Prospectus - Notowania

CEE countries
Positive signs from western countries, and especially the revival of German orders (in particular, investment assets) were reflected in
the improved outlook for countries in Central and Eastern Europe (CEE). Industrial production and exports in CEE countries already
showed signs of improvement in the summer. Furthermore, the decrease in imports tends to significantly reduce pressure on the
balance of trade, one of the most vulnerable elements in these countries.
In Q3 2009, with the exception of the Ukrainian hryvnia which was again under pressure, exchange rates in the other CEE countries
strengthened (the zloty posted one of the greatest movements since the Polish economy is one of the strongest in Europe). At the
same time, country risk, in terms of credit default swaps, was further reduced by over 120 bps on average in Q3 2009 (CDSs
dropped by more than half since the high reached in March). Credit Default Swaps related to major financial firms operating in the
region (Italian, Austrian and French banks) also dropped significantly.
In the area of monetary policy, several central banks cut rates further in the spring and summer. However, Poland and the Czech
Republic have already announced the end of the rate cut cycle (although possible rate hikes are still not planned). On the other hand,
Turkey, Russia and Hungary could further reduce rates in the coming months to stimulate the economy and bank lending.
Banking and Financial Markets
The first signs of economic recovery in recent months have not resulted in increases in bank lending, which has continued to
move slowly with no clear turning point in sight. In fact, in recent months, the annualized growth of loans to the private sector
in the Eurozone has further slowed its pace, reaching a historical low of +0.1% in August 2009 (the growth rate of loans to the
private sector was +5.8% as recently as December 2008). The sharp decline in loans to non-financial corporations was the
main contributor driving down growth in bank lending, while loans to households showed signs of stabilization.
In keeping with loan growth in the Eurozone overall, the growth of bank loans to the private sector declined considerably
in all three of the Group's reference countries. To be specific, overall loans to the private sector in August 2009 rose just 0.8%
on an annual basis in Germany (based on monthly statistics of the ECB) and by 1.9% y/y in Italy, while in Austria loans to the
private sector were up 3.4% y/y.
Corporate loans were the component of total loans that in recent months continued to suffer most from the (delayed) impact
of the economic slowdown and lower demand for loans to finance investment activities. In particular, in recent months the
pace of bank lending to non-financial corporations has slowed considerably, especially in Germany, with loan growth in
August 2009 of +1.1% y/y (down from +5.2% y/y in June 2009). The growth rate of loans to non-financial corporations was
also close to 1.0% y/y in Italy, which was at a ten-year low, and at +2.5% y/y in Austria.
In terms of loans to households, however, the first signs of recovery at the beginning of the year were taking hold due to a
resurgence in loans for house purchases. The growth rate for mortgages in August was +5.0% y/y in Italy and +5.1% y/y in
Austria, while in Germany loans for house purchases were down by just 0.4% in August after a decline of 0.7% in June 2009.
Consumer credit continued its slump in both Italy and Austria, while the positive impact from fiscal incentives on durable
goods consumption is still fueling growth in consumer credit in Germany (+3.6% y/y in August 2009).
Bank deposit growth in recent months continues to be mainly the result of steady growth in current account deposits driven
by a demand effect, which is related to the continued prevalence of a high risk aversion by households, and by a supply effect.
CONSOLIDATED INTERIM REPORT
AS AT SEPTEMBER 30, 2009
26