Activities
of PKO Bank Polski SA

Activities of PKO Bank Polski SA – the parent company of the PKO Bank Polski SA Group¹

As at 31 December 2011, the relation of total assets of PKO Bank Polski SA to the total assets of the PKO Bank Polski SA Group amounted to 98.8% and share of net profit of PKO Bank Polski SA for 2011 in the PKO Bank Polski SA Group’s consolidated net profit amounted to 103.8%. PKO Bank Polski SA, as the parent company, constitutes the most important component of the statement of financial position and income statement of the PKO Bank Polski SA Group. Consolidated financial results presented in Chapter 3 reflect also the financial results of PKO Bank Polski SA.

PKO Bank Polski SA is a universal commercial bank offering services to both domestic and foreign retail, corporate and other clients. PKO Bank Polski SA is licensed to hold foreign exchange and currencies and sell/buy them, as well as perform a full range of foreign exchange services, open and hold bank accounts abroad and to deposit foreign exchange in these accounts.

Retail segment

In 2011, activities undertaken by the Bank within the retail segment were focused on increasing attractiveness and competitiveness of offered products, as well as on reacting in a flexible way to changing market conditions. In the retail segment, PKO Bank Polski SA focused on providing comprehensive banking services which, on the one hand satisfy the credit needs, and on the other – the deposit and settlements needs of the clients. Efforts to improve the quality of the service, i.a. by improving the standard of providing services to the clients and enhancing the skills of employees (product training courses) were also performed. The activities aimed at specified groups of products are detailed below.

¹ In this sub-chapter the Bank’s management information is presented; any differences in total balances, shares and growth rates result from rounding.

Loan products available in retail segment

Products and services	Activity
Cash loan	In order to make the cash loan offer more attractive, in 2011 promotional product offers were carried out periodically i.a. for customers opting for product with extended insurance package, for customers opening current accounts from the Bank’s new offer while concluding a loan agreement and at the same time arrange for their salary/pension to be transferred to the newly opened current account and arrange for the loan to be repaid from that account. Within iPKO new remote loan sale campaigns were carried out (February 2011). The chief asset of the campaign was the opportunity to benefit from reduced commission compared with the standard offer.
SME Loans	The SME credit offer for current and potential clients of PKO BP SA, with loans in other banks, the possibility to benefit from special loan pricing conditions in PKO BP SA to repay debt in other banks (withdrawal from a commission for accepting the request, a very low commission for granting a loan, ranging from 0.1% and decreased by 1 pp. of the margin level). Promotion was valid from 1 June 2011 to 1 August 2011.
Mortgage loan	In 2011 the Bank PKO BP SA remained the market leader in sales of mortgage loans. In order to support sales, promotional activities were carried out in respect of two loans: the ‘WŁASNY KĄT hipoteczny’ loan and the Preferential mortgage loan with interest subsidised by BGK. Moreover, a special offer was launched for clients who purchase real estate as part of investments realised by selected developers (comprising a list of ca. 219 developers) and for employees of selected corporations (comprising 16 offers), as well as a special offer for clients of industry fairs – in respect of ca. 93 fairs organised. On 15 and 16 December 2011, open days were organised in relation to mortgage loans as part of which the customers who visited one of the Bank's branches and enrolled to a special list and then applied for a loan until 13 January 2012, and had or opened any current account with PKO BP SA, were granted preferential loan terms.
Credit cards	In the 1st quarter of 2011 PKO BP SA’s credit card offer was reorganised in a comprehensive manner, which involved inter alia: - expanding the insurance offer for credit cards, - introducing a new functionality (Instalment) for PKO Bank Polski SA’s credit cards which allows splitting non-cash credit card transactions into instalments, - introducing a new, attractive designs for credit cards issued with the Visa logo from the so-called gallery, - introducing a possibility of obtaining a credit card without the first annual fee for the card on condition that the user opens a current account under the new offer, and applies for the card, - introduction a new, free service for credit card holders - every customer who gave the mobile phone number gets a text message receives with a repayment term debt.
Credit cards	Additionally, in August and September were carried out promotional campaigns supporting the sale of blue, silver and gold credit cards and it consisted in ceasing to charge an annual fee for newly issued credit cards. From 1 November 2011 to 1 January 2012 the Bank participated in a promotion organised by the Visa organisation connected with the Olympic Games in London in 2012.

