Increase	721 865	5 807 664	321 118
- appropriation of net profit	589 627	286 612	286 613
- share premium on issue of new shares	42 229	5 516 702	31 657
- valuation of securities available for sale (net); in which:	56 364	-	-
gains/losses from valuation of securities available for sale	69 543	-	-
provision for deferred income tax of the securities portfolio valuation	(13 179)	-	-
- hedging financial instrument valuation (net); in which:	31 267	-	-
gains/losses from valuation of hedging instruments	38 601	-	-
provision for deferred income tax of hedging instruments valuation	(7 334)	-	-
- employee share option proceeds	2 378	4 350	2 848
- foreign exchange differences from valuation of foreign entities	-	-	-
- other	-	-	-
b) Decrease	(1 043 493)	(442 177)	(283 459)
- cost of issues	(204)	(96 414)	(34)
- dividend	(1 032 357)	-	-
- valuation of securities available for sale (net) in which:	-	(212 958)	(112 830)
gains/losses from valuation of securities available for sale	-	(262 878)	(139 275)
provision for deferred income tax of the securities portfolio valuation	-	49 920	26 445
- hedging financial instrument valuation	-	(50 495)	-
- foreign exchange differences from valuation of foreign entities	(4 823)	(10 901)	(243)
- other	(6 109)	(71 409)	(170 352)
3. Other capital and reserves at the end of the period	12 071 996	12 393 624	7 065 796
4. Net profit	2 808 628	2 155 478	1 595 656
Shareholders' equity at the end of the period	15 079 626	14 666 788	8 684 374
Minority interest at the beginning of the period	80 507	16 744	16 744
a) Changes:	5 810	63 763	(380)
- net profit	10 170	6 999	3 331
- other	(4 360)	56 764	(3 711)
Minority interest at the end of the period	86 317	80 507	16 364
Total equity	15 165 943	14 747 295	8 700 738


CONSOLIDATED STATEMENT OF CASH FLOW	III Quarter 2008	3 Quarters 2008	III Quarter 2007	3 Quarters 2007
(in PLN '000)	period from 08-07-01 to 08-09-30	period from 08-01-01 to 08-09-30	period from 07-07-01 to 07-09-30	period from 07-01-01 to 07-09-30
Cash flow from operating activities - indirect method
Net profit (loss)	841 365	2 808 628	554 410	1 595 656
Adjustments:	(1 582 006)	(3 899 113)	2 031 989	3 755 849
Deprecition	104 580	307 771	82 602	243 319
Share of profit (loss) associates	(24 562)	(92 760)	(36 821)	(115 110)
Foreign exchange differences	(92 904)	62 927	126 888	227 189
(Profit) loss on investing activities	(3 405)	(82 607)	(8 229)	(29 636)
Impariment	-	-	-	-
Interest and dividend	(5 969)	(112 814)	(216 182)	(608 124)
Change in loans and advances to banks	(2 715 575)	(616 125)	(84 351)	(156 914)
Change in financial assets as held for trading and other financial instruments at fair value through profit or loss	(1 870 485)	(1 791 591)	(590 673)	110 263
Change in derivative financial instruments	435 008	174 795	49 424	(114 511)
Change in loans and advances to customers	(2 259 798)	(4 825 265)	(1 110 934)	(3 277 527)
Change in net investment in the finance lease	(32 674)	(230 127)	(50 626)	(232 589)
Change in investment securities available for sale	40 093	23 833	(85)	(39 757)
Change in deferred income tax assets	(18 244)	(49 592)	23 421	5 405
Change in other assets	(96 529)	484 641	(226 302)	(503 892)
Change in amounts due to banks	4 929 967	5 966 156	78 644	4 116 521
Change in liabilities as held for trading	837 353	585 295	307 869	226 470
Change in derivative financial instruments and other financial liabilitiy at fair value through profit or loss	(350 078)	148 805	(76 226)	95 884
Change in amounts due to customers	(27 188)	(3 283 478)	3 848 014	4 194 040
Change in debt securities in issue	12 284	37 639	41 800	41 800
Change in provisions	240	(21 727)	3 833	(624)
Change in other liabilities	(556 753)	(892 557)	(89 486)	(267 052)
Income tax paid	(114 789)	(398 091)	(109 179)	(478 938)
Carrent tax	227 422	705 759	68 588	319 632
Net cash from operating activities	(740 641)	(1 090 485)	2 586 399	5 351 505

Cash flows from investing activities
Investing activity inflows	7 273 391	18 142 858	6 222 111	29 412 719
Sale of subsidiaries and associates	37	37	22 598	22 598
Sale of investment securities	7 386 030	18 003 504	6 168 967	28 916 843
Sale of intangible assets and tangible fixed assets	2 898	8 458	30	629
Other investing inflows	(115 574)	130 859	30 516	472 649
Investing activity outflows	(6 789 101)	(19 004 414)	(8 836 773)	(32 758 993)
Purchase of subsidiaries and associates	-	(5 182)	-	-
Purchase of investment securities	(6 681 624)	(18 734 169)	(8 705 001)	(32 490 775)
Purchase of intangible assets and tangible fixed assets	(107 477)	(265 063)	(131 772)	(268 218)
Other investing outflows	-	-	-	-
Net cash used in investing activities	484 290	(861 556)	(2 614 662)	(3 346 274)

Cash flows from financing activities
Financing activity inflows	97 942	222 279	-	31 918
Proceeds from loans and advances from other banks	-	-	-	-
Proceeds from other loans and advances	-	-	-	-
Issue of debt securities	97 942	179 704	-	-
Increase of subordinated liabilities	-	-	-	-
Issue of ordinary shares	-	42 575	-	31 918
Sale of own shares	-	-	-	-
Other financing inflows	-	-	-	-
Financing activity outflows	(135 855)	(2 935 803)	4	(1 503 928)
Repayments of loans and advances from other banks	-	-	-	-
Repayments of other loans and advances	-	-	-	-
Redemption of debt securities	(135 855)	(418 562)	4	-
Decrease of subordinated liabilities	-	-	-	-
Other financial liabilities	-	-	-	-
Payments of financial lease liabilities	-	-	-	-
Dividends and other payments to shareholders	-	(2 517 241)	-	(1 503 928)
Other than payments to shareholders expenditures due to appropriation of profit	-	-	-	-
Purchase of own shares	-	-	-	-
Other financing outflows	-	-	-	-
Net cash from financing activities	(37 913)	(2 713 524)	4	(1 472 010)

Total net cash flow	(294 264)	(4 665 565)	(28 259)	533 221
Net change in cash and cash equivalents	(294 264)	(4 665 565)	(28 259)	533 221
Cash and casch equivalents at the beginning of the period	11 887 014	16 258 315	11 194 817	10 633 337
Cash and cash equivalents at the end of the period	11 592 750	11 592 750	11 166 558	11 166 558

Quarterly individual financial report

QUARTERLY INDIVIDUAL REPORT

INCOME STATEMENT (in '000 PLN)	III Quarter 2008 period from 08-07-01 to 08-09-30	3 Quarters 2008 period from 08-01-01 to 08-09-30	III Quarter 2007 period from 07-07-01 to 07-09-30	3 Quarters 2007 period from 07-01-01 to 07-09-30

