Characteristics of operations of the PKO Bank Polski S.A. Group
The PKO Bank Polski S.A. Group - history
Main events and financial results achieved in 2023
Changes in the composition of the Management Board and Supervisory Board of PKO Bank Polski S.A.
The PKO Bank Polski S.A. Group development paths
The PKO Bank Polski S.A. Group market position
The Powszechna Kasa Oszczędności Bank Polski Spółka Akcyjna Group (PKO Bank Polski S.A. Group or the Bank’s Group) is one of the largest groups of financial institutions in Poland and in Central and Eastern Europe.
The Parent of the Bank’s Group is Powszechna Kasa Oszczędności Bank Polski Spółka Akcyjna (PKO Bank Polski S.A. or the Bank). PKO Bank Polski S.A. is the largest commercial bank in Poland and the leading bank on its home market in terms of the scale of operations, equity, loans, savings, number of Customers and size of the distribution network. PKO Bank Polski S.A. is a universal bank that services individuals, legal entities and other Polish and foreign entities.
Apart from strictly banking operations, the Bank’s Group also provides services in respect of leases, factoring, investment funds, pension funds and insurance, car fleet management services, transfer agent services, provides technological solutions, outsources IT professionals and supports other entities’ operations, manages properties. The Bank’s Group conducts banking operations and provides financial services outside Poland through its branches in the Federal Republic of Germany (German Branch), the Czech Republic (Czech Branch) and the Slovak Republic (Slovak Branch), as well as through its subsidiaries in Ukraine, Sweden and Ireland.
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More than 11.9 million  
of the Bank’s Customers
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Nearly 7.8 million 
of active IKO applications
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The PKO Bank Polski S.A. Group develops not only in its traditional area of operations, i.e. retail banking. It is also the leader in servicing corporate Customers and companies and enterprises (in particular in respect of financing them), and on the market of financial services for communes (gminy), counties (powiaty), voivodeships and to the budget sector. It is also the major managing underwriter of issues of municipal bonds.
The PKO Bank Polski S.A. Group has the largest share in the Polish banking sector (21.3%), in loans (18.1%), in sales of mortgage loans (35.9%) and the market for investment funds for individuals (20.1%). PKO Bank Polski S.A. is the leader in terms of current accounts and payment cards.
Increasing customer activity in the digital world, dynamic changes due to macroeconomic shifts and technology trends, the geopolitical situation and emerging regulatory requirements, as well as other variables, are driving growing expectations in the area of IT development. The Bank's Group offers customer-oriented, modern, secure and comprehensive services through digital access channels. Customers use iPKO and IKO as means of modern banking, which extends outside the traditional financial area. PKO Bank Polski S.A., in cooperation with Operator Chmury Krajowej S.A. and other global providers of cloud services, has consistently followed its “path towards the cloud”. The bank develops business operations and supports research and implementation efforts using secure, cutting-edge solutions, including those based on artificial intelligence and advanced data analytics, as well as robotics and automation.
As at the end of 2023, the branch network of PKO Bank Polski S.A. covered 945 own outlets (including branches, offices and centres) and 286 agencies. More than 3,000 ATMs were put at the disposal of the Bank’s customers.
The PKO Bank Polski S.A. Group is one of the largest and best assessed employers in Poland. As at the end of 2023, the PKO Bank Polski S.A. Group employed over 25.6 thousand FTEs.
The PKO Bank Polski S.A. Group between 2019 and 2023
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2023
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2022
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2021
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2020
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2019
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Statement of financial position (in PLN million)
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Total assets
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501,516
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431,447
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418,086
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376,966
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347,897
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Total equity
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45,227
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35,707
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37,693
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39,911
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41,578
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Own funds
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43,807
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43,759
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42,112
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41,516
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42,330
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Financing granted to customers
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262,920
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247,619
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247,572
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235,727
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244,083
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Customer deposits
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399,193
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338,868
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322,296
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282,356
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256,170
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Net profit/loss
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5,502
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3,312
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4,874
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-2,557
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4,031
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Financial ratios
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ROA net
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1.2%
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0.8%
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1.2%
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-0.7%
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1.2%
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ROE net
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13.3%
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9.6%
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12.1%
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-6.0%
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10.0%
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C/I1)
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31.6%
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45.0%
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40.4%
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40.9%
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41.3%
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Interest margin2)
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4.4%
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3.8%
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2.7%
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3.0%
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3.4%
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Share of impaired exposures
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3.44%
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3.79%
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3.98%
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4.43%
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4.26%
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Cost of credit risk
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0.50%
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0.52%
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0.55%
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0.78%
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0.46%
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Total capital ratio
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18.65%
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19.07%
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18.73%
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18.18%
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19.88%
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Operational data
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Number of customers of PKO Bank Polski S.A. (K), including:
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11,911
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11,666
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11,120
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11,006
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10,933
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Individuals (K)
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11,290
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11,071
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10,541
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10,463
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10,427
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Companies and enterprises (K)
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603
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578
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563
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526
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491
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Corporate Customers (K)
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18
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18
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17
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16
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16
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Number of branches of PKO Bank Polski S.A.
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9,279
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9,049
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8,490
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8,257
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8,012
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Number of employees (in FTEs)
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945
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967
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975
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1,004
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1,115
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Number of current accounts with the Bank (K)
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25,601
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25,071
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25,657
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25,859
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27,708
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Information on shares
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Stock exchange capitalization (in PLN million)
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62,900
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37,863
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56,163
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35,900
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43,075
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Number of shares (in million)
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1,250
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1,250
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1,250
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1,250
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1,250
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Share price (in PLN)
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50.32
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30.29
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44.93
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28.72
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34.46
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Dividend per share (in PLN)
(paid in the current year from pofit for the preceding years)
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0.00
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1.83
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0.00
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0.00
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1.33
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1) Data for the years 2021-2019 does not take into account presentation changes made in 2023, 2022 and 2020 which could have had an impact on the amount of the result on business activities and operating expenses.
2) The interest margin in 2022 was calculated excluding the impact of the recognition in the third quarter of 2022 of the effects of the Act on crowdfunding for business ventures and assistance for borrowers (so-called statutory loan holidays) of PLN 3,111 million.
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The PKO Bank Polski S.A. Group has been offering services to its retail and institutional customers for more than 100 years. The main events in the history of the Bank and the Bank’s Group.
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1919-1938
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1.
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Pocztowa Kasa Oszczędności was established on 7 February 1919 by virtue of a decree signed by the Head of the country, Józef Piłsudski, Prime Minister Ignacy Paderewski and Hubert Linde – PKO’s founder and first president.
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2.
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Pocztowa Kasa Oszczędności was vested with legal personality as a state institution, operating under the supervision of and with the guarantee of the State.
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3.
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The first local branch of Pocztowa Kasa Oszczędności was opened in Poznań.
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4.
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Pocztowa Kasa Oszczędności began running School Savings Unions (Szkolne Kasy Oszczędności).
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5.
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On the initiative of Pocztowa Kasa Oszczędności, the Ministry of the Treasury decided to set up Bank Polska Kasa Opieki (today Pekao S.A.) as a joint-stock company to facilitate the transfer of foreign currencies to Poland by Poles living abroad.
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6.
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Pocztowa Kasa Oszczędności strongly contributed to the development of non-cash transactions – every other larger industrial plant and every large enterprise had a cheque account with Pocztowa Kasa Oszczędności, and the cheque turnover in Poland was one and a half times higher than the cash turnover.
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1939-1945
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The Second World War was a period in which Pocztowa Kasa Oszczędności’s activity came to a standstill and it suffered huge losses.
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1946-1990
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1.
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Pocztowa Kasa Oszczędności was transformed into Powszechna Kasa Oszczędności.
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2.
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The Banking Law Act introduced a privilege for saving deposits held in Powszechna Kasa Oszczędności; they were covered by a State guarantee.
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3.
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Powszechna Kasa Oszczędności introduced a modern product: a current account.
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4.
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In the years 1975–1987, Powszechna Kasa Oszczędności was merged into the structures of the National Bank of Poland (NBP), yet it retained its identity.
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1991-2001
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1.
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The first Internet information portal of the Bank and the first e-PKO Internet branch were launched.
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2.
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PKO Towarzystwo Funduszy Inwestycyjnych S.A. (PKO TFI S.A.) began its operations.
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3.
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PKO BP BANKOWY PTE S.A. was formed.
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4.
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Bankowy Fundusz Leasingowy S.A. (currently PKO Leasing S.A.) was formed which provides operating and finance leases of non-current assets and property.
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5.
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PKO Bank Polski S.A., as one of the founders, formed Centrum Elektronicznych Usług Płatniczych eService S.A. (currently CEUP eService sp. z o.o.).
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6.
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In 2000, the Bank was transformed into a joint-stock company fully-owned by the State Treasury under the name Powszechna Kasa Oszczędności Bank Polski Spółka Akcyjna (PKO Bank Polski S.A.).
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2002-2009
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1.
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The Bank acquired Inteligo Financial Services S.A., a company that provides services covering the maintenance and development of banking systems, also including electronic access to bank accounts (Inteligo account).
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2.
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The Bank acquired 66.65% shares in KREDOBANK S.A. The company is registered and operates in Ukraine. At present, the Bank holds 100% of shares in the company’s share capital.
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3.
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In 2004, PKO Bank Polski S.A. was floated on the WSE. At the end of the first day of quotations, shares reached a price of PLN 24.50 against the issue price fixed at PLN 20.50.
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4.
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PKO BP Faktoring S.A. (currently PKO Faktoring S.A.) began operating.
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2010-2015
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1.
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2013–2015 strategy: “PKO Bank Polski. Every day the best” strengthened the position of the Bank’s Group as a leader in key market segments.
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2.
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In 2013, PKO Bank Polski S.A. set a new standard of mobile payments – IKO. The innovative solution on the market of mobile payments was used to create the BLIK payment system in 2015, which became a standard on the Polish market.
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3.
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The Bank signed an agreement for a twenty-year strategic alliance in the electronic payment market with EVO Payments International Acquisition GmbH, and at the same time sold a significant portion of shares in CEUP eService sp. z o.o.
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4.
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PKO Bank Hipoteczny S.A. was formed. Its operations include issuing long-term mortgage covered bonds and granting long-term mortgage loans to retail customers.
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5.
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PKO Bank Polski S.A. acquired shares in the Nordea Group companies, including shares in Nordea Bank Polska S.A., and a portfolio of amounts due from corporate customers. In October 2014, the merger of the banks was carried out.
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6.
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PKO Towarzystwo Ubezpieczeń S.A. was formed. The Company provides property insurance services to the retail customers of PKO Bank Polski S.A.
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7.
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PKO Bank Polski S.A. started its expansion into foreign markets and established its first foreign branch abroad (in Frankfurt-am-Main in the Federal Republic of Germany).
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2016-2021
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1.
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PKO Bank Polski S.A. implemented the strategy for 2016-2020 “We support the development of Poland and the Poles” and strategy for 2020-2022 “PKO Bank of the Future”.
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2.
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PKO Leasing S.A. – the Bank’s subsidiary – acquired Raiffeisen-Leasing Polska S.A. and Prime Car Management S.A. (with their subsidiaries). This allowed PKO Leasing S.A. to strengthen its position on the lease market, as well as to extend its offer of car fleet management services and rental of cars.
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3.
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The Bank’s Group acquired KBC TFI S.A. and the merger with PKO TFI S.A. helped additionally accelerate the rapid development of PKO TFI S.A., and strengthened its leading position in the retail funds segment.
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4.
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The Bank’s portfolio of investment projects expanded by Operator Chmury Krajowej sp. z o.o. (cloud computing services), which was joined by another shareholder – Polski Fundusz Rozwoju S.A.
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5.
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The Bank established an investment fund managed by PKO TFI S.A. under the business name PKO VC, which pursues an appropriate policy for a venture capital funds and invests in financial technological innovations.
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6.
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PKO Bank Polski S.A. continued its development abroad and established a corporate branch in Prague (the Czech Republic) and in Bratislava (the Slovak Republic).
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7.
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According to the Inteliace Research report, PKO Bank Polski S.A. was the largest bank in the CEE region in terms of assets in 2020.
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2022-2023
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1.
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In June 2022, PKO Bank Polski S.A. and 7 other banks established a system for the protection of commercial banks to ensure the liquidity and solvency of its participants, as well as to support the resolution regime carried out by the Bank Guarantee Fund (BGF).
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2.
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In the first half of 2023, a branch in Romania was opened. The operational launch of the Bucharest branch is planned for 2024.
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3.
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PKO Bank Polski S.A. has been implementing its strategy for 2023-2025 "Prepared for the challenges, focused on the future". The strategy involves leveraging the Bank Group's competitive advantages: the scale of operations, digital and technological advancement as well as security and stability. The Bank’s efforts will be focused on people – customers and employees, as well as innovation and technology.
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….
PKO Bank Polski S.A. continued offering settlements to its retail customers who had active loans in Swiss Francs (CHF), which were intended for satisfying their own housing needs.
For information on settlements and the cost of legal risk, see Section 8.1 "Support for borrowers".
On 8 August 2022, the Management Board of the Bank approved the establishment of a programme for the issue of Eurobonds by the Bank as the issuer (the Euro Medium Term Notes Programme – the “EMTN Programme”) of up to EUR 4 billion. Under the EMTN Programme, it will be possible to issue unsecured Eurobonds in any currency, including those in respect of which obligations may be classified as eligible liabilities or as the Bank’s own funds. Bonds issued under the EMTN Programme will be registered with the international central securities depository (ICSD) operated by Euroclear Bank SA/NV or Clearstream Banking société anonyme.
On 16 December 2022, the Moody's Investors Service rating agency assigned a (P)Baa3 rating to the EMTN Programme, for the unsecured bonds designated as Senior Non Preferred.
On 20 December 2022, the Prospectus for the EMTN Programme was approved by the Commission de Surveillance du Secteur Financier (CSSF) in Luxembourg. On 20 January 2023, the CSSF approved the first Supplement to the prospectus for the EMTN Programme.
On 1 February 2023, the Bank, as part of its inaugural EMTN issue allowing it to cover the senior portion of the requirement (being the difference between the MREL requirements denominated on a consolidated basis and the MREL on a stand-alone basis), issued 3-year Senior Preferred Notes with a total value of EUR 750 million, with the possibility of early redemption two years after the issue. The coupon of the issue is fixed, at 5.625%, payable annually until the early redemption date, and variable thereafter, with quarterly payments. Moody’s Investors Service has assigned a rating of A3 to the issue. The bonds were admitted to trading on a regulated market on the Luxembourg Stock Exchange and the Warsaw Stock Exchange (WSE) (in April 2023).
Since the third quarter of 2020, the PKO Bank Polski S.A. Group, starting with the reform of LIBOR benchmarks, has been running an inter-disciplinary project supervised by members of the Management Board of the Bank with the participation of subsidiaries’ representatives from PKO Bank Hipoteczny, PKO Leasing S.A. and PKO Faktoring S.A. related to the adjustment of the Bank and its subsidiaries to changes introduced as part of the benchmark reform. The work is being carried out by the National Working Group for Benchmark Reform (NWG), appointed by the Office of the Polish Financial Supervision Authority (PFSA Office). In 2023, the Steering Committee of the NWG (NWG SC) endorsed the following recommendations:
• on the standard OIS transaction based on WIRON;
• on the application of the WIRON index in issues of floating-rate debt securities;
• on the rules and methods of applying the WIRON benchmark (or benchmarks from the WIRON Compound Indices Family) when entering into new contracts for benchmark-based products in PLN offered by financial market entities;
• on the rules and methods of applying the WIRON interest rate index (or indices from the WIRON Compound Indices Family) when entering into new contracts in PLN for factoring products (excluding discounting products) for benchmark-based products in PLN offered by financial market entities;
• on the methods of applying the WIRON interest rate index (or indices from the WIRON Compound Indices Family) when entering into new agreements in PLN for leasing products for interest rate benchmark-based products in PLN offered by financial market entities;
• on the use of a replacement rate for the WIBOR benchmark in interest rate derivatives;
• on the rules and methods of conversion of existing issues of debt securities where WIBOR is used.
In January 2023, PKO Bank Polski S.A. and ING Bank Śląski S.A. executed the first transaction in the Polish financial market for which the WIRON interest rate index has been applied. The financial instrument being traded was an interest-rate derivative contract – Overnight Index Swap (OIS). With the transaction, the banks have tested the operational and technological capacity for applying WIRON in financial instruments.
On 13 February 2023, the PFSA Office announced that WIRON had become an interest rate benchmark. Banks may apply the WIRON benchmark to determine interest rate on consumer loans or mortgage loans.
On 25 October 2023, the NWG SC decided to revise the deadlines for the Road Map for the process of replacing the WIBOR and WIBID benchmarks indicating a final conversion date of the end of 2027. The NWG SC announced that neither the directions of the interest rate benchmark reform in Poland nor the scopes of measures planned to date in the Roadmap are changing.
On 31 October 2023, PKO Bank Polski S.A. decided to withdraw from the investment process relating to the potential acquisition by the Bank from Poczta Polska S.A. of the block of shares in Bank Pocztowy S.A. held by Poczta Polska S.A. i.e. 75% – 10 shares of Bank Pocztowy S.A. (the “Transaction”), and decided to discontinue any work relating to the Transaction (Current report No 22/2023).
PKO Bank Polski S.A. participated in another edition of the European stress tests conducted in 2023 by the European Banking Authority with the involvement of the Polish Financial Supervision Authority, the European Central Bank and the European Systemic Risk Board. The test was attended by 70 banks from 16 European Union (EU) and European Economic Area countries, covering 75% of the EU banking sector assets.
The pan-European stress tests carried out in 2023 do not have a passing threshold, but can serve as an important source of information for the supervisory review and evaluation process (SERP) and can assist competent authorities in assessing the Bank's ability to meet prudential requirements under stress scenarios.
According to the findings of the pan-European stress tests in 2023, the Bank's consolidated Common Equity Tier 1 (CET1) capital ratio would be 22.27% in 2025 in the baseline scenario and 13.26% in the stress scenario (the consolidated CET1 at the end of 2022 would be 17.67%). Without the application of the transition periods, the Bank's consolidated Common Equity Tier 1 (CET1) ratio would remain unchanged at the end of 2025 (it would be 16.48% at the end of 2022). The results of the tests reflect the Bank's prudential approach to simulations carried out for European and national supervisory purposes.
The most significant factor affecting the reduction in consolidated capital ratios at the end of 2025 in the stress scenario was the recognition of the effects of the cost of legal risk associated with mortgage loans denominated in and indexed to CHF on the Bank's projected performance in 2023-2025.
In 2023, the Bank’s Group developed products and services, including those offered via remote channels:
• it has launched a process for handling applications for mortgage loans under the Government's Safe 2% Loan programme at PKO Bank Polski;
• it has launched mobile authorisation in iPKO biznes for corporate and business customers of PKO Bank Polski to facilitate companies' day-to-day management of their finances;
• it has launched the option for PKO Bank Polski customers to confirm their identity with an electronic ID card (mDowód) (using the mObywatel 2.0 application on a smartphone) instead of a traditional ID card, when handling banking matters in branches;
• it has launched multi-person access for companies to the PKO Bank Polski online service, enabling joint management of the company's finances by several authorised persons, in accordance with the method of representation established by the company;
• it has extended the range of additional VAS (value added services) on the iPKO website and the IKO mobile app with further services: Telemedicine, i.e. online physician consultations, "Safely online" (protection against cyber threats) and "Safe Screen" (smartphone screen insurance).
The number of active IKO applications reached a record high of 7.8 million on the Polish banking market at the end of 2023.
The PKO Bank Polski S.A. Group's financial performance delivered in 2023 was significantly affected by an environment of high market interest rates, as well as regulatory and legal factors relating to the cost of legal risk of mortgages in convertible currencies.
Table 1. Basic financial data of the Bank’s Capital Group (PLN million)
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2023
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2022
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Zmiana (r/r)
|
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Net profit/loss
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5,502
|
3,312
|
+66.1%
|
|
|
Net interest income
|
18,318
|
11,424
|
+60.3%
|
|
|
Net fee and commission income
|
4,626
|
4,498
|
+2.8%
|
|
|
Result on business activities
|
24,179
|
17,254
|
+40.1%
|
|
|
Administrative expenses
|
-7,635
|
-7,769
|
-1.7%
|
|
|
Tax on certain financial institutions
|
-1,231
|
-1,266
|
-2.8%
|
|
|
Net write-downs and impairment
|
-6,850
|
-3,523
|
+94.4%
|
|
|
Total assets
|
501,516
|
431,447
|
+16.2%
|
|
|
Total equity
|
45,227
|
35,707
|
+26.7%
|
|
|
ROE net
|
13.3%
|
9.6%
|
+3.7 p.p.
|
|
|
ROA net
|
1.2%
|
0.8%
|
+0.4 p.p.
|
|
|
C/I (cost to income ratio)
|
31.6%
|
45.0%
|
-13.4 p.p.
|
|
|
Interest margin1)
|
4.37%
|
3.79%
|
+0.58 p.p.
|
|
|
Share of impaired exposures
|
3.44%
|
3.79%
|
-0.35 p.p.
|
|
|
Cost of credit risk
|
0.50%
|
0.52%
|
-0.02 p.p.
|
|
|
Total capital ratio
|
18.65%
|
19.07%
|
-0.42 p.p.
|
|
|
Common equity Tier 1 (CET 1)
|
17.77%
|
17.94%
|
-0.17 p.p.
|
|
|
|
|
|
|
|
1) The interest margin in 2022 was calculated excluding the impact of the recognition in the third quarter of 2022 of the effects of the Act on crowdfunding for business ventures and assistance for borrowers (so-called statutory loan holidays) of PLN 3,111 million.
The consolidated net profit of the PKO Bank Polski S.A. Group earned in 2023 amounted to PLN 5,502 million and was PLN 2,190 million higher than in 2022. The increase in the net profit was due to the following:
1) an improvement in the result on business activities of PLN 6,925 million which reached PLN 24,179 million, mainly due to:
• an increase in net interest income by PLN 6,894 million, driven by an increase in interest income related mainly to the higher average level of market interest rates and the recognition of the effects of statutory loan holidays of PLN 3,111 million in the third quarter of 2022, with a simultaneous increase in financing costs;
• an increase in net fee and commission income by PLN 128 million, driven by higher results generated on cards, lending, operating leases and investment funds;
• a decrease in other profit/loss by PLN 97 million, including mainly a decrease in the result on financial transactions (due to a deterioration in the result on derivatives) and in the result on insurance (due to a decrease in the sale of mortgage insurance and an update of actuarial assumptions).
2) deterioration in net write-downs and impairment of PLN 3,327 million as a result of:
• recognition in 2023 of the cost of legal risk related to mortgage loans in convertible currencies of PLN 5,430 million, i.e. PLN 3,516 million more than in 2022;
• an improvement of net write-downs and impairment (excluding the cost of legal risk) by PLN 189 million mainly due to the improved quality of the portfolio of corporate entities, companies and enterprises.
3) a decrease in administrative expenses by PLN 134 million, including a decrease in regulatory costs by PLN 1,265 million (as a result, among other factors, of the recognition in 2022 of an expense relating to the contribution to the assistance fund to System Ochrony Banków Komercyjnych S.A. in the amount of PLN 956 million and the cost of contributions to the Borrower Support Fund in the amount of PLN 314 million), with an increase in employee benefits expenses by PLN 738 million and an increase in material costs by PLN 326 million.
In 2023, there was an increase in the scale of operations of the Bank’s Group:
• total assets reached a record level of PLN 502 billion (+PLN 70 billion y/y);
• amounts due to customers increased to approx. PLN 399 billion (PLN +60 billion y/y), mainly as a result of an increase in both retail and private banking deposits;
• financing granted to customers amounted to approximately PLN 263 billion (+PLN 15 billion y/y), there was an increase in financing in both the corporate and retail segments;
• liquid assets (i.e. amounts due from banks, cash, balances with the Central Bank and securities from the banking book) amounted to nearly PLN 213 billion (PLN +60 billion y/y).
Subsequent events
On 2 February 2024, the Extraordinary General Shareholders' Meeting (EGM) of the Bank:
• dismissed 8 of the 10 members from the Supervisory Board of PKO Bank Polski S.A., i.e. Messrs: Mariusz Andrzejewski, Wojciech Jasiński, Dominik Kaczmarski, Rafał Kos, Tomasz Kuczur, Maciej Łopiński, Robert Pietryszyn and Bogdan Szafranski;
• appointed the following Ladies to the Supervisory Board of PKO Bank Polski S.A.: Hanna Kuzinska and Katarzyna Zimnicka-Jankowska, and the following Messrs: Maciej Cieślukowski, Szymon Midera, Andrzej Oślizło, Marek Panfil, Marek Radzikowski and Paweł Waniowski.
The State Treasury as the Eligible Shareholder, pursuant to the Bank’s Articles of Association, appointed:
• Ms Katarzyna Zimnicka-Jankowska – for the position of the Chair of the Bank’s Supervisory Board;
• Mr Paweł Waniowski - for the position of the Deputy Chair of the Bank’s Supervisory Board.
The Extraordinary General Shareholders' Meeting confirmed the individual suitability of the newly appointed members of the Supervisory Board and the collective suitability of the entire body.
Biographical notes of the Supervisory Board are available on the Bank's website.
On 7 February 2024, Mr Dariusz Szwed resigned from the function of the President of the Bank's Management Board as well as from the membership in the Bank's Management Board effective as of 14 February 2024.
On 14 February, the Bank’s Supervisory Board:
• dismissed 6 of the 8 members from the Management Board of PKO Bank Polski S.A., i.e. Messrs: Andrzej Kopyrski, Paweł Gruza, Maciej Brzozowski, Marcin Eckert, Wojciech Iwanicki, Artur Kurcweil;
• delegated members of the Bank's Supervisory Board:
Mr Szymon Midera to temporarily perform the duties of Vice President of the Management Board from 15 February 2024, with assignment to manage the work of the Management Board;
Mr Maciej Cieślukowski to temporarily perform the duties of Vice-President of the Management Board from 14 February 2024;
Mr Marek Radzikowski to temporarily perform the duties of Vice-President of the Management Board from 14 February 2024;
• approved the individual suitability assessments of the aforementioned delegated members of the Bank's Supervisory Board and the collective suitability assessments of the entire Management Board of the Bank.
PKO Bank Polski S.A.’s Strategy for 2023–2025 and implementation
On 8 December 2022, the Bank's Management Board adopted the Development strategy for PKO Bank Polski S.A. for 2023-2025 “Ready for the challenges, focused on the future”, as authorised by the Supervisory Board of the Bank. The strategy provides for the achievement of ambitious business and financial goals. It is based on the Bank’s main competitive advantages: scale of operations, digital and technological competence, as well as security and stability. The Strategy implementation process is divided into 7 pillars.
Table 2. Implementation of the Strategy in 2023 – performance indicators
|
INDICATOR
|
2025 GOAL
|
2023 PERFORMANCE
|
|
FINANCIAL GOALS
|
|
ROE
|
>12%
|
13,3%
|
|
C/I
|
<45%
|
31,6%
|
|
cost of risk
|
0,7%-0,9%
|
0,5%
|
|
capability to pay dividends/buy back shares
|
YES
|
YES
|
|
BUSINESS GOALS
|
|
improved customer satisfaction for each customer group according to the NPS
|
TOP 3
|
individual customer: TOP4
corporate customer: according to the assumed trajectory
|
|
improved employee satisfaction as measured by an increase in the eNPS
|
+20 points
|
>20 points
|
|
process digitisation rate for the individual customer
|
~100%
|
98%
|
|
growth of primary customer base under 35
|
25%
|
7%
in line with the assumed trajectory
|
|
increase in non-banking revenues of the Bank's Group companies
|
20%
|
14%
in line with the assumed trajectory
|
|
Increase in the proportion of women in MRT positions at the Bank
|
>30%
|
22,7%
|
|
The highest volume of new financing for sustainable and transformation projects
|
|
PLN 2.2 billion
|
At the end of 2023, the financial goals were delivered in line with the assumed trajectory.
ROE stood at 13.3% compared to a target of more than 12%. The C/I ratio was 31.6% versus a target of less than 45%. The cost of risk was 0.5%, with the target ranging from 0.7% to 0.9%. The bank meets the financial requirements for dividend distribution.
The degree to which the business goals have been met in each pillar, together with an indication of the most important measures, is outlined below:
PILLAR 1 - Customer at the centre – a simple, friendly and accessible Bank
The bank has implemented a number of initiatives to improve customer satisfaction, resulting in a significant improvement in the NPS ratio for individual customers, reaching TOP4 among banks in Poland - up 3 positions from 2022. The Bank has been building a long-term relationship with its customers by remaining the bank of first choice for more than 5 million primary customers, representing an increase by 6% y/y. Measures aimed at improving the retail customer experience included:
• identification of the most important areas for improvement in the customer service paths and a number of implementations, of which the most important are the implementation of service LiveChat, personalised tables of fees and commissions improving price transparency;
• implementation of customer service digitalisation processes - we were the first bank in Poland to implement solutions enabling customer service using a digital ID (mObywatel);
• carrying out more than 20 activation, relationship and internship campaigns;
• implementation of a project aimed at simplifying the language of communication both within the organisation and with customers and stakeholders - 70 female and male ambassadors in the PKO Prosto ("PKO Straight") programme;
• implementation of initiatives to strengthen the attitude and customer-oriented culture in the organisation - CX Galaxy, CX Day at PKO Rotunda;
• including NPS indicators in targets for management bonus goals and carrying out competence development initiatives among the Bank’s employees.
The NPS in the corporate customer segment improved at the end of 2023 remaining on track to reach TOP3 in 2025. In 2023, as part of improving the corporate customer experience and addressing key areas for improvement, the Bank implemented a number of new solutions. See Section 8.6 for a detailed description.
In 2023, PKO BP continued its work to align its offering and service model with the needs of customers in branches and in digital channels. The bank developed digital channels in terms of technology and products. Achievements in this area are presented in Section 8.6
In addition, in 2023:
• 47 more branches were upgraded to new formats and 21 branches were converted to cashless branches, for a total of 51 branches operated by the Bank;
• the Customer Assistant function was extended to further branches (see Section 8.7 for details);
• further processes, as well as identification using the mObywatel application, were implemented on customer screens in branches. At the end of the year, 29 sales and service processes in branches were available on screens and nearly 91% of the instructions within these processes are carried out digitally;
• the functionality of the IKO app was extended to include new capabilities (see Section 8.6);
The bank carried out a simplification programme to simplify its offering, digitise processes and automate after-sales service. The programme leads to the achievement of the strategic objective of nearly 100% availability of cases for individual customers in iPKO or IKO. At the end of 2023, the indicator was 98%.
In 2023:
• customers were provided with, among others, a new version of the iPKO online exchange service, change of telephone number, new process for submitting complaints in the iPKO service (for details, see Section 8.6);
• a function presenting investment costs, information on contributions and limits for Individual Retirement Security Accounts (IKZE) and Individual Pension Accounts (IPA) was introduced;
• in the wake of the new implementations, the Bank also carried out customer education activities presenting extensive self-service opportunities in remote channels.
PILLAR 2 - Lifestyle banking
In 2023, the Bank continued to develop the ecosystem of non-bank services under the VAS platform and carried out a number of measures to improve the attractiveness of its offering to young people. The initiatives launched translated into delivering on the Bank's strategic objective in terms of growth in the number of new young customers, in line with the stated trajectory. The base of so-called primary customers aged under 35 increased by 7% y/y. The Bank's strategy emphasises innovation, the expansion of its digital offering and the provision of tools to make everyday banking easier for young people, which translates into strengthening relationships with its youngest customers. In 2023, the number of contactless BLIK transactions has almost doubled, and the number of "selfie" accounts opened has increased by 15% year-on-year. In 2023:
• a new sales process was implemented for the PKO Konto Pierwsze (PKO First Account) in iPKO/IKO, the 500+ Rodzina – Rodzinny Pakiet Oszczędnościowy (500+ Family – Family Savings Package) account and the Pierwsze Konto Oszczędnościowe (First Savings Account) with an interest rate of 8%;
• the Bank's customers were the first to be offered payment cards made of recycled Ocean Plastic®;
• the range of accounts was simplified and streamlined, e.g. the Konto Pierwsze (First Account) was merged with Konto dla Młodych (Account for the Young) – the number of accounts was reduced from 19 to 8;
• the commitment to support the financing of the first home for young families continued (see Section 8.1 for details;
• a new Junior application was made available to customers, and the Bank continues to work on the new parent role in iPKO and IKO. For details on the PKO Junior application, see Section 8.6;
• campaigns were carried out to promote the image of a Bank that is “proven in action", a campaign to promote remote services in the IKO app, and a number of acquisition and promotional activities in respect of the offering for young customers;
• initiatives aimed at strengthening the PKO Bank Polski brand's presence in the world of the young were supported: sponsorship of sport and the use of the Metaverse world or the VAS platform. For more information, see Sections 8.5 and 8.6;
• the PKO Płacę później (PKO Pay Later) limit was made available, reaching almost 175 thousand active limits by the end of the year.
PILLAR 3 - The best value proposition for business customers thanks to the size of the Bank’s Group
As part of its strategic activities in the corporate customer segment in 2023, the Bank:
• continued work on the "product multiplatform". A "single sign on" link to the PKO Leasing Customer Portal and integration with further customers' financial and accounting systems was implemented. The proportion of customers who use financial and accounting systems available for integration with the Bank reached 35% at the end of 2023;
• in order to speed up the lending process, the so-called simple credit path, eDecision (decision made in the lending system), the credit risk auto-monitoring process carried out with the support of the CRM application, as well as the automatic generator for the so-called short agreement were implemented;
• conducted advanced work on freeing up the time of regional advisors and analysts.
The bank also developed its offering in the corporate and business segment. Activities in this area were implemented with a particular focus on the digitalisation of service processes and the optimisation of lending processes. The main implementations in 2023 included:
• the provision of multi-user access to the iPKO website;
• the provision of new lending products including, among others: a multi-purpose credit limit with a de minimis BGK guarantee and an ARiMR liquidity loan;
• development of an ecosystem of non-banking services;
• integration of service processes and systems with PKO TFI and launch of the development of an employee and customer satisfaction measurement system (eNPS/NPS) in the Bank's Group companies.
Delivery of the strategic goal of 20% growth in non-bank revenues of the Bank's Group companies over the strategy period reached 14% and is on track with the assumed trajectory.
PILLAR 4 – Leader of the ESG transition in the Polish banking sector
Measures to achieve the ESG goals are presented in Section 13.
PILLAR 5 – Agile technologies and future-ready operations
A key aspect of technological development in the strategy horizon is the optimisation of the development process and the shortening of the period from idea to implementation. Optimisation involves both increasing the use of DevSecOps or Agile working methods, as well as reducing technology debt and simplifying the Bank's application architecture. In 2023, the Bank's team implemented significant changes to the Bank's key IKO application release model, including:
• implementation of cybersecurity functions at the software development stage;
• introduction of a number of qualitative DevSecOps metrics;
• preparation of a synergistic "roadmap" for IKO development;
• development of IKO infrastructure based on microservices. At the end of 2023, the modern architecture had 35 microservices in operation vs. 24 at the end of 2022;
By implementing the aforementioned solutions, the Bank has reduced the time to implement changes to the IKO production environment by 28% over the last year.
In response to the increasing number of tasks, a number of initiatives were carried out in the area of operations. In 2023, owing to the use of repetitive Robotic Process Automation (RPA) activities in handling the so-called Government Loan Holidays and to support the processing of applications for the so-called Safe 2% Loan, robots performed work equivalent to more than 600 FTEs. In total, 65 processes were robotised and 82 were modified in 2023. The robots carried out 77.3 million operations in more than 100 processes in the operations area, more than 170 processes in other areas, including audit, tax or restructuring, and 19 processes of the Bank's Group companies.
In 2023, the solutions of the Process Robotics Platform team were recognised in the following competitions:
• Best in RPA – 3rd place in a competition organised by "Computerworld";
• Special award "Mocarze Hiperautomatyzacji" for PKO Bank Polski.
The Bank also optimises processes through elimination, standardisation, optimisation using lean six sigma methods and automation. Despite the progressive centralisation of the group companies' operational functions and the increasing number of tasks, the Bank has maintained its cost discipline. The current level of STP (straight through processing) automation of operations area processes is close to 60%.