The above mentioned changes in the loan offer resulted in an increase by 7.8% y/y i.e. PLN 8.0 billion in the volume of retail segment loans. The increase related mainly to mortgage loans (+) PLN 7.6 billion. PKO Bank Polski SA maintained its leading position in the market of the mortgage loans sale.

Loans in the retail segment (in PLN million)

Items	31.12.2011	31.12.2010	Change 2011/2010	Change (in PLN million)
Gross loans and advances, of which:*
- retail and private banking	21 550	23 046	-6.5%	(1 495)
- small and medium entities	15 345	14 340	7.0%	1 005
- mortgage banking	65 342	57 765	13.1%	7 577
- mortgage market (of which refinanced by the State budget)	7 887	6 971	13.1%	916
Total	110 124	102 122	7.8%	8 002

* Change in relation to business volumes previously presented results from a change in presentation; i.a. volumes currently presented include also valuation adjustments.

PKO Bank Polski SA continued activities relating to making the deposit offer more attractive to customers, both in terms of the permanent deposit offer and by introducing new products with high interest rates for its customers. The key activities undertaken in the area of deposit activities are shown below.

Deposit products available in retail segment

Products and services	Activity
Current savings account in the 'Superkonto’ Group	On 14 March, a new, innovative offer of current accounts diversified in terms of customer preferences, was added to the Bank’s offer: SUPERKONTO Oszczędne, PKO Konto za Zero, PKO Konto dla Młodych, PKO Konto Pogodne, PKO Konto Pierwsze. From 16 May 2011, 3 new types of accounts have been introduced, in which two of them dedicated to private banking clients: PKO Konto bez Granic, PKO Konto Aurum, PKO Konto Platinium II. The sale of new accounts was supported by an intensive advertising campaign. Under iPKO services, new accounts were made available to clients: Konto Pierwsze, Konto dla Młodych, Superkonto Oszczędne, Konto za Zero, PKO Konto Pogodne, PKO Konto bez Granic, PKO Konto Aurum, PKO Konto Platinium II. In respect of all the new packages, the monthly fee for using iPKO service is PLN 0.
'PLUS' Savings Account	On 18 August 2011 the Bank implemented a new product – ‘PLUS’ Savings Account with progressive interest rate (9 quota intervals). The product was offered: - in the standard option - with monthly capitalisation, available to all interested customers, - in the promotional option - with daily capitalisation (up to 29 December 2011) for owners of current accounts at PKO BP SA. Interest rate 3.90% corresponded to 4.80% on the standard deposit subject to the income tax. In connection with the amendment to the Tax Ordinance Act, the account with daily capitalisation was withdrawn from the offer as of 31 December 2011.
Deposit linked to investment funds (Lokata Inwestycyjna Akcji Plus/Stabilnego Wzrostu Plus)	Offered in the period from 16 March to 31 December 2011. The third edition of a product popular among the customers of the Bank. The product combines guaranteed profit from a high interest rate deposit with an investment portion in the form of investment fund participation units. Clients could choose from 2 subfunds in PKO TFI offer: Akcji PLUS or Stabilnego Wzrostu PLUS. The deposit is a product characterised by high interest on the deposit portion reaching 6.66% (deposit period – 12 months) and 5.55% (deposit period – 6 months), a low minimum amount of investment – PLN 2 000, and no fees for redemption of participation units after 12 months.
Deposit linked to funds (PKO Zrównoważony Plus)	Introduced to the offer from 12 September to 31 December 2011 was addressed to private banking clients. The deposit account was opened for a contractual period of 12 months. The recommended investment horizon for the investment component for PKO Zrównoważony Plus subfund was 4 years, profit is dependent on the results of PKO Zrównoważony Plus subfund. The fixed interest rate of the deposit component was 7% per annum. The minimum deposit payment was PLN 50 000.
Fixed-term deposit 2M, 3M with daily capitalisation of interest	From 18 August of the previous year very attractive 2- and 3-month fixed-term deposits with daily capitalisation of interest and 2- and 3-month fixed-term deposits with daily capitalisation of interest for new funds were introduced. The interest rate on deposits amounted to 4.05% and corresponded to the interest rate of 4.50% on the standard deposit subject to the income tax. The interest rate for new funds amounted to 4.50% and corresponded to the interest rate of 5.56% on the deposit subject to the ‘Belka’ tax. The minimum deposit payment was PLN 1 000. The deposit withdrawn from the offer on 31 December 2011.