Interest income	1 915 267	5 664 355	1 045 128	3 012 874
Interest expense	(881 489)	(2 556 905)	(465 135)	(1 303 085)
Net interest income	1 033 778	3 107 450	579 993	1 709 789
Fee and commission income	616 895	1 951 787	516 193	1 520 484
Fee and commission expense	(122 655)	(370 230)	(73 523)	(191 144)
Net fee and commission income	494 240	1 581 557	442 670	1 329 340
Dividend income	187 800	525 423	64	243 119
Result on financial instruments at fair value	47 311	38 640	9 371	53 751
Result on investment securities	5 024	85 519	5 401	16 052
Foreign exchange result	108 632	373 884	80 657	217 540
Other operating income	179 652	294 992	30 212	82 165
Other operating expenses	(31 118)	(69 201)	(11 296)	(39 390)
Net other operating income	148 534	225 791	18 916	42 775
Net impairment losses on financial assets and net provisions for guarantees and commitments	(38 369)	(133 244)	(10 624)	(87 292)
Overhead costs	(858 133)	(2 572 728)	(571 366)	(1 683 828)
Operating profit	1 128 817	3 232 292	555 082	1 841 246
Profit before income tax	1 128 817	3 232 292	555 082	1 841 246
Income tax expense	(194 353)	(531 347)	(101 878)	(319 798)

Net profit	934 464	2 700 945	453 204	1 521 448




Earnings per share (in PLN per share)
- basic for the period		10,30		9,11
- diluted for the period		10,29		9,10

BALANCE SHEET (in PLN '000)		30.09.2008	31.12.2007	30.09.2007
ASSETS
	Cash and amounts due from Central Bank	6 918 823	5 082 829	3 875 515
	Debt securities eligible for rediscounting at the Central Bank	967	1 108	2 055
	Loans and advances to banks	12 219 621	17 551 065	10 565 057
	Financial assets held for trading	4 840 136	2 828 802	1 975 407
	Derivative financial instruments	1 758 289	1 917 960	640 935
	Other financial instruments at fair value through profit or loss	3 981 665	3 777 679	1 493 398
	Loans and advances to customers	67 951 478	63 955 254	34 072 992
	Derivatives used for hedging	50 993	40 672	-
	Investment securities	18 543 049	17 715 886	16 464 467
	1. Available for sale	17 653 043	17 128 996	15 945 281
	2. Held to maturity	890 006	586 890	519 186
	Non-current assets held for sale	95 526	514	1 382
	Shares in subsidiaries	1 631 876	1 631 694	1 143 827
	Shares in associates	56 717	56 530	51 092
	Intangible assets	655 108	668 183	584 668
	Tangible fixed assets	1 774 707	1 908 424	1 384 080
	Investment property	53 631	55 730	58 132
	Income taxes	372 286	349 412	259 360
	1. Current tax assets	-	-	-
	2. Deferred income tax assets	372 286	349 412	259 360
	Other assets	1 729 831	2 026 814	830 917
TOTAL ASSETS		122 634 703	119 568 556	73 403 284

LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
	Amounts due to the Central Bank	1 267 550	1 485 921	1 546 890
	Amounts due to other banks	12 362 709	6 884 279	5 300 524
	Financial liabilities held for trading	1 076 677	491 382	437 843
	Derivative financial instruments	1 836 469	1 683 306	600 041
	Amounts due to customers	86 353 589	89 160 124	55 366 964
	Derivatives used for hedging	38 607	29 083	-
	Debt securities in issue	2 276 670	2 097 070	8
	Current income tax liabilities	275 509	51 793	45 090
	Provisions for deferred income tax	-	-	-
	Provisions	357 356	374 998	220 073
	Other liabilities	2 095 160	2 932 216	1 326 432
Total liabilities		107 940 296	105 190 172	64 843 865

Shareholders' equity
	Share capital	262 213	261 867	167 103
	Profit for the year and retained earnings	2 700 945	2 006 600	1 521 448
	Other capital and reserves	11 731 249	12 109 917	6 870 868
TOTAL SHAREHOLDERS' EQUITY		14 694 407	14 378 384	8 559 419
TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES		122 634 703	119 568 556	73 403 284

Capital adequacy ratio		10,29	11,13	12,04

STATEMENT OF CHANGES IN EQUITY	2008	2007	2007
(in PLN '000)	period from 08-01-01 to 08-09-30	period from 07-01-01 to 07-12-31	period from 07-01-01 to 07-09-30
Shareholders equity at the beginning of the period	14 378 384	8 620 165	8 620 165
a) adjustment related to IFRS/IAS introduction	-	-	-
b) adjustment due to fundamental errors	-	-	-
Adjusted shareholders equity at the beginning of the period	14 378 384	8 620 165	8 620 165
1. Share capital at the beginning of the period	261 867	166 808	166 808
a) Increase	346	95 059	295
- new shares issue	346	95 059	295
b) Decrease	-	-	-
- redemptions	-	-	-
1. Share capital at the end of the period	262 213	261 867	167 103
2. Retained earnings (loss) from previous years at the beginning of the period	2 006 600	1 728 539	1 728 539
a) Increase	-	-	-
- profit for previous year	-	-	-
b) Decrease	(2 006 600)	(1 728 539)	(1 728 539)
- appropriation to legal capital	-	(15 000)	(15 000)
- appropriation to general banking risk fund	-	(100 000)	(100 000)
- appropriation to reserve capital	(521 716)	(109 611)	(109 611)
- dividends	(1 484 884)	(1 503 928)	(1 503 928)
2. Retained earnings (loss) at the end of the period	-	-	-
3. Other capital at the beginning of the period	12 109 917	6 724 818	6 724 818
a) Increase	653 966	5 745 663	259 113
- appropriation of net profit	521 716	224 611	224 611
- issue of shares under its' nominal value	42 229	5 516 702	31 654
- valuation of securities available for sale (net);	56 558	-	-
in which
gains/losses from valuation of securities available for sale	69 782	-	-
provision for deferred income tax	(13 224)	-	-
- valuation of hedging financial instruments (net); in which:	31 267	-	-
hedging financial instrument valuation	38 601	-	-
provision for deferred income tax of the hedging financial instrument valuation	(7 334)	-	-
- valuation of management options	2 196	4 350	2 848
b) Decrease	(1 032 634)	(360 564)	(113 063)
- cost of issues	(204)	(96 414)	(31)
- dividends	(1 032 357)	-	-
- valuation of securities available for sale (net); in which:	-	(212 878)	(112 785)
gains and losses from valuation of securities
available for sale	-	(262 778)	(139 215)
provision for deferred income tax of the securities portfolio valuation	-	49 900	26 430
- valuation of hedging financial instruments (net); in which:	-	(50 039)	-
hedging financial instrument valuation	-	(61 776)	-
provision for deferred income tax of the hedging financial instrument valuation	-	11 737	-
- foreign exchange differences on branches abroad	(73)	(1 233)	(247)
3. Other capital at the end of the period	11 731 249	12 109 917	6 870 868
4. Net profit	2 700 945	2 006 600	1 521 448
Shareholders' equity at the end of the period	14 694 407	14 378 384	8 559 419

CASH FLOW STATEMENT	III Quarter 2008	3 Quarters 2008	III Quarter 2007	3 Quarters 2008
(in PLN '000)	period from 08-07-01 to 08-09-30	period from 08-01-01 to 08-09-30	period from 07-07-01 to 07-09-30	period from 07-01-01 to 07-09-30
Cash flow from operating activities - indirect method
Net profit (loss)	934 464	2 700 945	453 204	1 521 448
Adjustments:	(1 215 929)	(4 127 357)	2 129 139	3 854 876
Depreciation	93 604	276 865	76 420	227 820
Foreign exchange differences	(92 937)	76 314	116 510	223 384
(Profit) loss on investing activities	(4 899)	(85 485)	(7 845)	(28 703)
Impairment	-	-	-	2 002
Interest and dividend	(201 064)	(641 573)	(215 797)	(847 338)
Change in loans and advances to banks	(2 502 587)	(582 176)	(83 838)	(209 831)
Change in financial assets as held for trading and other financial instruments at fair value through profit or loss	(2 105 873)	(2 215 320)	(632 315)	195 218
Change in derivative financial instruments	427 919	159 671	49 405	(114 292)
Change in loans and advances to customers	(1 257 471)	(3 996 083)	(722 435)	(1 720 213)
Change in investment securities available for sale	(3 904)	(5 045)	(262)	(4 241)
Change in deferred income tax assets	303 014	275 223	45 146	41 894
Change in other assets	(526 830)	2 021	(317 875)	(398 103)
Change in amounts due to banks	4 474 905	5 260 059	(159 765)	2 875 137
Change in liabilities as held for trading	837 353	585 295	311 613	234 435
Change in derivative financial instruments	(358 487)	153 163	(76 249)	95 847
Change in amounts due to customers	89 883	(2 806 535)	3 785 527	3 555 714
Change in debt securities in issue	12 094	37 708	-	-
Change in provisions	3 934	(17 642)	3 966	(939)
Change in other liabilities	(508 080)	(831 567)	(7 638)	(118 000)
Income tax paid	(106 496)	(347 029)	(92 163)	(432 820)
Current tax	209 993	574 779	56 734	277 905
Net cash from operating activities	(281 465)	(1 426 412)	2 582 343	5 376 324