PILLAR 6 – Culture of innovation and agility
The implementation of strategic goals depends first and foremost on employee engagement, retaining and attracting talent and creating a supportive environment for growth. Therefore, the Bank aims to increase employee satisfaction. At the end of 2023, this goal was achieved - the eNPS of employees increased by more than 20 points to 45 points for the fourth quarter of 2023. The Bank's activities in this regard were implemented through:
• implementing a quarterly experience survey process (eNPS) and elaborating on the findings at team and bank-wide level;
• extending the benefit package to include elements expected by employees (including the choice of any medical package, an increase in total points on the MyBenefit platform, an additional day off, a higher reimbursement amount for glasses, the pilot launch of the MultiLife training and development programme; a package for retirees) and continuing the digitalisation of employee processes;
• developing a well-being strategy and implementing numerous initiatives to support employee well-being in terms of physical and mental health;
• enhancing the organisational culture - a cultural profile has been developed and implementation of new organisational values has been initiated through the #naWARTOŚCIowani campaign, a value-driven leader and employee model has been developed;
• increasing the involvement of leaders through a defined new profile of expectations based on new values and priorities for cultural change and increasing their impact in HR processes, e.g. including them in the design of HR policy solutions;
• defining a list of key competences with a strategy for the development of each of them and launching bank-wide programmes for the development of these competences for employees and trainees;
• launching an educational initiative to support the building of an equal opportunities bank and inclusive leadership;
• organising the market's first virtual job fair in the Metaverse space and implementing a comprehensive internal mobility programme within the Group;
• expanding the range of learning activities to include digital formats and greater accessibility of training content.
The second strategic objective addressed by Pillar 6 is the participation of women in MRT positions. With changes to the incentive system, building succession programmes and changes to the culture based on new organisational values, the Bank wants to achieve the goal of 30% participation of women in MRT positions by the end of 2025. At the end of 2023, this figure stood at 22.7%.
PILLAR 7 – Using the bank's strong position for inorganic growth
The Bank monitors and identifies potential acquisition targets for institutions in Poland and in the region. Analyses are conducted with a view to obtaining the benefits of transactions identified in the strategy (including: expertise and talent acquisition, technological synergies, customer base acquisition, business synergies, business and geographic diversification).
In 2023, the Bank’s Group:
• increased its share of the lending market in terms of volume for both individuals and institutional entities;
• reached a record level of mortgage sales (nearly PLN 22 billion), bringing its market share to nearly 36%;
• increased its share in the savings market of both private individuals and institutional entities;
• maintained its share in the market of investment funds for individuals at above 20%;
Table 3. Market share
|
|
31.12.2023
|
31.12.2022
|
31.12.2021
|
31.12.2020
|
31.12.2019
|
Change 2023/2022
|
|
Loans for:
|
18.1%
|
17.0%
|
17.4%
|
17.6%
|
17.9%
|
1.1 p.p.
|
|
1. individuals, of which:
|
22.6%
|
21.4%
|
21.9%
|
22.4%
|
22.8%
|
1.2 p.p.
|
|
- housing
|
24.2%
|
22.8%
|
23.7%
|
24.9%
|
25.8%
|
1.4 p.p.
|
|
PLN
|
25.0%
|
23.8%
|
24.7%
|
26.3%
|
27.6%
|
1.2 p.p.
|
|
foreign currency
|
19.8%
|
18.9%
|
20.1%
|
20.8%
|
21.0%
|
0.9 p.p.
|
|
- consumer and other, of which:
|
18.7%
|
17.8%
|
17.1%
|
16.5%
|
16.3%
|
0.9 p.p.
|
|
overdraft facilities
|
35.7%
|
35.5%
|
34.1%
|
32.7%
|
32.4%
|
0.2 p.p.
|
|
2. institutional entities
|
14.0%
|
13.0%
|
12.8%
|
12.6%
|
13.1%
|
1 p.p.
|
|
Non-Treasury debt securities
(indebtedness)
|
33.2%
|
30.8%
|
29.3%
|
30.2%
|
30.7%
|
2.4 p.p.
|
|
Mortgage loans (sales)
|
35.9%
|
20.4%
|
19.8%
|
19.7%
|
25.7%
|
15.5 p.p.
|
|
Total savings1) , of which:
|
21.3%
|
20.0%
|
19.2%
|
18.3%
|
18.3%
|
1.3 p.p.
|
|
- savings of individuals 2)
|
29.2%
|
28.1%
|
25.6%
|
24.3%
|
22.6%
|
1.1 p.p.
|
|
Deposits:
|
18.9%
|
17.6%
|
17.8%
|
17.3%
|
17.9%
|
1.3 p.p.
|
|
individuals
|
24.6%
|
23.3%
|
22.5%
|
21.9%
|
20.8%
|
1.3 p.p.
|
|
institutional entities
|
12.3%
|
11.2%
|
12.3%
|
11.5%
|
13.8%
|
1.1 p.p.
|
|
TFI assets - funds of individuals3)
|
20.1%
|
20.6%
|
19.9%
|
18.9%
|
19.5%
|
-0.5 p.p.
|
|
Brokerage activities - transactions on secondary market
|
9.7%
|
9.2%
|
12.3%
|
11.2%
|
7.5%
|
0.5 p.p.
|
Source: NBP, WSE, PBA, Analizy Online
1) Total savings comprise total deposits, TFI assets and retail savings bonds.
2) Savings of individuals include deposits of individuals, funds of individuals and saving Treasury bonds.
3) In 2021 the market data changed due to the change in the status of two funds into funds for individuals. The data for the prior period was recalculated.
Macroeconomic environment
Situationon on the financial Market
Position of the Polish banking sector
Position of the Polish non-banking sector
Ukrainian market
Regulatory and legal environment
Factors that will affect future financial performance
Macroeconomic factors which shaped the national economy in 2023 are presented below.
GDP on the brink of recession and recovery in the second half of the year
|
The pace and decomposition of GDP growth (%, y/y) and its components (p.p.)
|
|
|
|
|
In the first half of the year, the national economy was on the brink of recession, with GDP declining year-on-year. The second half of the year saw an improvement, with GDP growth accelerating from -0.6% y/y in the second quarter to around 1% y/y in the fourth quarter of 2023. At the beginning of the year, consumption decreased as a result of a decline in the purchasing power of income in real terms caused by inflation of more than a dozen per cent. In the third quarter, the decline in inflation, combined with stable nominal income growth in an environment of record-low unemployment, contributed to a recovery in consumer demand, although its momentum weakened somewhat towards the end of the fourth quarter. Solid investment growth continued throughout the year, picking up by 8% underpinned by the energy transition forced by high energy costs. Investment activity was also positively affected by the finalisation of projects financed under the concluding EU financial perspective. Economic activity in 2023 was negatively affected by the reversal of the inventory cycle, following its abnormally strong growth in 2022. Net exports, on the other hand, made a positive contribution to GDP growth - imports were under negative pressure from weak consumption and lower purchases by businesses, and their growth rate was lower than that of exports. A rapid improvement in the external balance of the Polish economy was recorded over the course of 2023 - the current account deficit of 2.4% of GDP in 2022 turned into a surplus of more than 1% of GDP in 2023, boosted by a sharp decline in the prices of imported goods.
Labour market resilient to the slowdown
The labour market was stable in 2023, despite the continuing slowdown in economic growth. The registered unemployment rate in December 2023 was 5.1%, 0.1 p.p. lower than at the end of 2022. Labour force participation rates improved steadily - according to the Labour Force Survey, in the third quarter a record 56.8% of the population aged 15-85 was employed and the labour force participation rate was 58.4%. The number of foreigners in the domestic labour market grew steadily, with the Social Insurance Institution's data indicating a stabilisation in the number of insured Ukrainians and an increase in the number of workers from other countries.
The decline in labour demand was reflected in fewer vacancies in the economy (111 thousand in the third quarter) and declining employment in the business sector. Nominal wages increased at double-digit rates in 2023, with the strongest increase recorded at the beginning of the year. The minimum wage increase of (on average) 17.8% in 2023 provided a noticeable boost, which was reflected in the above-average nominal wage growth observed in sectors with relatively higher minimum wage coverage (e.g. accommodation and catering, administration). In the first half of the year, wages in the corporate sector grew at a slower rate than inflation. However, the increase in real wages resumed in the autumn and its acceleration is driving the forthcoming recovery in consumption.
Rapid disinflation
2023 saw a marked disinflation, with CPI inflation falling from 18.4% y/y in February to 6.2% y/y in December. The fall in inflation was possible due to the extinction of a negative cost shock, which had pushed up energy and food prices sharply after Russia's attack on Ukraine. At the same time, regulatory measures that have limited the increase in food and energy prices in the past remained in force. From February to the end of the year, the rate of increase in food prices decelerated from 24.0% y/y to 6.0% y/y, the rate of increase in energy prices from 31.1% y/y to 9.8% y/y, and fuel prices, which had increased by 30.8% y/y in February 2023, fell by 6.0% y/y in December. At the same time, core inflation, or CPI excluding food and energy, slowed to 6.9% y/y in December from 12.0% y/y in February 2023. At the end of 2023, the momentum of core inflation was half of what it was at the beginning of the year, but at the same time it stopped declining, signalling that core inflation may be anchored at an excessively high level.
Public finances under pressure but in check
|
Deficit and debt of the public sector
|
|
|
The situation of national public finances has been deteriorating steadily since mid-2022 compared to other EU countries. Poland went from being a fiscal frontrunner in 2021 to moving towards the bottom of the EU ranking in terms of fiscal balance over the course of the subsequent two years, with factors such as energy price 'freezing' programmes, PIT reform and the need to increase arms expenditure by leaps and bounds (from around 2% of GDP before 2022 to around 4% of GDP in 2023) contributing to these developments. After the first quarter of 2023, the general government deficit stood at 5.4% of GDP. The Ministry of Finance expects it to be 5.6% of GDP for the whole of 2023. Public debt in the third quarter reached 48.7% of GDP and remains low relative to the EU.
Adjustment of interest rates
Table 4. NBP interest rates (end of the period)
|
|
4Q 2022 (%)
|
4Q 2023 (%)
|
|
Reference rate
|
6,75
|
5,75
|
|
Bill rediscount rate
|
6,80
|
5,80
|
|
Bill discount rate
|
6,85
|
5,85
|
|
Lombard rate
|
7,25
|
6,25
|
|
Deposit rate
|
6,25
|
5,25
|
During the first half of the year, the Monetary Policy Council (MPC) kept interest rates unchanged. It was only at the September meeting that an unexpectedly deep cut in NBP interest rates of 75 basis points was made, followed by a more conservative move of 25 basis points in October. Thereafter, the MPC went into wait-and-see mode and did not announce any changes to monetary policy parameters. The Council emphasises the high uncertainty surrounding fiscal and regulatory policy, as well as regarding the pace of economic recovery in Poland. Under these circumstances, the Council considered that the current level of interest rates is conducive to meeting the inflation target in the medium term.
Interest rate market
|
The year 2023 was characterised by high volatility, but eventually brought a marked decline in yields on Polish government bonds. At the end of 2023, the yields on 2-, 5- and 10-year bonds were 5.05%, 5.03%, 5.2% respectively. This was mainly due to a decline in inflation by more than 10 percentage points from 16.6% in December 2022 to 6.2% at the end of 2023. Declining inflationary pressure, combined with economic stagnation driven by weak consumption, permitted the MPC to cut interest rates by a total of one percentage point. We have also seen declines in bond yields in the underlying markets, although the major central banks - the ECB and the Fed - have not yet cut interest rates, and are only hinting at the onset of monetary easing cycles.
|
10-years bond yield (%)
|
|
|
Currency market
|
The złoty strengthened in 2023 against the euro by PLN 0.34 (7%) to PLN 4.34/EUR, and against the US dollar by PLN 0.44 (10%) to PLN 3.97/USD. This happened in spite of the weak economic situation and interest rate cuts made by the MPC. It should be noted that the structure of GDP - consumer recession combined with good foreign trade performance and solid investments - was supportive of the złoty. Towards the end of the year, after the parliamentary elections, the chances of unblocking European funds related to the National Recovery Plan increased, which gave a positive boost to the złoty. Developing country currencies were also supported by the weakening of the US dollar on international markets, which encouraged financial flows to emerging markets.
|
Foreign exchange rates
|
|
|
Stock market
|
The year 2023 saw high returns for those investing in stocks, including stocks listed on the Warsaw Stock Exchange. The WIG index climbed by more than 36% reaching the highest level in its history. This situation is partly attributable to the overly pessimistic attitude of investors worried about the economic impact of the war in Ukraine and interest rate rises, which had triggered an overly deep discounting of equities in the previous year. The economy was stagnant for most of the year, but the economic climate turned out better than expected, as did corporate earnings. The upturn was also driven by the two interest rate cuts by the MPC (September, October) and an increase in the chances of European funds from the National Recovery Plan being unlocked.
|
Global stock market
|
|
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Net profit and returns
(Calculations of PKO Bank Polski S.A, based on the last available PFSA data)
In 2023, the banking sector recorded net profit of PLN 27.9 billion, compared with the profit of PLN 10.7 billion a year earlier. The rolling return on equity (12M ROE) was 11.9%.
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Change in the net profit of the banking sector (PLN billion)
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The “provisions” item contains, among other things, a part of provisions related to the legal risk of foreign currency mortgage loans.
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The main source of the improvement in net profit was the increase in net interest income (+29.3% y/y), which was linked to the achievement (in September 2022) of the peak of the NBP rate cycle. The dynamics were also supported by the absence of the credit holiday that took place a year ago. The improvement in consumer sentiment in the second half of 2023 contributed to the increase in transactivity, while the launch of the government's "Safe 2% Loan" programme brought about a recovery in the home loan market and, as a result, a slight increase in commission income.
Rising prices, in particular energy, as well as increase in wages, translated into higher operating expenses. At the same time, the regulatory burdens decreased significantly compared to the previous year, owing to the suspension of the contribution to the Deposit Guarantee Fund (in connection with last year's establishment of System Ochrony Banków Komercyjnych S.A.) and the absence of additional contributions to the Borrower Support Fund.
The banks' capital position was improving on the back of rising profitability, with further improvement at the end of the year driven by rising profitability, higher valuation of debt instruments on the balance sheet and the issue of bonds to meet the MREL requirement. As at the end of September 2023, the total capital adequacy ratio amounted to 22.0%.
Loan and deposit market
Based on NBP data and the Analizy Online service site)
At the end of December 2023, the volume of total loans (net of changes in exchange rates) increased by 1.3% y/y (compared to +1.1% y/y at the end of 2022) after several months of negative year-on-year growth. For deposits, the annual growth rate accelerated to 9.3%, up from 6.2% at the end of 2022, posting an increase in momentum across all customer groups (households, corporates as well as central and local government).
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Dynamics of loans and deposits (y/y)
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December was the second consecutive month in which, after 13 months of negative annual growth, housing loans in PLN recorded a year-on-year increase of 2.2% y/y (compared to a decline of 1.6% y/y at the end of 2022). The recovery in the home loan market due, among other things, to the introduction of the government's "Safe 2% Loan" programme also led to a series of m/m volume increases from June 2023 onwards. The improvement in consumer sentiment in the second half of 2023 also translated into a recovery in the consumer loan market. Their growth rate (net of exchange rate changes) stood at 2.1% y/y at the end of 2023 (compared to -3.3% y/y at the end of 2022). Business loans, on the other hand, recorded a decline (-0.7% y/y in December 2023 against +9.0% y/y in December 2022), mainly due to a reduction in demand for current financing linked to the reversal of the inventory cycle.
The growth rate of deposits of private individuals accelerated to 12.3% y/y in December (compared to 4.1% at the end of 2022), with a clear change in their structure (current deposits increased by 7.3% y/y at the end of 2023, while the growth rate of term deposits fell to 18.7% y/y). At the end of 2023, assets of investment funds (IFs) for individuals were 32.7% y/y higher than at the end of 2022, driven by an improvement in the stock market and a fall in bond yields and a corresponding increase in their valuations. Investment funds also recorded a positive balance of deposits. Cash in circulation increased by 2.5% y/y in December (+3.9% y/y at the end of 2022).
Liquidity in the banking sector remained very good, with the loan/deposit ratio declining below 70% to 69.2% at the end of 2023 vs 75.6% at the end of 2022.
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Change of loans (y/y)
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Change of deposits, FI assets, cash (y/y)
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Investment Funds Market
(Based on the data of Analizy Online)
At the end of December 2023, assets managed by domestic Investment Fund Companies (TFIs) amounted to PLN 320.4 billion (an increase by PLN 50.9 billion y/y), thus reaching the highest level in history. Assets of individuals increased to PLN 195 billion at the end of 2023, accounting for nearly 61% of all funds accumulated in TFIs. As at the end of the analysed period, the value of funds accumulated in the Employee Capital Plans (PPK) target date funds increased to PLN 21.8 billion (+82% y/y).
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Structure of assets managed by the Investment Fund Management Companies (PLN billion)
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In 2023, the balance of payments and redemptions stood at PLN 22.1 billion (compared to PLN -23.7 billion in 2022). Individuals, for whom the total balance of payments and redemptions in 2023 amounted to PLN 23.7 billion (PLN -24.5 billion in 2022), contributed the most to the high level of net inflows to the market. Debt funds (whose valuations were supported by falling bond yields in 2023) were particularly popular with households, with PLN 19.4 billion flowing into them. Equity funds, on the other hand, were far less popular among individuals, recording an outflow of nearly PLN 0.5 billion in 2023.
Open Pension Funds Market
(Based on PFSA data)
In 2023, the assets of Open Pension Funds (OFEs) increased by 33% (+PLN 51.7 billion) to PLN 208 billion, driven to the greatest extent by a significant improvement in sentiment on the domestic equity market in the fourth quarter, but also by continued good economic conditions on global financial markets. Shares of companies listed on the domestic regulated market held a dominant position in the structure of OFE assets (approximately 82.1% of net assets at the end of 2023).
At the end of 2023, the number of OFE members stood at 14.6 million, down 2.3% (-338 thousand people) on the previous year.
Insurance market
(Calculations of PKO Bank Polski S.A, based on the last available PFSA data.)
In the period of three quarters of 2023, insurance companies earned a net profit of PLN 8 billion (+109.7% y/y), with a technical profit from insurance of 5.3 billion (+30.4% y/y). The financial performance of insurance companies was positively affected by the increase in the result on debt securities and other fixed-income securities and the decrease in the amount of claims paid (-8.3% y/y).
In the life insurance segment, gross written premiums increased by 7.25% y/y (to PLN 17 billion), with a 16.1% y/y decrease in claims paid (PLN 12.1 billion). Cost of insurance activities in the life insurance segment increased by 5.6% y/y (PLN 4.5 billion).
The other non-life insurance segment posted a y/y increase in gross premiums written of 10.4% (to PLN 40.7 billion), with a significant increase in the cost of claims paid to PLN 19.7 billion. Costs of insurance activities in the other personal and property insurance segment increased by 12.7% (to PLN 9.8 billion).
Lease market
(based on Polish Leasing Association data)
In 2023, the leasing market financed assets worth a total of PLN 102.5 billion, which represents an increase by 16.3% compared to 2022. Vehicles (mainly passenger vehicles) accounted for the largest share of financed assets at 70.9%, followed by machinery and equipment (24.4%).
The share of green assets in leased vehicles increased to 6.0% at the end of the third quarter (compared to 4.1% a year ago).
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Lease market structure (new sales) in PLN billion
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faktoring market
(Based on the Polish Factors Association data)
In 2023, the turnover of member companies of the Polish Factors Association decreased by approximately 2.3% y/y, amounting to PLN 450 billion, while the number of businesses using the services of factoring companies was approximately 26.4 thousand (+6.1% y/y).
The largest demand on the part of enterprises was for factoring without recourse, whose share in sales of factoring firms was approx. 38%. Manufacturing and distribution companies, mainly from the food, metal and chemical industries, continued to be the entities that used factoring services the most often.
Economic conditions
In the third quarter of 2023, economic growth decelerated to 9.3% y/y from 19.5% y/y in the second quarter of 2023. The high growth rate is due to a low reference base, which was dragged down by the effect of the war a year ago. The economy has been gradually recovering. In the third quarter of 2023, GDP, adjusted for seasonal factors, was up 0.7% q/q, following an increase by 0.8% q/q in the second quarter of 2023. The National Bank of Ukraine (NBU) expects GDP growth for the full year 2023 to have been stronger than expected at 5.7%. In contrast, GDP growth in 2024 is expected to decelerate to 3.6% due to weaker output in agriculture and increased labour market imbalances as a consequence of the ongoing war. The importance of the public sector, including military, social and infrastructure reconstruction spending, has increased in the structure of GDP. The share of investment in GDP has also increased, while private consumption has declined, which is typical of economies operating in war mode. Output in the agricultural sector was higher in 2023 than in the previous year. The labour market situation is gradually improving, and real incomes have returned to increases since the second quarter of 2023, also due to increases in funds paid by the state (salaries in the military sector, pensions, social transfers). According to UNHCR, the number of Ukrainian refugees outside Ukraine was 6.3 million in December 2023, and the number of internal migrants was 3.7 million. Inflation is declining rapidly, falling to 5.1% y/y in December 2023 from 26.6% y/y in December 2022. Inflationary processes have slowed significantly due to, among other factors, easing cost pressures (including on the agricultural goods part due to high yields), the disinflationary impact of the strengthening of the hryvnia (UAH) and the normalisation of expectations regarding inflation. Growing concerns about an increase in inflation in 2024 as the economic recovery continues may decelerate the scale of the ongoing NBU interest rate cut cycle (15% as at the end of January 2024 versus 25% in June 2023). The UAH exchange rate has been released, but the NBU reserves the option to intervene. Currency restrictions are being systematically eased (e.g. limits on foreign currency withdrawals for households have been lifted since December 2023). Foreign exchange reserves in December 2023 increased by 42% y/y to 40.5 billion US dollars (USD). The fiscal sphere remains a critical risk to Ukraine's macroeconomic stability. The fiscal deficit in 2023 exceeded UAH 1.3 trillion (about 20% of GDP) or, excluding foreign grants, UAH 1.7 trillion (about 26% of GDP). According to the Budget Act, the deficit in 2024 is expected to be around UAH 1.6 trillion (over 20% of GDP), and its funding depends on further inflows of external financing (so far mainly from the EU, the US and through IMF loans).
Ukrainian Banking Sector
According to data from the NBU, the number of banks which engaged in operations in Ukraine dropped to 63 at the end of November 2023 from 67 at the end of November 2022, due to the bankruptcy of four banks. At the end of November 2023, the value of the banking sector's assets increased by 22.5% y/y to 2.75 trillion Ukrainian hryvnias (UAH) and equity by 54.1% y/y to UAH 337.4 billion. The equity-to-assets ratio had been rising continuously for four quarters, and stood at 12.3% at the end of November 2023, approaching 12.8%, the level recorded at the end of January 2022 (before the Russian invasion of Ukraine). The main reason for the growth in equity was the high profits recorded in the second half of 2023. The banking sector will have to pay a 50% tax on "excess profits" in 2023, and as of 2024 the tax rate will be 25% (previously 18%). The NBU estimates that the one-off levy will not have a significant impact on the stability of the banking sector.
The capitalisation of the Ukrainian banking sector has been improving steadily. At the beginning of January, the capital adequacy ratio R2 decreased to 21.1%, compared to 25.4% at the beginning of December, which was due, among other factors, to the tightening of the capital requirements methodology. Disregarding these effects, the ratio improved significantly from 19.7% at the beginning of 2023 and 18% at the beginning of 2022 (10% requirement). The loan-to-deposit ratio among residents stood at 44.8% in November 2023, falling to its lowest level since the Russian aggression (72.2% in January 2022). The banking sector remains highly liquid, with LCR ratios exceeding requirements several times.
Total deposits increased by 24.2% y/y to UAH 2.26 trillion in November 2023, with resident deposits accounting for 98.6% of the total. Residents' foreign currency deposits grew at a slower rate than total residents' deposits in the second half of 2023 (8.9% y/y and 24.7% y/y respectively in November 2023), contrary to what happened in the first half of the year. The dynamics of total loans was negative in November (down 3.9% y/y to UAH 1.03 trillion), but the rate of decline has been steadily declining since August compared to the minimum level of -11.2% y/y recorded in July 2023. The volume of total loans has been continuously increasing on a month-on-month basis since July 2023, following an earlier period of strong declines. In November 2023, the dynamics of loans to households was positive for the first time since September 2022, at 1.3% y/y, with a further significant decline in loans to businesses (-6.5% y/y). The recovery in loans to households originates in the consumer segment, reflecting the rebound in consumption and rising real incomes of the population. The volume of mortgage lending has been growing steadily, while lending is practically limited to the state-subsidised eOselia programme. The state-subsidised “Affordable 5-7-9% Loan” programme remains the main driver of business lending, although the agreement with the IMF implies a revision of the programme and a focus of assistance on the SME sector. The outlook for lending growth is improving, mainly due to the improving business climate.
At the end of November 2023, the return on assets (ROA) in the Ukrainian banking sector stood at 5.57% and the return on equity (ROE) reached 52.77%.
The financial position and operations of the PKO Bank Polski S.A. Group were also affected by legal and regulatory solutions and supervisory recommendations that came into force in 2023, including in particular:
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With respect to loans
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The Consumer Pawn Loan Act of 14 April 2023 amended, among other things, the Civil Code and the Consumer Credit Act as regards the issue concerning natural persons running an agricultural holding. As a result of the amendments, protection has been extended to all persons running an agricultural holding for the production of crops or animals, including horticulture, fruit growing, beekeeping and fishing. The Act came into force on 7 January 2024. The amendments extended the protection provided by the Consumer Credit Act to persons operating an agricultural holding. The Bank is required to offer lending products to farmers in accordance with the requirements arising from the Consumer Credit Act and extend consumer protection to farmers in cases where financing up to PLN 255,550 is granted.
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In December 2023, the Court of Justice of the European Union issued three rulings:
1. in its judgment of 7 December 2023 in Case C-140/22, the CJEU stated that: exercise by a consumer of the rights which that consumer draws from the directive may not be conditional on the lodging, by that consumer, before a court, of a declaration by which he or she states, first, not to consent to that unfair term remaining effective, secondly, to be aware of the fact that the nullity of that term entails the cancellation of that agreement and, moreover, of the consequences of that cancellation and, thirdly, to consent to the cancellation of that agreement; Furthermore, it stated that the compensation sought by the consumer in respect of the restitution of the sums paid by him or her in the performance of the agreement at issue may not be reduced by the equivalent of the interest which that banking institution would have received had the agreement remained in force,
2. In its ruling of 11 December 2023 in Case C-756/22, the CJEU referred to the judgment in Case C-520/21 of 15 June 2023 and pointed out that a bank is not entitled to demand from a consumer the reimbursement of amounts other than the capital paid for the performance of that agreement and statutory default interest from the time of the demand for payment. In a subsequent ruling issued on 12 January 2024 in Case C-488/23, the CJEU definitively determined that banks are not able to claim adjustment from customers if the invalidity of the agreement is a consequence of the removal of abusive clauses from the agreement. The CJEU thus ruled that banks may not demand compensation from consumers consisting of a judicial adjustment of the payment corresponding to that capital, in the event of a substantial change in the purchasing power of the currency concerned after the transfer of that capital to the consumer,
3. In its judgment of 14 December 2023 in Case C-28/22, the CJEU addressed the issue of the limitation period for the parties' claims arising from an agreement declared invalid and objected to the fact that this period should start to run earlier for consumers than for the entrepreneur. At the same time, the CJEU questioned the applicability of a retention plea to the extent that it results in a limitation of the consumer's right to statutory interest for late payment.
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The Act of 26 May 2023 on state aid in saving for residential purposes and amending the Act of 1 October 2021 on family housing loans (present name of the act: a family housing loan and a safe 2% loan), under which on 3 July 2023 the Bank introduced a product Safe 2% Loan. Safe 2% Loan is provided under the government’s First Home Programme. Its purpose is to help in the acquisition of the first apartment for people aged up to 45. The main assumption is a contribution from the Government Housing Fund to loan instalments during the first 10 years of loan repayment. The programme translated into a marked increase in mortgage sales in the market and in the Bank to record levels (in nominal terms) of more than PLN 9 billion in monthly sales for the entire market with an increase in the Bank's share due to its dominant position in these loans.
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Amendment to Recommendation S of the PFSA with regard to the calculation of creditworthiness of 19 June 2023, introducing countercyclical system for calculating the interest rate buffer. It led to a reduction in the buffer for loans with variable interest rates under the current macroeconomic conditions, as well as the reduction of the buffer for loans with a periodical fixed interest rate and the period of determination of this rate for more than 5 years. Higher creditworthiness of customers supports the sale of mortgage loans. A new approach to setting this buffer has also been introduced, having a positive impact on creditworthiness in the period of falling rates.
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The Act of 6 October 2022 amending the acts to counteract predatory lending, obliging, inter alia, lending institutions to examine creditworthiness and make provision of financing subject to a positive assessment in this respect. Therefore, since 18 May 2023, these companies were obliged to submit and update information on the loan granted to the Credit Information Bureau. The new regulations contribute to less diversification of the bank’s and non-banking entities’ activities on the debt product market for retail customers.
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With respect to the financial market
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On 29 September 2023, most of the provisions of the Act on amending certain acts in connection with ensuring the development of the financial market and the protection of investors in this market entered into force. Under this Act, dozens of legal acts regulating, inter alia, the functioning of the financial market and the banking sector have been amended. In addition, the Act introduces new regulations on outsourcing and sub-outsourcing in the banking sector, which aim to streamline existing procedures and bring them in line with the Guidelines of the European Banking Authority. The Act aims to organise and streamline the functioning of financial market institutions, in particular with regard to the elimination of barriers to access the financial market, the improvement of oversight of the financial market, the protection of customers of financial institutions, the protection of minority shareholders in public companies and the increase of the level of digitisation in the implementation of supervisory duties by the NSC and the PFSA Office.
One of the key amendments is the restriction of the sale of corporate bonds to retail clients outside the regulated market or alternative trading system and crowdfunding platforms. The Act modifies and extends the existing rules regarding the blocking of accounts when, based on available information, there is a suspicion that a transaction made or planned may be linked to the commitment of a specific offence. In addition, the Act enables the exchange of information covered by secrecy (e.g. banking secrecy) where this is necessary to take action to counter threats to the security of ICT systems. Another new solution is the introduction of the option to use electronic service during the activities carried out by the PFSA, which represents a clear shift towards electronic communication between the PFSA and supervised entities.
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With respect to insurance
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International Financial Reporting Standard 17 Insurance Contracts (IFRS 17) published by the International Accounting Standards Board in May 2017 and amended in June 2020 and on 9 December 2021.
IFRS 17 was endorsed for use in European Union countries on 19 November 2021 by Regulation 2021/2036 of the European Union. The aim of the new standard is to introduce new uniform rules for the measurement of insurance and reinsurance contracts, ensuring greater comparability of reporting between providers of insurance products, and to provide a number of new disclosures for the use of financial statement users.
This standard is mandatory as of 1 January 2023. IFRS 17 changed the recognition, measurement, presentation and disclosure of insurance contracts distributed by Group companies, both as products linked to, among others, mortgage loans, cash loans and leasing products, and as stand-alone products. The implementation of IFRS 17 as of 1 January 2022 resulted in an increase in the Group’s assets by PLN 581 million, liabilities by PLN 295 million and equity by PLN 286 million. For a detailed description of the impact of the implementation of IFRS 17, see Note 14 "IFRS 17 Insurance Contracts" of the Bank Group's consolidated financial statements for the year ended 31 December 2023.
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On 26 June 2023, the PFSA issued Recommendation U. Banks must bring their operations into compliance by 1 July 2024. The primary objective of the new Recommendation U is to ensure that customers get value for money from the insurance products offered through bancassurance, including loan or credit repayment insurance (so-called CPI products), the manner in which insurance products are offered through bancassurance, the relationship between the bancassurance bank and the insurance provider. This institution, on the basis of an agreement with the bank, is obliged to bear the costs of insurance cover for the bank and to monitor the processes related to the offering of insurance products by banks, as part of the internal control system, the risk management system and through the audit committee.
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With respect to ESG risk management
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Commission Delegated Regulation (EU) 2023/2485 of 27 June 2023 amending Delegated Regulation (EU) 2021/2139 establishing additional technical screening criteria for determining the conditions under which certain economic activities qualify as contributing substantially to climate change mitigation or climate change adaptation and for determining whether those activities cause no significant harm to any of the other environmental objectives.
The delegated act adds or introduces technical screening criteria for new economic activities contributing to Environmental Objective I and II and revises the existing technical screening criteria for Environmental Objective I and II.
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Commission Delegated Regulation (EU) 2023/2486 of 27 June 2023 supplementing Regulation (EU) 2020/852 of the European Parliament and of the Council by establishing the technical screening criteria for determining the conditions under which an economic activity qualifies as contributing substantially to the sustainable use and protection of water and marine resources, to the transition to a circular economy, to pollution prevention and control, or to the protection and restoration of biodiversity and ecosystems and for determining whether that economic activity causes no significant harm to any of the other environmental objectives and amending Commission Delegated Regulation (EU) 2021/2178 as regards specific public disclosures for those economic activities.
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With respect to risk management
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Rulings of the Court of Justice of the European Union in Cases C-520/21 and C-287/22 increasing costs related to ongoing and possible lost proceedings in cases concerning foreign currency mortgage loans, necessitating an increase in legal risk provisions.
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The Regulation of the Minister of Finance of 22 September 2023 amending the Regulation in respect of a higher risk weight for exposures secured with mortgages on real estate, extending the application of preferential risk weights until 30 September 2025, resulting in the maintenance of lower capital requirements.
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With respect to identity verification
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Act of 7 July 2023 amending certain acts to mitigate certain effects of identity theft. The Act aims to increase protection against fraud resulting from data theft and to reduce the scale of fraudulent financial transfers by incurring financial obligations in the name of another person (e.g. credit agreements, loan agreements, real estate sale agreements) without the owner's knowledge and consent, as well as the phenomenon of so-called SIM swapping, i.e. making a duplicate SIM card, which can then be used to illegally authorise transactions. Due to the imposition of a new verification obligation on the Bank - the blocking of the PESEL number in the blocking database and the imposition of sanctions for non-compliance with the obligation, the Bank must implement changes (including system changes) in the processes of selling accounts, loans, credits, etc. and making withdrawals from accounts at Bank branches by 1 June 2024.
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The Act of 26 May 2023 on the mObywatel app introduced, among other things, a new type of document establishing identity in the physical presence of the parties - the mObywatel document. It is a mobile document stating the identity and Polish citizenship of a user of the mObywatel app in the territory of the Republic of Poland. The aforementioned Act entered into force on 14 July 2023. The entry into force of the aforementioned Act entailed the need to introduce the mObywatel document into the catalogue of identity documents recognised by the Bank, as well as the adaptation of the Bank's systems and processes.
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With respect to electronic delivery
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The Act of 12 December 2023 amended the provisions of the Act of 18 November 2020 on electronic delivery. The date of entry into force of the obligation to apply the amended law has been postponed. The deadline for the implementation of electronic delivery cannot be earlier than 30 March 2024 and later than 1 January 2025. In a communication from the Minister of Digitalisation dated 21 December 2023, the implementation deadline was changed from 30 December 2023 to 1 October 2024. Therefore, taking into account Article 155(1) of the above-mentioned Act, starting from 1 January 2025, banks are obliged to have an address for electronic delivery entered in the database of electronic addresses.
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With respect to residential trust accounts
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Amendments to the Act of 20 May 2021 on the protection of the rights of the purchaser of a residential unit or a detached house and the Developer Guarantee Fund (the "Development Act") introduced by two Acts of 7 July 2023:
1. on a pan-European individual pension product,
2. on amending the Act on spatial planning and development and certain other acts.
The Acts have a direct impact on, among other things, the revision of the content of the investment prospectus prepared by developers and, by extension, on the conditions under which banks provide services in respect of maintaining closed and open residential trust accounts.
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With respect to taxes
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Act of 16 November 2022 amending the Act on tax on selected financial institutions and certain other acts, which introduces, for selected taxpayers of a tax on certain financial institutions, including domestic banks, the right to reduce, as of 1 January 2023, the tax base by the value of assets in the form of securities covered by the statutory guarantee of the State Treasury and by the value of assets resulting from repo/reverse repo transactions specified in the regulations. The Bank uses the regulation, reducing the tax base for tax on certain financial institutions, among others by the value of assets (i) in the form of securities lawfully covered by the State Treasury guarantee and (ii) resulting from reverse repo transactions.