Fixed-term deposit 5M, 10M, 15M with daily capitalisation of interest	From November a very attractive 5-, 10-, 15-month fixed-term deposit with daily capitalisation of interest and a 5-, 10-, 15-month fixed-term deposit with daily capitalisation of interest for new funds were introduced. The interest rate on deposits amounted respectively to 4.10%, 4.20% and 4.30% per annum and corresponded to the interest rate of 5.10%, 5.27% and 5.45% on the standard deposit subject to the income tax, while the interest rate for new funds amounted respectively to 4.50%, 4.60% and 4.70% per annum and corresponded to the interest rate of 5.60%, 5.79%, 5.97% on the deposit subject to the ‘Belka’ tax. The minimum payment - PLN 1 000. The deposit withdrawn from the offer on 31 December 2011.
Insurance Policy with PZU Życie	Offered to the Bank’s customers in II editions from 26 April to 30 June 2011, from 11 July to 5 August 2011. The insurance policy is a group life and endowment insurance in PZU Życie SA (Insurer) with an attractive level of profit per annum of 4.05%, which corresponds to the profit of a deposit with an interest rate of 5.00% per annum. The term of the savings policy in all editions was 12 months.
Housing Savings Book (Oszczędnościowa Książeczka Mieszkaniowa)	In 2011, ‘Oszczędnościowa Książeczka Mieszkaniowa’ was revitalised. In January 2011 the deposit and investment product called ‘Oszczędnościowa Książeczka Mieszkaniowa powiązana z funduszami inwestycyjnymi PKO’ was introduced. The launch of the new version of the housing savings book is aimed at modernising the product offer of PKO BP SA and once again drawing the clients’ attention to this form of savings. The product is meant for clients expecting higher profits in a longer time horizon, which would not be charged with the tax on capital income on the deposit portion of the product. In July the savings account ‘Oszczędnościowa Książeczka Mieszkaniowa’ was modified (two additional saving thresholds were added). The characteristic of the product is an attractive interest rate on the deposit portion, preferences in drawing the mortgage loan ‘Własny Kąt’ in PKO BP SA, possibility of additional gains on the investment portion linked to PKO funds, exemption from personal income tax of interest obtained from the deposit portion. The ‘Oszczędnościowa Książeczka Mieszkaniowa’ with a fixed interest rate where the interest is 4.25% was introduced in August of the previous year.
SKO' circulating savings books (Obiegowe książeczki oszczędnościowe SKO)	In 2011, interest rates on funds accumulated on circulating savings books with a-vista deposits, issued for School Savings Accounts were changed twice by the Bank. - in period from 3 January to 31 May 2011, current interest rates was increased from 0.01% to 3.5% and applied a promotional interest rate of 4.5%, - on 1 September interest rate was increased from 3.5% to 5%. This change resulted from promoting by the Bank a positive image of School Savings Accounts, whose activity is based on the education of pupils in saving and entrepreneurship.
Biznes Waluta Package	The Package, introduced to the Bank’s offer in March 2011, is a tool for attracting dynamically developing companies from SME sector which carry out regular foreign transactions (export, import, foreign exchange). The basis of the package is ‘Internetowa Platforma Transakcyjna iPKO dealer’ (an internet transaction platform iPKO dealer).
SME Business Deposit	New editions of SME Business deposit (26 April and 17 October 2011) were introduced into Bank’s offer. This is a deposit with progressive interest rate for periods of 6 or 12 months. Since April 2011 SME Business Deposit with iPKO service is available in the Bank’s offer.
Pakiet Biznes Debiut 18	Pakiet Biznes Debiut 18, an attractive package for companies from the SME segment was introduced into the Bank’s offer (19 September 2011). The package is addressed to customers who have conducted business activities for no more than 12 months and are interested in a cheap offer of daily services.