Cash flows from investing activities
Investing activity inflows	7 469 491	18 514 343	6 189 123	29 443 740
Sale of subsidiaries and associates	38	38	-	-
Sale of investment securities	7 396 309	17 977 370	6 168 669	28 818 899
Sale of intangible assets and tangible fixed assets	129	511	22	293
Other investing inflows	73 015	536 424	20 432	624 548
Investing activity outflows	(6 750 723)	(18 842 503)	(8 795 401)	(33 086 742)
Purchase of subsidiaries and associates	-	(5 182)	-	(474 729)
Purchase of investment securities	(6 658 018)	(18 620 369)	(8 694 876)	(32 403 660)
Purchase of intangible assets and tangible fixed assets	(92 705)	(216 952)	(100 525)	(208 353)
Other investing outflows	-	-	-	-
Net cash used in investing activities	718 768	(328 160)	(2 606 278)	(3 643 002)

Cash flows from financing activities
Financing activity inflows	125 039	326 010	-	31 918
Loans received from banks	-	-	-	-
Loans received from other financial institutions	-	-	-	-
Issue of debt securities	125 039	283 435	-	-
Increase in subordinated liabilities	-	-	-	-
Issue of ordinary shares	-	42 575	-	31 918
Sale of own shares	-	-	-	-
Other inflows	-	-	-	-
Financing activity outflows	(36 692)	(2 649 064)	-	(1 503 932)
Repayment of bank loans	-	-	-	-
Repayment of loans received from other financial institutions	-	-	-	-
Redemption of debt securities	(36 692)	(131 823)	-	(4)
Decrease of subordinated liabilities	-	-	-	-
Repayment of other financial liabilities	-	-	-	-
Repayment of pricipal amounts under finance lease agreements	-	-	-	-
Dividends and other payments to shareholders	-	(2 517 241)	-	(1 503 928)
Outflows from profi appropriation other than payments to shareholders	-	-	-	-
Purchase of own shares	-	-	-	-
Other financing outflows	-	-	-	-
Net cash from financing activities	88 347	(2 323 054)	-	(1 472 014)

Total net cash flow	525 650	(4 077 626)	(23 935)	261 308
Net change in cash and cash equivalents	525 650	(4 077 626)	(23 935)	261 308
Cash and cash equivalents at the beginning of the period	12 210 922	16 814 198	10 862 648	10 577 405
Cash and cash equivalents at the end of the period	12 736 572	12 736 572	10 838 713	10 838 713

Additional information

4.1 The Group

The Bank Pekao S.A. Capital Group as at September 30, 2008 consists of Bank Pekao S.A as the parent entity and 25 subsidiary entities.

The following entities are included in the consolidated financial report as at September 30, 2008:

Company's name				Core activity	% of shareholder's share capital	Status of consolidation
Parent entity
Bank Pekao S.A.				Banking	-	-
Entities fully consolidated
UniCredit Bank Ltd. (before Bank Pekao (Ukraina) Ltd.)				Banking	100.00	full
Centralny Dom Maklerski Pekao S.A.				Brokerage	100.00	full
Pekao Fundusz Kapitałowy Sp. z o.o.				Financial	100.00	full
Pekao Leasing Sp. z o. o.				Leasing	100.00	full
Pekao Faktoring Sp. z o.o.				Financial	100.00	full
Pekao Pioneer Powszechne Towarzystwo Emerytalne S.A.				Financial	65.00	full
Pekao Telecentrum Sp. z o. o. (before Drukbank Sp. z o.o.)				No activities performed	100.00	full
Centrum Kart S.A.				Financial	100.00	full
Pekao Financial Services Sp. z o. o.				Financial	100.00	full
Pekao Bank Hipoteczny S.A. (beforeBPH Bank Hipoteczny S.A.)*				Banking	100.00	full
Pekao Leasing Holding S.A. (before BPH PBK Leasing S.A.)				Leasing	80.10	full
Finanse plc *				Financial agency	100.00	full
Indirect subsidiary - subsidiary of Pekao Leasing Holding S.A.
Pekao Leasing i Finanse S.A. (before BPH Leasing S.A.)				Leasing	80.10	full
Pekao Auto Finanse S.A. (before BPH Auto Finanse S.A.)				Car lease and fleet management	80.10	full
Indirect subsidiary - subsidiary of UniCredit Bank Ltd.
BDK Consulting Sp. z o. o.				Consulting, hotels, transportation	99.99	full
Subsidiary entities non-consolidated
Final Holding Sp. z o. o.				Holding management	100.00	non- consolidated
Pekao Property S.A. (before BPH Real Estate S.A.)				Real estate	100.00	non- consolidated
Centrum Usług Księgowych Sp. z o.o.				Accounting services	100.00	non- consolidated
Property Sp. z o. o. (in liquidation)				Real estate	100.00	non- consolidated
Centrum Bankowości Bezpośredniej Sp. z o. o.				Call-center	100.00	non- consolidated
Indirect subsidiary - subsidiary of Final Holding Sp. z o. o.
PKBL S.A. (in bankruptcy)				N/A	84.51/84.79	non- consolidated
Final S.A.				Aluminum profiles manufacturing	99.82/99.84	non- consolidated
	Indirect subsidiary - subsidiary of Property Spółka z o.o. (in liquidation)
	FBP Media Sp. z o. o.		Real estate	100.00	non- consolidated
	Indirect subsidiary - subsidiary of Pekao Property S.A. (before BPH Real Estate S.A.)
	Metropolis Sp. z o. o.		Real estate - venture capital	100.00	non- consolidated
	Jana Kazimierza Development Sp. z o. o.		Real estate - venture capital	100.00	non- consolidated
	Associated with Bank Pekao S.A.
	Central Poland Fund LLC		Financial brokerage	53.19	Equity
Xelion. Doradcy Finansowi Sp. z o.o.			Supporting, financial and insurance	50.00	Equity
Pioneer Pekao Investment Management S.A.			Financial brokerage	49.00	Equity
Pirelli Pekao Real Estate Sp. z o.o			Real estate	25.00	Equity
Krajowa Izba Rozliczeniowa S.A.			Clearing House	34.44	Equity
		CPF Management	Financial brokerage no activities performed	40.00		not valuated under equity method
		Polish Banking System S.A.. (in liquidation)	In liquidation	48.90		not valuated under equity method
		PPP Budpress Sp. z o. o. (in liquidation)	In liquidation	36.20		not valuated under equity method

* Percentage shares of entities which make up the Pekao S.A. Capital Group at the General Shareholder sMeeting/General Partners Meeting are as follows:

- Final Holding Sp. z o. o. - a subsidiary of Bank Pekao S.A. - holds 0.04 % share in Pekao Bank Hipoteczny S.A. (before BPH Bank Hipoteczny S.A.). Total share of the Group in Pekao Bank Hipoteczny S.A. equity is 100%,

- Final Holding Sp. z o. o. - a subsidiary of Bank Pekao S.A. - holds 0.02 % share in equity of Finanse plc Total share of the Group in Finanse plc equity is 100%.