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Regulation of the Minister of Finance of 28 December 2022 on the exclusion of the obligation to collect flat-rate CIT and PIT, which in 2023 excludes the application of the mandatory collection of flat-rate income tax by entities keeping securities accounts or collective accounts (the so-called technical payers) in the case of making payments by them in excess of PLN 2 million to non-residents on amounts due from securities recorded on those accounts. The effect of the regulation is the possibility for the Bank to apply, as an entity keeping securities accounts, preferential, i.e. resulting from double taxation agreements, the principles of taxation of receivables paid to non-residents, regardless of their amount.
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With respect to derivative market transactions – Recommendation A
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On 19 October 2022, the PFSA adopted Recommendation A (replacing the previous one from 2010) concerning the management by banks of the risks associated with the execution of derivative market transactions by banks. Recommendation A provides a set of best practices concerning the duties and responsibilities of management and supervisory boards, the identification and assessment of risks, monitoring, internal control systems, and the control and reporting of risks in the area covered by the Recommendation. In the Recommendation, the PFSA has adopted an approach based on the principle of proportionality, understood as the adaptation of solutions to the individual specificity and profile of a bank's activities and the scale of risk incurred by the bank. This means that a bank, when dealing in derivatives, should comply with regulations and the extent of policies and procedures should be appropriate to the scale and complexity of the activity.
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PKO Bank Polski S.A. notes a growing regulatory risk and a risk of macroeconomic changes. The following external factors may impact the operations and future financial performance of the Bank’s Group:
In the global economy:
• the war in Ukraine and its economic consequences, including the limited availability of energy resources, increased uncertainty among businesses and consumers, migration flows;
• increased geopolitical risk, with the risk of escalating conflicts in Ukraine, around Taiwan and in the Middle East, and increased political uncertainty in the run-up to the US presidential election;
• risk of repeated disruption to supply chains due to transport disruption in the Red Sea;
• further changes in global supply chains, related to reshoring, i.e. moving production closer to markets (nearshoring) and moving production to countries within broad alliance blocs (friendshoring);
• continued relatively low rates of global economic growth, including the slowdown in the US economy and the recession in Germany;
• a likely shift in the policies of the world's major central banks towards monetary easing;
• the possibility of access to investors from the European market due to debt issuance in the context of the regulatory requirements for minimum own funds and eligible liabilities (if necessary), as well as increased supply of US government bonds;
• risk of a potential additional burden related to the implementation of the global minimum tax (Pillar II) in connection with Council Directive (EU) 2022/2523, which has not yet been implemented in Poland but is effective from 1 January 2024 in selected tax jurisdictions where the Bank operates foreign branches and subsidiaries;
• changes in climate policy, including the accelerating energy transition and the increasing stringency and importance of environmental requirements;
In the Polish economy:
• the expected economic recovery, primarily driven by a recovery in private consumption;
• the path of further changes in NBP interest rates and the level of the mandatory reserve;
• the intensity and persistence of pro-inflationary factors and regulatory action aimed at limiting the scale of price growth;
• the situation in the financial markets, which may reflect, among other things, an increase in geopolitical risks due to a possible escalation of the armed conflict in Ukraine;
• the scale and pace of the inflow of EU funds, mainly under the NRP, and the possibility of their quick utilisation with the risk of supply constraints;
• the continuation of strong cost pressures from the labour market, in the face of a significant increase in the minimum wage and a recovery in demand for employees resulting from the economic recovery in an environment of limited supply in the labour market;
• the expected recovery in demand for loans, especially from households, in view of the prospect of interest rate cuts, programmes to reduce mortgage costs (Housing for a Start) and improved consumer sentiment;
• migration flows, including their impact on labor supply and aggregate demand in the economy;
• risks associated with the increasing polarisation of the political scene, which may limit the effectiveness of the government and affect the operation of some public institutions, including the NBP;
• the shape of new fiscal programmes, including solutions to support disadvantaged borrowers, increase access to the housing market (Housing for a Start), or reduce the contribution burden on entrepreneurs;
• possible further court decisions on the issue of foreign-currency housing loans and PLN loans based on WIBOR rates;
• existing and planned regulations triggering the need for banks to raise additional equity capital or long-term funding including:
the MREL requirement;
the long-term financing ratio;
CRR III/ CRD VI regulatory changes.
• the design of loan holidays 2.0 and the income criteria adopted;
• the risk that the Office for Competition and Consumer Protection (OCCP) will initiate proceedings against the Bank for violating the collective interests of consumers, including in the handling of complaints of the so-called unauthorized transactions, as well as the risk of imposing a penalty by the President of the OCCP in the ongoing proceedings concerning modification clauses in the contractual templates used by the Bank;
• the risk of national courts challenging the ability to charge interest on the so-called credited costs of consumer credit and, as a consequence, allowing borrowers to effectively benefit from the sanction of free credit;
• the risk of incurring a minimum corporate income tax liability, effective as of 1 January 2024, if the taxpayer incurs a loss or low income;
• implementation of corporate income tax requirements related to the obligation to send accounting records to the competent head of the tax office after the end of the tax year (JPK-KR) as of 1 January 2025;
• changes concerning the implementation of the remitter's obligations (including the technical remitter) in corporate and personal income tax, as well as disclosure requirements, with regard to, inter alia, selected bond income, income from investments in equity funds, including the extension of the period of application of the exclusion of the so-called pay & refund mechanism (changes effective as of 1 January 2024).
[GRI 2-2] Pursuant to the International Financial Reporting Standards (IFRS) as at 31 December 2023 the Bank’s Group comprised PKO Bank Polski S.A. as the parent and 36 direct or indirect subsidiaries (at all levels). All the subsidiaries were disclosed in the consolidated financial data pursuant to IFRS 10, “Consolidated financial statements”.
List of direct subsidiaries:
The list presents the share of PKO Bank Polski S.A. in the company’s share capital, and in the case of funds – share of the fund’s investment certificates held. All subsidiaries listed in the Consolidated financial statements of the PKO Bank Polski S.A. Group for the year ended 31 December 2023 (hereinafter: financial statements of the Bank’s Group for 2023) are accounted for using the acquisition accounting method.
A full list of the Bank’s subsidiaries, associates and joint ventures is presented in the 2023 financial statements of the Bank’s Group, in note 1 “Activities of the Group”.
In January 2023, the placing of Molina spółka z ograniczoną odpowiedzialnością 2 S.K.A. w likwidacji (in liquidation) and Molina spółka z ograniczoną odpowiedzialnością 4 S.K.A. w likwidacji (in liquidation) (entities from the Merkury fiz an portfolio) was entered in the National Court Register.
In September 2023, the Bank's Management Board approved the merger of the investment funds NEPTUN - fizan (the acquiring fund) and Mercury - fiz an (the acquired fund) by transferring the assets of the acquired fund to the existing acquiring fund and allocating investment certificates of the acquired fund to a participant of the acquiring fund in exchange for investment certificates of the acquired fund. With regard to the continuation of the operations of the Merkury – fiz an fund by NEPTUN – fizan, this transaction had no impact on the Consolidated Financial Statements of the PKO Bank Polski S.A. Group for the year ended 31 December 2023. Aforementioned merger was effected on 30 January 2024.
“KREDOLEASING” sp. z o.o., a subsidiary of KREDOBANK S.A., commenced leasing activities. The company launched operations to a limited extent due to the war in Ukraine, where it is based.
In 2023, PKO Bank Polski S.A. provided services to its related (subordinated) entities, including maintaining bank accounts, accepting deposits, granting loans and advances, debt securities issuance, granting of guarantees and spot exchange transactions and offering participation units and certificates of investment funds, lease products, factoring products and insurance products of the Bank Group companies, and services offered by Brokerage Office of PKO Bank Polski S.A.
The Bank provided services to PKO Bank Hipoteczny S.A. within the scope of intermediation in sales of housing loans for individuals, performing tasks as part of post-transaction services in respect of these loans and support tasks under the outsourcing agreement. The Bank offered its infrastructure and IT services and rented office space to selected Bank’s Group companies. Together with Centrum Elektronicznych Usług Płatniczych eService sp. z o.o., the Bank rendered services of payment transaction clearance.
A summary of receivables, liabilities, revenues and costs of the transactions between PKO Bank Polski S.A. and its subordinated entities, including these companies’ indebtedness vis-à-vis the Bank as at 31 December 2023, is presented in the financial statements of the Bank's Group for 2023 in Note 72 "Transactions with the State Treasury and related parties".
Information on transaction(s) with related parties concluded by the Issuer or its subsidiary, if they are material and have been concluded on terms other than on an arm’s length basis
Services provided by the Bank to related (subordinated) companies were performed on terms and conditions which do not diverge significantly from the arm’s length conditions.
In 2023, subsidiaries of PKO Bank Polski S.A. did not conclude any material transactions with related parties on conditions other than arm’s length.
Financial data is presented on a management basis.
The figures for 2022 have been restated due to the implementation of IFRS 17.
For definitions of major financial items (with reference to items from the income statement and statement of financial position) and financial indicators, see Chapter 14 (Glossary).
Any differences appearing in totals, shares and growth rates result from rounding off amounts to millions of PLN and rounding off percentages in the presented structures to one or two "decimal" places.
As a result of the PKO Bank Polski S.A. Group's performance in 2023, the main financial performance indicators reached the following levels:
Table 5. Financial indicators of the PKO Bank Polski S.A. Group
|
|
|
31.12.2023
|
31.12.2022
|
Change
|
|
ROE net
|
(net profit/(loss)/average equity)
|
13.3%
|
9.6%
|
+3.7 p.p.
|
|
ROA net
|
(net profit/(loss)/average assets)
|
1.2%
|
0.8%
|
+0.4 p.p.
|
|
C/I
|
(cost to income ratio)
|
31.6%
|
45.0%
|
-13.4 p.p.
|
|
Interest margin1)
|
(net interest income/average interest-bearing assets)
|
4.37%
|
3.79%
|
+0.58 p.p.
|
|
Share of impaired exposures
|
3.44%
|
3.79%
|
-0.35 p.p.
|
|
Cost of credit risk
|
0.50%
|
0.52%
|
-0.02 p.p.
|
|
Total capital ratio
|
(own funds/total capital requirement*12.5)
|
18.65%
|
19.07%
|
-0.42 p.p.
|
|
Common equity Tier 1 (CET 1)2)
|
17.77%
|
17.94%
|
-0.17 p.p.
|
|
Leverage ratio
|
7.81%
|
9.06%
|
-1.25 p.p.
|
1) The interest margin in 2022 was calculated excluding the impact of the recognition in the third quarter of 2022 of the effects of the Act on crowdfunding for business ventures and assistance for borrowers (so- called statutory loan holidays) of PLN 3,111 million.
2) The figures for 2022 are restated and recognise the retroactive crediting to the funds of the result for 2022 following the profit distribution by the AGM.
Net interest income
Net fee and commission income
Other net income
Administrative expenses
Net write-downs and impairment
PKO Bank Polski S.A. Group's consolidated net profit in 2023 stood at PLN 5,502 million, which was higher by PLN 2,190 million than in 2022, determined by an improvement in net interest income related mainly to higher average interest rates and the recognition of the effects of the Act on crowdfunding for business ventures and borrower assistance (the so-called statutory loan holidays) in 2022, with a simultaneous deterioration in the result due to the recognition of additional legal risk costs of mortgages in convertible currencies.
|
Change in net profit of the PKO Bank Polski SA Group (PLN million)
|
|
|
|
1) This item comprises tax on certain financial institutions, income tax, share in profits/ (losses) of associates and joint ventures, and profit/(loss) attributable to non-controlling shareholders.
2) Other net income reflects net insurance income, dividend income, net income on financial operations, net foreign exchange gains/(losses) and other net operating income and expense.
|
The profit on business activities of the PKO Bank Polski Group for 2023 amounted to PLN 24,179 million and was PLN 6,925 million (i.e. 40.1%) higher y/y, mainly as a result of an increase in net interest income and net fee and commission income, with a decrease in net other income.
Table 6. Income statement of the PKO Bank Polski S.A. Group (in PLN million)
|
|
2023
|
2022
|
Change
(in PLN million)
|
Change
(in %)
|
|
Net interest income
|
18,318
|
11,424
|
6,894
|
60.3%
|
|
Net fee and commission income
|
4,626
|
4,498
|
128
|
2.8%
|
|
Other net income
|
1,235
|
1,332
|
-97
|
-7.3%
|
|
Net insurance income
|
711
|
779
|
-68
|
-8.8%
|
|
Dividend income
|
14
|
51
|
-37
|
-72.2%
|
|
Gains/(losses) on financial transactions
|
271
|
377
|
-106
|
-28.0%
|
|
Foreign exchange gains/ (losses)
|
99
|
-73
|
172
|
2,4x
|
|
Net other operating income and expense
|
140
|
198
|
-59
|
-29.6%
|
|
Result on business activities
|
24,179
|
17,254
|
6,925
|
40.1%
|
|
Administrative expenses
|
-7,635
|
-7,769
|
134
|
-1.7%
|
|
Tax on certain financial institutions
|
-1,231
|
-1,266
|
35
|
-2.8%
|
|
Net operating result
|
15,313
|
8,219
|
7,094
|
86.3%
|
|
Net write-downs and impairment
|
-6,850
|
-3,523
|
-3,327
|
94.4%
|
|
Share in profits and losses of
associates and joint ventures
|
99
|
71
|
28
|
39.7%
|
|
Profit/loss before tax
|
8,562
|
4,767
|
3,795
|
79.6%
|
|
Income tax expense
|
-3,057
|
-1,455
|
-1,602
|
1,1x
|
|
Net profit (including non-controlling
shareholders)
|
5,505
|
3,312
|
2,193
|
66.2%
|
|
Profit (loss) attributable to non-controlling shareholders
|
3
|
0
|
3
|
-
|
|
Net profit/loss
|
5,502
|
3,312
|
2,190
|
66.1%
|
Net interest income
Net interest income for 2023 amounted to PLN 18,318 million, i.e. PLN 6,894 million more than in the previous year.
The y/y increase in the net income was mainly driven by an increase in income from financing granted to customers caused primarily by higher average interest rates. In addition, the year-on-year increase in net income was affected by the recognition in the third quarter of 2022 of a non-recurring loss charged to interest income on statutory loan holidays that reduced income on home loans by PLN 3,111 million. In the fourth quarter of 2023, the Capital Group estimated the actual level of loss due to loan holidays (taking into account, among others, empirical data on the participation rate of customers using loan holidays and prepayments made by customers during the period of the statutory loan holiday programme). Based on the results of the above analysis, the level of loss due to loan holidays was updated and the current amortization of this loss was proportionally reduced. The total positive effect recognized in the books of the Capital Group amounted to PLN 105 million.
Net interest income was also positively affected by the increase in income from securities, as a result of the increase in the average interest rate and the increased average portfolio volume, as well as the increase in interest income from interbank deposits and the mandatory reserve associated with the increased interest rates and the level of the reserve resulting from the increased volume of deposits.
Higher market rates and the Bank's increases in interest rates on deposit products drove up interest expenses, further amplified by the migration of customer funds from current accounts to term deposits. 2023 also saw an increase in interest expense from hedge accounting.
|
Interest income (PLN million)
|
Interest expense (PLN million)
|
|
|
|
Interest income amounted to PLN 31,217 million and was 58.1% higher than in 2022. This was mainly due to:
• an increase in income from financing granted to customers by PLN 8,231 million y/y - mainly due to a 1.8 p.p. increase in the average interest rate on financing granted to customers. (excluding the impact of statutory loan holidays), resulting from an increase in market interest rates, with a change in the structure of financing (an increase in the share of business and consumer loans at the expense of the share of housing, foreign currency and PLN loans);
• higher income on securities (PLN +2,655 million y/y), mainly as a result of an increase in average interest rates resulting from rising market interest rates and an increase in the average volume of the securities portfolio by nearly PLN 24 billion.
Interest expenses stood at PLN 12,899 million, up PLN 4,572 million from 2022, due to:
• an increase in interest expense on deposits by PLN 4,180 million y/y, which was attributable in particular to higher average annual interest rates in PLN following the MPC's decisions and the resulting increase in interest rates on deposits, as well as changes in the term structure involving an increase in the share of term deposits bearing higher interest rates;
• an increase in the expense from hedge accounting to PLN 3,817 million (PLN 237 million y/y), mainly as a result of rising rates for the PLN, which narrowed the margin between the variable rate paid and the fixed rate received on IRS transactions;
• an increase in bond issue costs by PLN 181 million, mainly related to the issue for the purposes of MREL.
|
The interest margin in 2023, excluding the impact of recognizing the effects of the statutory loan holidays in the third quarter of 2022, increased by 0.58 p.p. y/y to 4.37%.
The increase in the margin was driven by higher return on assets associated with the higher average level of market rates, which translated to an increase in interest rates on assets to a greater extent than on liabilities.
In 2023, the average interest rate on PKO Bank Polski S.A.’s loans was 9.4%, and the average interest rate on total deposits was 2.2%. In 2022, it was 7.6% and 1.1%, respectively.
|
Average interest rate and interest margin (in %)
|
|
|
|
|
|
* The indicators in 2022 were calculated excluding the impact of the recognition in the third quarter of 2022 of the effects of the Act on crowdfunding for business ventures and assistance for borrowers (so-called statutory loan holidays) of PLN 3,111 million.
|
|
|
|
|
|
|
|
|
|
Net fee and commission income
|
Net fee and commission income (in PLN million)
|
|
|
In 2023, net fee and commission income amounted to PLN 4,626 million, and was PLN 128 million higher than in the previous year. The increase in net commission income was due to, among other things:
• higher net income on cards (PLN +144 million y/y) due to a change in the method of settling certain commissions with card organisations (settlement of transactions in foreign currencies), a higher number of cards and higher transaction volumes;
• higher income on loans, insurance and operating leases (PLN +65 million y/y), mainly as a result of an increase in commissions on operating leases and business loans with a decrease in commissions on insurance;
• higher net income from investment funds, pension funds and brokerage activities (PLN +20 million y/y), mainly as a result of higher management fees of PKO TFI S.A. with a decrease in fees for the sale of Treasury bonds;
• lower net income from handling bank and other accounts (PLN 11 million y/y), mainly as a result of incurred commission expenses on guarantees and lower account management fees, with an increase in commissions on foreign transactions, cash transactions and transfers;
• lower net margin on foreign exchange transactions (PLN -90 million y/y), mainly lower commissions on foreign exchange at KREDOBANK S.A. and on exchange at table rates (including settlements with card organisations), accompanied by an increase in commissions on exchange at negotiated rates.
Other income
|
Net other income (in PLN million)
|
|
|
Other net income earned in 2023 amounted to PLN 1,235 million and was PLN 97 million lower than in 2022, among other things, as an effect of:
• lower net income from financial operations (PLN -106 million y/y), partly due to a decrease in net income from derivatives (including realised on instruments embedded in structured deposits), with an increase in net income from the valuation of both debt instruments and equities, and an improvement in net income from derecognition of assets;
• lower net insurance income (PLN -68 million y/y), mainly as a result of a decline in mortgage insurance sales and a change in actuarial assumptions regarding expected surrenders in cash loan insurance, with a simultaneous increase in the PKO DOM insurance portfolio and improved claim ratios, as well as an increase in the portfolio in insurance against the loss of value of the vehicle over time (GAP);
• lower net other operating income and expenses (PLN -58 million y/y), among other things as a result of:
– an increase in litigation costs reimbursed to borrowers for CHF loan settlements by PLN 28 million y/y;
– the recognition in 2023 of a loss on the sale of CO2 emission allowances of PLN 26 million, which was fully offset by a positive valuation of customer derivatives related to CO2 emission allowances;
– a decrease in donations to the PKO BP Foundation by PLN 24 million y/y, mainly as a result of the allocation of additional funds in 2022 to support Ukraine in connection with the outbreak of war and the relief efforts taken by the Foundation for Ukrainian refugees;
– a decrease in income from other leasing activities by PLN 23 million (including lower sales of post-lease cars and lower income from early termination of agreements);
• lower dividend income (PLN -37 million y/y), mainly as a result of dividends paid in 2022 by companies held in the PKO VC portfolio (PLN +38.8 million);
• an improvement in net foreign exchange income (PLN +172 million y/y), mainly the income on currency derivatives.
Administrative expenses
|
Administrative expenses (in PLN million)
|
C/I ratio components
|
|
|
|
In 2023, administrative expenses amounted to PLN 7,635 million and were 1.7% lower y/y. Their level was mainly determined by:
• decrease by PLN 1,265 million, i.e. 67.0% in regulatory costs, mainly as a result of the recognition in 2022 of an expense relating to the initial contribution to the aid fund at System Ochrony Banków Komercyjnych S.A. of PLN 956 million and the contribution to the Borrower Support Fund of PLN 314 million, while contributions to the Bank Guarantee Fund were lower by PLN 128 million. Contributions to the Bank Guarantee Fund amounted to PLN 280 million in 2023 and were entirely related to the contribution to the mandatory bank restructuring fund (in the previous year, the BFG's costs amounted to PLN 409 million, including PLN 291 million as a contribution to the resolution fund);
• an increase by PLN 738 million, or 21.7%, in the cost of employee benefits, mainly as a result of wage regulations,
• an increase of PLN 326 million, i.e. of 22.3% of tangible costs, mainly as a result of:
– an increase in property maintenance and rental costs by PLN 133 million, i.e. 46.5%, related, among other things, to the absence of the anti-inflation shield in 2023, which translated into an increase in electricity and heating costs;
– an increase in promotion and advertising costs by PLN 71 million, or 46.4%;
– an increase in IT costs by PLN 60 million, or 15.6%;
– an increase in legal advisory costs by PLN 38 million, i.e. 44.0%, mainly in connection with the handling of cases involving Swiss franc borrowers;
– an increase by PLN 27 million, or 32.2%, in cash management costs, mainly due to an increase in the transport fee and a higher number of transports.
• an increase in depreciation and amortization expense by PLN 67 million, or 6.6%, as a result of increased amortization of IT intangible assets.
PKO Bank Polski S.A. Group's operating efficiency, as measured by the C/I ratio, stood at 31.6% on an annual basis and improved by 13.4 p.p. y/y, mainly due to an increase in the net income from business activities (40.1% y/y), with a slight decrease in administrative expenses (-1.7% y/y).
Net write-downs and impairment
|
Net write-downs and impairment (in PLN million)
|
|
|
In 2023, net write-downs and impairment (including the cost of legal risk) amounted to PLN -6,850 million and deteriorated by PLN 3,327 million compared to that recorded in the previous year, which was mainly driven by the increase in the cost of legal risk of mortgage loans in convertible currencies by PLN -3,516 million as a result of an update of the parameters of the legal risk assessment model for these loans, taking into account the costs of the settlement programme, the number of settlements reached and estimates of the inflow of new court cases and their expected resolutions. The revision of the parameters adopted also accounts for the expected impact of the judgments of the Court of Justice of the European Union: the judgment of 15 June 2023 in Case C-520/21, the judgment of 14 December 2023 in Case C-28/22 and the order of 12 January 2024 in Case C-488/23 on the future case-law of the Polish courts and on a possible change in customer behaviour.
Net credit risk allowances stood at PLN -1,311 million and improved by PLN 234 million, mainly due to the improved quality of the portfolio of corporate entities, companies and businesses.
Net write-downs on non-financial assets amounted to PLN -109 million and deteriorated by PLN 46 million compared to the previous year, mainly due to the revaluation of real property and an increase in the impairment loss on shares in Bank Pocztowy.
|
Cost of credit risk at the Bank’s Group
|
Quality of the Bank’s Group's loan portfolio
|
|
|
|
The share of impaired loans amounted to 3.44% as at the end of 2023, a decrease of 0.35 p.p. compared to 2022, owing, among other things, to the improvement in the quality of the corporate client portfolio and the Bank's package sales of receivables.
At the end of 2023, the cost of risk amounted to -0.50% and was 0.02 p.p. lower than that recorded in the previous year.
Main items of the Statement of financial position
Financing granted to customers
Sources of financing operations
Customer deposits
External financing
Main items of the Statement of financial position
As at the end of 2023, the PKO Bank Polski S.A. Group’s total assets amounted to PLN 501.5 billion and increased by PLN 70.1 billion as of the beginning of the year. Thus, the Bank’s Group reinforced its leading position on the Polish banking market.
In terms of financing sources, customer deposits, equity, and external financing increased. The decrease in valuation of derivative instruments resulted in a decrease in other assets and other liabilities.
On the asset side, there was an increase mainly in liquid assets (by PLN 60 billion y/y) and financing granted to customers (by PLN 15 billion y/y).
|
Structure of assets (in PLN billion)
|
Structure of equity and liabilities (in PLN billion)
|
|
|
|
Liquid assets and cash in hand
|
At the end of 2023, the Bank Group's liquid assets and cash stood at around PLN 213 billion, representing an increase by PLN 60 billion since the beginning of the year. An increase of PLN 59.4 billion was recorded on securities (banking portfolio), in particular money bills of the National Bank of Poland and treasury bonds in PLN.
Amounts due from banks decreased by PLN 1.7 billion, with cash and balances at the Central Bank increasing by PLN 1.9 billion and buy-sell back transaction increase by PLN 0.4 billion since the beginning of the year.
|
Structure of liquid assets and cash in hand (in PLN billion)
|
|
|
|
|
Financing granted to customers
|
As at the end of 2023, financing granted to customers by the Bank’s Group was PLN 262.9 billion which represents an increase by PLN 15.3 billion y/y.
The volume of corporate loans increased by PLN 10.1 billion, while retail and private banking loans increased by PLN 5.1 billion, including real estate loans by PLN 3.7 billion and consumer loans by PLN 1.4 billion. Real estate loans grew as a result of an increase in mortgage loans in PLN (+ PLN 8.8 billion) mainly as a result of the Safe 2% Loan programme, with a decrease in mortgage loans in foreign currencies (PLN -5.1 billion) as a result of repayments, settlements signed and an increase in the provision for legal risk (impact of PLN -2.9 billion).
Excluding the impact of the above adjustment to the gross carrying amount, financing granted to customers at the end of 2023 would amount to more than PLN 265 billion compared to more than PLN 249 billion at the end of 2022.
Retail and private banking loans were the main items in the structure of financing by type, with share of 53.1% of the portfolio as at the end of 2023.
|
Structure of net financing granted to customers by type (in PLN billion)
|
|
|
|
* including lease receivables and non-Treasury bonds (excluding held for trading)
|
Sources of financing operations
|
Structure of the sources of financing of the Bank’s Group operations
|
Structure of the financing of the Bank’s Group operations by currency
|
|
|
|
|
* including repo transactions
** including liabilities in respect of debt securities issued, subordinated liabilities, loans and advances received
|
|
The PKO Bank Polski S.A. Group finances its operations from domestic and foreign sources which come from deposits (also on the interbank market), equity and financing from the wholesale market. The financing from the wholesale market includes liabilities in respect of debt securities issued, subordinated liabilities and loans and advances received from monetary and non-monetary institutions. The main source of financing the Bank’ Group’s operations are customer deposits, which represent 85% of all sources of finance.
By maintaining an optimal financing structure, the Bank’s Group is fully capable of further development and implementation of its investment objectives.
Customer deposits
Customer deposits constitute the basic source of financing the Bank’s Group’s assets. As at the end of 2023, amounts due to customers reached PLN 399.2 billion, which is an increase of PLN 60.3 billion over the year. The factor that contributed to the increase in the deposit base was an increase in retail and private banking deposits (PLN +41.1 billion), corporate deposits (PLN +13.7 billion) as well as business and enterprise deposits (PLN +5.1 billion).
In the ageing structure of customer deposits, the main items are current deposits whose share amounted to 67.9%, down 2.0 p.p. from the end of 2022 in favour of term deposits.
|
Structure of customer deposits by type (in PLN billion)
|
Ageing structure of customer deposits (in PLN billion)
|
|
|
|
|
* including liabilities in respect of insurance products
|
|
External financing
|
As at the end of 2023, long-term sources of financing amounted to nearly PLN 21,5 billion, which means an increase by PLN 0.9 billion since the end of 2022.
The change resulted from:
• issue of 3-year Senior Preferred Notes of EUR 750 million;
• an increase in bonds issued by PKO Bank Hipoteczny S.A. by PLN 0.5 billion;
• maturity of some of the EIB and CEB loans;
• a decrease in bonds issued by the PKO Leasing S.A. Group by PLN 0.6 billion as a result of the early redemption of securitisation bonds associated with the termination of the programme;
• a decrease in mortgage covered bonds of PKO Bank Hipoteczny S.A. by PLN 1.6 billion.
|
External financing (in PLN billion)
|
|
|
|
|
|
|
|
|
|
Key financial indicators
Income statement
Statement of financial position
Financial data is presented on a management basis.
For definitions of major financial items (with reference to items from the income statement and statement of financial position) and financial indicators, see Chapter 14 (Glossary).
Any differences appearing in totals, shares and growth rates result from rounding off amounts to millions of PLN and rounding off percentages in the presented structures to one or two "decimal" places.
PKO Bank Polski S.A.'s performance in 2023 translated into financial indicators as follows:
|
Table 7. Financial indicators of PKO Bank Polski S.A.
|
|
|
31.12.2023
|
31.12.2022
|
Zmiana
|
|
|
ROE net
|
(net financial result/average equity)
|
12.4%
|
9.9%
|
+2.5 p.p.
|
|
|
ROA net
|
(net profit financial result/average assets)
|
1.1%
|
0.8%
|
+0.3 p.p.
|
|
|
C/I
|
(cost to income ratio)
|
30.3%
|
43.7%
|
-13.4 p.p.
|
|
|
Interest margin1)
|
(net interest income/average interest-bearing assets)
|
4.37%
|
3.82%
|
+0.55 p.p.
|
|
|
Share of impaired exposures
|
3.18%
|
3.60%
|
-0.420 p.p.
|
|
|
Cost of credit risk
|
0.52%
|
0.42%
|
+0.1 p.p.
|
|
|
Total Capital Ratio
|
(own funds/total capital requirement*12.5)
|
20.84%
|
20.49%
|
+0.34 p.p.
|
|
|
Common equity Tier 1 (CET 1)2)
|
19.80%
|
19.19%
|
+0.61 p.p.
|
|
|
Leverage ratio
|
8.20%
|
9.26%
|
-1.06 p.p.
|
|
|
|
|
|
|
|
|
|
1) The interest margin in 2022 was calculated excluding the impact of the recognition in the third quarter of 2022 of the effects of the Act on crowdfunding for business ventures and assistance for borrowers (so-called statutory loan holidays) of PLN 2,443 million.
2) The figures for 2022 are restated and recognise the retroactive crediting to the funds of the result for 2022 following the profit distribution by the AGM.
Net interest income
Net fee and commission income
Other net income
Administrative expenses
Net write-downs and impairment
PKO Bank Polski S.A. net profit in 2023 stood at PLN 4,868 million, which was higher by PLN 1,610 million than in 2022, which was determined by the higher average level of interest rates and the recognition in 2022 of the effects of the Act on crowdfunding for business ventures and borrower assistance (the so-called statutory loan holidays) and high regulatory costs (including the cost relating to the initial contribution to the assistance fund to System Ochrony Banków Komercyjnych S.A. in the amount of PLN 956 million and the contribution to the Borrower Support Fund in the amount of PLN 307 million), with a simultaneous increase in the cost of legal risk of mortgage loans in convertible currencies by PLN 3,516 billion.
In 2023, the net result on business activities amounted to PLN 22,050 million and was PLN 6,205 million, i.e. 39.2% higher than in 2022. This was mainly the effect of an increase in net interest income by PLN 5,991 million y/y, and in net fee and commission income by PLN 93 million y/ y, as well as in net other income by PLN 121 million y/y.
Table 8. Income statement of PKO Bank Polski S.A. (in PLN millions)
|
|
|
2023
|
2022
|
Change
(in PLN million)
|
Change
(%)
|
|
|
Net interest income
|
17,215
|
11,224
|
5,991
|
53.4%
|
|
|
Net fee and commission income
|
3,911
|
3,818
|
93
|
2.4%
|
|
|
Other net income
|
924
|
803
|
121
|
15.1%
|
|
|
Dividend income
|
683
|
488
|
195
|
39.9%
|
|
|
Gains/(losses) on financial transactions
|
211
|
390
|
-179
|
-45.9%
|
|
|
Foreign exchange gains/ (losses)
|
81
|
-108
|
189
|
1.7x
|
|
|
Net other operating income and expense
|
-51
|
33
|
-84
|
-2.5x
|
|
|
Result on business activities
|
22,050
|
15,845
|
6,205
|
39.2%
|
|
|
Administrative expenses
|
-6,678
|
-6,925
|
247
|
-3.6%
|
|
|
Tax on certain financial institutions
|
-1,166
|
-1,190
|
24
|
-2.0%
|
|
|
Net operating result
|
14,206
|
7,730
|
6,476
|
83.8%
|
|
|
Net write-downs and impairment
|
-6,697
|
-3,168
|
-3,529
|
1.1x
|
|
|
Profit/loss before tax
|
7,509
|
4,562
|
2,947
|
64.6%
|
|
|
Income tax expense
|
-2,641
|
-1,304
|
-1,337
|
1.0x
|
|
|
Net profit/loss
|
4,868
|
3,258
|
1,610
|
49.4%
|
|
Change in the net profit of the PKO Bank Polski S.A. (in PLN million)
|
|
|
|
|
|
1) Net other income reflects dividend income, result on financial transactions, net foreign exchange gains/(losses) and other net operating income and expense.
2) The item includes tax on certain financial institutions and income tax.
|
|
|
|
|
|
|
|
|
|
Net interest income
Net interest income for 2023 amounted to PLN 17,215 million, i.e. PLN 5,991 million more than in the previous year. The y/y increase in the net income was mainly driven by an increase in income from financing granted to customers due to an increase in interest rates. The effect is greater due to the recognition in the third quarter of 2022 of a non-recurring loss of PLN 2,443 million related to statutory loan holidays, reducing income on home loans (reduced by the results of the settlement of the impact of loan holidays carried out in the fourth quarter of 2023, which resulted in the reversal of the initial loss on loan holidays of PLN 83 million). Net interest income in 2023 was negatively affected by an increase in interest expense from hedge accounting and an increase in interest expense on customer deposits, resulting mainly from increases in market rates for the PLN.
|
Interest income (PLN million)
|
Interest expense (PLN million)
|
|
|
|
Interest income in 2023 reached PLN 28,886 million and was 55.9% higher than in 2022, largely as a result of:
• an increase in revenue from financing granted to customers by PLN 7,363 million y/y - mainly related to a 1.8 p.p. increase in the average interest rate on financing granted to customers. (excluding the impact of statutory loan holidays), with a change in the structure of the average volume of loan receivables (an increase in the share of business and consumer loans at the expense of housing loans in PLN and foreign currencies);
• higher income on securities (PLN +2,523 million y/y), mainly as a result of an increase in average interest rates resulting from rising market interest rates and an increase in the average volume of the securities portfolio by nearly PLN 24.8 billion.
Interest expenses stood at PLN 11,672 million, up PLN 4,372 million from 2022, mainly due to:
• increase in interest expense on deposits by PLN 4,063 million, mainly related to an increase in average interest rates on deposits associated with increases in PLN interest rates following the MPC's decisions and changes in the term structure involving an increase in the share of term deposits bearing interest at higher rates;
• an increase in the expense from hedge accounting to PLN 3,404 million (PLN +262 million y/y), mainly as a result of rising rates for the PLN, which narrowed the margin between the variable rate paid and the fixed rate received on IRS transactions;
• an increase in bond issue costs by PLN 243 million y/y, mainly related to the issue for the purposes of MREL.
|
The interest margin in 2023, excluding the impact of recognizing the effects of the statutory loan holidays in the third quarter of 2022, increased by 0.55 p.p. y/y to 4.37%.
The increase in the margin was driven by a higher return on assets, which was related to the increase in market rates in Poland, which translated to an increase in interest rates on assets to a greater extent than on liabilities. The return on assets was negatively affected by changes in the structure of interest-bearing assets (the share of securities increased at the expense of mainly the share of the highest interest-bearing amounts due from customers and at the expense of the share of amounts due from banks).