Nasza Wspólnota Plus Package	Making the offer more attractive and enhancing competitive position on the housing community market by introducing the Nasza Wspólnota Plus (sale from 18 April 2011). The fee for maintaining the account of PLN 12 includes domestic transfers through iPKO or iPKO Biznes. Moreover, the account holders pay lower rates for maintaining the repair fund account, subscription for iPKO Biznes service and open cash payments in PLN. Additionally, the new offer supports the sale of investor loans from the ‘Nasz Remont’ group by decreasing the fee by 50% for maintaining the basic current account in the period of the first four years of crediting.
2+3M Deposit	The Offer introduced on 14 November of the previous year was addressed to the customers of the housing market. The contractual period of the deposit is 5 months and the interest rate is up to 4.6%. In case of withdrawing funds after 2 months but before the expiry of 5 months, the customer shall receive interest at the level of 4.3%.
2-year Structured Bank Securities (BS) based on S&P 500 index	The product combines guaranteed profit from a high interest rate deposit with an investment portion in the form of investment fund participation units. Clients can choose from 2 subfunds in PKO TFI offer: Akcji PLUS or Stabilnego Wzrostu PLUS. The deposit is a product characterised by high interest on the deposit portion (reaching 6.66% for deposit period – 12 months and 5.55% for deposit period – 6 months), a low minimum amount of investment – PLN 2 000, and no fees for redemption of participation units after 12 months.
Structured Bank Securities based on the price of copper	In the Bank's offer from 29 August to 23 September 2011. BS based on the price of copper (listed on the London Metal Exchange (LME)) is a 2-year investment product with 100% guarantee of principal on the redemption date. An investor obtains a profit equal to a percentage change in the value of copper regardless of the direction of the change, provided that the price never reaches or exceeds the specified barriers. If the barrier is reached or exceeded the premium will be 3% for the investment term. The minimum investment amount is PLN 5 000.
Structured Bank Securities based on the price of gold	Introduced into the offer from 24 October 2011 to 18 November 2011. BS is an investment product with 100% guarantee of principal on the redemption date. The minimum investment amount is PLN 5 000. The premium value denominated in PLN will be dependent on changes in gold prices expressed by GOLDLNPM fixing performed by The London Gold Market Fixing Ltd.
Structured gold-based deposit (Investors’ gold, Gold’s Price III)	A two-year structured deposit based on the gold price (Investors’ gold, Gold’s Price III) offered to customers in II editions from 30 May to 24 June and from 21 November to 16 December 2011. It is an investment product which guarantees full protection of capital on the maturity date and the possibility of obtaining higher profits than from a standard fixed-term deposit. The minimum amount of deposit is PLN 5 000. In exchange for maintaining the deposit until the end of the contractual period, the client received an amount based on the current gold price.
INTELIGO	Under the Inteligo account a debit card MasterCard PayPass in the EMV standard was launched which enabled making payments using the PayPass contactless technology. The card is offered both in the segment of individual clients (from February 2011) and in the SME segment (since March 2011). From May, the clients who have Individual Pension Accounts – Bonds maintained by the Brokerage House of PKO BP SA can have permanent access to information on their account balance through the Inteligo webpage.
Dobolokata	In July 2011, the interest on fixed-interest deposits with daily interest payment was increased to 3.70% - for 1M deposits, 4.20% for 3M deposits and 4.45% for 6M deposits. From September, the offer of a fixed-term deposit with daily payment of interest as part of the Inteligo Account was extended for two new terms of 9M and 12M, with nominal interest rates of 5.24% and 5.59% respectively (communicated respectively 6.47% and 6.90%). The deposit was withdrawn by the end of 2011.
IGO deposit with daily capitalisation of interest	From 9 September 2011, a new attractive deposit product with daily capitalisation of interest (to 5.52%, communicated 7.0%) – IGO deposit was introduced. The minimum amount of one deposit was PLN 1 000. Tenors and nominal interest rates of IGO-deposit were as follows:- 3M – 4.45%, 6M – 5.00%, 9M – 5.22%, 12M- 5.52%.The deposit was withdrawn as of 31 December 2011.