As at September 30, 2008 the composition of the Capital Group was unchanged as compared to June 30, 2008.

As at September 30, 2008 the Group engagement in subsidiary and associated entities non-consolidated or not valued under the equity method were included at the cost of purchase. Financial data of these companies are immaterial and have no influence on Group consolidated financial report.

4.2 Results achieved in three quarters of 2008 and factors which influenced these results

In order to assure better comparability of dynamics of the main components of the profit and loss statement, data covering the third quarter of 2007 are presented as "combined data (hereafter referred to as "combined data" or "combined result") of Pekao Group and Pekao285, i.e. the part of Bank BPH S.A. merged with Bank Pekao S.A. as a result of the Spin-off of Bank BPH S.A. registered on November 29, 2007".

4.2.1 Results of the Group

Results achieved in this period are confirming high profitability of Pekao Group measured by return on average equity (ROE), which in three quarters of 2008 stood at 24.3%∗. The strength of the capital structure of Bank Pekao S.A. Group is reflected by capital adequacy ratio at the level of 11.1% after three quarters of 2008, that allows for further sound and stable development of the Group's activity.

The structure of Income Statement both in three quarters of 2007 and three quarters of 2008 was influenced by one-off transactions:

in three quarters of 2007 the sale of shares in Commercial Union PTE with impact of transaction on pre-tax profit of PLN 178.0 million and on net profit of PLN 144.2 million,

in three quarters of 2008 the sale of part of enterprise of CDM conducting corporate brokerage and investment banking services with impact of transaction on pre-tax profit of PLN 435.7 million and on net profit of PLN 352.4 million.

Moreover, the Group's results for three quarters of 2008 were influenced by the sale of non-performing receivables portfolio with impact on the Group's net profit of PLN 77.2 million.

The consolidated profit and loss account for three quarters of 2008 and combined data for three quarters of 2007 are presented below:

(PLN million)

	3Q 2008	3Q 2007 combined	Change
Net interest income*	3,471.0	3,184.2	9.0%
Fee and commission income	1,788.8	2,282.6	(21.6%)
Dividend income	5.2	6.7	(22.4%)
Trading income / FX gains	443.4	774.6	(42.8%)
Other operating income / cost net	232.6	93.0	150.1%
Gain on sale of discontinued operations	436.2	0.0	x
Total income	6,377.2	6,341.1	0.6%
Overhead costs (including depreciation)	(2,838.5)	(2,770.0)	2.5%
Operating income	3,538.7	3,571.1	(0.9%)
Impairment losses on loans and advances	(159.4)	(284.5)	(44.0%)
Share in net profit (loss) of the associates	92.8	115.1	(19.4%)
Pre-tax profit	3,472.1	3,401.7	2.1%
Tax charge	(653.3)	(637.9)	2.4%
Net profit	2,818.8	2,763.8	2.0%
Attributable to equity holders of the Company	2,808.6	2,756.0	1.9%
Attributable to minority interest	10.2	7.8	30.8%

* Including income on SWAP transactions.

The Group's income

In three quarters of 2008, the Group's total income amounted to PLN 6,377.2 million, PLN 36.1 million (0.6%) higher than combined income in three quarters of 2007.

A growth in net interest income by PLN 286.8 million (9.0%) allowed to partially compensate for the decrease in net fee and commission income.

The Group's overhead costs (including depreciation)

(PLN million)

	3Q 2008	3Q 2007 combined	Change
Overhead costs (including depreciation)	(2,838.5)	(2 770,0)	2,5%
Personnel costs	(1,408.7)	(1 422,9)	(1,0%)
Non-personnel costs	(1,122.1)	(1 059,0)	6,0%
Depreciation	(307.7)	(288,1)	6,8%

Overhead costs were kept under control, the increase was connected mainly with the costs of the integration and also expansion in the Ukrainian market.

In three quarters of 2008, the Group's cost / income ratio amounted to 44.5%, in comparison with 43.7% in three quarters of 2007.

As at the end of September 2008, the Bank had 20,196 employees, compared to 20,636 as at the end of December 2007. The Group had 22,424 employees as at the end of September 2008, compared to 22,926 as at the end of December 2007.

Impairment losses on loans and advances

For three quarters of 2008, impairment losses on loans and advances amounted to PLN 159.4 million and were PLN 125.1 million (44.0%) lower than the combined result for three quarters of 2007, thanks to effective credit risk management.

(PLN million)

	30.09.2008	31.12.2007	Change
Gross receivables above*	78,512.4	74,334.9	5.6%
not impaired	73,912.4	68,574.4	7.8%
impaired	4,600.0	5,760.5	(20.1%)
Impairment losses	(3,986.3)	(4,855.5)	(17.9%)
Interest	227.5	219.1	3.8%
Total value	74,753.6	69,698.5	7.3%

* Including debt securities eligible for rediscounting at the Central Bank, net investment in the finance lease, non quoted securities and Buy Sell Back transactions.

At the end of September 2008, the ratio of impaired receivables to total receivables amounted to 5.9% compared to 7.7% at the end of 2007. The ratio decreased due to the increased volume of total loans and a reduced volume of impaired loans, also as a result of sale of non-performing receivables transaction completed in September 2008.

Loans

(PLN million)

	30.09.2008	31.12.2007	Change
Gross loans (principal)*	77,404.3	73,832.2	4.8%
corporate (principal)	52,691.3	49,595.9	6,2%
retail (principal)	24,713.0	24,236.3	2.0%

* Including debt securities eligible for rediscounting at the Central Bank and net investment in the finance lease, excluding non quoted securities and BSB transactions.

Savings

(PLN million)

	30.09.2008	31.12.2007	Change
Corporate customers deposits	41,626.3	50,006.9	(16.8%)
non-financial institutions	32,132.7	37,309.9	(13.9%)
financial non-banking institutions	4,121.7	4,249.1	(3.0%)
budgetary institutions	5,371.9	8,447.9	(36.4%)
Retail deposits	39,397.7	36,434.0	8.1%
Structured Certificates of Deposits (SCD)	2,246.4	2,049.6	9.6%
Repo and sell buy back transactions	3,997.3	2,703.9	47.8%
Total liabilities to customer (including SCD, repo and sell-buy-back transactions)*	87,267.7	91,194.4	(4.3%)

Mutual funds managed by PPIM	17,568.7	28,717.5	(38.8%)
incl. distributed through the Group's network	16,190.4	27,000.3	(40.0%)

* excluding interest accrued and due in transit

At the end of September 2008, total volume of liabilities to Group's customers (including customer deposits, structured certificates of deposits and repo and sell-buy-back transactions) amounted to PLN 87,267.7 million and was PLN 3,926.7 million lower (4.3%) than at the end of 2007. Total volume of deposits of retail customers and structured certificates of deposits was PLN 3,160.5 million higher than at the end of 2007 reaching the level of PLN 41,644.1 million, despite negative impact of PLN appreciation. Total volume of deposits of Group's corporate customers incl. repo and sell buy back transactions amounted to PLN 45,623.5 million decreasing since the beginning of the year by ca. PLN 3,1 billion due to budgetary sector institutions and by ca. PLN 4,0 billion due to decreasing cashflows of corporate entities.

At the end of September 2008, the net assets value of mutual funds under management of Pioneer Pekao TFI S.A. amounted to PLN 17,568.7 million. The decrease of PLN 11,148.8 million compared to the end of 2007 was driven by unfavorable market conditions that led to significant decrease of shares and other securities prices and resulted in negative valuation of assets under management (negative impact of valuation amounted ca. PLN 5,873 million in that period).

