Strategy/Company/Ops Update

08.11.2017 - Report 59/2017: Adoption of the Bank's Strategic Directions until 2020

Management Board of Bank Polska Kasa Opieki Spółka Akcyjna ("Bank" "Bank Pekao"), acting on the basis of Article 17 sections 1, 4 and 7 of European Parliament and Council Regulation (EU) No 596/2014 on market abuse and repealing Directive 2003/6 / EC of the European Parliament and of the Council and Commission Directive 2003/124 / EC, 2003/125 / EC and 2004 / 72 / EC (Journal of Laws No 2014, No. 173, page 1, as amended, hereinafter referred to as "MAR"), hereby informs that on 7th November 2017 the Management Board adopted and the Supervisory Board's approved the Strategic Directions for the years 2018-2020.

"Power of the Polish Bison" Strategic Directions 2018-2020

Bank Pekao is entering the new strategic perspective with a very strong business and financial standing.

Key financial goals in the strategic directions plan for 2020:

- Achieve return on equity (RoE) at 14% level

- Achieve efficiency ratio (C/I) at below 40%

- Achieve net profit greater than PLN 3B

- Continuation of capital adequacy management that enables the ~100% dividend payment for 2017 and 2018

Bank Pekao 2020 vision is built on value creation for our shareholders via the path of smart growth in most profitable segments, while ensuring continued focus on cost and risk discipline. Universal character of our business model, enabling integrated service across all client segments is our competitive advantage. Bank Pekao is competing on highest quality and efficiency in building our relations with clients.

Bank's strategic directions translate into 4 business priorities:

- Leader of smart growth

- Efficiency and quality expert

- Integrated risk management expert

- Employer for the best talent

Smart growth leader. As a banking leader in Poland and a member of region's largest capital group, the Bank aims at strengthening its market positioning through dynamic development of the Retail segment, optimisation of business models in Micro and in the newly created SME division, as well as via focus on increased profitability in the corporate segment. Bank intends to leverage on potential synergies within the PZU group, cooperation with PFR, and to explore options of non-organic growth

Efficiency and quality expert. Optimisation and digitalisation of processes and sales network will make Pekao the leader of service effectiveness and quality. Bank will focus on enhancing commercial effectiveness in traditional sales/service channels (branches) as well as on further growth and promotion of remote channels following clients' preferences. Bank's objective it to ensure outstanding customer experience in key products and processes.

Integrated risk management expert. Effective risk management is crucial for business transformation and Bank's safe growth. Bank will primarily concentrate on development of competences in risk modeling, as well as in portfolio and policy management. Thanks to leveraging synergies between CRM and risk analytics, as well as utilizing AI and Machine Learning technologies, the Bank will gain new competences for optimal client risk profiling.

Employer for the best. Creation of engaging, value based culture is one of the key enablers of the strategy. Thanks to unique career development opportunities, competence building and effective cooperation, Bank intends to become the employer for the best talent.

Smart growth and efficiency improvements will allow for one of the highest RoE in Polish banking sector. Particularly strong capital position will support the execution of intended growth plans, while maintaining the dividend policy.

Bank Pekao aspires to develop business and operational standards aligned to global banking leaders. Our goal is to become profitability, quality and efficiency champion in Poland and Europe.

Attachment: Bank Pekao 2018-2020 Strategic Directions Presentation

Legal notice:The Bank informs that these assumptions and objectives of the Strategic Directions do not constitute forecasts or estimates of results, including financial information, and are only indicative of the Bank's planned areas of activity and prospects for development in the years 2018-2020.