The above mentioned activities contributed to a significant increase in the portfolio of deposits in the retail segment, of 9.0% y/y which related mainly to retail and private banking deposits (+9.7% y/y).

Deposits in retail segment (in PLN million)

Items	31.12.2011	31.12.2010	Change 2011/2010	Change (in PLN million)
Client deposits, of which*:
- retail and private banking	99 631	90 860	9.7%	8 771
- small and medium entities	8 932	8 593	4.0%	340
- housing market	5 406	5 083	6.3%	322
Total	113 969	104 536	9.0%	9 432

* Change in relation to business volumes previously presented results from a change in presentation; volumes currently presented include also balance sheet interest and valuation adjustments.

Corporate segment

During 2011 the corporate segment of PKO Bank Polski SA continued its growth path commenced in the previous years. Operations in the previous year were focused on comprehensive development in all aspects, i.e. results, volumes, products, organisational improvements and on flexible adaptation to current client needs and the changing economic conditions. All initiatives – commenced and completed in 2011 – led, in consequence, to maintaining by PKO Bank Polski SA its position as the leader of the banking sector in financing business entities. In spite of another crisis on the financial markets (the public finance crisis), the corporate segment of PKO Bank Polski SA successfully implemented the strategy it had adopted, deriving measurable benefits for the Bank. Throughout 2011 PKO Bank Polski SA participated in projects of huge importance to Polish entrepreneurship and, consequently, to the Polish economy. Last year PKO Bank Polski SA financed several significant transactions on the Polish market, both of an investing nature and supporting corporate recovery processes. PKO Bank Polski SA participated in, amongst others, a material acquisition on the telecommunications market, and it took part in the consolidation of the Polish chemical industry, thanks to which the largest fertiliser concern in Poland was established.

In 2011, there was a noticeable improvement in the corporate loan market. Lending activities accelerated significantly. According to NBP data, the corporate loan market grew by 19.4% per annum. The business activity
of enterprises improved, which resulted in an increased demand for loans and, in response, an increase in the availability of this product on the part of banks.

PKO Bank Polski SA was an active market player for another year, dynamically developing the sales of its products, which resulted in the volume of loans to corporate clients increasing by more than 16% in 2011 compared with 2010. As at the end of 2011, the corporate segment achieved a record loan volume of PLN 33.9 billion.

2011 was a period of intense competition on the financial services market, both in terms of loan products and deposit products, which caused the migration of customers among individual entities of the banking sector. During that time the corporate segment of PKO Bank Polski SA took intensive measures to strengthen the customers’ relationships with the Bank by means of, amongst others, a loyalty programme and the flexible adaptation of the current product offer to client needs, which allowed the Bank’s corporate client base to be maintained at a level in excess of 11.4 thousand at the end of 2011.

The development of the corporate segment in 2011 can be seen not only on the side of the loan base but also the deposit base. The funds raised from corporate customers amounted to almost PLN 29 billion as at the end of 2011, which allowed a 14.8% y/y increase to be achieved.

Loans and deposits in the corporate segment (in PLN million)

Items	31.12.2011	31.12.2010	Change 2011/2010	Change (in PLN million)
Gross corporate loans*	33 636	28 703	17.2%	4 933
Corporate deposits**	28 874	25 154	14.8%	3 720

* Change in relation to business volumes previously presented results from a change in presentation; i.a. volumes currently presented include also valuation adjustments.

** Change in relation to business volumes previously presented results from a change in presentation; volumes currently presented include also balance sheet interest and valuation adjustments.<

In 2011, PKO Bank Polski SA also conducted several internal operations and external operations aimed at improving the functioning of the corporate segment (client-oriented operations).

An important project initiated in 2011 was the centralisation of strategic client service. The Bank’s largest clients will be served by a dedicated specialised entity. This will contribute greatly to raising the standard of service offered to these clients, and it will strengthen the clients’ relationships with the Bank.

Other important projects which were carried out within the corporate segment in 2011 included: optimising the lending process – improving the lending process, implementation of the CRM system for the purposes of planning and monitoring sales, and the continuation of the project consisting of centralising corporate operations, as well as the expansion and modernisation of the network of night drop boxes.

2011 was yet another period of improving and developing the Bank’s products and services which are, on the one hand, very important to meeting the needs of corporate clients and which, on the other hand, allow the Bank to participate actively in business. Last year the development of corporate products comprised, i.a. expanding the functionality and revitalising the internet platform iPKO Biznes, implementing a new platform enabling direct contact with the client, and modernising products i.a. such as mass disbursements.

In 2011, the Bank submitting a proposal for the provision of comprehensive services to the Social Insurance Institution (ZUS) and subsequently winning the tender was a prestigious activity.

Investment segment

Despite the unfavourable and extremely volatile market environment, in 2011 the Bank consistently pursued its strategic goals in respect of the development of the investment banking segment.