In 2023, the average interest rate on the Bank’s loans was 9.4%, and the average interest rate on total deposits was 2.1%. In 2021, it was 7.6% and 1.1%, respectively.
|
Average interest rate and interest margin (in %)
|
|
|
|
* The indicators in 2022 were calculated excluding the impact of the recognition in the third quarter of 2022 of the effects of the Act on crowdfunding for business ventures and assistance for borrowers (so-called statutory loan holidays) of PLN 2,443 million.
|
Net fee and commission income
|
Net fee and commission income (in PLN million)
|
|
|
In 2023, net fee and commission income amounted to PLN 3,911 million and was PLN 93 million higher than in the previous year. The increase was determined – among other things – by:
• higher net income on cards (PLN +156 million y/y) due to a change in the method of settling certain commissions with card organisations, a higher number of cards and higher transaction volumes;
• higher net income on loans and insurance (PLN +46 million y/y), mainly in effect of an increase in commission on business loans, as well as commission on insurance, with an increase in commission costs on loans;
• lower net income from handling bank and other accounts (PLN -12 million y/y), mainly as a result of incurred commission expenses on guarantees and lower account management fees, with an increase in commissions on foreign transactions, cash transactions and transfers;
• lower net income from investment funds and brokerage activities (PLN -39 million y/y), mainly due to a decrease in commission on the sale of Treasury bonds;
• lower net margin on foreign exchange transactions (PLN -58 million y/y), mainly as a result of lower commissions on exchange at table rates (including the effect of a change in the settlement method with some card organisations), with an increase in commissions on exchange at negotiated rates.
Other net income
|
Net other income (in PLN million)
|
|
|
In 2023, other net income amounted to PLN 924 million and was PLN 121 million higher than that earned in 2022, among other things due to:
• an increase in dividend income by PLN 195 million (higher dividends paid by PKO Leasing, PKO TFI and PKO BP Finat);
• an increase in net foreign exchange income by PLN 189 million, mainly as a result of an improvement in the net income on currency derivatives;
• lower net other operating income and expenses (PLN -83 million y/y), among other things as a result of:
– an increase in litigation costs reimbursed to borrowers for CHF loan settlements by PLN 28 million;
– the recognition in 2023 of a loss on the sale of CO2 emission allowances in the amount of PLN 26 million, which was fully offset by a positive valuation of customer derivatives related to CO2 emission allowances recognised in net income from financial operations;
– the recognition of income of PLN 23 million in 2022 in respect of a decrease in liability related to providing additional capital to a subsidiary, whereas income recognized in 2023 in this respect amounted to PLN 1 million.
• lower net income on financial operations (PLN -179 million y/y), among other things, as a result of a decrease in net income on derivatives (including that realised on instruments embedded in structured deposits), with higher net income on both debt instruments and equities, and an improvement in net income on derecognition of assets.
Administrative expenses
In 2023, administrative expenses amounted to PLN 6,678 million and were 3.6% lower y/y. Their level was mainly determined by:
• decrease by PLN 1,254 million, i.e. 68.7% in regulatory costs, mainly as a result of the recognition in 2022 of an expense relating to the initial contribution to the assistance fund at System Ochrony Banków Komercyjnych S.A. in the amount of PLN 956 million and the payment to the Borrower Support Fund in the amount of PLN 307 million, with simultaneous decrease in contributions to the Bank Guarantee Fund by PLN 119 million – these costs amounted to PLN 262 million and represented entirely a contribution to the mandatory bank restructuring fund (in the previous year, BGF costs stood at PLN 381 million, of which PLN 264 million represented the contribution to the resolution fund);
• an increase by PLN 645 million, or 22.0%, in the cost of employee benefits, mainly as a result of wage adjustments and an increase in headcount;
• an increase by PLN 291 million, i.e. of 23.1% of tangible costs, mainly as a result of:
– an increase in property maintenance and rental costs by PLN 127 million, or 48.1%;
– an increase in promotion and advertising costs by PLN 59 million, or 42.8%;
– an increase in IT costs by PLN 40 million, or 12.7%;
– an increase in legal advisory costs by PLN 38 million, i.e. 45.4%, mainly in connection with the handling of cases involving Swiss franc borrowers;
– an increase in cash management costs by PLN 27 million, or 32.1%;
• an increase in depreciation and amortization expense by PLN 71 million, or 7.8%, as a result of increased amortization of IT intangible assets.
• PKO Bank Polski S.A.'s operating efficiency, as measured by the C/I ratio, stood at 30.3% on an annual basis and improved by 13.4 p.p. y/y, mainly due to an increase in the net income from business activities (39.2% y/y), supported by a decrease in operating expenses (3.6% y/y) due to the absence of a significant burden of regulatory costs.
|
Administrative expenses (in PLN million)
|
C/I ratio components
|
|
|
|
Net write-downs and impairment
In 2023, net write-downs and impairment (including the cost of legal risk) amounted to PLN -6,697 million and deteriorated by PLN 3,529 million compared to that recorded in the previous year. The level of the result was mainly determined by the increase in the cost of legal risk of mortgage loans in convertible currencies by PLN 3,516 million as a result of an update of the parameters of the legal risk assessment model for these loans, taking into account the costs of the settlement programme, the number of settlements reached and estimates of the inflow of new court cases and their expected resolutions. The revision of the parameters adopted also accounts for the expected impact of the judgments of the Court of Justice of the European Union: the judgment of 15 June 2023 in Case C-520/21, the judgment of 14 December 2023 in Case C-28/22 and the order of 12 January 2024 in Case C-488/23 on the future case-law of the Polish courts and on a possible change in customer behaviour.
Net credit risk allowances stood at PLN -1,166 million and remained relatively unchanged from the previous year, with an increase in allowances on housing loans offset by an improvement in the net result on the corporate customer portfolio.
Net write-downs on non-financial assets amounted to PLN -100 million and deteriorated by PLN 11 million compared to the previous year, mainly due the reconstruction of additional write-downs on costs charged to the customer, while the asset depreciation write-down improved.
|
Net write-downs and impairment (in PLN million)
|
|
|
The share of impaired loans amounted to 3.18% as at the end of 2023, down 0.42 p.p. compared to 2022, driven by an increase in the total receivables portfolio and the Bank's package sales of receivables.
At the end of 2023, the cost of risk amounted to -0.52% and was 0.10 p.p. lower than that recorded in the previous year.
|
Quality ratios of the Bank’s loan portfolio
|
Cost of Bank’s credit risk
|
|
|
|
Main items of the Statement of financial position
Liquid assets and cash
Financing granted to customers
Customer deposits
External financing
Main items of the Statement of financial posiotion
As at the end of 2023, the PKO Bank Polski S.A.’s total assets amounted to PLN 474,7 billion and increased by PLN 69,5 billion as of the beginning of the year. Therefore, PKO Bank Polski S.A. reinforced its position as the largest institution in the Polish banking sector.
In terms of financing sources, customer deposits, equity, and external financing increased. The decrease in valuation of derivative instruments resulted in a decrease in other assets and other liabilities.
On the asset side, there was an increase mainly in liquid assets (by PLN 57,7 billion y/y) and financing granted to customers (by PLN 17,2 billion y/y).
|
Structure of assets (in PLN billion)
|
Structure of equity and liabilities (in PLN billion)
|
|
|
|
Liquid assets and cash
|
At the end of 2023, the Bank's liquid assets and cash stood at more than PLN 209 billion, representing an increase by PLN 57.7 billion since the beginning of the year.
The increase in liquid assets was primarily influenced by the growth of securities (banking portfolio)
by PLN 58 billion, in particular for National Bank of Poland money bills and treasury bonds in PLN. Amounts due from banks also decreased by PLN 2.5 billion, with cash and balances at the Central Bank increasing by PLN 2 billion and buy-sell back transaction increase by PLN 0.4 billion.
|
Structure of liquid assets and cash in hand (in PLN billion)
|
|
|
|
|
Financing granted to customers
As at the end of 2023, financing granted to customers by the Bank was PLN 240.8 billion which represents an increase by PLN 17.2 billion y/y.
|
The volume of corporate loans increased by PLN 11.0 billion, while the volume of retail and private banking loans increased by PLN 6.6 billion. The increase in retail and private banking loans was mainly in real estate loans, which were significantly positively impacted by the effect of the Safe 2% Loan programme with the recognition of additional costs of legal risk of foreign currency loans in the amount of PLN 2.9 billion.
Excluding the impact of the above adjustments to the gross carrying amount, financing granted to customers at the end of 2023 would amount to more than PLN 243 billion compared to PLN 225 billion at the end of 2022.
Retail and private banking loans and corporate loans were the main items in the structure of financing by type, with a share of 50.0% and 43.0%, respectively, at the end of 2023.
|
Structure of net financing granted to customers by type (in PLN billion)
|
|
|
|
* including non-Treasury bonds (excluding held for trading)
|
Customer deposits
Customer deposits constitute the basic source of financing of the Bank’s assets. As at the end of 2023, amounts due to customers reached PLN 394.6 billion, which is an increase of PLN 59.7 billion since the beginning of the year. The factor that contributed to the increase in the deposit base was an increase in retail and private banking deposits (PLN +41.0 billion), corporate deposits (PLN +13.4 billion) as well as business and enterprise deposits (PLN +4.9 billion).
In the structure of amounts due to customers by type, the main items are the retail and private banking deposits (69.4% as at the end of 2023).
In the ageing structure of customer deposits, the main items are current deposits whose share amounted to 67.8%, down 2.0 p.p. from the end of 2022 in favour of term deposits.
|
Ageing structure of customer deposits (in PLN billion)
|
Structure of customer deposits by type (in PLN billion)
|
|
|
|
External Financing
|
PKO Bank Polski S.A. is an active participant of the debt securities markets, which enables it to diversify the sources of financing its operations and to adapt them to the regulatory requirements regarding long-term financial stability.
As at the end of 2023, long-term sources of financing amounted to about PLN 6.2 billion, which means an increase by PLN 2.7 billion since the end of 2022, mainly as a result of the issue of 3-year Senior Preferred Notes upon maturity of some of the EIB and CEB loans.
|
External financing (in PLN billion)
|
|
|
The report was prepared on the basis of the provision of § 15.1.10a of the Articles of Association of PKO Bank Polski S.A. and pursuant to Article 17.6 of the Act on the Principles of Management of State Treasury Property.
In 2023 the Bank incurred representation expenses, expenditure on legal services, marketing services, public relations and social communication services, and advisory services related to management totalling PLN 346.0 million, which represented 1.57% of the Bank’s Result on Business Activities (RBA). The corresponding costs incurred by the Bank in 2022 totaled PLN 257.6 million, which accounted for 1.63% of the Bank's RBA).
Table 9. PKO Bank Polski S.A. representation expenses, expenditure on legal services, marketing services, public relations and social communication services, and advisory services related to management.
|
Type of expense constituting part of the Bank’s administrative expenses
|
2023
|
|
value
(w PLN million)
|
share in RBA
(%)
|
|
Marketing services
– advertising campaigns supporting the sale of products offered by the Bank, and image campaigns/measures supporting the creation of a positive image of the Bank (mainly a campaign on cyber security, a campaign on the opportunity to finance customer needs and the Bank of the Year image campaign) and sponsorship activities
|
181.5
|
0.82%
|
|
Legal services
– providing constant legal services on behalf of the Bank based on civil law agreements concluded with law firms, expenses on ad hoc legal aid and expenses related to CHF housing loan cases
|
122.4
|
0.56%
|
|
Costs of management advisory services
– advisory services related to business and finance advice
|
21.4
|
0.10%
|
|
Public relations and social communication services
– internal and external communication actions, relating mainly to media publications and support for staff projects
|
14.4
|
0.07%
|
|
Entertainment costs
– expenses aimed at maintaining positive relations with customers, partners and counterparties
|
6.3
|
0.03%
|
|
Total
|
346.0
|
1.57%
|
Equity
Capital adequacy measures
Dividend and profit appropriation
The equity of the PKO Bank Polski S.A. Group increased by PLN 9.5 billion, i.e. by 26.7% y/y. The increase is mainly due to a higher result in the current period, an increase in unappropriated profit and an increase in accumulated other comprehensive income, reflecting changes in the fair value of the securities portfolio and derivatives in hedge accounting.
The level of equity at the end of 2023 reflects the payment of an interim dividend for the financial year 2023 in the amount of PLN 1.6 billion. By decision of the Bank's Management Board adopted on 19 December 2023 (with the approval of the Supervisory Board and the Polish Financial Supervision Authority "PFSA"), funds from the reserve capital earmarked for this purpose in accordance with the resolution of the Annual General Meeting of PKO Bank Polski S.A (AGM) of 21 June 2023 on the distribution of PKO Bank Polski S.A's profit earned in 2022 were allocated to the dividend.
Table 10. Total equity and total capital adequacy ratio of the PKO Bank Polski S.A. Group (in PLN million)
|
|
31.12.2023
|
31.12.2022
|
Change
(PLN million)
|
Change
(%)
|
|
|
Total equity, including:
|
45,227
|
35,707
|
9,520
|
26.7%
|
|
|
Share capital
|
1,250
|
1,250
|
0
|
0.0%
|
|
|
Supplementary capital
|
22,860
|
23,085
|
-225
|
-1.0%
|
|
|
General banking risk fund
|
1,070
|
1,070
|
0
|
0.0%
|
|
|
Other reserves
|
7,138
|
7,091
|
47
|
0.7%
|
|
|
Accumulated other comprehensive income
|
-3,392
|
-9,007
|
5,615
|
-62.3%
|
|
|
Retained earnings
|
10,810
|
8,920
|
1,890
|
21.2%
|
|
|
Net profit or loss for the period
|
5,502
|
3,312
|
2,190
|
66.1%
|
|
|
Non-controlling interests
|
-11
|
-14
|
3
|
-21.4%
|
|
|
Own funds
|
43,807
|
43,759
|
48
|
0.1%
|
|
|
Total capital ratio 1)
|
18.65%
|
19.07%
|
|
-0,42 p.p.
|
|
|
1) The figures for 2022 are restated and recognise the retroactive crediting to the funds of the result for 2022 following the profit distribution by the AGM.
|
|
|
|
|
|
|
|
Capital adequacy measures as at the end of 2023
Capital adequacy for the PKO Bank Polski S.A. Group.
The capital adequacy of the PKO Bank Polski S.A. Group in 2023 remained significantly above the supervisory limits.
As at the end of 2023, the total capital ratio of the PKO Bank Polski S.A. Group amounted to 18.65% and compared with the end of 2022 it decreased by 0.42 p.p., and the core capital Tier 1 ratio amounted to 17.77% and decreased by 0.17 p.p.
The drop in the capital ratios was determined by an increase in capital requirements by PLN 0.4 billion (resulting mainly from an increase in credit risk requirements by PLN 0.8 billion with a decrease in operational risk requirements by PLN 0.2 billion and market risk requirements by PLN 0.2 billion, with a stable level of own funds.
The level of own funds was most significantly affected by the payment of an interim dividend from reserve capital, which reduced equity by PLN 1.6 billion, the increase in the fair value of financial assets measured at fair value through other comprehensive income by PLN 1.1 billion (in the absence of the possibility to apply the provisions mitigating the impact of the COVID-19 pandemic (Article 468 of the CRR) in 2023), recognition as Common Equity Tier 1 capital, with the approval of the PFSA, of part of the net profit earned for the period from 1 January 2023 to 30 June 2023 in the amount of PLN 1.7 billion and T2 amortisation, which reduced own funds by PLN 0.5 billion.
The increase in the own funds requirement for credit risk by PLN 0.8 billion was driven by an increase in the loan portfolio with the simultaneous application of a preferential risk weight for the portfolio of corporate loans covered by a credit protection guarantee (with the PFSA's consent), which reduced the requirements by approximately PLN 0.5 billion at the end of 2023. Decrease in operational risk requirements by PLN 0.2 billion, mainly due to the implementation of individual scaling of the cost of legal risk of mortgage loans in CHF in the AMA approach in accordance with the PFSA's decision obtained on 22 February 2023, and PLN 0.2 billion lower market risk requirements mainly as a result of not exceeding the foreign exchange position threshold at the end of 2023 compared to the end of 2022.
|
Capital adequacy measures of the Bank’s Group
|
Own funds requirements of the Bank’s Group (in PLN billion)
|
|
|
|
Capital adequacy for PKO Bank Polski S.A.
In 2023, the total capital ratio of PKO Bank Polski S.A. increased by 0.35 b.p. to 20.84%, and the core capital T1 ratio by 0.61 b.p. to 19.80%. The increase in capital ratios is mainly due to an increase in own funds by PLN 1.1 billion and an increase in capital requirements by PLN 0.1 billion.
PKO Bank Polski S.A.'s own funds were higher mainly as a result of an increase in the fair value of financial assets measured at fair value through other comprehensive income by PLN 0.9 billion, with a decrease in the reduction due to exposures excluded from the exposure concentration limit, and deferred tax on the core equity Tier 1 position of PLN 1 1.1 billion. In addition, the increase in own funds resulted from the consent of the PFSA to include in the core equity Tier 1 a part of the Bank’s net profit earned for the period from 1 January 2023 to 30 June 2023 of PLN 1.6 million.
The increase in the own funds requirement for credit risk amounted to PLN 0.6 billion and was driven mainly by an increase in the loan portfolio and the application of a preferential risk weight for the portfolio of corporate loans covered by a credit protection guarantee (with the PFSA's consent), which reduced the requirements by approximately PLN 0.5 billion at the end of 2023. Decrease in own funds requirements for operational risk by PLN 0.2 billion, mainly due to the implementation of individual scaling of the cost of legal risk of mortgage loans in CHF in the AMA approach in accordance with the PFSA's decision obtained on 22 February 2023, and PLN 0.2 billion lower market risk requirements as a result of not exceeding the foreign exchange position threshold at the end of 2023 compared to the end of 2022.
|
Capital adequacy measures of the Bank
|
Own funds requirements of the Bank (in PLN billion)
|
|
|
|
Determination of target MREL levels
The Bank Guarantee Fund has set the minimum requirement for own funds and eligible liabilities (MREL) for PKO Bank Polski S.A.
The BGF determined the target MREL TREA requirement for the Bank on a consolidated data at the level of 15.36% of TREA (total risk exposure amount), which should be met by own funds and eligible liabilities meeting the subordination requirement at the level of 13.78% of TREA.
The MREL TEM (total exposure measure) requirement for the Bank on a consolidated basis has been set at 5.91% of TEM and should be met by own funds and eligible liabilities meeting the subordination requirement of 5.60% of TEM.
In accordance with Article 97(4) of the Act on the Bank Guarantee Fund, BGF exempted PKO Bank Hipoteczny S.A. from the requirement to maintain a minimum level of its own and eligible liabilities. Following this decision, TREA and TEM levels are adjusted to exclude PKO Bank Hipoteczny S.A. from consolidation.
In addition, the BFG indicated that KREDOBANK S.A. is not part of the group subject to resolution and should also be excluded from consolidation for the purposes of determining MREL.
The required levels are presented in the table below.
Table 11. Required MREL levels (in %)
|
|
31.12.2023
|
|
MREL (TREA)
|
15.36
|
|
MREL (TREA) subordinated
|
13.78
|
|
MREL (TEM)
|
5.91
|
|
MREL (TEM) subordinated
|
5.60
|
As at 31 December 2023, the MREL ratio in relation to the total "TREA" risk exposure amounted to 16.38% (in accordance with the Act on macro-prudential supervision, Common Equity Tier 1 instruments held by an entity for the purposes of the combined buffer requirement cannot be used to meet this requirement; without this restriction, the ratio was 21.18%). With regard to the total exposure measure "TEM", the MREL ratio was 9.25%.
Resolutions relating to the appropriation of profit for 2022 and retained earnings
On 21 June 2023, the Annual General Meeting of PKO Bank Polski S.A. (The Bank’s AGM) passed a resolution on distribution of profit of PKO Bank Polski S.A. for 2022, in accordance with which:
• the amount of PLN 1,629,138,013.50 was allocated to reserve capital for the payment of dividends, including interim dividends, in accordance with § 30 of the Bank's Articles of Association;
• the amount of PLN 1,629,138,013.50 was left as unapportioned.
At the same time, the Bank’s AGM passed a resolution to leave PKO Bank Polski S.A.’s retained earnings from the previous years, in the amount of PLN 7,808,836,372, undistributed.
The above resolutions are compliant with the individual recommendation of the PFSA received on 17 March 2023, in which the PFSA confirmed that the Bank fulfils the requirements for the payment of dividends at a level of up to 50% of the net profit for 2022 but, at the same time, recommended that the Bank mitigate the risks present in its operations.
The distribution of profit for 2022 adopted by the AGM did not preclude the Bank's Management Board from deciding to distribute profit to shareholders in the form of an interim dividend and to use the reserve capital for this purpose.
In 2023, the Bank consulted the PFSA on two occasions relating to the possibility of the Bank distributing part of its profit from reserve capital in the form of an interim dividend. On 21 July 2023, the Bank received a negative opinion from the PFSA Office in this respect, and on 11 December 2023, the Bank received a positive opinion from the PFSA Office.
In its letter dated 11 December 2023, the PFSA stated that having analysed the current economic and financial standing of the Bank and the arguments presented by the Bank, the PFSA did not raise any concerns to the potential payment of interim dividend by the Bank in the amount of PLN 1.6 billion or less from the profit earned in the period between 1 January 2022 and 31 December 2022 allocated to the reserve capital in line with resolution No 7 of the Annual General Meeting of 21 June 2023 with regard to the distribution of profit earned by PKO Bank Polski S.A. in 2022. The PFSA noted that all decisions affecting the Bank's capital position, including those relating to the distribution of generated profit, should be made taking into account not only the provisions of law and the supervisory authority's positions and guidelines, but also the principles of prudent and stable management of the Bank, and in particular - the need to ensure that the Bank is equipped with own funds to cover all risks occurring in its operations, as well as its further sustainable development.
On 19 December 2023, the Bank's Management Board, acting on the authorisation of the General Meeting (Resolution No 7/2023), decided to pay an interim dividend for the financial year 2023 and to earmark PLN 1,600,000,000 for this purpose. On the same day, the Supervisory Board approved the payment of the interim dividend. The interim dividend was paid out only of the reserve capital created for dividend payment, including interim dividends.
1,250,000,000 shares (series A, B, C, D) gave entitlement to the Interim Dividend. The interim dividend per share was PLN 1.28 gross. The record date for the interim dividend was 25 January 2024. The interim dividend was paid on 1 February 2024.
Dividend policy
On 28 November 2022, PKO Bank Polski adopted a dividend policy for the Bank and the Group (“Dividend policy”). The Dividend policy takes into account the Bank’s intention to provide stable dividend payments in the long term, in accordance with the principle of prudent management of the Bank and the Bank’s Group, in compliance with the law and the PFSA position on the dividend policy assumptions of commercial banks. The objective of the Dividend policy is to optimize the capital structure of the Bank and the Group, while considering the return on equity, the cost of capital and the capital needs for development, and maintaining an appropriate level of the capital adequacy ratios and meeting the minimum requirement for own funds and eligible liabilities (MREL). The repurchase of own shares for redemption is an additional tool for capital redistribution. The General Meeting gives its consent to the acquisition of own shares by the Bank, after prior approval of the Supervisory Board, specifying the terms of the acquisition, including the maximum number of shares to be acquired, the period of authorization to acquire shares, which may not exceed five years and the maximum and minimum amount of consideration for the acquired shares, if the acquisition takes place for consideration. Purchase of own shares for redemption in each case requires the Bank to obtain the prior consent of the Polish Financial Supervision Authority.
The PFSA’s recommendations regarding dividend payments in 2024
In December 2023, the PFSA adopted a position on the 2024 dividend policy of supervised institutions.
The dividend payment criteria for commercial banks indicated in the PFSA’s positions are as follows:
1. an amount of up to 50% of the profit for 2023 may only be paid out by banks that fulfil all of the following criteria:
• not implementing a recovery programme;
• positively assessed in the supervisory review and assessment process (SREP) – final SREP score not worse than 2.5;
• having a leverage ratio (LR) of more than 5%;
• having a Tier 1 core capital ratio (CET1) of not less than the required minimum: 4.5% +56.25% x P2R requirement + combined buffer requirement + P2G;
• having a Tier 1 capital ratio (T1) not lower than the required minimum: 6% +75% x P2R requirement + combined buffer requirement + P2G;
• having a total capital ratio (TCR) not lower than the required minimum: 8% + P2R requirement + combined buffer requirement +P2G;
where:
P2R (Pillar II Requirement) means the additional regulatory capital requirement - currently assigned to cover risks associated with foreign currency lending,
P2G (Pillar II Guidance) or additional capital recommendation – the Bank's sensitivity to an unfavorable macroeconomic scenario is measured using the results of supervisory stress tests.
2. An amount of up to 75% of the profit for 2023 may be paid only by banks meeting at the same time the criteria for payment of 50% and at the same time whose portfolio of receivables from the non-financial sector is characterised by good credit quality (the ratio of the portfolio of non-performing loans to the non-financial sector (NPL), including debt instruments, is at a level of no more than 5%).
The criteria set out in points 1 and 2 should be met by the bank both at the individual and consolidated level, as at the end of 2023 and on the date of the decision of the General Shareholders' Meeting to distribute dividends. The maximum possible level of dividend to be distributed from profit earned in 2023 is limited to 75% in connection with the expectation of strengthening the capital base in order to absorb the possible materialisation of risks accumulated in the environment of the Polish banking sector.
Additionally, the PFSA indicated that the banks which have considerable portfolios of foreign currency housing loans should adjust the rate of dividend distribution based on two additional criteria:
• Criterion 1 – based on the share of foreign currency housing loans for households granted to unsecured borrowers in the total portfolio of amounts due from the non-financial sector;
• Criterion 2 – based on the share of loans granted in 2007 and 2008 in the foreign currency housing loans for households’ portfolio.
The PFSA recommended that appropriate adjustments be applied, depending on the size of the Bank's portfolio:
• Criterion 1:
– banks with a share exceeding 5% – adjustment of the dividend rate by 20 p.p.;
– banks with a share exceeding 10% – adjustment of the dividend rate by 40 p.p.;
– banks with a share exceeding 20% – adjustment of the dividend rate by 60 p.p.;
– banks with a share exceeding 30% – adjustment of the dividend rate by 100 p.p.;
• Criterion 2:
– banks with a share exceeding 20% – adjustment of the dividend rate by 30 p.p.;
– banks with a share exceeding 50% – adjustment of the dividend rate by 50 p.p.
whereas the total value of the adjustment (maximum 75%) is the sum of adjustments resulting from both criteria.
The PFSA additionally advised that banks should not undertake other activities, in particular those outside the scope of their current business and operating activities, which could result in a reduction of own funds, without prior consultation with the PFSA. This also applies to dividend payments, if any, from retained earnings and buybacks of own shares. The PFSA expects that any implementation of such operations will be preceded in each case by a consultation with the PFSA and will depend on its outcome.
In a letter dated 13 December 2023, PFSA advised the Bank to mitigate the risks inherent in the Bank's operations by maintaining own funds to cover an additional capital add-on to absorb potential losses resulting from a stress event, in the amount of 0.48 p.p. at the individual level (the level recommended by the PFSA in 2022 was 0.72 p.p.) and 0.42 p.p. at the consolidated level (the level recommended by the PFSA in 2022 was 0.66 p.p.) over the value of the total capital ratio.
According to the letter from the PFSA, the Bank will also receive an individual recommendation regarding both the possibility to pay dividends and other actions that may result in a reduction of the capital base. For details of the PFSA's recommendations to the Bank, see "Events subsequent to the balance sheet date" in Chapter 12.
As at 31 December 2023 the ratios amounted to:
• at the consolidated level:
– Tier 1 capital ratio (T1) and core equity ratio Tier 1 (CET1) = 17.77%;
– total capital ratio (TCR) = 18.65%;
– Criterion 1 = 2.74%;
– Criterion 2 = 26.67%;
• at the separate level:
– Tier 1 capital ratio (T1) and core equity ratio Tier 1 (CET1) = 19.80%;
– total capital ratio (TCR) = 20.84%;
– Criterion 1 = 3.30%;
– Criterion 2 = 27.45%.
The Bank’s intention is to pay dividend in 2024 from the net profit for 2023. The recommendation of the Bank's Management Board regarding dividends will be determined after receiving an individual dividend policy recommendation from the PFSA.
Pursuant to Article 395 § 2(2) of the Commercial Companies Code, the decision on profit distribution remains within the competences of the Bank’s Annual General Meeting.
Support for borrowers
Support of Ukraine and the situation of Ukrainian companies from the Bank’s Capital Group
Operating segments of the Bank’s Group
Insurance and leasing
IT projects and other services
Access channels of PKO Bank Polski S.A.
Distribution network of PKO Banku Polskiego S.A.
Operations area
International cooperation
Operations of other subsidiaries
Prizes and awards for the PKO Bank Polski SA Group
The Bank, in cooperation with Bank Gospodarstwa Krajowego (BGK), offers solutions under the Government's First Home Programme. The offering includes two products: Housing Account and the Government’s Safe 2% Loan Programme. Since 1 September 2022, the Bank has been offering a mortgage loan under the “Housing Without Own Contribution” programme. The bank also allows customers to take advantage of statutory loan holidays.
Housing Account under the government’s First Home Programme
The account is designed for people aged between 13 and 45 who do not hold title to a property. One person can have one Account. The maximum duration of the account is 10 years (the account may not be maintained until 31 March of the year following the expiry of 10 years counted from 31 December of the year in which the account agreement was signed). The Account is offered free of charge, but requires regular payments of between PLN 500 and PLN 2,000 per month. The customer can use one month a year for a "holiday from saving" without any consequences – he will still be entitled to the bonus and tax exemption. Until 31 December 2023, the Account offered a promotional interest rate of 5.35% per annum. A promotional interest rate of 4.00% per annum applies in the period from 1 January 2024 to 31 March 2024.
If the Account is held for at least 3 full calendar years and the customer fails to meet the regular deposit condition or withdraws part of the funds accumulated, or if the maximum term of the Account expires, it will be converted into a Housing Deposit. The deposit will bear interest at no less than 75% of the interest rate on a 12-month savings term deposit account or, if the Bank does not offer one, at no less than 50% of the WIRON index. The condition for entitlement to the housing bonus and income tax exemption is that the Account must be maintained for a minimum of 3 years and that the funds accumulated in the Account must be used for a housing purpose. The funds can also be used for any purpose, but this entails a loss of benefits. Between 10 August and 31 December 2023, 2,772 Accounts were opened and credited with a total of more than PLN 11.5 million by the Bank's customers.
The Government’s Safe 2% Loan Programme
In July 2023, the Bank launched the 2% Safe Loan. Under the Safe 2% Loan programme, customers can receive subsidies for loan instalments and financing of up to 100% of the expenditures related to the purchase or construction of their first property. The loan can be used, for example, to purchase an apartment or a house, construct and finish a house, and even purchase a plot along with the construction of a house.
According to the programme, loan instalments for 10 years will be reduced by contributions of the Government Housing Fund. Loans up to PLN 500 thousand for a single and/or PLN 600 thousand for marriage and a couple or single with a child will be covered by additional payments. The maximum amount of the own contribution may not exceed PLN 200 thousand, unless the own contribution consists solely of an undeveloped plot of land.
During the subsidised instalment period, the loan will bear interest at a fixed rate to be determined by the Bank once every 5 years. This programme does not have a limit on the price per 1 sqm. A loan may be sought by persons who did not have an apartment or a house, who have not reached 45 years of age and are creditworthy. Part of the financed amount may be covered by a BGK guarantee. The programme will run until the end of 2027.
In 2023, 64.3 thousand applications were submitted and the number of signed agreements was 29 thousand as at 31 December 2023.
Housing loan under the “Housing without own contribution” programme
Since September 2022, PKO Bank Polski S.A. has been offering a housing loan with family repayment. If, during the repayment of the loan, the family grows with a second or subsequent child, BGK will pay PLN 20 thousand (for the second child) or PLN 60 thousand (for the third and subsequent child) towards the loan repayment. The loan, granted under the terms of the "Housing without own contribution" program, allows financing of up to 100% of expenses related to the acquisition or construction of a property. Individuals who are creditworthy but do not have sufficient savings for own contribution can apply for the loan. A part of the amount financed is guaranteed by BGK.
Since the launch of the programme, 324 of the Bank's customers have taken advantage of the offering, and the total value of housing loans with family repayment granted to natural persons as at 31 December 2023 reached PLN 112 million, with 282 loans for PLN 99.4 million in 2023 alone.
Loan holidays
The Bank's Group continues to provide the so-called statutory loan holidays, i.e. it allows the suspension of repayment of mortgage loans or advances used to meet one's own housing needs, if the agreement was concluded in PLN before 1 July 2022 and the term of the loan ends after 31 December 2022 - one agreement per customer.
The Act of 7 July 2022 on the crowdfunding of business ventures and on assistance for borrowers enabled the suspension of loans for one month per quarter in 2023.
The option to suspend repayment could also be used by customers who have reached settlements for loans in CHF and the current currency of the loan is PLN. Customers of PKO Bank Polski S.A. and PKO Bank Hipoteczny S.A. could apply through the iPKO website, the Bank's branches or by mail.
By the end December of 2023, 298.5 thousand customers of the Group applied for a suspension of their mortgage loan or advance repayment, and the total number of suspended instalments amounted to 2,108 thousand.
In the fourth quarter of 2023, the Bank Group estimated the actual level of the credit holiday loss, taking into account, among other things, empirical data on the participation rate of customers' use of loan holidays and early repayments made by customers throughout the period of the statutory loan holiday programme. Based on the outcome of the aforementioned analysis, the Bank's Group has partially reversed the loan holiday loss and reduced, proportionally, the amortisation of this loss in the amount of PLN 131 million. This translated into an increase in net interest income and a decrease in the adjustment of the gross carrying amount of loans. The realised loss on statutory loan holidays, excluding the effect of amortisation, was, in the opinion of the Group, PLN 2,980 million compared to PLN 3,111 million recognised in July 2022.
For details of the level of credit holiday loss in 2023, see the Bank Group's financial statements for 2023, Note 35 “Loans and advances to customers”.
Mortgage loans in foreign currencies – Settlement programme
In 2023, PKO Bank Polski S.A. offered settlements to its retail customers who had active mortgage-backed loans in CHF. The settlement involves converting CHF loans into PLN loans as if it had been a PLN loan from the start subject to interest rate at the WIBOR reference rate increased by the margin historically applied to such loans. The settlements are offered during mediation proceedings conducted by the Mediation Centre of the PFSA. The bank also offers settlements on a large scale for loans subject to litigation.
PKO Bank Polski S.A. settlement programme meets its assumptions, i.e. it is a real aid for people repaying mortgage loans in CHF. The mediation formula is free of charge. The customer can come to an agreement with the Bank and/or terminate the mediation proceedings without consequences without reaching an understanding. The programme completely eliminates the materialised and future foreign exchange risk of customers and is a convenient and certain alternative to long-term and costly litigation. According to the assumptions, the Bank bears all the financial consequences of restoring to the consumer the actual and legal status in which the consumer would find themselves if they did not enter into a Swiss Franc loan agreement with the Bank. In the opinion of the Bank, this action fully implements the requirements of Directive 93/13 (Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts) and complies with previous case law of the Court of Justice of the European Union (CJEU).
In order to mitigate the interest rate risk borne by the customer, since the implementation of the programme, the Bank has offered borrowers the possibility to choose a fixed rate option for 5 years. If the period of loan repayment remaining after concluding the settlement is shorter than 5 years, the fixed interest rate will apply until the end of the term of the agreement. Fixed-rate loans are more and more popular – this option was selected in the settlement process in the second half of 2023 by 81% of customers who continue to repay the loan after signing the settlement, and a total of 78% of customers who sign a settlement agreement providing for continuing the loan since the beginning of offering settlements.
By 31 December 2023, 57 thousand mediation applications were registered, 37,195 mediations concluded with a positive outcome, 13,096 mediations concluded with a negative outcome. The total number of settlements concluded as at 31 December 2023 was 36,822, of which 35,154 were concluded in mediation proceedings and 1668 in court proceedings.
CJEU case-law
In its ruling of 15 June 2023 in Case C-520/21, the CJEU ruled that if a loan agreement containing unfair terms is declared invalid, Directive 93/13: (i) does not preclude a judicial construction of national law whereby a consumer is entitled to claim compensation from a credit institution that goes beyond reimbursement of the monthly instalments and fees paid for performance of that agreement and beyond payment of the statutory interest for late payment from the date of the call for payment, provided that the objectives of Directive 93/13 and the principle of proportionality are complied with, and that (ii) precludes a judicial construction of national law whereby a credit institution is entitled to demand compensation from a consumer that goes beyond the reimbursement of the principal paid for the performance of that agreement and beyond the payment of statutory default interest from the date of the call for payment.