4.2.2 The structure of the net profit

The structure of the net profit of the Group is shown in the following table:

(PLN million)

	3 quarters 2008	3 quarters 2007 combined
Net profit of Bank Pekao S.A.	2,700.9	2,668.3
Entities consolidated under full method
Centralny Dom Maklerski Pekao S.A.*	413.5	153.2
Pekao Leasing Holding S.A.**	28.7	22.7
Pekao Bank Hipoteczny S.A. (d. BPH Bank Hipoteczny S.A)	20.7	21.9
UniCredit Bank Ltd.***	16.8	(9.5)
Pekao Leasing Sp. z o.o.	15.5	12.5
Pekao Pioneer PTE S.A.	12.7	9.6
Pekao Financial Services Sp. z o.o.	11.6	11.5
Pekao Faktoring Sp. z o.o.	6.6	5.7
Centrum Kart S.A.	5.4	2.3
Pekao Fundusz Kapitałowy Sp. z o.o.****	2.8	19.5
Pekao Telecentrum Sp. z o. o. (d. Drukbank Sp. z o.o.)	0.3	0.1
Finanse plc (d. BPH Finance plc)	0.0	1.0
Pekao Access Sp. z o.o.	-	(0.1)

Entities valued under the equity method
Pioneer Pekao Investment Management S.A.	82.0	102.4
Krajowa Izba Rozliczeniowa S.A.*****	11.4	4.2
Pirelli Pekao Real Estate Sp. z o.o.	4.7	12.9
Central Poland Fund LLC	(0.3)	0.0
Xelion. Doradcy Finansowi Sp. z o.o.	(5.6)	(5.7)
Exclusions and consolidation adjustments ******	(519.1)	(276.5)
Net profit of the Group attributable to shareholders	2,808.6	2,756.0

* The result of three quarters of 2008 includes the effect of sale of the corporate business part of the company.

** The result of the subsidiary includes results of it's subsidiaries Pekao Leasing i Finanse S.A and Pekao Auto Finanse S.A.

*** In the result for three quarters of 2007, the result of UniCredit Bank Ltd. for three quarters of 2007 and the result of Joint Stock Commercial Bank HVB-Bank Ukraine for the second and the third quarter of 2007 were included.

**** The result for three quarters of 2007 includes the impact of the sale of shares of Anica System S.A.

***** The Bank's share in the company's result amounted to 22,96% till 29.11.2007, and 34,44% till 30.11.2007.

****** Includes transactions within the Group, including dividends from subsidiaries for the year 2007 paid in 2008 and net profit attributable to minority interest.

The results of Bank Pekao S.A.

The main items from the profit and loss account of the Bank for three quarters of 2008 and combined data for three quarters of 2007 are as follows:

(PLN million)

	3Q 2008	3Q 2007 combined	Change
Net interest income*	3,178.4	2,939.9	8.1%
Non-interest income	2,759.9	3,068.7	(10.1%)
Total income	5,938.3	6,008.6	(1.2%)
Overhead costs (including depreciation)	(2,572.8)	(2,528.3)	1.8%
Operating income	3,365.5	3,480.3	(3.3%)
Impairment losses on loans and advances	(133.2)	(229.1)	(41.9%)
Pre-tax profit	3,232.3	3,251.2	(0.6%)
Net profit	2,700.9	2,668.3	1.2%

* Including income on SWAP operations.

Total income of the Bank after three quarters of 2008 in comparison with combined data for three quarters of 2007 was lower by PLN 70.3 million and was impacted by the following:

an increase in net interest income of PLN 238.5 million,

a decrease in non-interest income by PLN 308.8 million, therein a decrease of fee and commission income by PLN 375.2 million, mainly due to unfavorable market conditions impacting income on investment products and fees on brokerage activity.

The Bank's combined results for three quarters of 2007 were influenced by the sale of shares in Commercial Union PTE with impact of transaction on pre-tax profit of PLN 178.0 million and on net profit of PLN 144.2 million. The Bank's results for three quarters of 2008 were influenced by the sale of non-performing receivables with impact on the Bank's Bank's net profit of PLN 77.2 million.

At the same time operating costs were kept under control while the cost of risk has decreased substantially.

The main items of the Bank's balance sheet at the end of September 2008 in comparison with the end of December 2007 are as follows:

	30.09.2008	31.12.2007	Change
Total gross loans in PLN million*	70,207.6	67,701.6	3.7%
Impaired receivables to total receivables in %	5.7	7.7	(2.0 p.p.)
Total deposits in PLN million*	80,717.9	85,658.8	(5.8%)
Structured Certificates of Deposits in PLN million	2,246.4	2,049.6	9,6%
Repo and sell buy back transactions	3 997,3	2 703,9	47,8%
Total assets in PLN million	122,634.7	119,568.6	2.6%
Mutual funds distributed through the Bank's network in PLN million	14,569.0	24,153.9	(39.7%)
Capital adequacy ratio in %	10.3	11.1	(0.8 p.p.)

* The nominal value.

The volume of loans of the Bank's clients as at the end of September 2008 amounted to PLN 70,207.6 million, increasing by PLN 3,461.0 million since the beginning of the year thanks to both retail and corporate segments (excluding impact of the transaction of sale of non-performing receivables portfolio completed in September 2008, decreasing the volume of gross loans for the amount of ca PLN 955 million ). Total volume of retail loans amounted to PLN 23,490.6 million and volume of corporate loans amounted to PLN 46,717.0 million at the end of September.

At the end of September 2008, total volume of liabilities to the Bank's customers (including customer deposits, structured certificates of deposits and repo and sell-buy-back transactions) amounted to PLN 86,961.6 million and was PLN 3,450.7 million lower (3.8%) than at the end of 2007.

4.2.3 Achievements of Bank Pekao S.A.

Bank Pekao S.A. is a universal, commercial bank, offering a full range of banking services to both individual and corporate clients, operating in Poland and abroad. Pekao Group's subsidiary financial institutions operate in banking, asset management, pension funds, brokerage, leasing and factoring markets.

	30.09.2008	31.12.2007
Total number of PLN current accounts (in thousand) *	4,300.3	4,179.7
of which packages (in thousand)	3,234.6	3,205.1
Number of mortgage loans accounts (in thousand) **	179.7	181.0
of which PLN mortgage loans accounts (in thousand)	121.7	117.1
Number of customers with consumer loans accounts (in thousand) ***	604.3	605.3
Total number of outlets (in items)	1,047	1,058
Total number of ATMs (in items)	1,885	1,885

* Number of accounts including accounts of pre-paid cards

** Retail customers accounts

*** Includes "Pozyczka Ekspresowa" and "Pozyczka od reki"

The Bank has a superior physical distribution available to its clients, with a comprehensive and convenient countrywide network. The distribution network is supplemented with teams of Relationship Managers and a network of the Private Banking offices. The number of customers using alternative distribution channels such as the call centre and internet banking platform is growing systematically. Pekao24 service (for the retail clients), PekaoBiznes24 (for corporate clients) and PekaoFIRMA24 (for SME clients) facilitate the management of financial assets, and the scope of services is being systematically extended.

In the third quarter of 2008 particular attention was paid to enriching electronic distribution channels, aiming at providing wide range of internet banking services with the highest security standards applied. Product offer of the Bank was extended with a new electronic product - eFinancing which is fully integrated with PekaoBiznes24 service and enables the Bank's customer and its counterparties to use unique services such as on-line service and reporting, monitoring and generation of the counterparty's loyalty programme. In PekaoFIRMA24 service a new functionality of execution of foreign currency transfer via the Internet enabling the customers exchange rate negotiation was added.

Bank Pekao S.A. is playing important role in all processes connected with EU funds availability for enterprises within the framework of EU budget for the years 2007-2013.