In its treasury operations, the Bank focused on developing cooperation with corporate clients in respect of investing free cash flows, transactions on the currency market and managing market risk. The importance of electronic distribution channels for treasury products increased. Trading operations on the money, currency and debt markets concentrated on market making of PLN instruments while applying a conservative approach to market risk in conducting operations on its own account.

The Bank optimised the sources and costs of financing its operations, and specifically in respect of loans denominated in foreign currencies. To this end apart from continuing the issuance of debt on the Euro market (via the subsidiary PKO Finance AB), issues of short-term debt on the domestic market was also started addressed mainly to the financial institutions segment.

In respect of brokerage activities, the network of customer service points of the Brokerage House was further developed, restructured and modernised. The network of brokerage service points located in the Bank’s branch offices was significantly expanded, which together with the POS of the Brokerage House enabled offering brokerage services in over 1 000 locations, which is the largest number of locations among all the financial institutions operating in Poland. The Brokerage House also attached a lot of weight to the development of remote distribution channels for brokerage services – preparations were under way for a new internet transaction system for customers. Capital market risk analysis competencies were reconstructed and institutional sales were reinforced for the purpose of improving the position of the Brokerage House in the institutional clients segment. The Brokerage House continued its activities on the primary market and in financial advisory services. Operations on its own account focused on market making on the equity markets (WSE, New Connect) and derivative financial instruments (futures, index options).

Achievements of PKO Bank Polski SA in the investment segment – treasury activities

Investment activity		Activity
Treasury activities	Treasury products sales	Development strategy and achieved results
		Treasury instruments are sold to individual and institutional clients via network of the Bank’s branches and dedicated Treasury dealers. In 2011, further increase in sales of traditional Treasury products trading such as foreign exchange SPOT, FORWARD and OPTIONS transactions were achieved. Compared with 2010, the value of SPOT and FORWARD transactions, and OPTIONS turnover was higher by 5%, 9% and 6% respectively. In November 2010, the Bank offered the Internet Transaction Platform to its institutional clients, which enables exercising foreign exchange transactions. Number of clients who used this distribution channel during a month increased from 69 in December 2010 to 552 in December 2011.
		Risk
		Automation of the simulation process of a price of the underlying change effect was introduced for customers - in accordance with the provisions of PFSA A Recommendation.
	Interbank market	Achieved results
		The Bank is the Treasury Securities Dealer, it holds a high level of trading in the interest rate and foreign exchange market. In 2011 in the Ministry of Finance’s contest for the Treasury Securities Dealer, which assessed activity on the interest rate market, PKO BP SA took the 1st place again. According to the data for the end of December 2011, the Bank’s share (cumulatively) in FRA transactions was 25% in the previous year, and 18.5% in 2010, while in the IRS market remained at the previous year level, i.e. about 21%. The Bank is still one of the primary market-makers in the foreign exchange market. In 2011, the share of PKO BP SA in the spot foreign exchange market amounted to 9%. Bank is also an active participant in the money market and it acts as a Money Market Dealer. In 2011, the Bank took the 2nd place in the IAD (Dealer Activity Index) assessment of market activity conducted by NBP.
		Own securities issues of PKO BP SA are conducted from August 2011, PLN 4.9 billion was placed in the market as at the end of 2011.
		Risk
		In order to secure its trading, in 2011 the Bank concluded 1 framework agreement (with a domestic bank) and 3 hedging agreements to framework agreements, moreover 4 ISDA agreements (with foreign banks) and 5 CSA Annex, as well as one GMRA agreement were concluded. The Bank actively managed the financial risk (liquidity, interest rate and currency), focusing on the exposure minimising.