In the Bank's opinion, on the grounds of national legislation and the principle of proportionality, the customers cannot make additional claims against the Bank, primarily because they have not provided the Bank with a financial service consisting in the provision of capital. Nor is it reasonable to conclude that the Bank has enriched itself at the expense of the customer and the consumer has been impoverished. With the funds obtained, the customer met its housing needs and the Bank bore the costs of raising the funds, making them available and servicing the loan over the years. Even if it were to be considered that there were legal grounds for the customers' claims, the customer's claims would not necessarily be upheld and the courts may exercise their jurisdiction to dismiss the action when it constitutes an abuse of rights. At present, there is no case law on such customer claims.
With regard to the banks' ability to pursue claims beyond the reimbursement of the capital paid in nominal terms, the CJEU also expressed its position in two orders issued at the end of 2023 and the beginning of 2024. In an order of 11 December 2023, the CJEU ruled that a banking institution is not entitled to demand from a consumer the reimbursement of amounts other than the capital paid for the performance of that agreement and statutory default interest from the time of the demand for payment. In this ruling, the CJEU, as in judgment C-520/21, did not explicitly rule out valorisation, leaving the possibility for banks to pursue this claim open. However, by another decision, issued in case C-488/23 of 12 January 2024, the CJEU definitively determined that Banks are not able to claim valorisation from customers if the invalidity of the agreement is a consequence of the removal of abusive clauses from the agreement. The CJEU thus ruled that banks may not demand compensation from consumers consisting of a judicial valorisation of the payment corresponding to that capital, in the event of a substantial change in the purchasing power of the currency concerned after the transfer of that capital to the consumer.
Increased cost of legal risk
In 2023, the PKO Bank Polski S.A. Group increased the write-downs on legal risk related to mortgage loans denominated and indexed to CHF by PLN 5,430 million. The increase in the cost of risk resulted from updating the parameters of the legal risk assessment model for these loans, taking into account, among other things, the expected effects of the CJEU judgment of 15 June 2023 in case C-520/21 on the future case-law of the Polish courts, the impact of the CJEU decision of 12 January 2024 in case C-488/23, concerning the question of the admissibility of a demand for compensation from the consumer consisting in a judicial valorisation of the capital paid out in the event that the loan agreement is declared invalid, and also taking into account the CJEU decisions of December 2023 in the cases: C-140/22 of 7 December 2023, C-756/21 of 11 December 2023, C-28/22 of 14 December 2023, concerning the issue of calls for payment and the statutory default interest charged thereon. In addition, the Bank took into account the costs of the settlement programme, the number of settlements and estimates of the inflow of new lawsuits and their expected resolutions.
Detailed information on the write-downs for the legal risk in 2023 was presented in the Financial Statements of the Bank’s Group for 2023, Note 26 "Cost of legal risk of mortgage loans in convertible currencies".
Humanitarian aid and assistance to employees of the Ukrainian Group Companies
The Bank’s Group continued its efforts to support Ukrainian citizens, coordinated by the PKO Bank Polski Foundation. The Foundation donated a total of PLN 3.7 million, including:
• approx. PLN 2.5 million to continue providing accommodation and food in Poland for refugees from Russian-occupied areas,
• PLN 1.2 million to support fifteen NGOs and entities carrying out aid activities.
Activities of Ukrainian companies
PKO Bank Polski S.A. Group companies, including KREDOBANK S.A. with its registered office in Lviv, and its subsidiary, "KREDOLEASING" sp. z o.o., as well as debt collection and financial companies with their registered offices in Kyiv and Lviv, continue to operate in Ukraine.
KREDOBANK S.A. is an universal bank which services customers mainly in the western part of Ukraine and in Kyiv. As at the end of 2023, the Company’s head office was in Lviv; there were 68 branches, 13 of which are located in regions most affected by warfare. It grants loans mainly to corporate and medium and small enterprices (SME) customers, also under government programmes and in cooperation with foreign banks.
KREDOBANK S.A.’s priority is to ensure the safety of its employees and maintain uninterrupted operations servicing customers on an on-going basis. The Company complies with all restrictions imposed by the National Bank of Ukraine (NBU) under martial law. KREDOBANK S.A. is included in the list of banks of systemic importance, which includes the top 15 Ukrainian banks. The bank's status confirms the important role of the bank for the operations of the Ukrainian banking sector. The company runs a stable and profitable business. 32 branches of KREDOBANK S.A., which are part of POWER BANKING (joint banking network, established at the initiative of the National Bank of Ukraine), continue to provide customers with services from a specific list of urgent banking services.
Based on guarantees received from the European Bank for Reconstruction and Development and European Commission funds deposited with the BGK (guaranteeing coverage of potential losses), KREDOBANK S.A. expanded lending. In February 2023, KREDOBANK S.A. signed a cooperation agreement with BGK, which covers the endorsement and discounting of letters of credit issued by the company and their post-financing within the established limit. The above transactions are available to importers who are customers of KREDOBANK S.A. and will be accepted by BGK on a case-by-case basis.
KREDOBANK S.A. also provided financing to customers as part of its cooperation with Deutsche Sparkassenstiftung für internationale Kooperation (DSIK) and the Enterprise Expansion Fund.
At the end of 2023, KREDOBANK S.A. granted UAH 9.14 billion (PLN 948 million) in new loans. Compared to 2022, lending increased by more than 100% (UAH 4.54 billion in 2022). The increase in lending was mainly related to sales in the corporate and SME segments.
KREDOBANK S.A. Group reported an increase in assets for 2023 from UAH 38,650 million to UAH 55,819 million and reported a significant net profit of UAH 1.24 billion in an environment of increased income tax, compared to UAH 0.14 billion for 2022.
In 2023, KREDOBANK S.A. received numerous awards and distinctions for its activities in Ukrainian bank rankings.
Table 12. Selected financial data of KREDOBANK S.A. Capital Group*
* consolidated data according to the International Financial Reporting Standards – the principles in force in the Bank’s Group.
The financial and organizational situation of the other Ukrainian companies in the Bank’s Group remained stable at the end of 2023. The companies are operating under wartime austerity, have not experienced liquidity tensions, and are maintaining relations with existing counterparties. Service restrictions and work organization are being adjusted on an ongoing basis to the current military situation.
Cooperation between Kredobank S.A. and the EBRD to support the recovery of the Ukrainian economy
KREDOBANK S.A. has signed an agreement with the European Bank for Reconstruction and Development (EBRD), under which it is able to release funding for Ukrainian entrepreneurs in the total amount of EUR 125 million. The cooperation relates to three areas, i.e. loan guarantees that allow loans of up to EUR 100 million to be granted, investment incentives in the form of grants from the EBRD for small and medium-sized business (sublimit of EUR 15 million out of EUR 100 million) and the opening of a EUR 25 million limit by the EBRD to finance investment projects that support foreign trade. In accordance with the risk-sharing arrangement, the EBRD secures 50% of the credit risk on the new financing of up to EUR 100 million granted by KREDOBANK S.A. for the first 50% of loans (past due more than 90 days).
Two loan tranches of EUR 50 million each (EUR 100 million in total) were disbursed until 31 December 2023. The first loan tranche was drawn down at 100% and the second at 4.8% (EUR 2.4 million). A total of 52.4% of the allocated limit was drawn down as at 31 December 2023. 143 customers received funding.
At the same time, the allocated sublimit for the first of the two tranches for investment funding of EUR 7.5 million has been completely exhausted, together with a simultaneously allocated grant of EUR 1.5 million (for any purpose). 54 customers (38%) benefited from the incentive in the form of a sub-limit, with 70% in the form of leasing. A second tranche for investment funding of EUR 7.5 million has also been released and is drawn down in 2024.
Implementation of the sanctions imposed on Russia and Belarus
In 2023, PKO Bank Polski S.A. implemented, on an ongoing basis, the restrictions and changes resulting from the sanctions imposed on Russia and Belarus and introduced, on an ongoing basis, guidelines for the financing of and providing banking services to persons and entities having business dealings with Russia and Belarus, including those customers on whom sanctions have been or can be imposed.
Retail segment
Corporate and investment segment
The PKO Bank Polski S.A. Group conducts business activities in segments adapted in terms of products and services to specific groups of customers. The manner in which the business segments are divided is consistent with the sales management model and a comprehensive product mix. Currently, the Bank’s Group conducts its business activities in the retail segment as well as in the corporate and investment segments.
Number of customers: 11,892.6 thousand
Financing granted: PLN 180.6 billion
Savings volume: PLN 469.3 billion
Number of customers: 18.5 thousand
Financing granted: PLN 94.6 billion
Savings volume: PLN 72.9 billion
The segment descriptions present management data that include PKO Bank Polski S.A. and significant entities of the Bank's Group; any differences in totals, shares and growth rates are due to rounding.
The offer of the PKO Bank Polski S.A. Group for individuals, companies and enterprises covers a wide range of credit, deposit and insurance products, as well as electronic banking services.
In 2023 in the retail segment the Bank’s Group built strong and long-term relations with customers, among other things by making available a maximum number of processes remotely. It focused on developing tools and access channels to enable customers to easily manage their finances from any place and at any time.
Individuals can take advantage of consumer loans in the form of cash advances, revolving loans, credit cards, the "PKO Pay Later" deferred payment service, and housing loans. Investment and investor loans, revolving loans, leases and factoring are available to companies and enterprises.
The deposit and investment offer comprise, among other things, regular saving products, term and structured deposits, investment products of PKO TFI S.A., and Treasury savings bonds.
In 2023, the Bank's product range was expanded to include products resulting from government programmes: Housing Account and Safe 2% Loan.
In 2023, the Bank Group’s offer provided insurance services, both those related and not linked directly to bank products, to all customers in the retail segment. Insurance linked to Bank products is offered to Customers in connection with, among other things, consumer loans and mortgage loans, checking accounts and bank cards. The offer of insurance independent of Bank products includes, among other things, life insurance, insurance of real estate, travel, motor, Bezpieczny Plan and the OnkoPlan oncological insurance policy, and insurance of leased assets.
Customers of the segment
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As at the end of 2023 the Retail Segment serviced more than 11.9 million customers, including:
• almost 11.3 million individuals, including 18.9 thousand of Private Banking customers;
• more than 0.6 million companies and enterprises.
In 2023, the number of customers serviced in the retail segment increased by more than 244 thousand.
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Number of retail segment customers (in millions)
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Business volumes
As at the end of 2023:
• total financing for retail segment customers was nearly PLN 181 billion and increased during 2023 by more than PLN 5.9 billion (i.e. 3.4%). This was mainly driven by an increase in the mortgage banking loan portfolio (PLN +3.8 billion), whose level was significantly positively influenced by the Safe 2% Loan programme, with a negative effect from settlements reached and provisions related to the legal risk of foreign currency mortgage loans. In 2023, the financing of companies and enterprises remained stable (PLN +0.3 billion);
• retail segment savings amounted to PLN 469 billion and went up by PLN 74.2 billion (i.e. 18.8%) in 2023. This was driven most significantly by an increase in retail and private banking deposits (PLN +41.1 billion) and funds invested in Treasury savings bonds (PLN +19.1 billion).
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Gross loan receivables in the retail segment (in PLN billion)
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Customer savings in the retail segment (in PLN billion)
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* taking into account insurance product liabilities
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The Bank reinforced its position as market leader in terms of the number of checking accounts maintained (ROR). This number amounted to nearly 9.3 million and went up by more than 229 thousand during the year. It covers all active accounts, which constitutes growth potential for further cooperation with customers.
In 2023, the Bank's Group sold more than 397 million Treasury savings bonds, and the volume of Treasury savings bonds held by the Bank's customers issued to the domestic market amounted (at nominal value) to more than PLN 101 billion, up by more than 23% from the end of 2022.
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Number of current accounts* (in millions)
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Indebtedness under Treasury bonds issued for the domestic market (in PLN billion)*
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* number of all active accounts with a potential for growth of cooperation with the customer
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* nominal value of savings bonds; source: Brokerage Office of PKO Bank Polski S.A.
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In 2023, the Bank Group granted housing loans to individuals with a total value of more than PLN 21.9 billion, strengthening its leading position in the market with a share of 35.9% throughout 2023 (an increase in share by nearly 16 p.p.). 2023 proved to be a record year in terms of both nominal sales and market share.
Sale of consumer loans amounted to a total of PLN 17.8 billion (including PLN 15 billion of cash loans) and in 2023 increased by over PLN 3.1 billion, i.e. 21.4% (cash loan increased by nearly PLN 2.9 billion, i.e. 23.6%)
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Sales of housing loans (in PLN billion)*
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Sale of consumer loans (in PLN billion)
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* source: ZBP, sale of PKO Bank Polski S.A. and PKO Bank Hipoteczny S.A.
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In 2023, the share of fixed-rate loans in new sales (granted by PKO Bank Polski S.A. and PKO Bank Hipoteczny S.A.) reached 72.5%, and their total share in the portfolio of PLN mortgage loans increased to 27.3% as at 31 December 2023 (compared to 17.9% as at the end of 2022).
In 2023, 64.3 thousand Safe 2% Loan applications were submitted to the Bank and the number of agreements concluded as at 31 December 2023 is 29 thousand.
Activities in 2023
Deposit offering
PKO Bank Polski S.A., operating in an environment of persistently high inflation and high interest rates, maintained the attractiveness of its deposit offering in the first half of 2023 – it has introduced new products and changed the terms and conditions of existing products. Taking into account the interest rate cut by the MPC and changes in the competitors' offerings, the Bank gradually reduced deposit interest rates in the second half of 2023.
The Bank for individual customers (natural persons) in particular:
• introduced new products:
- IKO birthday deposit with interest of 10% p.a., thanks to which customers could allocate their funds up to PLN 50 thousand for 6 months, provided that the mobile application is active (the implementation of at least one of the three conditions in IKO – purchase of investment funds, purchase of insurance, establishment of a standing order). The deposit was active from 1 June to 30 June 2023,
- deposit for Personal Banking customers and Private Banking customers, which allows funds to be deposited for 3 months,
- PKO Towarzystwo Funduszy Inwestycyjnych S.A. (PKO TFI) Investor deposit for Private Banking customers who invest in funds managed by PKO TFI – it is a 3-month deposit, non-revolving, opened up to the maximum amount of funds accumulated by the customer in open-ended investment funds and in an account for PPK/PPE,
- 25-month, non-revolving structured term deposits based i.a. on baskets of shares: American, German or Asian companies, and on baskets of shares: telecommunications companies, biotechnology companies, companies related to e-commerce and lifestyle; 24-month, non-renewable deposits based on baskets of shares of: dividend companies II, financial companies, UK companies, automotive companies, technology companies, global companies, companies related to the aviation sector, US companies,
- "PKO Mój Plan” (“PKO My Plan”) regular investment programme. In this programme, the customer can choose between 2 debt funds and 3 equity funds. The first deposit is at least PLN 2,000 and each subsequent deposit is at least PLN 200.
• reintroduced the Mobile Deposit, which allows funds to be deposited for three months, and subsequently reduced the interest rate to 4.75% per annum,
• reduced the interest rate of:
- the deposit for new funds to 4.75% per annum for 3 months and 4.25% per annum for 12 months, respectively,
- deposits for Personal Banking and Private Banking customers to 3.5% and 4% per annum respectively,
- term deposits to 1%/ 2%/ 2.5% per annum for periods of 3, 6 and 12 months respectively,
- the 60+ deposit to 3% per annum,
- the PKO TFI investor deposit to 5.25% per annum,
- the Specialised Investment Programme Autolokacja III to 6% per annum,
In 2023, the bank launched 11 editions of the New Funds promotion for the Plus Savings Account, where the promotional interest rate was as follows:
- 5.5% in January, February, March, April, May and July,
- 6.5% in June, September, October,
- 5.75% in November and
- 5.25% in December.
The promotion on Pierwsze Konto Oszczędnościowe (First Savings Account – an account for people up to the age of 18) is also active until the end of April 2024, with an interest rate of up to 8% per annum on systematic savings of up to PLN 10 thousand.
The average interest rate on new term deposits in PLN (for individuals and enterprises) in 2023 was 5.23%. The average interest rate on all term deposits in PLN placed with PKO Bank Polski S.A was 5.08% in 2023, compared to 3.11% in 2022.
Loan offering
In 2023, the Bank:
• with regard to housing loans (in addition to the activities described in Chapter 8.1 Borrower support):
- extended the offer of a “green mortgage” to 30 September 2025 by increasing the discount on the mortgage margin for the customer delivering an energy performance certificate;
- extended the offer to support borrowers with CHF mortgage loans until 31 December 2024 to limit the negative effects following from the changes in the exchange rate of CHF;
- introduced a special offering for uniformed services reducing the loan origination fee;
- continued a promotional offer with a commission reduced to 0.5% when using life insurance;
• with regard to consumer loans as part of the cash loan offering:
- unified the offering. At present, regardless of the customer segment, it is possible to obtain financing of up to PLN 300 thousand without collateral;
- made fixed-rate financing available through online channels;
• with respect to supporting operations and financing of companies and enterprises:
– made an EKO loan available to housing associations and cooperatives. Customers who make green investments benefit from the commission-free financing of the Our Renovation Investor Loan. These investments include, but are not limited to: insulating buildings, purchasing and installing photovoltaic panels and heat pumps, building parking spaces with access to an electric/hybrid vehicle charger.
– updated its financing offering for individual farmers running agricultural holdings - increasing the limit for a clean loan to PLN 300 thousand for the farmer's loan and overdraft facility, and made the Agricultural Guarantee Fund (FGR) guarantees available in June 2023. Under the agreement with Bank Gospodarstwa Krajowego (BGK), the Bank was able to grant repayment guarantees for current account working capital loans, the SME loan and the investment loan of up to 80% of their value. In addition, with the guarantee, entities can access subsidised interest rates on revolving working capital loans (i.e. overdrafts and SME loans) of 5% per annum;
– made available, in cooperation with BGK, a new green loan for the upgrade of infrastructure (e.g. buildings, machinery and equipment). The aim of the investment is to reduce energy consumption by at least 30%.
– extended the thermal upgrade loan offering with a BGK premium to all corporate customers. The loan is intended for the purpose of improving the energy efficiency of public buildings, increasing thermal insulation of buildings and saving energy;
– extended the offering to include loans in EUR (auxiliary account overdrafts, non-revolving working capital loans, investment loans) with the possibility of establishing a de minimis guarantee;
– introduced micro-factoring limits for new customers;
– introduced a special offering for a loan to refinance liabilities with a 0% commission for an overdraft and/or a loan with a 0.5% commission with the possibility of applying individual conditions for margins;
– introduced a promotion for the Bank’s customers without a loan – as part of the promotion, the commission for granting an overdraft facility/loan was reduced to 0%;
– extended the preferential conditions for granting de minimis guarantees until the end of 2023 – collateral up to 80% of the loan value, no commission fee.
The PKO Bank Polski S.A. Group consistently tightens cooperation with the largest corporations, central and local government entities and foreign customers, and expands its scope based on the range of products offered.
The Bank’s Group participates in financing strategic investment projects and local government projects. The financing takes the form of syndicated loans and bilateral loans, or the issue of securities.
The Bank's Group offers wide access to funds to finance investment projects and advisory services focused on selecting the optimum form of funding and repayment terms to its customers.
The Bank maintains securities accounts for customers and facilitates domestic and foreign market transactions, and acts as a depositary for pension and investment funds.
The Bank's Customers who are interested in entering and increasing their share of international markets may use a wide scope of products and services, such as: transaction banking, including international cash pooling, e-banking, Treasury products, trade finance and corporate loans, offered by the Bank’s foreign branches.
Customers of the segment
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As at the end of 2023 the Corporate Segment and the Investment Segment serviced nearly 18.5 thousand customers, including:
• nearly 9.3 thousand corporate customers, more than 1.4 thousand strategic customers;
• more than 5.5 thousand local and central government institutions plus budgetary and related entities;
• more than 1.9 thousand foreign customers;
• nearly 0.4 thousand financial customers.
Since the beginning of 2023, the number of customers serviced in this segment increased by more than 0.8 thousand.
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Number of corporate and investment segment customers (in thousand)
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In 2023, the Bank’s Group maintained its position as market leader for servicing the largest local government units: it handles the budgets of 7 voivodeships and 25 cities with poviat rights, including 8 voivodeship capital cities. For many years the Bank has also been financing and servicing banking of other public entities, including Social Insurance Institution, organizational entities of Państwowe Gospodarstwo Leśne Lasy Państwowe (State Forests), hospitals, communal companies, systematically reinforcing the position of a leader in financing the Polish economy both independently and as a significant participant of banking syndicates.
Under the service offer of the Bank’s subsidiaries, customers from the corporate segment may use lease and factoring products and services. A wide range of fixed assets may be financed in the form of a lease, depending on the customers’ needs. Apart from standard products, the offer also includes services of renting car fleet and cooperation with suppliers.
Business volumes
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Gross financing of customers from corporate segment (in PLN billion)
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Savings in the corporate segment (in PLN billion)
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* the item does not include bonds of international financial organizations
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As at the end of 2023, total financing of customers from the corporate segment, including loans, bonds issued, lease and factoring receivables amounted to nearly PLN 95 billion and increased since the beginning of the year by nearly PLN 10.2 billion (i.e. 12.0%). The largest increases were in loans by more than PLN 5.1 billion (or 8.5%) and bonds by nearly PLN 2.5 billion (or 16.9%).
The level of savings of corporate segment customers as at 31 December 2023 stood at nearly PLN 73 billion and increased over the year by more than PLN 14.7 billion, mainly as a result of an increase in deposits by PLN 13.7 billion and an increase in the level of funds invested in bonds issued by the Bank's Group companies by nearly PLN 1 billion.
Activities in 2023
In 2023, the PKO Bank Polski S.A. Group:
• in terms of its deposit offering, operating in an environment of persistently high inflation and high interest rate volatility, adjusted the interest rate on its dynamic account to enable effective and automatic deposit of surpluses, above the minimum amount of PLN 500;
• with respect to financing and banking services for public entities, it concluded:
– agreements for comprehensive banking services for the budgets of the Mazowieckie and Małopolskie provinces and their organizational entities, as well as the city of Szczecin, the city of Gdynia, the city of Elbląg, the city of Zamość and their organizational units;
– 6 syndicated loan agreements totalling more than PLN 0.7 billion, under which the Bank's share totalled nearly PLN 0.4 billion;
– 215 municipal bond issue agreements totalling nearly PLN 3.0 billion;
• with respect to financing the corporate segment customers, it concluded:
– 53 syndicated loan agreements totalling more than PLN 46.6 billion, nearly EUR 9.6 billion, USD 0.4 billion and nearly NOK 0.5 billion, under which the Bank's share totalled more than PLN 10.8 billion, more than EUR 1.1 billion and nearly USD 0.1 billion;
– 1 bank guarantee agreement for more than EUR 0.1 billion;
– 1 agreement to issue corporate bonds in the form of a banking syndicate in the amount of PLN 0.35 billion;
– as co-organiser and joint bookrunner, agreements for the issue of corporate bonds in the form of banking syndicates totalling nearly PLN 3.5 billion, under which the Bank's share totalled more than PLN 0.6 billion;
• with respect to brokerage activities (conducted by the Bank’s Brokerage Office), it conducted:
– as joint bookrunner, the accelerated book-building share offering of Allegro.eu S.A. with a total value of over PLN 2.9 billion;
– as co-offering agent, global coordinator and manager, a book-building share offering of CCC S.A. worth approximately PLN 505 million;
– as global co-ordinator and manager, an accelerated book-building share offering of Atal S.A. worth PLN 262 million;
– as global co-ordinator and joint bookrunner, an accelerated book-building share offering of Archicom S.A. worth PLN 220 million;
– as a member of the distribution syndicate, issues of Kruk S.A. bonds with a total value of PLN 265 million;
– as offering agent and global coordinator, issues of bonds of Ghelamco Invest Sp. z o.o. totalling approximately PLN 125 million;
– as an investment company acting as intermediary in the public offering, issues of Echo Investment S.A. bonds with a total value of approximately PLN 100 million;
as at the end of 2023:
– it maintained almost 152 thousand securities accounts and cash accounts, as well as more than 568.4 thousand registration accounts;
– it provided services concerning units in 394 funds and sub-funds managed by 10 fund management companies.
In 2023, insurance and leasing services provided both to retail and corporate customers were intensified.
Activities and achievements:
Insurance
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Housing insurance
PKO Dom
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In 2023, more than 411 thousand insurance agreements were concluded. Gross premiums written in 2023 amounted to PLN 125.7 million, up 68% on the same period in 2022.
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PKO Moto motor insurance
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In 2023, the Bank changed its motor insurance distribution model based on a stand-alone offering under its own brand PKO Moto.
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Launch of the process of sharing data covered by bank secrecy for use by PKO Towarzystwo Ubezpieczeń S.A. to, inter alia, assess insurance risk, calculate premium, improve loss adjustment process. The data is shared on the basis of a voluntary consent of the Bank's customer.
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In 2023, more than 190 thousand motor insurance agreements were concluded at the Bank, with more than 120 thousand of these already under the new PKO Moto model. The premium written on agreements concluded in 2023 totalled PLN 154 million.
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Leases
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Expansion of financing for luxury brands
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The PKO Leasing Group has become a partner of Inchcape JLR Poland sp. z o.o. for the financing of Jaguar, Range Rover, Defender and Discovery luxury brands in Poland with a gross vehicle weight of up to 3.5 tonnes. The agreement provides for the wholesale financing of stock and retail financing of new and used cars in the form of leases, lease loans, a subscription programme, long and short-term rentals.
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Szybkie Auto (Fast Car)
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Extension of the pilot “Szybkie Auto" ("Fast Car") procedure, which is designed to finance vehicles from authorised dealers and enables a financing decision to be made within one business day.
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Development of other vehicle financing
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Establishing cooperation with KROSS and enabling business customers of 36 KROSS stores throughout Poland to use the PKO Leasing offer in the field of universal bicycle leasing as well as those supported by an electric engine.
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Leasing 2.0
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The launch of three new products aimed at financing cars, heavy transport as well as machinery and equipment. The new products have been structured in such a way as to enable both the customer and adviser to have immediate, transparent information about the available transaction parameters, the required documents and the stage of the process.
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Free registration
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Organising another edition of the promotional Free Registration offering with insurance against the loss of value of the vehicle over time (GAP). The offering is aimed at all PKO Leasing and Bank customers and in the iPKO process supported by bank advisors.
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Summer with leasing
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Making a fuel card worth PLN 500 available to small and medium-sized enterprises from the banking channel (for agreements with a value of more than PLN 100 thousand).
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PKO Leasing Online at Media Expert
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Expansion of the cooperation with Media Expert with an online channel (www.mediaexpert.pl) enabling the customers of the retailer to benefit from a fast, fully automatic and remote leasing process available 24/7 without leaving the office.
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Simplified lease
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Introduction (in collaboration with the Bank) of an offering for customers operating as sole proprietors - simplified lease for new and used cars and trucks up to 3.5 tonnes, with a net value of up to PLN 300 thousand (the offering is available online at the IPKO website - without leaving the office and without unnecessary formalities).
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Offering for agriculture
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Signing of agreements with the following companies:
• Bauer Group Polska sp. z o.o., a nationwide supplier of agricultural machinery and equipment for their financing.
• Wielton S.A. - Wielton Agro Finance – one of the three largest manufacturers of semi-trailers, trailers and car bodies for a new promotional factory financing programme for customers in the agro segment (farms and agricultural enterprises).
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Development of digital processes and remote channels
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• launch of the company's processes and systems for the acceptance of mID as an acceptable form of customer identity identification,
• making the transition from IPKO Biznes to the PKO Leasing Customer Portal available to customers,
• implementation of further stages in the development of digital process tools PKO Leasing Online enabling customers to obtain leasing financing in stationary stores and from online suppliers from the machinery and equipment segment
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The PKO Bank Polski S.A. Group offers modern and comprehensive services accessible via its digital channels. The Bank, in cooperation with Operator Chmury Krajowej S.A. and other global providers of cloud services, has consistently followed its “path towards the cloud”. PKO Bank Polski S.A. has been developing its operations with a particular focus on solutions based on artificial intelligence, robotics and automation.
Significant activities of the PKO Bank Polski S.A. Group in 2023:
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PKO Pay Later
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PKO Bank Polski was the first bank in Poland to independently provide the deferred payment service "PKO Pay Later". At the end of 2023, approximately 175 thousand customers were active users of the service, and the total amount of limits granted reached PLN 138 million. Customers have so far executed close to 1.9 million transactions for the total amount of PLN 260.4 million. 98% of transactions were executed with a BLIK code.
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Digital Mortgage
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Release of a new calculator on the Bank's website to calculate the estimated instalment and creditworthiness for the Własny Kąt mortgage.
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Release of a monthly loan instalment and creditworthiness calculator on the Bank's website – a component adapted to the Safe 2% Loan.
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Making the Tenant Certificate service available on iPKO and the IKO mobile app. "Code for Simpl.rent services for landlords" is a solution for landlords to verify a tenant before signing a lease.
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Embedding instalment and creditworthiness calculators in a new layout on pkobp.pl. Preparation of an enhanced service for electronic signature and seal taking into account integration with the new document repository.
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Bank in the Metaverse
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Conducting the first Virtual Job Fair in an innovative form in Poland, using the rapidly developing Metaverse technology. The fair attracted over 600 participants and over 30 recruitment processes were launched. The media coverage reached a total of more than 3.7 million people worldwide.
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Premiere of an Educational VR game from PKO Bank Polski.
The game, by means of a virtual simulation and specific real-life examples, helps to manage the household budget and teaches not only the practical application of economic knowledge, but also the right social attitudes. It is an element of the "Kasa z klasą" educational programme developed by PKO Bank Polski in cooperation with the Foundation.
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PKO Bank Polski, at the "TechnoBiznes 2023" Gala, was awarded in the "Lider2022" competition organised by Gazeta Bankowa for opening a branch in Metaverse and honoured for its robotisation solutions that support processes related to statutory loan holidays. The competition's jury, which evaluated 40 technological solutions presented by banks, recognised the innovative nature of PKO Bank Polski's implementations.
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PKO Bank Polski will accelerate growth in the Metaverse
The Bank is preparing to create attractive spaces on gaming platforms such as Fortnite and Roblox and wants to expand its activities on Metaverse-class platforms such as Decentraland and The Sandbox. It also wants to build more VR models of its branches. The bank is currently looking for companies with the right technological experience to collaborate on the creation and maintenance of virtual spaces and gamification design on gaming and Metaverse-class platforms.
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Poland ClimAccelerator
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Continuation of the Bank's participation in the Poland ClimAccelerator programme, which aims to search for start-ups, scale-ups and innovative companies operating in the field of green technologies that will be feasible for implementation in the Bank's Group companies;
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Implementation of 4 carbon footprint calculators for the Bank's customers.
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Launch of calculator solution trials with 200 customers, along with a one-year subscription, onboarding, and full consultancy support.
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Collaboration with the Fintech Poland Foundation
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Joining the FinTech Poland community in the development of technology-based services. The aim of the initiative is to integrate the financial innovation community in Poland. The Foundation has published a report entitled “How to do fintech in Poland”, portraying the industry in the context of the overall economy and the financial sector. PKO Bank Polski S.A was the strategic partner of the project.
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Let's Fintech Programme
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Promoting Polish innovation in the field of finance under the slogan Future Finance Poland with the participation of Polish companies and institutions (PKO Bank Polski, the Polish Investment and Trade Agency and the FinTech Poland Foundation) at the Singapore Fintech Festival, the largest annual FinTech festival worldwide organised by the Monetary Authority of Singapore, Elevandi and Constellar in cooperation with the Association of Banks in Singapore. The main message of the Polish delegation was to showcase Poland's advantages, which offer strong arguments in its efforts to become one of the leading global financial centres. This year's edition was attended by more than 60 thousand people from 130 countries. Owing to the activities carried out by the Let's Fintech team, the Bank generated PLN 1.8 million in AVE (advertising equivalent).
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Process automation
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Implementation of 295 processes by the end of 2023 using technology that enables the automation of structured, repetitive activities (RPA). For further details, see Chapter 1.5
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Voicebots
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Launch of new and development of existing bots for:
• measuring NPS (Net Promoter Score) after a customer visit to a branch;
• handling questions on the automatic enrolment of PPK in TFIs;
• information support for the government's Safe 2% Loan programme;
• confirmation of large-value transfers;
• context handling for the topic of enforcement seizures;
• confirmation of a BLIK withdrawal transaction at an ATM;
• extensions to the analytics of card payments in the voice assistant in IKO (it can perform a spending analysis by 7 categories and 40 subcategories).
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More than 13.8 million conversations in total conducted by bots in 2023 (up 32% y/y). All of the Bank's voicebots have already handled a total of 31 million calls.
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Cloud technologies
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Launch of new functionalities of the IKO mobile application in cloud computing, including full support for establishing and maintaining the session and operation history.
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Migration and activation of the eBankart system (responsible for Bank’s debit cards). Implementation of the system on the new platform is part of Road 2 Cloud strategy.
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Launch of work on Artificial Intelligence (AI) technologies in cloud environments to prepare them for the deployment of AI for business and technology applications in the Bank.
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ESG in the risk area
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Development of algorithms for climate risk determination and climate risk database. The scope of data covers, among other things, flood risks, substrates and droughts in the Bank’s systems to the addresses of mortgage collateral and address of the registered office of companies. In addition, the acquisition of sector data on physical risks.
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Automatic acquisition of data on the actual energy efficiency of the real estate (EP) from the Central Register of Building Characteristics to the credit risk database for real estate collateral.
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Preparation of a tool to handle verification of compliance with the Taxonomy (in the form of surveys).
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Cooperation with and inclusion of the Bank in the Partnership for Carbon Accounting Financials (PCAF) on emissions performance (acquisition of sector data, best practices on emissions performance and decarbonisation approaches, access to PCAF databases).
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Security of card payments
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Use of the BOT to confirm BLIK cash withdrawal transactions at ATMs according to specific parameters.
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PKO Token Space
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Development and submission of a grant application to the NCRD (National Centre for Research and Development) for the PKO Token Space Predict project, concerning the development of models for predicting the price of digital assets.
The solution will use artificial intelligence technologies.
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Credit risk assessment platform
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Implementation of the use of Machine Learning models for credit appraisal processes for businesses, mortgages and increased use of Machine Learning models for Customer Finance.
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IKO mobile banking
iPKO Internet banking
Contact Center of PKO Bank Polski S.A.
IKO mobile banking
PKO Bank Polski SA offers advanced technological solutions to its customers, providing them with complete, simple, functional and at the same time safe access to banking services using telephones. Digital banking at the Bank is strongly supported by the IKO mobile app, which the Bank has been developing for 10 years. The app currently has more than 100 features and offers a wide range of services, including non-banking ones.
The number of active IKO applications reached a record high of nearly 7.8 million on the Polish banking market at the end of 2023. Since its launch in March 2013, users have logged in to the application nearly 8.7 billion times and made nearly 2.6 million transactions for a total amount of PLN 709 billion.
The number of transactions concluded until the end of 2023 using the proximity BLIK in the IKO application amounted to more than 72.7 million.
In 2023, all bots handled more than 13.8 million calls, which is a record - an increase by 32% y/y. The year ended with more than 31 million calls, including 5 bots with a total number of calls exceeding 1 million (helpline - 15.3 million, voice assistant in IKO - 5.1 million, soft debt collection (reminder of overdue payments) - 4.7 million, NPS surveys (relational and transactional) - 2.9 million, cash loan lead - 2 million).
In 2023, the IKO voice assistant made a total of more than 2.5 million customer calls (+70% y/y).