Our customers are actively supported by the Bank's experts in the process of EU funds gathering through current consultations and also thanks to the development of the Bank's instruments supporting this process. One of such unique instrument in the Polish market is the Internet search engine for information about the EU funds. This search tool as well as Bank's EU newsletter, providing up to date information about legislation changes and support programs in place, are available on the Bank's website.

4.2.4 Achievements of subsidiaries

Pioneer Pekao TFI S.A.

At the end of September 2008, the net assets value of mutual funds under management of Pioneer Pekao TFI S.A., a company managed by Pioneer Pekao Investment Management S.A. (in which the Bank holds a 49% share), amounted to PLN 17,568.7 million and was lower by PLN 11,148.8 million compared with the end of 2007. This decrease was driven by unfavorable market conditions that led to significant decrease of shares and other securities prices and resulted in negative valuation of assets under management (negative impact of valuation amounted ca. PLN 5,873 million in that period). As at September 30, 2008, the Company had 1,144.8 thousand of opened accounts (a decrease by 9.9% in three quarters of 2008).

The net assets value of mutual funds under management of Pioneer Pekao TFI S.A. is presented in the table below:

(PLN million)

	30.09.2008	31.12.2007
Net assets value	17 568,7	28,717.5
- bond and money market funds	5 087,0	4,550.5
- equity funds	4 706,7	10,564.7
- balanced funds	7 775,0	13,602.3

In the third quarter of 2008 the Company extended its offer with Pioneer Surowców i Energii mutual fund being a part of Pioneer Funduszy Globalnych SFIO.

Centralny Dom Maklerski Pekao S.A. (CDM)

At the end of September 2008, CDM maintained 158.1 thousand investment accounts and its market share amounted to 15.4%. CDM also offered on-line access to investment accounts, allowing its customers to buy and sell all instruments listed on the Warsaw Stock Exchange and on the OTC market (CeTO) through the Internet. As at September 30, 2008 CDM maintained 27.8 thousand on-line accounts, 1.4 thousand more than at the end of 2007.

In three quarters of 2008 the Company achieved:

a 17.5% share in the bond trading volume on the Warsaw Stock Exchange,

a 2.8% share in the stock trading volume on the Warsaw Stock Exchange,

a 4.2% share in the futures trading volume on the Warsaw Stock Exchange.

In line with Bank's strategy of concentration on retail brokerage services, being a part of the integrated services offered by Bank to retail clients, CDM on the basis of a sale agreement dated January 28, 2008 sold to UniCredit CA IB Polska S.A. part of the enterprise conducting corporate brokerage and investment banking services.

UniCredit Bank Ltd.

As of September 30, 2008 UniCredit Bank pursues its activity through 61 branches. Bank provides services for 135.2 thousand individual clients and over 2.1 thousand corporate clients.

According to information provided by Bank Austria Creditanstalt AG (BA-CA), a member of UniCredit Group, BA-CA on January 24, 2008 completed on the acquisition of 94.2% of the share capital of Ukrsotsbank (which is the fourth largest bank in Ukraine by assets) from the group of investors represented by Interpipe Group. The structure of the Ukrainian operations belonging to the UniCredit Group is currently being assessed.

4.3 Segment reporting

Segment reporting of the Pekao Group covers following areas:

Retail banking area - full-range of banking activity related to retail clients and small and micro companies with annual turnover not exceeding PLN 10 million, and also income of companies consolidated under the full method and assigned to retail activity,

Corporate banking area - full-range of banking activity related to medium and large companies, and also income of companies consolidated under the full method and assigned to corporate activity,

Treasury and Investment activities area - Bank's involvement on inter-bank market, in debt securities and capital investments in companies, which are not a part of other segments, and also income of companies consolidated under the full method and assigned to this activity.

Information on main segments' results for three quarters of 2008:

(PLN million)

	Retail activity	Corporate activity		Treasury and Investment activity	Total Group (Continuing operations)	Total Group (Continuing and discontinuing operations)
		Continuing operations	Discontinuing operations
External interest income	2,188.5	2,271.4		1,626.8	6,086.7	6,086.7
External interest expense	887.0	1,358.8	0.1	440.8	2,686.6	2,686.7
Net external interest income	1,301.5	912.6	(0.1)	1,186.0	3,400.1	3,400.0
Internal interest income	2,052.0	2,646.2		(4,698.2)	0.0	0.0
Internal interest expense	1,183.4	2,196.1		(3,379.5)	0.0	0.0
Net internal interest income	868.6	450.1		(1,318.7)	0.0	0.0
Net interest income	2,170.1	1,362.7	(0.1)	(132.7)	3,400.1	3,400.0
Non-interest income	1,578.8	821.1	436.5	140.8	2,540.7	2,977.2
Total income	3,748.9	2,183.8	436.4	8.1	5,940.8	6,377.2

Allocated assets	32,404.7	43,499.0	0.0	41,466.3	117,370.0	117,370.0
Unallocated assets					9,732.5	9,732.5
Total assets					127,102.5	127,102.5

Allocated liabilities	54,299.1	36,170.8	0.0	13,841.4	104,311.3	104,311.3
Unallocated liabilities					22,791.1	22,791.1
Total liabilities					127,102.5	127,102.5

Information on main segments' results for three quarters of 2007*:

(PLN million)

	Retail activity	Corporate activity		Treasury and Investment activity	Total Group (Continuing operations)	Total Group (Continuing and discontinuing operations)
		Continuing operations	Discontinuing operations
External interest income	917.6	1,191.9		1,068.3	3,177.8	3,177.7
External interest expense	267.9	810.1	2.3	241.0	1,319.0	1,321.2
Net external interest income	649.7	381.8	(2.3)	827.3	1,858.8	1,856.5
Internal interest income	971.7	875.8		(1,847.5)	0.0	0.0
Internal interest expense	429.9	816.1		(1,246.0)	0.0	0.0
Net internal interest income	541.8	59.7		(601.5)	0.0	0.0
Net interest income	1,191.5	441.5	(2.3)	225.8	1,858.8	1,856.5
Non-interest income	1,530.0	337.6	40.3	100.0	1,967.6	2,007.9
Total income	2,721.5	779.1	38.0	325.8	3,826.4	3,864.4

Allocated assets	14,052.1	24,219.2		30,956.9	69,228.3	69,228.3
Unallocated assets					6,531.7	6,531.7
Total assets					75,759.9	75,759.9

Allocated liabilities	29,834.4	25,118.0		8,995.1	63,947.5	63,947.5
Unallocated liabilities					11,812.4	11,812.4
Total liabilities					75,759.9	75,759.9

* Data of Pekao Group before the integration with the part of Bank BPH S.A, which was merged with Bank Pekao S.A. through the division of Bank BPH S.A. as registered on November 29, 2007, in line with those published for the third quarter of 2007

4.4 Adjustments for provisions, deferred tax provision and assets

(PLN million)

	Group		Bank Pekao S.A.
	30.09.2008	31.12.2007	30.09.2008	31.12.2007
Total provisions	358.1	379.8	357.4	375.0
of which:
provisions for off-balance sheet liabilities	172.4	186.2	176.0	186.2
provisions for liabilities to employees	127.9	123.6	126.0	121.9
other provisions	57.8	70.0	55.4	66.9
Provision for deferred tax	2.0	0.3	0,0	0.0
Deferred tax assets	448.1	419.0	372,3	349.4

4.5 Write-offs for revaluation of assets

(PLN million)

	Group		Bank Pekao S.A.
	3Q 2008	3Q 2007*	3Q 2008	3Q 2007*
Total	(159.4)	(132,6)	(132.2)	(87,3)
for loan receivables	(176.3)	(139,2)	(146.5)	(93,0)
for off-balance sheet liabilities	13.6	6,5	10.0	6,5
other	3.3	0,1	3.3	(0,8)

4.6 Information on contingent assets and liabilities

(PLN million)

	30.09.2008	31.12.2007
Contingent liabilities granted and received	52,638.3	61,325.0
Liabilities granted:	39,235.6	38,716.8
Financial	34,677.5	34,264.6
Guarantees	4,558.1	4,452.2
Liabilities received:	13,402.7	22,608.2
Financial	2,450.8	2,199.5
Guarantees	10,951.9	20,408.7
Financial derivatives	258,946.3	298,579.7
currency transactions	93,743.1	109,653.5
interest rate transactions	157,737.3	188,215.7
securities transactions	7,465.9	710.5
Other	20,810.6	17,663.0
Total off-balance sheet items	332,395.2	377,567.7

4.7 Post balance sheet events

Registration of Centralny Dom Maklerski Pekao S.A capital reduction by the Local Court

On October 31, 2008, the Local Court for the Capital City of Warsaw, XIII Business Department KRS registered the reduction of company capital of Centralny Dom Maklerski Pekao S.A. (CDM).