Achievements of PKO Bank Polski SA in the investment segment – brokerage activities

Investment activity		Activity
Brokerage activities	shares’ market	In 2011 the value of turnover of the Brokerage House in the share market amounted to PLN 28.8 billion, which represents an increase of 3% compared with 2010. The share of the Brokerage House in the turnover amounted to 5.05%, giving 7th position in ranking.
	primary market	In 2011 the Brokerage House was active on the primary market and it was another very good year for the Brokerage House. The value of public offers, in which the Brokerage House participated, amounted nearly to PLN 5 683.5 million, which makes DM one of the leaders on the primary market by value of initial public offerings (IPO) carried out. DM ranks among the top three most active brokerage houses by scale of initial offerings on the share market in 2011 (source: Parkiet 09.01.2012). Jastrzębska Spółka Węglowa SA (the greatest IPO offer on the Polish market in 2011) and Bank Gospodarki Żywnościowej SA debuted on the market with the participation of DM. DM participated in secondary public offerings (SPO) of: Ciech, Zakłady Azotowe w Tarnowie – Mościcach, Cersanit.
		In 2011 the Brokerage House introduced the bonds of the City of Warsaw, the company Multimedia Polska SA and Bank Pocztowy SA to the Catalyst market. The value of bonds introduced amounted to about PLN 754 million.
		DM participated in the sales consortium of the following companies: MEGARON, Kredyt Inkaso, Kino Polska, Industrial Milk Company, Enel-Med, Toya, AC.
		DM also participated in other transactions on the capital market. The Brokerage House acted as, i.a. an offering party in public offerings of shares in connection with the merger of the Tauron Group companies (EnergiaPro SA and PEC Katowice SA) with a total value of about PLN 319 million and the function of the offer or in the share sale transaction in the privatisation of Krajowa Spółka Cukrowa SA with a total value of over PLN 1.2 billion. It also participated in the transaction of buying up own shares of Multimedia Polska SA (value of approx. PLN 83 million) and in the transaction of buying up bonds of Polkomtel SA (value of over PLN 1 billion). In 2011, the Brokerage House also serviced the consecutive phases of the incentive plans for TIM SA and ELEKTROTIM SA.
		In 2011, as part of the services on the primary market, DM also handled Subscription Warrants of TIM SA and subscriptions to shares as part of the Incentive Plan for employees of and persons related to SELENA FM SA.
		At the same time, in 2011, a new product in the Bank's offer was successfully introduced, i.e. the Structured Bank Securities (BS). This resulted in 3 issues of the BS, i.e. Structured United Finance BS, Structured BS based on the price of copper, Structured BS based on the price of gold.
		Also in 2011, the subscriptions and payments to the first issue of non-public A-series corporate bonds of Lokaty Budowlane SA were carried out.
		As at the end of 2011, the Brokerage House serviced the units of 162 funds and subfunds managed by 12 Fund Management Companies.
	NewConnect market	In 2011, in the NewConnect market, DM achieved a turnover of more than PLN 391 million and held the 4th place with a 10.01% market share. DM was the market maker in the NewConnect market for 52 companies, which gives it 2nd place in the market.
	bonds’ market	DM maintains its leading position in the market with a 45.17% share.
	futures/forward market	In 2011, the fastest growth of turnover was recorded on the options market. In spite of high volatility in the second half of 2011, the market was developing in a stable manner. DM executed 5% of turnover on the market and ranked 1st in the market ranking with a share of 14.92%.
		On the contracts market, due to the high operational risk in this market segment, the turnover of DM dropped by more than 22%, which was reflected in falling to the 10th position on the market and the decrease of the share in turnover to 3.66%.
		In 2011, the value of turnover of DM on the contracts market amounted to over 1 070 thousand of items, and nearly 268 thousand of items on the options market.
		At the end of 2011 the number of signed agreements on acting as the market maker by DM amounted to 49 (3rd position on the market) and 19 agreements on acting as the issue underwriter (5th position on the market).
	number of accounts	As at the end of 2011, as part of its operations, DM maintained 155.1 thousand securities and cash accounts and 153.4 thousand registration accounts. The over 25% increase in the number of securities accounts enabled DM to rise to the 4th position among the 45 participants of the National Depository for Securities (KDPW).
	development	The planned replacement of the transaction system of the Stock Exchange with the UTP system will be of crucial importance to the development of the brokerage services market in Poland, including the DM’s customers. Modernisation of the IT infrastructure of the Brokerage House carried out in parallel to the above replacement will enable the customers to avail themselves of, i.a. the increased speed and efficiency of the stock exchange system and new types of orders.

A broader description of the operations of PKO Bank Polski SA - the parent company of the PKO Bank Polski SA Group, including its business activities and financial results in 2011 is presented in the Directors’ Report of PKO Bank Polski SA for 2011, which forms an integral part of the Annual Report of PKO Bank Polski SA.

Annual Report 2011