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IKO transactions (in millions)
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In 2023, IKO functionality has been expanded to include new capabilities:
• addition of the “Daily” panel, which allows personalised shortcuts to the most frequently used options to be set up on the main screen;
• contact with the Bank in the app - addition of the option to send messages to the Bank directly from the app;
• purchase of gold at the Mint of Poland;
• ordering foreign currency transfers from and to an account maintained in a currency other than PLN;
• reminders about the upcoming expiry date of the identity document and the need to update it;
• introduction of a message during the IVR call to warn the customer of possible scams;
• presentation of clear and legible information on:
– rates of return for investment products;
– promotional interest rate in the savings account;
– fees and commissions for accounts and debit cards;
• the option to express the spouse's digital consent when launching selected products offered by the Bank;
• enabling customers to complete a questionnaire for the NPS survey after the completion of various transactions and operations;
• enabling the "PKO Konto Pierwsze" to be opened fully online;
• management of tax recipients;
• support for additional cards;
• changes in loans and advances:
– presentation of information related to loan holidays;
– presentations of the instructions that can be given for a given loan;
– presentation of the branch where the agreement for this product was concluded;
– servicing the 2% loan - presentation of schedule information;
• spending analysis in the IKO voice assistant;
• submission of instructions for a Certificate of loan;
• applying for car insurance on the IKO app (renewing or cancelling a policy, providing information on the sale of a car);
• enabling the purchase of a Term Deposit;
• presentation of enforcement seizures on accounts;
• continued improvement of WCAG digital accessibility;
• development of cloud solutions to support the growing volume of application log-ons.
iPKO internet banking
The customers can use iPKO and iPKO biznes, PKO Leasing and PKO Junior as part of the Bank's electronic banking services. These services provide customers with access to information on their accounts and products, and enable them to execute a number of transactions online.
iPKO
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Number of retail segment customers with access to iPKO (in millions)*
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* from the second quarter of 2019 a change in the definition – the number of retail customers who have an active relation with a product in the iPKO service
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In 2023, the Bank introduced the following new features to iPKO to make it easier for customers to use banking services:
• value-added services ecosystem (VAS Marketplace) where the following services were made available throughout 2023: Telemedycyna (Telemedicine), Bezpieczny ekran (Safe Screen), Bezpiecznie w Internecie (Safe on the Internet), Legimi, Simpl.rent, Canal+ and Multikino code purchases;
• price microservice – a new section added to the product details with information on fees and commissions;
• placing satisfaction surveys in messages, with the ability to direct them to specific customer groups;
• adaptation of the iPKO website to support mID;
• PKO Moto motor insurance package;
• summary of the portfolio of investment funds, i.e. its value, result and rate of return from the beginning of the investment and implementation of notifications of changes in the portfolio;
• the possibility of using the dark mode in the functions displayed in IKO from iPKO (customers who use the dark mode in the IKO app will already see it in all available functions that are displayed in IKO from iPKO);
• a new ekantor service with a user-friendly and simplified interface, linked to an AI-based classification;
• multi-person access, whereby customers can, i.a., give their employees the authority to manage their e-banking account, manage the company's finances with their representatives and select the people who will order and accept transfers and other transactions;
• new version of the iPKO dealer online exchange service for businesses;
• documents with information about changes to the account or its terms and conditions can be downloaded directly from iPKO;
• new current account application;
• application for financial support for farmers – access to the entry point for logging into the ARiMR platform;
• addition of an anniversary deposit.
In addition, in 2023 the Bank implemented changes to the existing functionalities of the website:
• Open Banking - release of functions for adding accounts from other banks and managing AIS (account information services);
• a new layout for the Savings section of iPKO ensuring convenient browsing of deposits on any device, including phones and tablets;
• a new, responsive process of temporary blocking and unblocking of cards;
• expansion of many new functions by other language versions;
• new compact process for purchasing a Term Deposit;
• changes in filtering and displaying the history of operations, taking into account suggestions and comments received from customers;
• optimisation of the process of changing a telephone number by the customer himself/herself without the need for hotline consultants to confirm it;
• option to change the amount in foreign transfers in the event of a charge exceeding the amount of the transfer;
• presenting the exact time of the card operation in the transaction details;
• information about the costs associated with investing in investment funds;
• more convenient use of direct debits adapted to display on mobile devices (RWD);
• new notification icon and the appearance of the message inbox, along with providing convenient service on mobile devices;
• new edition of the 300+ (Good Start) application.
iPKO business
The iPKO biznes electronic banking system is addressed to all institutional customers who wish to have online and mobile access to the standard products and specialist banking services.
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Number of the Bank’s customers with access to iPKO biznes (in thousands)
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In 2023, the Bank made new functionalities available to the iPKO biznes users, such as:
• integration with further popular financial and accounting systems – customers can retrieve account history, statements and order transfers directly from their ERP system, without having to log on to iPKO biznes;
• the tender accounts module, where it is possible to control the main and linked tender accounts, as well as to manage payments of counterparty tender deposits and submit tender settlement instructions;
• the SWIFT Tracker module for foreign transfers, where the customer can access, i.a. the status of the transfer, costs and information on reasons for rejection or cancellation;
• direct access to the PKO Leasing Customer Portal without the need for an additional login (this measure resulted from the strategic objective Expansion of the product multiplatform);
• quick issue of information or sales messages for a selected list of customers;
• addition of mID in the products and services supported in iPKO biznes;
• a bundle of usability-enhancing changes, including improvements to the PKO Cash service resulting from the NPS survey, and facilitations to the iPKO biznes mobile authorisation.
In addition, in 2023 the Bank implemented changes to the existing functionalities of the website:
• mobile authorisation tools,
• ability to generate and send confirmations of financial operations directly from the application, present blockades (unsettled transactions) on debit cards, and add information on the sum of blockades on debit and prepaid cards;
• ability to order domestic transfers and transfers to own account. Transfer orders in the mobile app can be ordered by users who are authorised to carry out such operations in the iPKO business website. The ability to order transfers will only be available to app users who have access to corporate/company accounts held at a Polish branch;
• the option to sign an agreement for access to the new version of the iPKO dealer platform with a mobile authorisation tool;
• execution of Express Elixir instant transfers.
PKO Leasing website
PKO Leasing S.A. has been developing functionalities for remote customer self-service through the Customer Portal, a state-of-the-art online platform for lease agreement management.
By the end of 2023:
• 96.5% of PKO Leasing customers used the Customer Portal;
• online payment options were expanded to include BLIK and BLIK OneClick, with 300 thousand transactions executed;
• PKO Leasing S.A. processed 33 thousand online applications;
• sending letters by post has been replaced by online delivery on the Portal. This included:
- debt collection letters - termination of agreements, requests for payment, renewals;
- fines;
- letters concerning the scheduled termination of the agreement.
PKO Junior application
PKO Junior is the bank's offering for parents and children up to the age of 12. Currently, many banks address their offerings to this age group and an important element is the mobile app for children. With its features, it teaches the child how to manage a budget on the phone. The use of the app is comfortable and safe, as the parent controls all the actions performed in the PKO Junior app in their iPKO service. The bank was the first to offer such a solution on the Polish market.
After 10 years of operation, the app has been re-developed in a new technology - Flutter. With this change, the app can be developed simultaneously on two platforms: Android and iOS. The Bank released a new version of the app in July 2023.
To date, 749 thousand children aged 12 and below have benefited from the offer. On average, 8 non-cash transactions are made by children each month and 98.6% of all their transactions are card payments.
The new functionalities of the PKO Junior app include:
• the option of logging in with a password, PIN number, fingerprint and facial scan (biometrics);
• new security standards, in line with current guidelines of the Bank;
• intuitive menus that make it easier for children to navigate and that are consistent with IKO navigation.
Contact Center of PKO Bank Polski S.A.
The Contact Center provides efficient and effective service over the phone, via email, chat and social media.
Bank employees are available around the clock and provide comprehensive customer service by:
• executing instructions;
• providing information and education;
• encouraging active use of self-service applications;
• selling the bank's products and insurance products.
To ensure the highest quality and efficiency of service, artificial intelligence is used. A customer contacting the helpline is greeted by a voicebot. Its task is to:
• recognise the intention of the contact;
• handle simple matters for the customer (providing information, performing simple instructions, e.g. assigning a PIN to a payment card, blocking access to the Internet service and IKO app);
• transferring the call to a qualified consultant if necessary.
In 2023, the Bank implemented confirmation of suspicious transactions (transfers, BLIK, card transactions) via voicebot. As a result, more instructions are confirmed in less time.
In 2023, bots handled more than 15 million calls. This contributed to a significant reduction in service costs.
The Bank demonstrates attention to customer security. Special attention is paid to potentially fraudulent situations. The Bank educates customers on security to strengthen vigilance and prevent scams.
The option to confirm the identity of the employee calling and to verify the customer using the IKO app has been introduced. With this solution, the customer is assured that he or she is talking to an employee of the Bank.
Solutions to meet the needs of our customers are identified and introduced on an ongoing basis. In 2023, two specialised lines were launched: service for customers aged 75 and over and for customers reporting security threats. These solutions ensure that our customers are served with special attention and that the extent and manner of service takes into account their special needs.
Service is provided in English and Ukrainian. In 2023, the hours of operation of the Ukrainian-language helpline have been extended (7 a.m. to 10 p.m.) and service on weekends and holidays has been introduced.
The quality of service provided by our employees is recognised in external surveys. In the 2023 Moje Bankowanie survey, the Bank's telephone and e-mail service obtained high positions on the podium. In the summary for the full year, it ranked second. This is a jump of 5 positions compared to the previous year.
The Institution of the Year survey recorded a high increase in the quality score of the Bank's Helpline, and the quality of service provided to Ukrainian-speaking customers by an employee was recognised in the Polish Contact Centre Awards competition.
Network of branches and agencies
Corporate Banking Centre
Private Banking Centre
Network of branches and agencies
PKO Bank Polski SA, with an eye to providing convenient access to its products and services, provides its customers with a wide network of retail branches and agencies, private banking offices, corporate branches, as well as branches located abroad. The modernisation and optimisation of the branch network is carried out on a continuous basis, and decisions on whether to open a branch on a particular micro-market are made by reference to economic criteria, taking into account the growth potential. In 2023, the space allocated to retail branches was reduced by 11.2 thousand m2 owing to optimisation measures taken.
At the end of 2023, the Bank's branch network comprised:
• 882 retail branches organized into 10 regional divisions, 8 private banking offices and 11 corporate banking offices;
• 23 regional corporate centres (RCK) organized into 7 regional corporate branches, as well as the branches located in the Federal Republic of Germany and the Czech and Slovak Republics.
In relation to the end of the year 2022, the total number of retail units decreased by 23.
Table 13. Operating data of the retail and corporate segment
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2023
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2022
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2021
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2020
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2019
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Number of branches in the retail segment
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911
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934
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942
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972
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1,073
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regional retail branches
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10
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10
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10
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10
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11
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retail branches
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882
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905
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913
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943
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1,043
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private banking branches
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8
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8
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8
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8
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8
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corporate banking branches
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11
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11
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11
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11
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11
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Number of branches in the corporate and investment segment:
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34
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33
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33
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32
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42
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regional corporate branches
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7
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7
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7
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7
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7
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regional corporate centres
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23
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23
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23
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23
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33
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Foreign branches1)
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4
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3
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3
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2
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2
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Number of agencies
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286
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349
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447
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492
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538
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Number of ATMs
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3,056
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3,011
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2,976
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3,022
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3,080
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1) Figures for 2023 include the Romanian branch, which has not yet commenced operations.
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The branch and ATM network is complemented by the agency network. At the end of 2023, the Bank cooperated with 286 agencies. The drop in the number of agencies observed during the last years is caused by a reduction in profitability as a result of the changing and dynamic market situation.
The Bank continues to improve the conditions in which customer service is provided and enhance the comfort of its operations by upgrading or relocating its branches to more attractive locations. The aim is to provide modern, user-friendly branches, tailored to the needs of customers and employees. The Bank has transformed nearly 200 branches in recent years. In 2023 alone, the first year of the Bank's new Strategy, 47 upgraded own branches were handed over, including the completion of: 17 branch relocations and 30 branch upgrades.
Customer amenities such as electronic media and Internet workstations have been put in place in upgraded and relocated branches. At the same time, work continues on converting some branches into branches without cash processing in advisory positions, so-called cashless branches. Cash can only be deposited or withdrawn by customers using self-service devices. At the end of 2023, 50 branches operated under the cashless model (change by 17 branches y/y).
In addition to measures to improve the quality of employees' work, in 2023 the Bank carried out a project to provide even better support for customers with disabilities. As part of the project, the methodology for determining the accessibility of bank branches for people with different types of disabilities was revised. Training on how to serve people with different types of disabilities was prepared and delivered - by 15 December 2023, 81% of the network's employees received training. Upgrades were made to several dozen bank branches taking into account accessibility requirements for people with disabilities. In 2023, the Bank continued to implement a new service model for retail customers, based on the role of the Customer Assistant, i.e. an employee responsible for the initial identification of the customer's needs from the moment he or she enters the branch and for arranging the visit as efficiently as possible. At the end of 2023, the Customer Assistant service model was in operation in around 200 branches.
Corporate Banking Centre
PKO Bank Polski S.A.'s Corporate Banking Centre (CBP) is an optimal service model designed to support the development of entrepreneurs and meet their needs for financial services. Operating since 2018, CBP generates a steady increase in performance by successively expanding its customer base and increasing the level of customer satisfaction, which was confirmed by an independent NPS survey compared to other competing banks, ranking PKO Bank Polski S.A. 3rd (source: Indicator Polska, May 2022, surveys of customers with revenues of 5-30 million). In 2023, the threshold for qualifying customers to be served by the CBP has been increased (companies with annual revenues of PLN 15-60 million), which should contribute to higher year-end acquisitions and optimise the sales model.
By separating the Corporate Banking Centre, PKO Bank Polski can build a positive image and brand of PKO Bank Polski as a reliable business partner for Polish enterprises, owing to, among other things:
• a specialised group of nearly 140 advisers, who continue to improve their competences and work directly with credit analysts and specialists from the Bank's Group;
• better matching of the product and pricing offering to customers' needs and shorter waiting time for a loan decision as a result of improvements in the lending process;
• increased attractiveness of the offering by adding products from the Bank's Group, and close cooperation with dedicated specialists in factoring, leasing and treasury products;
• cyclical meetings with customers to promote the Bank's and the Bank Group's products and, above all, to educate and popularise innovative solutions based on market opportunities and current public programmes.
Private Banking Centre
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PKO Bank Polski S.A. has been providing comprehensive financial services as part of its Private Banking offering for more than a dozen years and provides customers with access to a wide range of financial products and instruments, from personal and deposit accounts serviced both remotely and in the traditional manner, through brokerage and treasury services, prestigious credit cards with a convenient insurance package, to a full spectrum of investment products and the rental or leasing of cars or yachts. Private Banking also offers comprehensive financing for current and investment needs.
The Private Banking Offices serve customers in the largest Polish cities: Warsaw, Gdansk, Kraków, Katowice, Poznan, Wroclaw, Łódź, Szczecin, Bydgoszcz, as well as Białystok and Lublin.
As at the end of 2023, the Private Banking Centre managed a portfolio of assets worth nearly PLN 70 billion (an increase by 22.2% y/y), and the number of clients served was about 18.9 thousand (an increase of 12.7% y/y).
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Agreements and assets of the customers of the Private Banking Centre
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In 2023, the operations area continued to centralize and transform services in the Bank and Bank Group's companies, as well as centralise operational tasks, resulting in very good efficiency and cost performance. Tasks were carried out in a state-of-the-art structure involving the following operational units: Contact Center and after-sales and development teams. This is another year when the operations area, through active automation and robotics activities, recorded an increased number of tasks completed. At the same time, it has systematically reduced the involvement of people handling processes manually.
By combining the competences of the two areas (operations and Contact Center), we were able to build a state-of-the-art, remotely operated middle office process for handling cases after the death of our customers. Owing to the extensive cooperation between the employees of operations, the Contact Center and the branch network, the current handling of heirs contacting the Bank has been simplified and allows the task to be completed during a single contact.
In less than a month, the Bank designed and implemented a process for the Safe 2% Loan which has been very popular among customers. The process was largely robotised and automated, and for cases that required manual handling, the Bank ensured that it was executed with high efficiency and quality, so that customers received funds in a very short time.
The operations area continued to handle the statutory credit holiday process, which was largely automated. Only cases that required additional clarification were referred to manual handling.
In order to meet the expectations of our customers, the operations area implemented telephone handling of cases reported that can be resolved in a single contact, without having to accept a notification and wait for a resolution. As a result, customers receive assistance and a solution already during or immediately after the call, and the Bank does not engage additional staff to clarify simple requests.
In response to the needs reported by customers and in fulfilment of the obligation imposed by the legislator, the Bank introduced the operational handling of the housing account with the BGK subsidy mechanism. The process has been largely robotised. Only complicated cases that require additional clarification are referred to manual handling.
In addition, the process of handling certificates issued at the request of customers has been largely robotised. At present, the majority of cases concerning loan and deposit products are handled automatically, which has significantly reduced the waiting time for documents to be issued.
The operations area has started to redesign the enforcement seizure process. As a result of the changes, customers receive faster responses to enquiries regarding seizures. A number of improvements have been introduced affecting the timeliness of service, which is important for both customers and enforcement authorities.
In 2023, the Bank implemented products dedicated specifically to farmers, such as a loan with subsidies from the Agency for the Restructuring and Modernisation of Agriculture and an agricultural guarantee, into its operational service. As in other areas, a significant proportion of these processes have been robotised.
The OCR mechanism was implemented in the process of registering mail addressed to the Bank, improving the efficiency of this process.
The total number of tasks completed by robots by the end of 2023 exceeded 256.3 million, with 77.3 million in 2023 alone.
The Group entities, in particular PKO Bank Polski S.A., PKO Bank Hipoteczny S.A. and PKO Leasing S.A., have been actively using the opportunities to issue financial instruments on the debt markets, both in Poland and abroad, for many years.
The Bank’s Group acquires funds from foreign financial markets, among other things by obtaining loans from international financial institutions (including the Development Bank of the Council of Europe and the European Investment Bank) which allows it to present a preferential offer to SMEs.
KREDOBANK S.A., as a Ukrainian company, additionally obtains funding from special credit programmes from the Enterprise Development Fund and grants from the Deutsche Sparkassenstiftung für internationale Kooperation (DSIK) for SME clients using investment loans.
The Bank’s Group also participates in portfolio guarantee programmes (including of the European Investment Fund). In 2023, guarantees were offered under the COSME programme.
For detailed information on securities issues and loans received in the context of international cooperation, see Note 38 “Financing received” to the financial statements of the Bank’s Group for 2023.
The Bank's Group remains a leader in the Polish market in providing services to banking financial institutions. Through an extensive and effective network of correspondent banking relationships, it ensures the Bank's smooth operation in foreign markets, despite the challenges and restrictions stemming from the war in Ukraine.
The Bank’s Group is systematically increasing the portfolio of serviced foreign corporate and financial customers and expanding the range of available products. The Bank focuses mainly on acquiring customers that are daughter companies of leading foreign entities from the area of the European Union, and at the same time expands competences which allow building long-term relations with customers from other regions of the world, including particularly Asia.
The insurance companies from the Bank’s Group – PKO Życie Towarzystwo Ubezpieczeń S.A. and PKO Towarzystwo Ubezpieczeń S.A. – cooperate with reinsurers on the international market.
PKO Bank Polski S.A.'s subsidiaries, with their registered office in Poland, offer mortgage loans and provide services mainly in respect of leases, factoring, investment funds, pension funds and insurance, car fleet management services, transfer agent services, provide technological solutions and outsource IT professionals.
Characteristics of the operations of selected PKO Bank Polski S.A. Group companies
The results of operations presented in the description are derived from the financial statements of the individual companies prepared according to the International Financial Reporting Standards, and in respect of insurance companies, according to Polish Accounting Standards. Data available as at the date of the financial statements.
PKO Bank Hipoteczny SA is the leader on the Polish mortgage bank market in terms of total assets and the portfolio of mortgage loans. The company is also the largest issuer of mortgage covered bonds in Poland.
In 2023, PKO Bank Hipoteczny S.A. reported a net profit of PLN 165.8 million (vs. a net loss of PLN 405.8 million in 2022, which was related to the recognition of a loss on loan holidays introduced by the Act of 7 July 2022 on crowdfunding for business ventures and borrower assistance).
PKO Bank Hipoteczny S.A. specializes in granting mortgage housing loans to retail customers and purchases receivables in respect of such loans from PKO Bank Polski S.A. The Company issues mortgage covered bonds (in PLN and in foreign currencies), which constitute one of the main sources of long-term financing of loans secured with real estate in the PKO Bank Polski S.A. Group.
As at 31 December 2023 the total gross value of the PKO Bank Hipoteczny S.A. loan portfolio amounted to PLN 18.0 billion, including PLN 8.1 billion of mortgage housing loans purchased from PKO Bank Polski S.A.
In 2023, PKO Bank Hipoteczny S.A. carried out three mortgage covered bond issues with a total nominal value of PLN 1.75 billion. The total nominal value of mortgage covered bonds issued by the company and outstanding as at the end of 2023 was PLN 10.4 billion. This included green mortgage bonds worth PLN 2.7 billion.
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PKO Towarzystwo Funduszy Inwestycyjnych S.A.
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The core business of the Company is creating and managing investment funds. The Company also offers specialized investment programs and manages Employee Pension Programmes (PPE) and Employee Capital Plans (PPK).
In 2023 the Company earned net profit of PLN 237.7 million (vs. PLN 189.3 million in 2022).
The value of the funds’ net assets under the Company’s management amounted to PLN 40.8 billion as the end of 2023, which represents a 27.7% increase in assets.
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Value of assets of managed investment funds (in PLN billion)
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PKO TFI S.A. ranks first with 20.06% share of funds' assets under management excluding selected investors and second in terms of net assets value with 12.74% share of the total investment fund market*.
As at 31 December 2023, PKO TFI S.A. managed 60 investment funds and sub-funds.
At the end of 2023 PKO TFI S.A. was the Polish market leader in Employee Capital Plans in terms of the assets under management with a 31.3% market share.
* Source: Analizy Online, January 2024.
The Company manages PKO BP Bankowy Otwarty Fundusz Emerytalny and PKO Dobrowolny Fundusz Emerytalny, which offer the Individual Retirement Account (IKE) and Individual Retirement Security Account (IKZE).
In 2023, the Company earned net profit of PLN 24.1 million (vs. a PLN 24.8 million in 2022).
Results of operations of the Open Pension Fund (OFE)*:
As at the end of 2023, the net asset value of PKO BP Bankowy OFE managed by PKO BP BANKOWY PTE S.A. amounted to PLN 9.5 billion, which is an increase by more than PLN 2.4 billion compared with the end of 2022. The increase reflects a significant improvement in the financial markets.
PKO Bankowy OFE had 850.0 thousand participants as at the end of December 2023 (864.1 thousand as at the end of 2022). PKO BP Bankowy OFE ranks 7th on the pension fund market in terms of net asset value and in terms of the number of participants*.
* Source: www.knf.gov.pl
The PKO Leasing S.A. Group (i.e. PKO Leasing S.A. and its subsidiaries) offers financial services in respect of lease and factoring and provides insurance agent, fleet management and vehicle rental services.
The PKO Leasing S.A. Group earned a net profit of PLN 353.4 million in 2023. The net profit for the year 2022 was PLN 347.2 million.
PKO Leasing S.A. and its subsidiaries offer leases and loans. Customers may use these services to finance their fixed assets, such as passenger cars, delivery vehicles and trucks, machines, equipment, technological lines, medical equipment, computer hardware and software.
As at 31 December 2023, the carrying value of amounts due from customers in respect of leases and loans (both matured and not yet matured) and the carrying value of fixed assets under operating leases in the PKO Leasing S.A. Group totalled PLN 24.7 billion.
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Amounts due from customers in respect of leases and advances, and fixed assets under operating leases (in PLN billion)
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The PKO Leasing S.A. Group has been the leader of the Polish lease and rental market for several years. It pursues the “Cyfrowa Era Leasingu” (Digital Era for Leases) strategy, which stipulates stronger use of digital tools and development of operations in new market segments.
PKO Faktoring S.A. provides domestic and export factoring services with and without recourse, reverse factoring and a factoring programme service for suppliers.
In 2023, the carrying amount of amounts due from customers was PLN 5.39 billion. As at the end of 2022, it was PLN 3.60 billion.
In 2023, the value of factoring turnover was PLN 31.02 billion (in 2022: PLN 31.4 billion).
As at 31 December 2023, the Company ranked 5th (in terms of turnover) among the factoring companies associated in the Polish Factors’ Association, with a market share of 8.7%.
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PKO Życie Towarzystwo Ubezpieczeń S.A. Group
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The PKO Życie Towarzystwo Ubezpieczeń S.A. Group earned a net profit of PLN 82.9 million in 2023 (in 2022, the Group’s net profit was PLN 54.9 million).
PKO Życie Towarzystwo Ubezpieczeń S.A.’s business activities comprise life insurance (Section I insurance). The Company offers both standalone products and products supplementing the banking products offered by PKO Bank Polski S.A.
Gross written premiums under insurance contracts concluded by the Company in 2023 amounted to PLN 553 million. As at the end of 2023, the Company insured 1,054 thousand people (1,026 thousand people in 2022).
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Gross written premium (in PLN million)
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PKO Towarzystwo Ubezpieczeń S.A.
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In 2023, the Company earned net profit of PLN 107.0 million (vs. PLN 87.0 million in 2022).
PKO Towarzystwo Ubezpieczeń S.A.’s business comprises other non-life insurance (Section II insurance). The Company focuses on providing insurance against loss of income, accident and sickness, as well as property insurance for borrowers and mortgage borrowers. The Company also offers motor insurance and state-of-the-art residential and home insurance, PKO Dom.
The company reports a high NPS of 60.39 for the claim handling process.
Gross written premiums under insurance contracts concluded by the Company in 2023 amounted to PLN 678 million. As at the end of 2023, the Company insured 1,474 thousand people (1,413 thousand people in 2022).
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Gross written premium (in PLN million)
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In 2023 the Company earned net profit of PLN 27.8 million (vs. PLN 29.6 million in 2022).
PKO BP Finat sp. z o.o. provides technological and operational services to support the core activities of PKO Bank Polski S.A. Group companies.
PKO Finat sp. z o.o. also provides comprehensive services to companies outside the Bank's Capital Group, mainly from the financial sector, performing activities that support their core business, including PPK record-keeping services, transfer agent services, ancillary services for closed-end fund and company accounting for investment funds, handling group insurance dedicated to products offered by PKO Bank Polski S.A. It also specialises in competence outsourcing of IT specialists, project teams and IT processes, including production processes for IT systems and applications.
The company also provides intermediation services in the sale of non-financial products to the Bank's customers. It provides a wide range of services available through electronic banking, including phone top-ups, gift cards to platforms with entertainment and other services, toll payments, e-Accounting for entrepreneurs, BIK products, insurance, tickets for Ekstraklasa matches, to name a few.
In 2023, PKO Finat sp. z o.o. launched the VAS API Integration Platform serving as an interface between the Bank and digital service providers for the handling of procurement processes, settlements and recurring payments.
In 2023, the PKO Bank Polski S.A. Group received many prizes and awards, the most important of which are listed below.
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Awards receives by PKO Bank Polski S.A.
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BEST DIGITAL LOAN FOR SMEs
(November 2023)
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PKO Bank Polski S.A. was ranked 1st in the CEE 23 SME Banking Awards in the "digital lending for SMEs" category and 3rd in the "online banking for SMEs" category.
The CEE SME Banking Awards competition has been organised by the SME Banking Club, an association of bankers, for several years. As part of this initiative, banks and fintechs are awarded for the best digital solutions for SME customers in the CEE region.
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ECO-FRIENDLY CARDS
(November 2023)
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PKO Bank Polski S.A.'s payment cards made from recycled material were awarded in the Green Face of Technology category at the Future of Payments conference, held by the Cashless Poland Foundation.
The Bank has been issuing payment cards to its customers made of Ocean Plastic® from the Parley for the Oceans organisation since mid-2023. PKO Bank Polski S.A. is the first bank in Poland to join the small group of issuers of payment cards made of this material.
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DIGITAL EXCELLENCE AWARDS
(November 2023)
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PKO Bank Polski S.A. has won the "Community Award" for PKO Pay Later.
This is a deferred payment service. PKO Bank Polski S.A. was the first bank in Poland and one of the few in the world to make it independently available to its customers in November 2022. Within a year, the service was activated by more than 150 thousand customers, who used it to pay for purchases totalling PLN 198 million.
The Digital Excellence Awards is an initiative launched by DE Group, addressed to organisations that want to showcase their transformational successes.
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TOP BRAND
(November 2023)
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PKO Bank Polski S.A. has become the winner of the "banks" category in the 16th edition of the ranking.
The media power of the Bank's brand was estimated at more than 8.4 million points. This is the second value of the brand's media power in a general ranking of 500 brands from 50 industries present on the Polish market.
Top Brand is the largest media survey in Poland carried out by Press magazine and PSMM Monitoring & More.
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GLOBAL RETAIL BANKING INNOVATION AWARDS
(October 2023)
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PKO Bank Polski S.A. was ranked 1st in the "Outstanding Customer Relations & Brand Engagement Initiative" category for activities related to building its presence in the Metaverse. In justifying the award, the organisers noted the innovative approach in organising the #PKOBankTalentów Virtual Job Fair and the marketing activities building the engagement of metaverse platform users around the Bank's brand.
The Global Retail Banking Innovation Awards competition is hosted by The Digital Banker. In this year's edition, the jury assessed 530 projects submitted by 190 banks from around the world.
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THE BEST ANNUAL REPORT
(October 2023)
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PKO Bank Polski S.A. won 3 awards in the competition. It was awarded the special award “The Best of The Best” for the another consecutive year. It also received an award for the best remuneration report. The third award was given for a consistently high level of financial reporting.
The Bank's Annual Report was appreciated mainly for its presentation, its approach to the various elements of the report and the completeness of the regulatory disclosures.
The competition has been organised by the Institute of Accounting and Taxation for 18 years.
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HYPERAUTOMATION CHAMPIONS 2023
(June 2023)
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PKO Bank Polski S.A. received the jury's special award "Hyper Automation Champion" in the 2nd edition of the competition. The bank was recognised for its use of Robotic Process Automation technology in the implementation of loan holidays.
The main objective of the competition is to reward the most effective hyper-automation implementations. Their effectiveness is measured by comparing the business objectives set before the implementation with the results obtained afterwards.
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FINNOSCORE LEADER
(May 2023)
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PKO Bank Polski S.A. was ranked 1st in the Finnoscore 2023 ranking and became the European Digital Banking Leader.
The bank was rated highest for its online banking, mobile app, attractiveness to potential customers and remote onboarding. This distinction confirms the Bank's strong position as a technology leader, not only in the Polish banking sector, but also compared to the world's leading banks.
The ranking is based on publicly available information and objectively assesses the digital maturity and innovation experience of banks. 300 criteria were examined in 12 selected segments. 230 banks from 26 countries in Europe and North America were analysed.
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GOLDEN BANKER
(May 2023)
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PKO Bank Polski S.A. won in the mortgage loan product category. The bank stood out from the competition with, among other things, an attractive mortgage price offering featuring a full set of options for customers choosing different interest rates. In the child's account category, PKO Bank Polski S.A. was ranked 2nd. The organiser recognised the Bank for its attractive savings offering for the youngest.
It was the fourteenth edition of the ranking organised by "Bankier.pl" and "Puls Biznesu".
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BROKER OF THE YEAR
(April 2023)
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The WSE granted the Broker of the Year prize to the Brokerage Office – Biuro Maklerskie PKO Banku Polskiego. The award was presented for the highest share of a local stock exchange member in session trading in shares from the Main Market and NewConnect and for the highest share of an exchange member in session trading in treasury and non-treasury bonds on the regulated market and the WSE ATS (Alternative Trading System of the WSE). This is the sixth time the Brokerage Office has received this award.
|
|
MOBILE TRENDS AWARDS
(March 2023)
|
In the 12th edition of the IKO competition, PKO Bank Polski S.A.'s mobile app won, for the second year in a row, the top prize in the internet user vote, winning over apps with significantly more users.
IKO is the most popular mobile banking app in Poland and one of the best-rated banking apps in the world. It is appreciated, among other things, for its innovation, practical features and user-friendly solutions.
The Mobile Trends Awards is a prestigious industry award. It is granted to companies that make successful use of mobile technologies.
|
|
TOP EMPLOYER 2023
(January 2023)
|
PKO Bank Polski S.A. was awarded the prestigious Top Employer title and certificate for the 4th time. It confirms a responsible personnel strategy, a high-quality working environment and consistency in shaping the corporate culture.
This year's survey results demonstrate that the solutions implemented by the Bank in the areas of recruitment, onboarding, ethics and the digitalisation of HR processes, among others, rank it at the forefront of the labour market. The Bank's rating regularly improves, which confirms the systematic development and implementation of improved personnel management strategies.
The certification programme run by the Top Employers Institute is one of the most demanding and the Top Employer title one of the most prestigious in the area of HR management.
|
|
Awards received by the Bank’s subsidiaries
|
|
DIAMONDS OF INNOVATION
(November 2023)
|
PKO Leasing S.A.'s offering available on the Bank's iPKO website was recognised in the Diamonds of Innovation competition in the category "Innovation of the Year: Finance".
Customers of PKO Bank Polski S.A., running a sole proprietorship, can sign a leasing agreement for the purchase of a car on iPKO website, online, without leaving the office and without unnecessary formalities.
Diamonds of Innovation is a competition held by the Executive Club, which rewards business leaders for innovative activities that define the directions of industry development.
|
|
LEADER OF EU FINANCIAL INSTRUMENTS IN POLAND
(September 2023)
|
PKO Leasing S.A. was awarded twice by the National Contact Point for EU Financial Instruments. The company was honoured in the categories 'Best National EU Financial Intermediary' and 'Best Leasing Company'.
PKO Leasing S.A. has almost 20 years of experience in cooperating with EU institutions in the field of raising finance. The award confirms the commitment of the largest leasing company in Poland to offering a variety of solutions to customers to facilitate access to funding.
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Principles of Risk Management
Characteristics of the credit policy of the PKO Bank Polski S.A.
Risk management is one of the key internal processes, both in PKO Bank Polski SA, and in other entities of the PKO Bank Polski SA Group. Risk management is aimed at ensuring the profitability of business activities while ensuring control over the risk level and maintaining it within the system of limits and risk tolerance limits adopted by the Bank and the Group in the changing macroeconomic and legal environment.
The primary objective is to ensure adequate management of all types of risk related to its business. As part of the risk management system, the Bank’s Group identifies, measures and assesses, controls, forecasts, monitors and reports risk, and performs management actions.
The process of risk management in the Bank’s Group consists of the following stages:
Risk identification:
Risk identification consists of recognizing the existing and potential sources of risk and estimating the significance of its potential impact on the Bank’s and the Bank Group’s financial situation. As part of risk identification, the Bank and the Bank’s Group entities identify the risks considered to be material in the Bank’s or the Group’s operations.
Risk measurement and assessment:
Risk measurement and assessment are aimed at determining the scale of threats connected with the risks arising. Risk measurement covers determining the risk assessment measures adequate to the type and significance of the risk, and data availability. Quantitative and qualitative risk measurement results are the basis for the risk assessment aimed at identifying the scale or scope of risk.
As part of risk measurement, the Bank’s Group carries out:
• specific stress tests which are conducted separately for individual risk types and are used to assess sensitivity of a given risk to unfavourable market conditions,
• comprehensive stress tests conducted jointly for the concentration risk and risks regarded as material, used to determine sensitivity of the capital adequacy measures and Bank’s results to the occurrence of a negative scenario of changes in the environment and the functioning of the Bank’s Group.
The stress-tests are conducted by the Bank’s Group based on assumptions which ensure a sound assessment of the risk, in particular taking into account the recommendations of the Polish Financial Supervision Authority.
Risk control:
Risk control involves the determination of risk control mechanisms adjusted to the scale and complexity of the Group’s activities, especially in the form of strategic tolerance limits for the individual types of risk. Strategic risk tolerance limits are subject to regular monitoring, and if they are exceeded, the Bank’s Group takes management actions.
Risk forecasting and monitoring:
Risk forecasting involves foreseeing future risk levels, taking into account the assumed business development projections, and internal and external events. Risk level forecasts are assessed by the Bank and the Bank’s Group (so-called “reverse stress tests”) in order to verify their accuracy.
Risk monitoring involves observing deviations from the forecasts or the adopted benchmarks (e.g. limits, thresholds, plans, prior period measurements, recommendations and instructions issued by external supervisory and regulatory authority). Risk monitoring and forecasting frequency is adequate to the materiality and variability of specific risks.
