Bank Zachodni WBKSA, the Polish unit of Allied Irish Bank (AIB), said third-quarter profit rose as interest income advanced, offsetting a drop in fees from asset management.
AIB holds a 70 per cent stake in Bank Zachodni.
Net income gained 9 per cent to 247.1 million zloty (€70.3 million), the Wroclaw-based bank said in a statement. That beat the 239.6 million-zloty median estimate of 12 analysts surveyed by Bloomberg. Provisions for bad loans doubled to 43.8 million zloty.
Earnings "are very good, but what are worrisome are provisions, especially because with growing volumes this may stay high in the future," said Hanna Kedziora, an analyst at PKO Bank Polski SA in Warsaw.
Polish banks have benefited from a lack of interest-rate cuts in the third quarter, which helped them maintain margins and boost profit. This may change in the fourth quarter after the global credit crisis forced them to increase interest payments on deposits needed to finance lending.
Zachodni declined 1.9 per cent to 118 zloty as of 11.37am in Warsaw trading, giving the company a market value of 8.6 billion zloty. The stock has dropped 53 per cent this year, compared with a 48 per cent drop for Poland's WIG20 Index.
Net interest income, the difference between payments on deposits and what the bank charges on loans, advanced by a third to 429.5 million zloty. Fees dropped 11 per cent to 343.8 million zloty, hurt by a slowdown at the fund business and declines on the Warsaw stock exchange.
Fees fell as the assets of investment funds based in Poland dropped to a two-year low in September, according to estimates from Analizy Online sp.z o.o., a Warsaw-based research company.
Zachodni, whose costs rose 16 percent and revenue increased 11 per cent in first nine months of the year, still sees "certain chances" of increasing revenue faster than costs in the full year, Chief Executive Officer Mateusz Morawiecki said at a press conference in Warsaw. Still, he said he "wouldn't sign it in blood."
Bloomberg