As of today, the share capital of Centralny Dom Maklerski Pekao S.A. stands at PLN 56,331,898.

On June 9, 2008, the Extraordinary General Meeting of Centralny Dom Maklerski Pekao S.A. adopted a resolution on the reduction of company capital of Centralny Dom Maklerski Pekao S.A. from PLN 181,715,800 by PLN 125,383,902 to the amount of PLN 56,331,898.

Bank Pekao S.A. currently holds a stake worth PLN 56,331,898, totaling 100% of share capital of Centralny Dom Maklerski Pekao S.A. and carrying 100% of votes in the General Meeting of Centralny Dom Maklerski Pekao S.A.

4.8 Seasonality or cyclical nature of the Bank's activity

The demand for the financial services offered by the Bank is stable, and so the impact of seasonal changes is immaterial. Due to the nature of the Bank's activity, it is not subject to seasonal or cyclical changes.

4.9 The sale of non-performing receivables

On September 26, 2008 the Bank concluded the agreement for the assignment of non-performing receivables with EGB Podstawowy Niestandaryzowany Sekurytyzacyjny Fundusz Inwestycyjny Zamknięty managed by Skarbiec Towarzystwo Funduszy Inwestycyjnych S.A. The amount of principal of loan receivables covered by this agreement as at January 31, 2008 is PLN 599,980,720.06.

On September 26, 2008 the Bank concluded the agreement for the assignment of non-performing receivables with VPF III Niestandaryzowany Sekurytyzacyjny Fundusz Inwestycyjny Zamknięty managed by Copernicus Capital Towarzystwo Funduszy Inwestycyjnych S.A. The amount of capital of loan receivables covered by this agreement as at January 31, 2008 is PLN 859,472,412.74.

The total amount of unpaid capital of receivables being the subject of the above-mentioned transactions is PLN 1,459,453,132.80. The non-performing receivables sold are receivables from entrepreneurs. These receivables are almost fully covered by loan loss reserves, therefore the transaction does not have any substantial influence on the value of the net credit portfolio of the Bank. Total volume of gross loans reported as at 30 September is lower by ca. PLN 955 million as a result of that transaction.

4.10 Issuance, redemption and repayment of debt securities

Issuance of bonds of Bank Pekao S.A.

On the basis of Resolution No. 6 of the Bank's Extraordinary General Meeting dated July 25, 2003 on the issue of registered bonds under an incentive programme, the Bank issued registered A and B series bonds with pre-emptive rights to take up the Bank's F series shares as well as registered C and D series bonds with pre-emptive rights to take up the Bank's G series shares.

All the pre-emptive rights to take up F series shares pursuant to the implementation of the right of priority ensuing from the A and B series bonds and all the pre-emptive rights to take up G series shares pursuant to the implementation of the right of priority ensuing from the C series bonds were executed.

The Bank acquired 69,028 registered series C bonds from Pekao Faktoring Sp. z o.o., for the purpose of redemption, and a total of 345,972 series C bonds from eligible persons, upon the request thereof for early redemption, pursuant to the implementation of the right of priority to take up the Bank's shares ensuing from the bonds, for the purpose of redemption thereof.

The issue price of G series share amounts to PLN 123.06.

The execution of the pre-emptive rights to take up G series shares can be exercised in respect of D series bonds from January 1, 2009 to December 31, 2012.

D series bonds can be purchased from the Trustee agent by eligible persons until December 30, 2008.

The bonds that will not be sold by the Trustee agent by December 30, 2008, will be purchased on December 31, 2008 by the Bank for the purpose of redemption at the nominal value.

Issuance of bonds of UniCredit Bank Ltd.

As of September 30, 2008 total outstanding volume of bonds issued by UniCredit Bank Ltd. (at face value) amounts to UAH 619 million, of that bonds issued in 2006, with face value of UAH 79 million and the maturity date on January 19, 2010 and bonds issued in 2007, with face value of UAH 540 million and the maturity date on November 12, 2009. In October 2008 UniCredit Bank Ltd. conducted an early redemption of the bonds with face value of UAH 215 million.

Structured Certificates of Deposits

Structured Certificates of Deposits are investment products for Bank's clients that are an alternative for traditional banks' deposits. The total value of Bank's liabilities relating to these products amounted to PLN 2,246.4 million at the end of September 2008 (principal value). In Bank's balance sheet there are 41 issues of Structured Certificates of Deposits in PLN, Euro and USD with the maximum maturity date set at March 8, 2011. Liabilities with the date of maturity in 2008, 2009, 2010 and 2011 account for 24.1%, 36.0%, 29.7% and 10.2% of total liabilities, respectively.

Pekao Leasing Holding S.A. (former BPH PBK Leasing S.A.) bonds

The total value of liabilities due to that bonds (principal) amounted to PLN 354.2 million at the end of September 2008 with the date of maturity up to 3 months.

Pekao Bank Hipoteczny S.A. mortgage-backed securities

The total value of liabilities due to that mortgage-backed securities amounted to PLN 927.6 million at the end of September 2008 (principal value). Nominal value of these securities with the date of maturity 1 - 3 years - 67.1% and 3 - 5 years - 32.9% of total nominal value.

4.11 Dividend paid

Pursuant to Resolution of the Ordinary General Meeting of Bank Pekao S.A. dated April 23, 2008, PLN 9.60 per one ordinary share was appropriated for payment of a dividend in respect of 2007, i.e. 6.7% higher as compared to the dividend paid in respect of 2006 (PLN 9.00 per one share). The ex-dividend date was declared for the May 15, 2008 and the dividend was paid on June 3, 2008. All the Bank's shares are ordinary shares.

4.12 Effects of changes in the Group's structure

As at September 30, 2008 the composition of the Capital Group has not changed compared to the information disclosed as at June 30, 2008.

4.13 The position of the Management Board regarding the possibility of achieving previously published forecasts

The Bank has not published a forecast of financial results for 2008.

4.14 Information regarding shareholders owning at least 5% of the total number of votes at the General Meeting of Bank Pekao S.A.

The shareholders of Bank Pekao S.A. owning directly or indirectly through their subsidiaries at least 5% of the total number of voting rights at the General Meeting of Bank Pekao S.A. are as follows:

Shareholder's name	# of shares and votes at the General Meeting		Share in share capital and total number of votes at the General Meeting	# of shares and votes at the General Meeting		Share in share capital and total number of votes at the General Meeting
	September 30, 2008			December 31, 2007
UniCredito Italiano S.p.A.	155,433,755	59.28%		155,433,755	59.36%
Other shareholders	106,778,874	40.72%		106,432,902	40.64%
Total	262,212,629	100.00%		261,866,657	100.00%

Since the beginning of the 2008 share capital of the Bank has been increased by the total amount of PLN 345,972 as a result of issue of 345,972 series G ordinary bearer shares which have been taken up by participants of share option programme.