Risk reporting:
Risk reporting includes informing about the results of the risk identification, measurement, assessment and forecasting, causes of changes in the risks, actions taken and recommended. The scope, frequency and form of the reporting are adjusted by the Bank to the managerial level of the recipients. If potential liquidity problems arise, the Supervisory Board is immediately informed about significant changes in the risk level, and in particular, about threats and remedial actions taken, and of their impact on the Bank’s liquidity level.
Management actions:
Management actions consist of determining the desired risk level favourable for building the structure of assets and liabilities. Management actions may result, in particular, in:
• acceptance of the risk – determining the acceptable risk level, taking into account business needs and developing management actions in the event that the level is exceeded;
• reduction of the risk – mitigation of the impact of the risk factors or effects of its materialization (e.g. by reducing or diversifying the risk exposure, determining limits, utilizing collaterals);
• transfer of the risk – transferring responsibility for covering potential losses (e.g. by transferring the risk to another entity with the use of legal instruments, such as insurance contracts, security services agreements for a building, accepting guarantees);
• risk avoidance – resignation from the risk-generating activity or elimination of the probability of materialization of the risk factor, including in particular determination of zero tolerance to risk.
The Bank supervises the functioning of individual entities in the Bank’s Group. The Bank monitors their risk management systems and supports their development. In addition, the Bank takes into account the level of risk in particular Group companies for the purpose of the risk monitoring and reporting system at the Bank’s Group level. Risk management in the Bank takes place in all of the organizational units of the Bank.
The organization of risk management in PKO Bank Polski S.A. is presented in the diagram below:
The Supervisory Board supervises and evaluates the risk management process, in particular, on the basis of regular reports on the risk, taking into account the adequacy and effectiveness of the risk management system and information about the implementation of the risk management strategy, also the level of limits which limit the risk and conclusion from stress tests, and if necessary, orders the verification of the process.
The Supervisory Board is supported by the following committees: the Nominations and Remuneration Committee, the Risk Committee and the Audit Committee.
In respect of risk management, the Management Board the Bank is responsible for strategic risk management, including supervising and monitoring actions taken by the Bank in respect of risk management. The Management Board makes major decisions affecting the risk profile of the Bank and adopts internal regulations concerning risk management. It ensures operation of the risk management system, monitors and assesses its functioning, and transfers the respective information to the Supervisory Board. In its risk management activities, the Management Board is supported by the following committees:
• the Risk Committee;
• Asset and Liability Management Committee (KZAP);
• Bank’s Credit Committee (KKB);
• Operational Risk Committee (KRO);
• Sustainable Development Committee (KZR).
Risk management at the Bank’s Group is based, in particular, on the following principles:
• the Bank’s Group manages all identified types of risk;
• the risk management process is appropriate from the perspective of the scale of operations and materiality, scale and complexity of a given risk, and adjusted on an on-going basis to take account of the new risks and their sources;
• risk management methods (especially models and their assumptions) and risk management measurement or assessment systems are tailored to the scale and complexity of individual risks, the current and planned operations of the Bank’s Group and its operating environment, and are periodically verified and validated;
• organisational independence of the risk management area from business operations is maintained,
• risk management is integrated into the planning and controlling systems;
• the level of risk is monitored and controlled on an on-going basis;
• the risk management process supports the implementation of the Bank’s strategy in compliance with the Risk Management Strategy, in particular with respect to the level of risk tolerance.
The Bank assesses the materiality of all the identified risks on a regular basis, at least annually. Some of them have a material impact on the profitability and capital necessary to cover the exposure. Internal capital is assessed for risks that are regarded as material. All risks classified as material for PKO Bank Polski S.A. are also material for the Bank’s Group.
In 2023, the catalogue of risk types regarded as material was not extended.
Below is a list of all risks regarded as material in the Bank.
• credit risk – the risk of incurring losses due to the Customer’s default in payments to the Bank’s Group or as a risk of a decrease in the economic value of amounts due to the Bank’s Group when the Customer’s ability to repay amounts due to the Bank deteriorates;
• currency risk – the risk of incurring losses in connection with exchange rate fluctuations. The risk is generated by maintaining open positions in various foreign currencies;
• interest rate risk – the risk of incurring losses on the Bank’s Group’s statement of financial position and off-balance sheet items sensitive to interest rate changes, in connection with changes in interest rates on the market;
• liquidity risk – the risk of the inability to regularly settle liabilities due to a lack of liquid assets; liquidity risk comprises financing risk;
• operational risk – the risk of losses being incurred due to the failure or unreliability of the internal processes, people and systems or due to external events. Operational risk excludes reputation and business risks, and includes legal and cyber security risks;
– legal risk – the risk of losses being incurred due to a lack of knowledge and understanding, failure to comply with legal norms and accounting standards, inability to enforce contractual provisions, unfavourable interpretations or rulings issued by courts or public administration bodies,
– cyber security risk – the degree of exposure to potential negative cyber security risk factors related to telecommunication technologies which may lead to a financial loss for the organization by violating the availability, integrity, confidentiality or accountability of the information processed in the Bank’s IT system resources (SIB);
• risk of foreign currency mortgage loans for households – the risk of incurring losses due to the customer’s default in payments to the Bank related to a foreign currency mortgage loan;
• business (strategic) risk – the risk of failing to achieve the assumed financial targets, including incurring losses, which results from adverse changes in the business environment, making bad decisions, incorrectly implementing the decisions made, or not taking appropriate actions in response to changes in the business environment;
• macroeconomic risk – the risk of deterioration in the Bank’s Group financial situation as a result of an adverse change in macroeconomic conditions; macroeconomic risk includes geopolitical risk, understood as the macroeconomic effects taking into account the negative effects of the geopolitical environment on the economy and financial markets;
• model risk – the risk of incurring losses resulting from incorrect business decisions made based on the models in place.
The Bank pursues the ESG risk integration plan with the risk management system. The Bank manages ESG risk as part of its management of other risks as – ESG risk is not a separate risk but a cross-cutting risk affecting individual risks, in particular credit risk.
ESG risk was defined by the Bank as the risk of negative financial consequences for the Bank of the current or future impact of ESG risk factors on customers and counterparties or the Bank’s statement of financial position items.
Significant activities of the PKO Bank Polski S.A. Group in 2023.
PKO Bank Polski S.A. has been monitoring the situation of its customers on an ongoing basis and adjusting its credit policy with a view to securing a good quality loan portfolio. As part of the measurement of credit exposures, the Bank specifically took into account information on customers' economic ties with counterparties in Ukraine, Belarus and Russia. The Bank Group recognized an allowance for its portfolio of loans granted in Ukraine.
In the Bank’s Group (Polish entities), the Bank applied guidelines for the financing of and providing banking services to:
• customers conducting business whose business model is based on the benefits of active operation in the markets of Russia and Belarus or through significant links (e.g. economic, personal),
• customers on whom sanctions have been or can be imposed in connection with Russia’s war in Ukraine.
In terms of interest rate risk, the series of interest rate cuts initiated in the third quarter of 2023 reduced the reference rate to 5.75% at the end of 2023, which translated into an increase in valuations in the portfolio of debt instruments and derivatives that hedge the volatility of interest income. At the same time, the customers’ interest in mortgage loans temporarily based on fixed interest rates, in particular the "Safe 2% Loan'', continues, affecting the interest income sensitivity measures of the Bank.
The Bank's Group has maintained a safe level of liquidity, allowing for a quick and effective response to potential threats. Supervisory and internal measures of liquidity risk were maintained significantly above accepted warning thresholds. In 2023, the PKO Bank Polski S.A. structured its sources of funding accordingly by adjusting its deposit offering (in particular deposit interest rates) to meet current needs, while at the same time renewing long-term securities and covered bonds issued maturing in 2023 in the amount of approximately PLN 4.5 billion (including EUR 0.75 billion and PLN 1.25 billion).
KREDOBANK S.A.'s liquidity, despite the ongoing conflict in Ukraine, remained stable and secure; the company did not experience a decline in liquidity measures or significant deposit outflows; KREDOBANK S.A. is classified by the NBU as a systemic bank of Ukraine.
At the same time, in connection with the war in Ukraine, the Bank has had a Support Group, chaired by the Head of Crisis Staff, in place since 2022 to, among other things, prevent the disruption of the Bank's critical processes, exchange information within the Bank's Group and coordinate the aid provided. The Bank takes actions to mitigate the threats associated with the war in Ukraine on an ongoing basis, in particular with respect to ensuring access to the Bank’s systems and cyber security.
A detailed description of material risks management principles, including risk mitigation techniques, protection measures taken and hedge accounting policies is provided in the Bank Group’s financial statements for 2023 (in the part describing risk management and in Note 33 “Hedge accounting and other derivative instruments”), and in the Capital Adequacy Report and other information reportable by the PKO Bank Polski S.A. Group as at 31 December 2023.
The credit policy of the Bank and the Bank’s Group consists of a set of principles and guidelines contained in credit regulations and procedures, which together form the credit risk management process.
The Bank’s credit risk management takes into account external factors, including compliance with external regulations and recommendations of the supervision and inspection authority, as well as internal factors, including in particular the level of strategic limits and credit risk parameters.
The priority of the risk management activities is the balanced relation of risk and the assumed profitability level, within the specified risk appetite limits. Comprehensive risk measurement is ensured by using a wide range of qualitative and quantitative methods, which are supported by appropriate IT systems and analytical tools.
The credit risk management model is adjusted to the current business activity and market conditions in the individual customer segments.
Credit risk assessment of exposures is separated from the sales function thanks to an appropriate organizational structure, independence in developing and validating tools supporting an assessment of credit risk and independence of decisions approving departures from the recommendations of these tools.
The financing terms offered to the customer depend on the assessment of credit risk level of the customer. The risk assessment takes into account the sector policies described in Chapter 13.7.6B.
In order to mitigate the level of credit risk resulting from interest rate increases and inflation, PKO Bank Polski S.A. and PKO Bank Hipoteczny S.A. introduced changes to the parameters used in the assessment of the creditworthiness of individual borrowers applying for housing loans (in accordance with Recommendation S and the position of the Office of the PFSA of 7 March 2022 communicated to banks). As part of these changes, the minimum value of the interest rate buffer was increased to 5 p.p., the minimum subsistence costs were increased (taking into account the inflation rate), and the maximum acceptable DStI (debt service to income) values were changed.
According to the rating of corporate customers, companies and enterprises, the Bank each time assesses and classifies the impact of environmental, social and corporate governance factors (ESG) on the customer’s creditworthiness and identifies leveraged credit transactions.
The Bank’s subsidiaries with a material level of credit risk manage credit risk individually. Their credit risk assessment and measurement methods are adapted to those applied at PKO Bank Polski S.A. They take into account the specific nature of the entity’s activities.
Principles for remunerating members of the Management Board of PKO Bank Polski S.A.
Variable remuneration components for Members of the Management Board and key managers who have a material impact on the Bank’s risk profile
Information on non-financial remuneration components due to individual Members of the Management Board and key managers
Principles for remunerating members of the Supervisory Board of PKO Bank Polski S.A.
Agreements concluded between the Bank and managers
Liabilities due to pensions for former supervisors and managers
[GRI 2-19] Compensation Plan for Members of the Bank’s Management Board is regulated by:
a) Remuneration Policy for members of the Supervisory Board and the Management Board of the Bank, approved by the resolution No. 35/2020 of the General Shareholders’ Meeting of the Bank dated 26 August 2020;
b) Remuneration Policy for employees of the Bank and the PKO Bank Polski S.A. Group, approved by resolution No 195/2022 of the Bank’s Supervisory Board dated 30 December 2022;
c) Principles of employment and remuneration of members of the Bank's Management Board, approved by Resolution No 196/2022 of the Bank's Supervisory Board of 30 December 2022.
In accordance with these Principles, Members of the Bank’s Management Board are entitled to:
• fixed remuneration in the amount specified in the Act of 9 June 2016 on the terms of setting the remuneration of managers of certain companies, and as at 31 December 2023 amounting to, with respect to the President of the Management Board: 15 (fifteen) fold, and with respect to the other Members of the Bank’s Management Board: 14.5 (fourteen and a half) fold of the average monthly remuneration in the corporate sector, without profit sharing schemes in the fourth quarter of the preceding year, as announced by the President of the Central Statistical Office,
• variable remuneration – additional remuneration awarded and paid after the performance appraisal period, in particular: bonuses, awards for special professional achievements, severance pay (excluding fixed remuneration and benefits awarded based on the applicable legal regulations).
Benefits for members of the management board of PKO Bank Polski S.A. received and due from PKO Bank Polski S.A.
Table 14. Employee benefits for Members of the Management Board of the Bank paid in 2023 by PKO Bank Polski S.A. (in PLN thousand)
|
|
Fixed remuneration paid in 2023
|
Varialble remuneration
for 2018-2023* paid in 2023
|
Other benefits**
|
Total remuneration paid and benefits provided in 2023
|
|
Benefits paid in cash
|
Share-based payments settled in cash
|
|
Dariusz Szwed
|
879
|
-
|
-
|
4
|
883
|
|
Maciej Brzozowski
|
1,201
|
236
|
-
|
4
|
1,441
|
|
Marcin Eckert
|
1,201
|
303
|
90
|
4
|
1,598
|
|
Paweł Gruza
|
1,201
|
127
|
-
|
4
|
1,332
|
|
Wojciech Iwanicki
|
1,201
|
293
|
37
|
57
|
1,588
|
|
Andrzej Kopyrski
|
1,201
|
-
|
-
|
25
|
1,226
|
|
Artur Kurcweil
|
1,201
|
295
|
50
|
58
|
1,604
|
|
Piotr Mazur
|
1,201
|
430
|
396
|
75
|
2,102
|
|
|
|
|
|
|
|
|
Maks Kraczkowski
|
336
|
646
|
366
|
645
|
1,993
|
|
Mieczysław Król
|
336
|
657
|
378
|
650
|
2,021
|
|
Management Board of the Bank
|
9,960
|
2,987
|
1,317
|
1,524
|
15,788
|
|
Members of the Management Board,
who ceased to perform their functions
in previous years
|
-
|
1,610
|
2,254
|
945
|
4,809
|
|
Total
|
9,960
|
4,597
|
3,570
|
2,470
|
20,597
|
* Severance payments awarded and paid in 2023 were included in variable remuneration for 2023.
** Contributions to the Employee Pension Programme (EPP), compensation for abiding by the non-competition clause and income from private use of a company car - in 2023
|
|
Fixed remuneration paid in 2022
|
Variable remuneration
for 2017-2021 paid in 2022
|
Other benefits *
|
Total remuneration paid and benefits provided in 2022
|
|
Benefits paid in cash
|
Share-based payments settled in cash
|
|
Paweł Gruza
|
425
|
-
|
-
|
-
|
425
|
|
Maciej Brzozowski
|
832
|
-
|
-
|
-
|
832
|
|
Marcin Eckert
|
1,074
|
131
|
-
|
-
|
1,205
|
|
Wojciech Iwanicki
|
1,074
|
54
|
-
|
19
|
1,147
|
|
Maks Kraczkowski
|
1,074
|
354
|
563
|
70
|
2,061
|
|
Mieczysław Król
|
1,074
|
366
|
613
|
72
|
2,125
|
|
Artur Kurcweil
|
1,074
|
72
|
-
|
31
|
1,177
|
|
Piotr Mazur
|
1,074
|
380
|
646
|
74
|
2,174
|
|
|
|
|
|
|
|
|
Iwona Duda
|
670
|
48
|
-
|
407
|
1,125
|
|
Bartosz Drabikowski
|
1,028
|
127
|
139
|
45
|
1,339
|
|
Management Board of the Bank
|
9,399
|
1,532
|
1,961
|
718
|
13,610
|
|
Members of the Management Board,
who ceased to perform their functions
in previous years
|
-
|
2,051
|
3,510
|
1,211
|
6,772
|
|
Total
|
9,399
|
3,583
|
5,471
|
1,929
|
20,382
|
…* Contributions to the Employee Pension Programme (PPE) and compensation for abiding by the non-competition clause.
Table 15. Benefits from PKO Bank Polski S.A. to members of the Bank's Management Board payable and potentially payable in subsequent years (in PLN thousand)
|
|
Variable remuneration payable as at 31.12.2023
- share-based payments settled in cash
|
Variable remuneration
granted for 2019-2023*,
approved and not approved for payment
|
Total amount of variable remuneration payable and potentially payable
|
|
Variable remuneration in cash
|
Amount of cash to be converted into a financial instrument
|
|
Dariusz Szwed
|
-
|
-
|
-
|
-
|
|
Maciej Brzozowski
|
-
|
180
|
416
|
596
|
|
Marcin Eckert
|
-
|
322
|
625
|
947
|
|
Paweł Gruza
|
-
|
85
|
212
|
297
|
|
Wojciech Iwanicki
|
-
|
281
|
573
|
854
|
|
Andrzej Kopyrski
|
-
|
-
|
-
|
-
|
|
Artur Kurcweil
|
-
|
291
|
585
|
876
|
|
Piotr Mazur
|
61
|
438
|
846
|
1,345
|
|
|
|
|
|
|
|
Maks Kraczkowski
|
44
|
486
|
818
|
1,348
|
|
Mieczysław Król
|
58
|
498
|
831
|
1,387
|
|
Management Board of the Bank
|
163
|
2,581
|
4,906
|
7,650
|
|
Members of the Management Board who ceased to perform their functions in previous years
|
355
|
1,467
|
2,613
|
4,435
|
|
Total
|
518
|
4,047
|
7,520
|
12,085
|
* Severance payments awarded in 2023, which will be paid in subsequent years, are included in the variable remuneration in the form of cash for 2023. As these severance payments were included in the variable remuneration awarded for 2023, their allocation to instrument and cash will be made when calculating the total variable remuneration for 2023.
Table 16. Remuneration of members of the Bank's Management Board received from related parties (in PLN ‘000)
|
|
2023
|
2022
|
|
Marcin Eckert*
|
62
|
-
|
* The figure presented relates to net remuneration for serving on the Supervisory Board of the associate of PKO Bank Polski S.A.
[GRI 2-19] PKO Bank Polski S.A. strives to ensure the validity of the rules for determining variable components of remuneration. This is performed in accordance with the requirements of CRD V and the Commission Delegated Regulation (EU) 2021/923 supplementing Directive 2013/36/EU of the European Parliament and of the Council with regard to regulatory technical standards setting out the criteria to define managerial responsibility, control functions, material business units and a significant impact on a material business unit’s risk profile, and setting out criteria for identifying staff members or categories of staff whose professional activities have an impact on the institution’s risk profile that is comparably as material as that of staff members or categories of staff referred to in Article 92(3) of that Directive.
Variable remuneration components are awarded primarily based on bonus targets set within the framework of the Management by Objectives (MbO) programme.
The purpose of the targets set is to guarantee that the risk related to the activities of the Bank is taken into account. Risk is reflected both by determining the appropriate risk-sensitive criteria for assessing the effectiveness of work, and reducing or withdrawing the variable remuneration component in the case of deteriorated financial results, loss or deterioration in other ratios.
Variable remuneration components for the particular assessment period (calendar year) are awarded after settling bonus targets, in accordance with the table below:
Table 17. Forms of variable remuneration
|
Amount of variable remuneration (gross)
|
Non-deferred variable remuneration
|
Deferred variable remuneration
|
|
50% cash / 50% phantom shares
|
50% cash / 50% phantom shares
|
|
Up to PLN 700,000 (inclusive)
|
60% of the basic variable remuneration
|
40% of the basic variable remuneration
|
|
– in the first year following the bonus period
|
– in equal instalments over the next years after the first year following the bonus period
|
|
Over PLN 700,000
|
PLN 420,000 plus 40% of the amount exceeding PLN 700,000
|
PLN 280,000 plus 60% of the amount exceeding PLN 700,000
|
|
The deferral period for which the phantom shares are awarded equals 5 years.
|
|
|
|
|
|
|
Each of the components of accrued variable remuneration may be reduced as a result of:
• breach of the obligations arising from the contract;
• lack of compliance with the legal regulations or Customer service standards;
• improper performance of professional duties;
• attitude towards other employees breaching social coexistence rules.
The bonus amount:
• for the Management Board Member (MBM) can be adjusted (decreased or increased) by a certain ratio, depending on the results achieved by the Bank, specified in the Bank’s Annual Note (a set of key management indicators specified for a given calendar year);
• for an MRT (Material Risk Taker), who is not a Member of the Management Board, it can be adjusted (increased) by a certain ratio, depending on the results achieved by the Bank, specified in the Bank’s Annual Note.
The Bank’s Supervisory Board or the Management Board respectively may apply a malus solution reducing the amount of the variable remuneration component due in subsequent settlement periods. This is possible in the case of:
• a significant deterioration in the Bank’s results;
• a significant adverse change in equity;
• MRT breaching the law or making serious errors;
• adjustment of the achievement and degree of achievement of the results or targets of MRT;
• deterioration in the performance of the areas supervised or managed by the aforementioned persons;
• granting the variable remuneration component based on incorrect or misleading information or MRT fraud.
The remuneration policy for members of the Bank's Supervisory Board and Management Board does not provide for an obligation to pay back awarded and already paid out variable remuneration. The policy empowers the Supervisory Board to adopt additional provisions, inter alia, regarding the Bank demanding the return of the variable remuneration (clawback). In 2023, no such demand occurred.
MRTs (except Members of the Bank’s Management Board) may benefit from health care services financed by the Bank and the social benefits fund. MRTs (including Members of the Bank’s Management Board) can avail themselves of PPEs.
In the case of severance pay related to dismissal (other than resulting from generally applicable laws), the amount reflects the performance assessment for the last three years of employment. The Bank’s internal regulations stipulate the maximum amount of severance pay.
A Member of the Management Board shall be entitled to severance pay subject to fulfilling the function of Member of the Bank’s Management Board for at least twelve months before termination of the aforementioned contract. An MRT can receive the severance pay subject to being employed as an MRT for at least twelve months before termination of the employment contract.
Members of the Management Board and certain MRTs are additionally subject to non-competition agreements. These agreements provide for payment of compensation equivalent of up to 100% of the basic salary arising from the contract for refraining from employment in a competitive firm after termination of employment with the Bank, for no more than six months.
The “Rules for Employment and Remuneration of Members of the Bank’s Management Board” also include provisions involving:
1. the application of the above Principles to a limited extent, as provided for in Article 9ca (1b) of the Banking Law;
2. determining the maximum ratio of the average total annual gross remuneration of the Bank's Management Board members to the average total annual gross remuneration of other employees of the Bank at 1:22;
3. implementing gender neutrality principles with regard to the compensation of members of the Bank's Management Board;
4. inclusion of environmental and social responsibility goals;
5. In May 2023 the Bank’s Management Board passed a resolution on disbursements of variable remuneration awarded to the Bank’s MRTs in 2023. In June 2023, the Bank's Supervisory Board passed a resolution on approving the amount of variable remuneration to be paid to the Members of the Bank’s Management Board. Its provisions were amended by a resolution of the Supervisory Board in July 2023, postponing the date of payment of remuneration from July 2023 to 3 November 2023. The resolutions of the Management Board and the Supervisory Board with respect to variable remuneration for 2020 maintained limits of the amounts payable in respect of the deferred portion of the remuneration of 21% due to the financial results achieved compared to the long-term development plans. In connection with the circumstances related to the COVID-19 epidemic, in particular the extraordinary business restrictions, and the possible economic consequences of the situation and their expected impact on the banking sector, in 2023 the change in proportion and date of payment of variable remuneration for the years 2018-2019 introduced in 2020 was upheld.
Table 18. Changes in the proportion and dates of payment of variable remuneration.
|
Description
|
Amount arising from internal regulations previously in force
|
Amount arising from extraordinary resolutions adopted in 2023, respectively:
|
|
Proportion between non-deferred and
deferred variable remuneration for 2019
|
Non-deferred 60%*
|
Non-deferred 40%*
|
|
Deferred 40%*
|
Deferred 60%
|
|
Proportion between variable remuneration
for 2019 in cash / in the form
of financial instruments
|
Cash 50%
|
Cash 40%
|
|
Financial instrument 50%
|
Financial instrument 60%
|
|
Date of payment of deferred variable
remuneration with reference to
outstanding instalments for the years 2018-2019
|
MBM
|
cash
|
MBM
|
cash
Financial instrument
|
MBM
|
cash
|
|
Financial instrument
|
2 January
|
Instrument
|
Financial instrument
|
|
MRT
|
cash
|
MRT
|
cash
Financial instrument
|
MRT
|
cash
|
|
Financial instrument
|
15 November
|
Instrument
|
Financial instrument
|
|
* In accordance with internal regulations, up to the amount of PLN 700,000 the proportion is 60% to 40%, and above this amount 40% to 60%.
|
|
|
|
|
|
|
|
|
|
|
Since 1 July 2017, the principles for employment and remuneration of Members of the Bank’s Management Board have been adapted to the provisions of the Act of 9 June 2016 on the terms of setting the remuneration of managers of certain companies (Journal of Laws of 2016, item 1202 as amended). Following the change, Members of the Management Board are not entitled to non-financial remuneration components.
[GRI 2-19] Monthly remuneration for the members of the Bank’s Supervisory Board is determined by the Remuneration Policy for Members of the Bank’s Supervisory Board and Management Board. Monthly remuneration of members of the Supervisory Board is determined as a product of the base salary referred to in Article 1(3)(11) of the Act of 9 June 2016 on the terms of setting the remuneration of managers of certain companies and the following multiplier:
• for the Chairman of the Supervisory Board – 2.75;
• for the Deputy Chairman of the Supervisory Board – 2.5
• for the Secretary of the Supervisory Board – 2.25;
• for the remaining Members of the Supervisory Board – 2.
The remuneration shall be increased by 10% if a Member of the Supervisory Board sits on at least one standing committee of the Supervisory Board.
In addition to their remuneration, Members of the Supervisory Board shall be entitled to reimbursement for the costs incurred in connection with their function. This comprises in particular travel costs from the place of residence to the location of the Supervisory Board’s meeting and back, costs of accommodation and food.
Remuneration received by members of the Supervisory Board from PKO Bank Polski S.A.
Table 19. Remuneration received by Members of the Supervisory Board from PKO Bank Polski S.A. (in PLN thousand)
|
|
Fixed remuneration paid in 2023
|
Fixed remuneration paid in 2022
|
|
Mariusz Andrzejewski
|
182
|
163
|
|
Wojciech Jasiński
|
228
|
204
|
|
Dominik Kaczmarski
|
205
|
183
|
|
Andrzej Kisielewicz
|
182
|
163
|
|
Rafał Kos
|
182
|
163
|
|
Tomasz Kuczur
|
182
|
163
|
|
Maciej Łopiński
|
185
|
204
|
|
Robert Pietryszyn
|
230
|
19
|
|
Bogdan Szafrański
|
182
|
163
|
|
Agnieszka Winnik–Kalemba
|
182
|
163
|
|
|
|
|
|
Grzegorz Chłopek
|
-
|
143
|
|
Krzysztof Michalski
|
182
|
163
|
|
Total
|
2,122
|
1,894
|
In 2023, every Member of the Bank’s Management Board has concluded a management agreement with the Bank. The agreements lay down, among other things, the remuneration terms and competition ban.
In 2023, there were no liabilities arising from pensions and benefits of a similar nature for former members of management, supervisory or administrative bodies and no liabilities incurred in connection with those pensions (in accordance with the provisions of § 70(7)(18) of the Regulation of the Minister of Finance of 29 March 2018 on current and periodic information submitted by issuers of securities and the conditions for recognizing as equivalent the information required by the law of a non-member country (Journal of Laws of 2018, item 757 as amended).
Information for investors
Statement of compliance with the corporate governance principles
Shares of PKO Bank Polski S.A. and its related entities held by the Bank’s authorities
Quotations of shares of PKO Bank Polski S.A. on the WSE
Ratings
Investor relations
In 2023, the share price of PKO Bank Polski S.A. increased by 66.1% to PLN 50.32 at the end of the year, reaching PLN 51.5 during the year, the highest since the crisis initiated by the collapse of Lehman Brothers. Such a strong increase in the share price reflected a significant increase in earnings per share and an increase in valuation expressed as the P/BV ratio due to an improvement in return on equity and a reduction in the cost of capital of the Polish market.
|
Prices of PKO Bank Polski S.A. shares in the period 31.12.2022-31.12.2023
|
Changes in the price of shares of PKO Bank Polski S.A. vs. WIG-Banki index in the period 31.12.2022-31.12.2023 (31.12.2021=100%)
|
|
|
|
At the end of 2023, PKO Bank Polski S.A. was the largest domestic bank listed on the WSE. At the end of the last trading session in 2023, it was valued by the investors at PLN 62.9 billion.
Due to their high liquidity and capitalization, the Bank’s shares are a part of a number of stock exchange indices, such as the Polish large companies’ indices WIG20 and WIG30, the WIG-Banki banking sector index, the index of companies representing the highest social responsibility standards WIG-ESG, the MSCI Emerging Markets index and the large companies index FTSE Russell and STOXX Europe 600.
Table 20. Key data on the PKO Bank Polski S.A. shares
|
|
2023
|
2022
|
|
Share price at the end of the year (PLN)
|
50.32
|
30.29
|
|
Maximum share price (PLN)
|
51.50
|
50.44
|
|
Minimum share price (PLN)
|
24.83
|
21.14
|
|
Rate of return since the beginning of the year (%)
|
66.13
|
-27.57
|
|
Number of shares (K)
|
1,250,000
|
1,250,000
|
|
Capitalization at the end of the year (PLN million)
|
62,900.0
|
37,862.5
|
|
Average trading volume per session
|
2,685,704
|
3,483,522
|
|
Share in trading volume (%)
|
8.86
|
9.64
|
|
Average number of transactions per session
|
7,736
|
8,110
|
|
Earnings per share (PLN)
|
4.40
|
2.65
|
|
Book value per share (PLN)
|
36.18
|
28.57
|
|
P/E (x)
|
11.43
|
11.43
|
|
P/BV (x)
|
1.39
|
1.06
|
Source: Data based on the WSE statistics
Price of shares and capitalization of PKO Bank Polski S.A. compared to competing banks
|
Changes in the price of shares of PKO Bank Polski S.A. vs. share prices of competing banks
in the period 31.12.2018-31.12.2023 (31.12.2018=100%)
|
Capitalization (end of period, PLN billion)
|
|
|
|
Ratings of PKO Bank Polski S.A.
The creditworthiness of PKO Bank Polski S.A. is assessed by Moody’s Investors Service rating agency which awards a paid rating to the Bank.
Table 21. Ratings of PKO Bank Polski S.A. as at 31 December 2023 (paid rating)
|
Moody’s Investors Service
|
|
Long-term deposit rating
|
A2 with stable outlook
|
|
Short-term deposit rating
|
P-1
|
|
Senior unsecured debt rating
|
A3 with stable outlook
|
|
MTN Programme rating
|
(P)A3
|
|
Other short-term liabilities of the Programme rating
|
(P)P-2
|
|
Counterparty risk assessment - long-term
|
A2
|
|
Counterparty risk assessment - short-term
|
P-1
|
|
Opinion on counterparty risk (CR) - long-term
|
A2(cr)
|
|
Opinion on counterparty risk (CR) - short-term
|
P-1(cr)
|
Table 22. ESG ratings of PKO Bank Polski S.A. as at 31 December 2023
|
FTSE Russell
|
3,3
|
|
MSCI
|
A
|
|
Sustainalytics
|
23,5 (Medium)
|
|
V.E
|
46
|
Ratings of PKO Bank Hipoteczny S.A.
Table 23. Ratings of PKO Bank Hipoteczny S.A. as at 31 December 2023 (paid rating)
|
Moody’s Investors Service
|
|
Long-term issuer rating
|
A3
|
|
Short-term issuer rating
|
P-2
|
|
Counterparty risk assessment - long-term
|
A2
|
|
Counterparty risk assessment - short-term
|
P-1
|
|
Opinion on counterparty risk - long-term
|
A2(cr)
|
|
Opinion on counterparty risk - short-term
|
P-1(cr)
|
|
Rating for PLN mortgage covered bonds issued
|
Aa1
|
|
Rating for EUR mortgage covered bonds issued
|
Aa1
|
The ratings for the covered bonds issued are confirmed with each issue.
Ratings of KREDOBANK S.A.
As at 31 December 2023, KREDOBANK S.A. had the following ratings granted by Ukrainian rating agencies:
Table 24. Ratings of KREDOBANK S.A. as at 31 December 2023 (paid ratings)
|
“Expert-Rating” Rating Agency
|
|
Credit rating on country-wide scale
|
uaAAA with stable outlook
|
|
“Standard-Rating” Rating Agency
|
|
Credit rating on country-wide scale - long-term
|
uaAAA with stable outlook
|
|
Credit rating on national scale - short-term
|
uaK1 with stable outlook
|
|
Deposit rating on country-wide scale
|
ua1 with stable outlook
|
The long-term credit rating of KREDOBANK S.A. on a country-wide scale reflects the investment level, and thus meets Ukrainian statutory requirements regarding investing funds from insurance reserves by insurers and investing pension fund assets.
PKO Bank Polski S.A. maintains regular contact with investors and financial market analysts and aims at maintaining high communication standards. The Bank’s representatives ensure transparent, reliable and complete access to information on the functioning of the Bank, its financial performance and the situation in the banking sector. The Bank allows various forms of contact preferred by the investors and analysts.
In 2023, 342 investor meetings were held.
• The Bank's and the Bank Group's financial performance was presented after each quarter by the Bank's Management Board; the performance presentation was broadcast over the Internet,
• The Bank's Management Board participated in a number of investor conferences held by brokerage firms: 277 meetings were held during 16 face-to-face conferences and 4 online conferences with investors from Poland (42%), the UK (32%), other European countries (14%), North America (mainly the US) and South America (9%), Asia (3%) and Africa (1%);
• 61 individual meetings took place, of which 23 were held online and 38 took place in the Bank’s office.
PKO Bank Polski S.A. is observed by a wide group of analysts from brokerage offices who issue recommendations to entities listed on the WSE on an ongoing basis. At the end of the year 2023, 18 Polish and foreign analysts published reports and recommendations concerning the Bank’s shares.The average target price of the Bank’s shares for 2023 was PLN 53.4.
|
Recommendations of analysts and the average target price 
|
|
|
All information of significance to the Bank’s investors and shareholders was immediately published on the Investor Relations website at https://www.pkobp.pl/investor-relations/. In 2023, the Bank once again launched its online annual report in the form of a website in two language versions: Polish and English (https://raportroczny2022.pkobp.pl/ https://raportroczny2022.pkobp.pl/en/), which facilitates obtaining key financial and business information.
Application of the corporate governance principles
Control systems in the process of preparing financial statements
Share capital, significant blocks of shares and control powers
Restrictions imposed on shares of PKO Bank Polski S.A.
Principles of appointing and dismissing members of the Management Board of PKO Bank Polski S.A.
Principles for amending the Articles of Association of PKO Bank Polski S.A.
General Shareholders’ Meeting of PKO Bank Polski S.A. and the shareholders’ rights
Supervisory Board of PKO Bank Polski S.A. - composition, powers and principles of functioning
Management Board of PKO Bank Polski S.A. - composition, powers and principles of functioning
Diversity policy in the composition of the Bank’s Management Board and Supervisory Board
General corporate governance principles in place at PKO Bank Polski S.A., i.e. the internal regulations for the Bank’s management and control of its operations taking into account the principles and expectations of all stakeholders, arise from the generally applicable legal regulations, including in particular the Commercial Companies Code and the Banking Law, the laws regulating the functioning of the capital market and the rules issued by the WSE (Best Practices for companies listed at the WSE), the Polish Financial Supervision Authority (corporate governance principles for supervised entities and supervisory recommendations for the banking sector).
The Bank is subject to the following sets of corporate governance principles:
• „Best Practices for WSE Listed Companies 2021” (applicable to the Bank in connection with the listing of the Bank's shares on the WSE Main Market).