4.15 The Issuer's shares held by the Management and Supervisory Board Members

According to information available to the Bank as at the date of submitting this report, the members of the Bank's management and supervisory bodies held 78,446 shares of Bank Pekao S.A. The table below presents the number of shares held by the Management Board Members:

	As at the date of submitting the report		Change
	For the third quarter 2008	For the second quarter 2008	Change
Jan Krzysztof Bielecki	25,000	45,000	(20,000)
Luigi Lovaglio	40,357	98,036	(57,679)
Marian Wazynski	13,089	23,089	(10,000)
Total	78,446	166,125	(87,679)

The Bank Pekao S.A. Capital Group is running an incentive programme in the form of management stock options. The Programme covers the Management Board of the Bank, the remaining managerial staff, key employees for realisation of Bank's strategy, as well as employees of subsidiaries. The persons who meet the requirements set in the Programme will be able to acquire the Bank's shares.

As at the date of submitting this report the incentive programme for 2004 includes 36 persons for a total 293,275 shares, 109,791 of which will be able to be purchased by the management. The Members of the Supervisory Board did not participate in the management stock options programme.

The table below presents the number of management stock options held by the Management Board Members:

	As at the date of submitting the report		Change
	For the third quarter 2008	For the second quarter 2008	Change
Jan Krzysztof Bielecki	40,000	40,000	0
Luigi Lovaglio	32,678	32,678	0
Paolo Iannone	23,000	23,000	0
Marian Wazynski	14,113	14,113	0
Total	109,791	109,791	0

4.16 Pending litigations

In the third quarter of 2008 the number of the legal proceedings in courts, appropriate bodies of arbitration or public administration bodies, in respect to the liabilities of the Group was 534. The total value amounted to PLN 759.2 million. The number of legal proceedings in respect to receivables was 3,280 with a total value of PLN 932.5 million. The value of legal proceedings relating to the liabilities of the Group in the third quarter of 2008 does not exceed 10% of the issuer's equity.

In the opinion of issuer any proceeding that was in progress in courts, appropriate bodies of arbitration or public administration bodies during the third quarter of 2008, as well as all the proceedings taken together did not create any threat to the financial liquidity of the Bank.

4.17 Assessment of the financial credibility of Bank Pekao S.A.

As at September 30, 2008, Bank Pekao S.A. had the following financial credibility ratings:

Fitch Ratings
Long-term rating (IDR)	A
Short-term rating	F1
Individual rating	B/C
Support rating	1
Outlook of IDR	Positive

Standard and Poor's
Long-term rating	A
Short-term rating	A-1
Outlook	Stable

Moody's Investors Service Ltd. (The Bank has not ordered Moody's rating)
Long-term deposit rating	A2
Short-term deposit rating	Prime-1
Financial strength	C
Outlook	Positive

On October 2, 2008, the Ratings Agency Fitch has confirmed Bank Pekao S.A. ratings and has changed the Outlook from "Positive" to "Negative" in connection to change of the Outlook of UniCredit's S.p.A. from "Positive" to "Negative".

On November 6, 2008 Moody's Investor Service changed the Outlook of Bank Financial Strength Rating ("BFSR") from "Positive" to "Stable". The bank's local currency deposit ratings Aa3, foreign currency deposit rating A2 (Stable) and Prime-1 short-term deposit rating were affirmed.

4.18 Transactions of related entities

Sale of shares in related entity

On August 4, 2008, the Bank sold in favour of the natural person 74 shares of Bankowe Doradztwo Podatkowe Ltd. with the total par value of PLN 37.370 (PLN 505 each), comprising a 74.00% stake in the Company`s share capital and representing the same number of votes at the shareholders meeting (but only 48,68% of total number of votes), classified as a long-term investment, for the price of PLN 37,370 which was the equivalent of the net book value on the balance sheet of the Bank.

Disposed assets were qualified as an assets of material amount on the basis of Section 2 subsection 5 Decree of the Ordinance of the Minister of Finance, dated October 19, 2005 re: current and periodical information submitted by the issuers of securities.

File for bankruptcy of Bank's indirect subsidiary

On August 6, 2008, the Bank received information that on June 2, 2008 the natural person performing individual business activity as PHU Wojtex Real Estate Agency in Warsaw filed for bankruptcy of Metropolis Sp. z o. o., Bank's indirect subsidiary.

Based on the decision on September 17, 2008 District Court for the Capital City of Warsaw, X Business Division for bankruptcy and repair issues dismissed the motion of bankruptcy of Metropolis sp. z o. o. This motion is pending appeal since it was appealed by the applicant.

No other transactions with related entities, other than typical and routine transactions, with the total value since the beginning of the year exceeded the equivalent of EUR 500 thousand, in the third quarter of 2008 the Bank and its subsidiaries have been concluded.

In the third quarter of 2008, the Bank and its subsidiaries did not provide any sureties or guarantees in respect of loans or advances to any single entity or a subsidiary of that entity, as a result of which the total value of existing sureties and guarantees would have equal or exceeded10% of the Bank's equity.

4.19 Enclosing agreement between UniCredit S.p.A. and Ministry of the State Treasury

On September 2, 2008 has received information that UniCredit S.p.A. and Ministry of the State Treasury ("MST") have signed agreement regarding put and call options of Bank Pekao S.A. shares held by MST. On the basis of this agreement the MST shall have a Put Option, while UniCredit shall have a Call Option, with respect to the shares held by the MST in the Bank and summing up to approximately 3.95% of Bank's share capital.

According to this agreement, in both cases of options the price will be calculated as the volume-weighted average of the official daily quotations of Bank's shares on the Warsaw Stock Exchange S.A. for a period of six months preceding the date of exercise of the option, increased by 3%.

The put option may be exercised by the MST since the date of signing of the agreement to June 30, 2009, whilst the call option may be exercised by UniCredit S.p.A. since December 23, 2008 until December 23, 2009.

The MST shall have the right to terminate the agreement unilaterally until December 22, 2008.

Upon the signing of the agreement, the Privatization Agreement dated June 23, 1999 regarding Bank Polska Kasa Opieki S.A., the Privatization Agreement dated October 22, 1998 regarding Bank BPH S.A. and the Agreement regarding Bank Pekao S.A. and Bank BPH S.A. between the MST and UniCredit S.p.A. dated April 19, 2006 shall be deemed fully completed.

4.20 Factors which will affect the results of at least the next quarter

The third quarter may be described as a period of increased volatility and escalation of global risk aversion among international investors, what have found its reflection in the situation on Polish FI, FX and equity market.

Some anticipated earlier cyclical slowdown in pace of economic growth is strengthened by effects of the global uncertainty on financial markets.

World financial markets crisis influence directly the situation on the Polish market of financial services in such areas as the level and structure of households savings, the growth pace and structure of loan portfolio and in the area of liquidity and interbank transactions.

Important for perspectives of Polish real economy and financial market, is a declaration of Euro adoption in 2012 with a target date of convergence conditions fulfillment in 2011. Materialization of Polish aspirations supported by precise measures in this regard, combined with still strong structure of Polish economy, may improve the perception of Poland and Polish assets among global investors and thus support the stability on financial markets.

Forthcoming quarters will certainly be the period of economic slowdown what together with lowering of inflationary pressure seem to be the final arguments ending interest rates tightening cycle in Poland. The situation on the Polish market will largely depend on the global factors. However, there are significant internal factors like inflow of EU funds and, still strong foreign direct investment , which should make the economic slowdown in Poland to be somewhat less severe compared with the downturn expected in the developed countries of Western Europe and USA.

This information is provided by RNS

The company news service from the London Stock Exchange

END

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