– „Best Practices for WSE Listed Companies 2021” are available on the WSE website in the section on corporate governance issues of listed companies (https://www.gpw.pl/best-practice2021),
• „Corporate Governance Principles for Supervised Institutions” (applicable to the Bank in connection with its status as an institution supervised by the PFSA),
– “Corporate Governance Principles for Supervised Institutions” are available on the Polish Financial Supervision Authority’s website (https://www.knf.gov.pl/dla_rynku/regulacje_i_praktyka/zasady_ladu_korporacyjnego)
Corporate governance principles contained in Best Practices for WSE Listed Companies 2021
The Supervisory Board of Giełda Papierów Wartościowych w Warszawie S.A. (“the Warsaw Stock Exchange”, “WSE”), by resolution No 13/1834/2021 of 29 March 2021, adopted a set of corporate governance principles for joint-stock companies issuing shares, convertible bonds or bonds with pre-emptive right, which are admitted to trading on a WSE regulated market, i.e. “Best Practices for WSE Listed Companies 2021” (“Best Practice 2021”), which entered into force on 1 July 2021.
Best Practice 2021 is addressed to all authorities of the company. The Management Board of PKO Bank Polski S.A. (hereinafter: the Bank’s Management Board or the Management Board), the Supervisory Board of PKO Bank Polski S.A. (hereinafter: the Bank’ Supervisory Board or the Supervisory Board) and the General Shareholders’ Meeting of PKO Bank Polski S.A. (hereinafter: the General Shareholders’ Meeting of the Bank or the General Shareholders’ Meeting) expressed their opinion on the application of these practices – they all approved the Best Practice 2021 without any exceptions.
In 2023 none of the Bank’s authorities declared any deviations from the principles of the Best Practice 2021.
The information on the scope of application of the aforementioned principles by the Bank (in the form stipulated in the WSE Rules) is available on the Bank’s website (https://www.pkobp.pl/investor-relations/corporate-governance/best-practice-for-wse-listed-companies-2021/).
The Supervisory Board's assessment of the manner in which the Bank complies with its disclosure requirements under the WSE Rules and the regulations on current and periodic information disclosed by issuers of securities is contained in the annual reports of this body, which are available on the Bank's website.
Incidental breach of Best Practices 2021
In 2023, there was no incidental breach of any of the principles contained in the Best Practice 2021.
Corporate governance principles for supervised institutions issued by the Polish Financial Supervision Authority
The “Corporate Governance Principles for Supervised Institutions” issued by the PFSA on 22 July 2014 (the “Principles”) define the internal and external relations for institutions supervised by the PFSA, including the relations with the shareholders and customers, the organizational structure, the functioning of internal audit, the key internal systems and functions, the statutory bodies and the principles for their cooperation.
In 2014, the Bank accepted the Principles for use with respect to the competences and obligations of the Management Board, i.e. managing the Bank’s affairs and its representation, in compliance with the generally binding laws and the Bank’s Articles of Association. Nevertheless, it was assumed that Chapter 9 of the Principles, concerning the managing of assets at the customer’s risk, will not be applied due to the fact that the Bank does not conduct such activities.
The Supervisory Board accepted the Principles for use with respect to the competences and obligations of the Supervisory Board, i.e. supervising the conduct of the Bank’s affairs in compliance with the generally binding laws and the Bank’s Articles of Association.
The General Meeting, within the scope of its powers, adopted the Principles for use, subject to departure from the following principles:
• § 10 (2) of the Principles, with respect to the introduction of personal rights or other special rights for shareholders;
• § 12 (1) of the Principles with reference to shareholders’ responsibility for prompt recapitalisation of the supervised institution;
• § 28 (4) of the Principles with reference to the assessment by the decision-making body of whether the adopted remuneration policy promotes the development and operational security of the supervised institution.
In accordance with the justification presented by the State Treasury together with the proposed draft resolution of the General Shareholders’ Meeting of 2015, waiving the application of the principle specified in §10 (2) and §12 (1) of the Principles was justified by the uncompleted process of the Bank’s privatization by the State Treasury.
Waiving the application of the principle set out in § 28 (4) was justified by the excessive scope of the remuneration policy in question, which is subject to the assessment by the decision-making authority. In the opinion of the State Treasury, the policy for remunerating employees who perform key functions but are not members of the supervisory or management bodies should be assessed by their employer or principal (i.e. the Bank represented by the Management Board whose activities are supervised by the Supervisory Board).
Pursuant to § 27 of the Principles, the Bank's Supervisory Board performs a regular assessment of the application of the Principles and the results of this assessment are made available on the Bank's website and communicated to the other bodies of the Bank. To date, the Supervisory Board has made such an assessment on eight occasions - for 2015, 2016, 2017, 2018, 2019, 2020, 2021 and 2022 (in all these cases it gave a positive evaluation).
As of 1 January 2022, PKO Bank Polski S.A. has also applied the provisions of Recommendation Z, concerning internal governance principles in banks, issued by the PFSA. Recommendation Z supplements, details and develops issues in the field of issues which have already been regulated in the Principles. In the event that the scope of the Recommendation coincides with the scope of the Principles, the provisions of Recommendation Z shall take precedence. To the extent not regulated in Recommendation Z, the Principles shall apply.
The content of Recommendation Z is available on the PFSA website: https://www.knf.gov.pl/knf/pl/komponenty/img/Rekomendacja_Z_70998.pdf).
Information on the application of the principles contained in the Best Practice 2021 and the PFSA Corporate Governance Principles for Supervised Institutions
Information on the application of corporate governance principles is set out below. In accordance with the Commission Recommendation of 9 April 2014 on the quality of corporate governance reporting (2014/208/EU), the issues which, in the Bank’s opinion, are the most important for the shareholders are described.
|
General Shareholders’ Meeting and shareholder relations
|
The Bank sets the place, date and form of the General Shareholders’ Meetings taking into account the need to allow as many shareholders as possible to participate. The Bank did not organize any General Shareholders’ Meetings using means of electronic communication (e-meeting) in 2023. As a result of adopting all principles contained in Best Practice 2021, as well as the waiver of the exemption of §8(4c) of the PFSA “Corporate Governance Principles for Supervised Institutions”, the Bank allows the possibility of organizing e-meetings if it is expected by the shareholders. The Bank is able to provide the technical infrastructure necessary to hold them and is prepared in terms of procedures for the organisation of e-meetings (the Supervisory Board has adopted regulations for holding general meetings using electronic communication means). Irrespective of the above, in order to ensure maximum transparency of the decision-making process, the General Shareholders’ Meetings are broadcast in real time and they are open to media representatives.
On 7 June 2021, the Annual General Shareholders’ Meeting adopted all principles contained in Best Practices 2021, including the principle that draft resolutions must be presented not later than 3 days before the date of the meeting and that the candidates to the Supervisory Board must make the necessary statements. The General Meeting held in 2023 adhered to these principles.
As a rule, the Management Board and Supervisory Board members participate in the General Shareholders’ Meetings. In 2023, their participation took different forms – either of the physical presence at the place of the meeting or of real time bilateral communication with the use of electronic means. These bodies were represented by persons capable of discussing the matters on the agenda and providing informed responses to any questions asked during the meeting. The Management Board presented the financial results and other relevant information contained in the financial statements and discussed significant events relating to the previous financial year, comparing the presented data to the preceding years.
In accordance with the Bank’s dividend policy adopted in 2022, the Bank intends to distribute dividends in the long term in a stable manner, in compliance with the principle of prudent management of the Bank and the Bank’s Group. At the present stage, the Bank does not identify any reasons not to apply Best Practice 2021 with respect to limiting the possibility of retaining the total profit earned in a given year at the Bank.
|
Information policy and communication with investors
|
|
The Bank’s overriding aim regarding information activities is to guarantee high standards of communication with the participants of the capital market, which are a sign of respect for the principles of universal and equal access to information. To achieve this aim, the Bank pursues its information policy in a manner that ensures proper, reliable and complete access to information about the Bank for all investors, with no preferences as regards any of them. The above rules have been formally adopted by the Bank in the “Principles of information policy of PKO Bank Polski S.A. regarding communication with investors and clients”, available on the Bank’s website (Information disclosure policy - PKO Bank Polski (pkobp.pl)).
The Bank communicates with the investors directly, by organizing online performance meetings, by participating in a wide range of investor conferences and bilateral meetings, and through its activity on the corporate website, which has a dedicated investor relations section. The website contains key information on the Bank and the securities issued, including the information on the Bank’s strategy, financial statements, presentations, key financial data in a format that allows its direct use, contact details and other information which is usually published by companies, in accordance with the relevant recommendations.
The investor relations section at Corporate Governance - PKO Bank Polski (pkobp.pl) contains information on corporate governance principles, basic corporate documents, policies and reports, as well as information on the application of Best Practice 2021 and the PFSA's “Corporate Governance Principles for Supervised Institutions”.
In view of the adoption of the Strategy for 2023-2025, and in order to ensure proper communication with stakeholders, the Bank has published information about the Strategy's objectives, measurable goals, including in particular long-term goals, and measures planned for its implementation on its website. This information is available in the investor relations section at Strategy of PKO Bank Polski S.A. na lata 2023-2025 (pkobp.pl).
The ESG area is one of the pillars of PKO Bank Polski S.A.'s strategy for 2023-2025. The Bank's ESG strategy includes a set of metrics in three areas of sustainability: environmental, social and corporate governance. Information on the ESG targets included in the 2023-2025 Strategy is available on the Bank's website: Strategy of PKO Bank Polski S.A. na lata 2023-2025 (pkobp.pl).
In addition to the regular meetings associated with the publication of results, dialogue with shareholders is carried out on an ongoing basis. The investors’ questions are answered immediately after their receipt, not later than within 14 days. If more time is required due to special circumstances, the investor is notified in advance about the planned date of providing the response. The Bank does not limit the group of persons entitled to information to the shareholders. When answering questions, the Bank assesses the possibility of providing a response to a specific question taking into account the need to protect company secrets or a potential conflict with the applicable laws. It also evaluates the importance of the question in order to provide explanations within an appropriate time and at the appropriate level of detail.
The Bank also has recommended internal regulations in place concerning the provision of explanations and rectification of false, inaccurate or detrimental media reports.
|
Management Board and Supervisory Board of the Bank
|
Members of the Management Board and Supervisory Board are appointed in a manner allowing for the selection of persons having high qualifications, skills and experience that are adequate to their position and ensuring that the Management Board and Supervisory Board members (both individually and collectively) will issue independent opinions and decisions in all areas of the Bank’s operations.
The above is reflected in the following policies in place at the Bank:
• The policy concerning the assessment of appropriateness of the candidates for members and members of the Supervisory Board of Powszechna Kasa Oszczędności Bank Polski S.A. (adopted by the General Shareholders’ Meeting);
• The policy concerning the appropriateness of the Management Board members and key officers of the Bank and appropriateness assessment at the Bank’s Group companies (adopted by the Supervisory Board of the Bank).
The policy for ensuring diversity of the composition of the Management Board and Supervisory Board is a part of the suitability policy.
The diversity policy defines diversity objectives and criteria and is designed to ensure that members of the Management Board and Supervisory Board are appropriately selected to obtain a broad range of competences, knowledge and skills that are adequate for the position and, at the same time, to ensure diversity in terms of age and gender. The competent authorities that select candidates for specific positions take into account the result of suitability assessment and aim at achieving a balance between genders or at least 30% representation of the less numerous gender. The aforementioned suitability policies also specify deadlines and methods for monitoring the achievement of diversity objectives.
In accordance with the Bank’s Articles of Association, if the number of Supervisory Board members drops below five, the General Shareholders’ Meeting must be convened to appoint an appropriate number of members.
The General Meeting and the Supervisory Board, as part of succession management, make decisions on the selection of new members respectively: of the Supervisory Board and the Management Board, bearing in mind: the objective of ensuring continuity in decision-making by the bodies as well as individually by the members of the Management Board in the area they supervise; the need to ensure the achievement of the Bank's strategic objectives; the principle of diversity in the composition of the bodies; and ensuring the collective suitability of the bodies.
Having regard to the representations made by the members of the Supervisory Board, as at 31 December 2023 the Supervisory Board was mostly composed of independent members. The Chair of the Supervisory Board does not combine his function with managing the work of the audit committee of the Supervisory Board. More information on the Supervisory Board is provided in section 11.2.8.
In accordance with the rules, the Supervisory Board members voting against a resolution may express a dissenting opinion which shall be recorded in the minutes. The Supervisory Board votes on resolutions by open ballot. Voting by secret ballot is ordered when personal issues are discussed or at the request of at least one Supervisory Board member.
Members of the Supervisory Board devote the necessary amount of time for the performance of their duties. The turnout is very high and any absences are justified.
The Supervisory Board may use the services of external advisors, experts or consultants at the Bank’s cost.
Since the Bank has adopted all principles contained in Best Practice 2021, the Supervisory Board annual reports contain elements required by Best Practice 2021.
Serving on the Bank’s Management Board is the main area of activity for the members of this body, who do not take any other professional activity if devoting their time to such activity would make it impossible for them to serve on the Management Board diligently.
Appointment of a Management Board member to the supervisory body of a company which does not belong to the Bank’s Group requires the approval of the Supervisory Board.
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Internal systems and functions
|
PKO Bank Polski S.A. has a management system in place, comprising an internal control system and a risk management system. The Management Board is responsible for the design and implementation of these systems. These systems are designed to suit the size of the Bank as well as the nature and scale of its business. The Bank has separate units within its structure responsible for carrying out tasks in the aforementioned systems.
The internal control system supports the management of the Bank by ensuring the effectiveness and efficiency of the Bank's operations, the reliability of financial reporting, compliance with the Bank's risk management principles and compliance of the Bank's operations with generally applicable laws, the Bank's internal regulations, supervisory recommendations and market standards adopted by the Bank. The internal control system is arranged at the Bank on three independent levels:
The internal control system at PKO Bank Polski S.A. comprises:
• the control function which ensures compliance with controls relating, in particular, to risk management at the Bank; this function covers all of the Bank’s units, and the organizational positions in these units responsible for the performance of tasks allocated to a particular function.
• the compliance function – the Compliance Department (CD), which is an organisationally separate, independent function with a key role in compliance and non-compliance risk management,
• the internal audit function – the Internal Audit Department (IAD), which is an independent and objective function performing assurance and advisory activities to assess the adequacy and effectiveness of the risk management system and the internal control system.
The Bank appoints an officer to head the internal audit function (IAD), who acts in accordance with the law, the supervisory regulations of the PFSA, as well as best practices and the International Standards for the Professional Practice of Internal Auditing published by the Institute of Internal Auditors.
The heads of IAD and CD report directly to the President of the Management Board and are appointed with the prior approval of the Supervisory Board. The IAD activities are subject to an independent external evaluation at least once in five years.
The Supervisory Board evaluates the internal control system and its components on an annual basis based on the information and reports provided by the Management Board, the Audit Committee of the Supervisory Board, the IAD and the CD, as well as the findings of the registered auditor and those resulting from the supervisory activities of authorised institutions. The Supervisory Board is supported in such activities by the Audit Committee of the Supervisory Board.
Other entities of the Bank’s Group have internal control systems adapted to the specific nature of their activities. The manner of functioning of internal control systems depends on the business entity’s size and scope of its operations.
The risk management process consists of the following main components: the risk management strategy adopted by the Management Board and approved by the Supervisory Board, the processes for managing the specific types of identified risk, and regular reviews of the aforementioned strategy and processes. The heads of the structures responsible for the management of other risks report to the Management Board member supervising the Risk Management Area.
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Conflict of interest and related party transactions
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The Bank has adopted the principles for the management, identification and disclosure of conflicts of interest or potential conflicts of interest and taking actions to control such conflicts, minimize their occurrence and mitigate their adverse effect on the Bank’s operations and its relations with the customers and other entities.
These principles regulate e.g. the responsibilities of the members of the Bank’s bodies with respect to reporting potential and actual conflicts of interest and limiting the involvement of persons who have a potential conflict of interest in the matters to which such conflict of interest relates. In accordance with the rules and regulations of the Management Board and the Supervisory Board, their members have the right to express dissenting opinions, which are recorded in the minutes of the Management or Supervisory Board meeting.
The principles of conflict management also apply to preventing preference of some shareholders over the others - all transactions and agreements must be concluded on an arm’s length basis, in compliance with the generally applicable laws and the Bank’s internal regulations.
[GRI 2-20] Guided by prudent and stable risk, capital and liquidity management and with particular concern for the long-term prosperity of PKO Bank Polski S.A. and the interests of its shareholders, and having regard to external regulations in the area of remuneration, the Bank has introduced adequate internal regulations governing, inter alia, the remuneration principles for persons holding managerial positions, including members of the Bank's bodies. The remuneration rules put in place are designed to support the implementation of the Bank's strategy and long-term interests and to contribute to sound and effective risk management.
The Bank has a remuneration policy for members of the Supervisory Board and the Management Board adopted by the Annual General Shareholders’ Meeting in 2020.
According to this policy, the total remuneration of a member of the Bank’s Management Board consists of a fixed part and a variable part. The variable remuneration depends on the level of achievement of management objectives such as: achieving the net financial result of the Bank and the Bank’s Group, achieving the indicated economic and financial indicators (including the customer satisfaction indicator), implementing the strategy of the Bank and the Bank’s Group and maintaining the market position of the Bank. The Supervisory Board defines objectives for the individual Management Board members, which should also include such criteria as acting in the public interest, taking part in environmental protection and preventing potential adverse social effects of the Bank’s operations. The total fixed and variable remuneration of each member of the Bank's Management Board is in line with the principle of gender neutrality.
PKO Bank Polski S.A. also adopts rules on the remuneration of employees whose activities have a significant impact on the Bank’s risk profile (Material Risk Takers; hereinafter: MRT). The MRT's variable remuneration depends on the level of achievement of bonus targets, which, depending on the tasks assigned, may take into account the Bank's financial situation and the growth in its value and include e.g. customer satisfaction index or the level of execution of the Bank’s strategy.
The heads of the internal audit function, the compliance function, the legal function, the organisational units in charge of risk management at the second level and the human resources function receive variable remuneration for the achievement of the objectives resulting from their functions, and their remuneration shall not depend on the financial performance of the areas of the Bank’s operations controlled by them.
The payment of variable remuneration to both members of the Bank's Management Board and other MRTs is preceded each time by an assessment of the Bank's economic position, as well as a long-term evaluation of these individuals in terms of the proper performance of their duties.
The maximum ratio of the average total annual gross remuneration of the Bank's Management Board members to the average total annual gross remuneration of other employees of the Bank was set at 1:22.
The level of remuneration of members of the Bank’s authorities and MRTs is adequate to the scope of tasks entrusted to particular persons. The work in committees of the Bank’s Supervisory Board is taken into account in the remuneration of the members of these committees. The amount of remuneration of the Supervisory Board members does not depend on the Bank’s short-term results.
Other best practices
The Bank has revised and redefined the applicable values. Three key values have been introduced for the successful implementation of the Bank's mission and strategy:
1. partnership - together we care about the best customer and employee experience, we build partner relations based on mutual respect, openness and trust;
2. growth - we embrace change and take on ambitious challenges, we nurture our own growth and support others in doing so, we offer support to customers to grow in a rapidly digitalising world;
3. impact - we act boldly, value proactivity, responsibility and commitment, are innovative in creating solutions and effective in achieving goals.
The values were formulated based on the opinions and proposals of employees and the Bank's Management Board. The values adopted by the Bank are communicated in particular by indicating the behaviours and attitudes that comply with these values and are taken into account in the management processes applied in the Bank.
Accordingly, the Bank's Management Board adopted the revised Code of Ethics of PKO Bank Polski S.A. in the form of a resolution on 15 December 2023 (Code of Ethics), which sets out the new values of the Bank. A draft resolution of the Supervisory Board approving the amended Code of Ethics is currently being processed.
The Code of Ethics sets out the framework for the mutual relations between individuals who work for the Bank, between the Bank's employees and those who act on behalf of the Bank, as well as between those who act on behalf of the Bank. The Bank's Code of Ethics also sets out the values, principles, standards of conduct and ethical attitudes in relations with customers and in the Bank's business activities and in the Bank's relations with the environment. The Code is directly related to the Bank’s organizational culture; it supplements this culture and is a tool supporting the popularization and implementation of ethical values at the Bank.
The values, principles, standards of conduct and ethical attitudes outlined in the Bank's Code of Ethics apply to all employees of the Bank, as well as to persons acting on behalf of the Bank, including those performing banking and factual activities related to banking activities, and to persons intermediating in their performance, including in particular persons representing the Bank and acting on behalf of the Bank.
Verification of compliance with the Bank's ethical principles is assessed by the Bank's Management Board on an annual basis. Information on the outcome of the assessment by the Management Board is communicated at least once a year to the Bank's Supervisory Board.
The internal control system at PKO Bank Polski S.A. covers, among other things, the process of preparing financial statements to ensure effective and reliable operations, reliability of disclosures presented and compliance with laws, internal regulations and best market practices and standards. At all levels of the internal control system, the Bank's employees apply controls built into the processes and systems and IT applications that support the implementation of these processes. These controls are subject to independent monitoring on all internal control system levels, which includes testing and ongoing review of controls.
In the process of preparing financial statements, which is an essential process for achieving the objectives of the Bank's internal control system and business objectives, the Bank has established controls, and compliance with these controls is monitored independently at a frequency and to the extent specified in the control function matrix for this process.
The basis for the preparation of the consolidated financial statements of the PKO Bank Polski S.A. Group are the financial statements of the parent company, PKO Bank Polski S.A., and the financial information of consolidated companies and investment funds (so-called consolidation packages) supplemented by additional data and disclosures necessary in the consolidation process, provided by these companies and funds and the Bank's units participating in the process of preparing the consolidated financial statements.
The financial statements of PKO Bank Polski S.A. are based on the Bank's accounting records. Source data from the data warehouse is also used. The process of preparing financial data for reporting purposes is automated, and data preparation is subject to operational and acceptance procedures. The controls in place in the process of preparing the financial statements involve verifying and reconciling the reporting data with the accounting records and other documents underlying the preparation of the financial statements, as well as with the applicable regulations on accounting policies and the preparation of financial statements.
The process of preparing financial statements is subject to regular multi-stage verification (in particular with regard to the correctness of accounting reconciliations, substantive analysis and reliability of information), and the financial statements are subject to multi-stage approval. The Bank has embedded controls in the processing of financial data for reporting purposes, which include verification of the accuracy and reliability of the data presented. Manual corrections, including those resulting from management decisions, are subject to special verification.
The Bank’s employees monitor changes in external reporting regulations on an ongoing basis, analyze market standards and apply best practices, and, if necessary, update internal regulations and implement changes in systems supporting the reporting process.
The financial reporting process uses reporting applications both for the preparation of the Bank's financial statements and for the consolidation process, as well as for the preparation of consolidated financial statements. IT systems used for reporting meet cyber security requirements.
The Accounting and Reporting Department, which reports to the Vice-President of the Bank's Management Board responsible for the Finance and Accounting Area, is responsible for the preparation and compilation of the financial statements of PKO Bank Polski S.A. and the PKO Bank Polski S.A. Group.
In terms of the qualitative and quantitative information contained in the financial statements concerning:
• risk management in the Bank and the Bank’s Group;
• disclosures on tax issues;
• disclosures on segmentation;
the Accounting and Reporting Department cooperates with the Banking Risk Division, the Tax Department and the Planning and Controlling Department.
The Accounting and Reporting Department oversees the accuracy, completeness and consistency of the data contained in consolidation packages prepared by consolidated entities (companies and funds). This Department also controls the consistency and completeness of the Bank's accounting records, as well as administers and manages the chart of accounts.
To ensure the completeness of the disclosures required by International Financial Reporting Standards in the annual financial statements, the Accounting and Reporting Department prepares a checklist based on the applicable standards. In addition, on 21 December 2021, a resolution of the Bank's Management Board introduced the Policy on Disclosure of Financial Instruments in the financial statements of PKO Bank Polski S.A. thus meeting the requirements of Recommendation R regarding the rules for classifying credit exposures, estimating and recognizing expected credit losses and credit risk management. Pursuant to section 36.6 of the Recommendation, the Bank's Management Board annually reviews the applied policies for disclosure of information on financial instruments. The Policy is reviewed in order to ensure its compliance with the Bank's risk profile, current market conditions, accounting standards and supervisory requirements. The last review for the period from 31 December 2022 to 31 December 2023 was adopted by the Management Board on 13 February 2024.
Annual and semi-annual financial statements and quarterly interim reports (comprising the Management Board's commentary and the consolidated financial statements of the PKO Bank Polski S.A. Group, together with the condensed financial statements of PKO Bank Polski S.A.):
• are submitted to the Management Board of PKO Bank Polski S.A., which, after preliminary approval, forwards them to the Audit Committee of the Supervisory Board and the Supervisory Board;
• are subject to review by the Audit Committee of the Supervisory Board and the Supervisory Board (whereby, in the case of the annual financial statements of the Bank and of the Group, the opinion of the Supervisory Board is expressed in the form of a resolution);
• are finally authorised for publication by the Bank's Management Board.
The statements bear a qualified electronic signature by all members of the Management Board.
Annual and semi-annual financial statements, in accordance with generally applicable legislation, are additionally subject to audit and review by an independent audit firm, as appropriate.
The Supervisory Board performs annual assessments of the compliance of the annual consolidated financial statements of the Bank’s Group, the annual financial statements of the Bank and the Directors’ Report on the operations of the Bank’s Group and of the Bank with the books, documents and facts, pursuant to Article 382 (3) of the Commercial Companies Code.
PKO Bank Polski S.A. is committed to ensuring the highest reporting standards. Each year, it participates in The Best Annual Report competition, where it has been awarded the special prize "The Best of the Best" for the best annual report in the financial institutions category for several years now.
The Bank also exercises control functions with respect to the consolidated subsidiaries through its representatives on the supervisory bodies of the respective entities.
Audit firm
On 23 September 2021, pursuant to § 15(1)(2) of the Bank’s Articles of Association, the Bank’s Supervisory Board selected PricewaterhouseCoopers Polska spółka z ograniczoną odpowiedzialnością Audyt sp. k. (PwC) as the audit firm to audit and review the financial statements of the Bank and of the Bank’s Group for the years 2022-2023. PricewaterhouseCoopers Polska spółka z ograniczoną odpowiedzialnością Audyt sp. k. with its registered office in Warsaw, ul. Polna 11, is entered in the list of audit firms maintained by the National Board of Registered Auditors under the number 144. On 31 January 2022, the Bank concluded an agreement with PwC for the audit and review of the financial statements of the Bank and the Bank’ Group for the years 2022-2023. The financial statements of the Bank and the Bank's Group for 2020-2021 were also audited by PwC in accordance with the Supervisory Board's decision of 13 December 2018.
In 2023, PwC provided permitted non-audit services to the Bank, including review of the financial statements, review of consolidation packages prepared for the purpose of demonstrating disclosures related to the implementation of IFRS 17 "Insurance Contracts”, issuance of comfort letters for the purpose of conducting the issuance, assurance services to assess the Bank's compliance with client asset custody requirements, evaluation of the report prepared by the Supervisory Board on the remuneration of the members of the Bank's Management and Supervisory Boards.
Table 25. Total net remuneration payable to PwC (in PLN ‘000)
|
Total net remuneration due to the audit firm auditing the financial statements for services of the Bank
|
2023
|
2022
|
|
for the audit of the financial statements of the Bank and the consolidated financial statements of the Bank's Group
|
1 913
|
1 549
|
|
for assurance services, including reviews of the financial statements
|
1 737
|
1 010
|
|
Total
|
3 650
|
2 559
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On 15 December 2022, the Supervisory Board selected KPMG Audyt Spółka z ograniczoną odpowiedzialnością sp.k. as the audit firm to audit and review the financial statements of the Bank and of the Bank’s Group for the years 2024–2026.
As at 31 December 2023, the share capital of PKO Bank Polski S.A. amounted to PLN 1,250,000,000 and was divided into 1,250,000,000 shares with a nominal value of PLN 1 each. All the Shares have been fully paid. The amount of the Bank’s share capital did not change in 2023.
Table 26. Structure of the share capital of PKO Bank Polski S.A.
|
Series
|
Type of shares
|
Number of shares
|
Nominal value of 1 share
|
Nominal value of series
|
|
A Series
|
ordinary registered shares
|
312,500,000
|
PLN 1
|
312,500,000
|
|
A Series
|
ordinary bearer shares
|
197,500,000
|
PLN 1
|
197,500,000
|
|
B Series
|
ordinary bearer shares
|
105,000,000
|
PLN 1
|
105,000,000
|
|
C Series
|
ordinary bearer shares
|
385,000,000
|
PLN 1
|
385,000,000
|
|
D Series
|
ordinary bearer shares
|
250,000,000
|
PLN 1
|
250,000,000
|
|
|
|
1,250,000,000
|
|
1,250,000,000
|
According to the best knowledge of PKO Bank Polski S.A., as at 31 December 2023 the following three shareholders held, directly or indirectly, significant blocks of shares (at least 5%): State Treasury, Nationale-Nederlanden Otwarty Fundusz Emerytalny and Allianz Polska Otwarty Fundusz Emerytalny.
Table 27. Shareholding structure of PKO Bank Polski S.A.
|
|
As at 31.12.2023
|
As at 31.12.2022
|
Change in the share in the number of votes at the GSM
|
|
Number of shares
|
Share in the number of votes at the GSM and in the share capital
|
Number of shares
|
Share in the number of votes at the GSM and in the share capital
|
|
State Treasury
|
367,918,980
|
29.43%
|
367,918,980
|
29.43%
|
0.00%
|
|
Nationale-Nederlanden Open Pension Fund1)
|
115,594,152
|
9.25%
|
108,266,112
|
8.66%
|
0.59%
|
|
Allianz Poland Open Pension Fund1)
|
101,787,594
|
8.14%
|
106,567,559
|
8.53%
|
-0.39%
|
|
Other shareholders2)
|
664,699,274
|
53.18%
|
667,247,349
|
53.38%
|
-0.20%
|
|
Total
|
1,250,000,000
|
100%
|
1,250,000,000
|
100%
|
0.00%
|
|
|
|
|
|
|
|
|
1) Wyliczenia według stanów posiadania akcji na koniec danego okresu publikowanych przez PTE w informacjach półrocznych lub rocznych o strukturze aktywów funduszu i kursu z Biuletynu Statystycznego GPW.
2) W tym Bank Gospodarstwa Krajowego, który na 31 grudnia 2023 roku posiadał 24.487.297 akcji, co stanowi 1,96% udziału w liczbie głosów na Walnym Zgromadzeniu.
The shares of PKO Bank Polski S.A. and other securities issued by the Bank do not carry any specific control rights.
The Bank is not aware of any agreements concluded in 2023, based on which any changes could occur in the future in the proportions of the shares held by the current shareholders or bond holders.
Table 28. Exposure of Open Pension Funds to the shares of PKO Bank Polski S.A.
|
Shareholder
|
Number of shares
|
Share in the number of votes at the GSM and in the share capital
|
Number of shares
|
Share in the number of votes at the GSM and in the share capital
|
|
As at 31.12.2023
|
As at 31.12.2022
|
|
Nationale-Nederlanden OFE
|
115,594,152
|
9.25%
|
108,266,112
|
8.66%
|
|
Allianz Poland OFE
|
101,787,594
|
8.14%
|
106,555,815
|
8.52%
|
|
PZU OFE
|
58,996,508
|
4.72%
|
56,683,943
|
4.53%
|
|
Vienna OFE (formerly; Aegon OFE)
|
33,777,391
|
2.70%
|
31,967,391
|
2.56%
|
|
Uniqa OFE (formerly: AXA OFE)
|
23,513,483
|
1.88%
|
23,513,483
|
1.88%
|
|
Generali OFE
|
52,899,640
|
4.23%
|
21,445,456
|
1.72%
|
|
Pocztylion OFE
|
6,443,630
|
0.52%
|
6,443,630
|
0.52%
|
All shares of PKO Bank Polski S.A. carry the same rights and obligations. No shares are preference shares, in particular with respect to voting rights (one share carries one vote) or dividend.
The Articles of Association of PKO Bank Polski S.A. limit the voting right of shareholders holding more than 10% of the total number of votes at the General Shareholders’ Meeting and prohibit these shareholders from exercising more than 10% of the total number of votes at the General Shareholders’ Meeting. The above restriction does not apply to:
– those shareholders who on the date of passing the resolution of the General Shareholders’ Meeting introducing the limitation of the voting rights had rights from the shares representing more than 10% of the total number of votes in PKO Bank Polski S.A. (i.e. the State Treasury and BGK);
– shareholders who have rights from A-series registered shares (the State Treasury);
– shareholders acting jointly with the shareholders referred to in the second bullet point based on agreements concluded concerning the joint execution of voting rights on shares.
The limitations to the voting rights of the shareholders expire at the moment when the share of the State Treasury in the Bank’s share capital drops below 5%.
In accordance with:
• § 6 (2) of the PKO Bank Polski S.A.’s Articles of Association, the conversion of A-series registered shares into bearer shares and the transfer of these shares requires the approval of the Council of Ministers in the form of a resolution. The conversion into bearer shares or transfer of A-series registered shares, after obtaining such approval, results in the expiry of restrictions in respect of the shares subject to conversion into bearer shares or transfer, to the extent to which this approval was given;
• Article 13 (1) (26) of the Act of 16 December 2016 on the principles for public property management (apart from the statutory exceptions), the shares of PKO Bank Polski S.A. held by the State Treasury or rights from these shares cannot be sold;
• Article 77 of Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms, amending Regulation (EU) No 648/2012, any reduction, redemption or repurchase of Common Equity Tier 1 instruments issued by the Bank is only possible with the prior permission of the PFSA.
The Bank has not identified any other restrictions relating to transfer of the ownership rights arising from the Bank’s securities.
[GRI 2-10] The Management Board of PKO Bank Polski S.A. consists of three to nine members. Management Board members, including the President and Vice-Presidents, are appointed and dismissed by the Supervisory Board for a joint three-year term.
The powers of the Supervisory Board include suspending, for important reasons, individual or all members of the Management Board and delegating members of the Supervisory Board, for a period of no more than three months, to temporarily perform the duties of members of the Management Board who have been dismissed, have resigned or are unable to perform their duties for other reasons.
The Management Board members should meet the requirements of Article 22aa of the Banking Law, i.e. have higher education, at least five years of experience in employment or business activity, including at least three years on a management or independent position or as a person running business activity on their own.
In accordance with the “Suitability policy concerning the Management Board members and key officers of the Bank and suitability assessment at the Bank’s Group companies” (the “Suitability Policy”):
• Management Board members are appointed by the Supervisory Board after completing the qualification process;
• the process of selection of Management Board members ensures appointment of competent persons and guarantees their suitability and proper performance of their obligations, taking into account the principle of diversity in the composition of the Bank's Management Board.
Suitability of the candidates and members of the Management Board is verified in the form of assessment of their individual suitability and the collective suitability of Management Board members. The suitability assessment is performed by the Nominations and Remuneration Committee of the Supervisory Board each time a new Management Board member is appointed and once a year as part of the periodical assessment. The suitability assessment is approved by the Supervisory Board. The Supervisory Board may also perform an additional suitability assessment in other, justified situations, which affect the requirements addressed to the Management Board or its individual members.
The suitability criteria set out in the Management Board Suitability Policy include an assessment of their qualifications, understood as knowledge, experience and skills in terms of their suitability for their functions and duties assigned, as well as in terms of the Bank's management principles, the structure of the Bank's Group and potential conflicts of interest that may be related to their functions and duties assigned, and an assessment of their reputation.
In addition, the assessment criteria include, among others, an assessment of the integrity and ethicality of conduct, the ability to form independent judgement and the ability to devote sufficient time to the responsibilities assigned.
Following the annual review of the Management Board Suitability Policy, in December 2023 the Bank's Supervisory Board adopted amendments to the Policy.
The major changes included:
• specifying the deadline and method of achieving the gender diversity objectives on the Management Board by assuming that the target achievement of at least a minimum level of gender diversity (i.e. 30%) in the composition of each Bank's Management Board should take place starting from the appointment of the Bank's Management Board for a new joint term after 31 December 2025, and that the achievement of this target will be achieved by applying the principle of equal opportunities in the selection of Management Board members and fostering a culture of diversity in the organisation.
Before a Management Board member is appointed for another term, the assessment of his/her performance during the previous terms (including the previous suitability assessments) is taken into account.
Appointing the President of the Management Board and the Board Member responsible for managing material risk in the Bank’s operations requires the consent of the PFSA.
The term of office of a Management Board member expires not later than on the day of the General Shareholders’ Meeting approving the financial statements for the last full financial year of his/her term. The term of office of a Management Board member also expires upon his/her death, resignation of dismissal. The mandate of a Management Board member appointed during a term of office of the Management Board expires at the end of the term of office for which he/she was appointed.
Pursuant to the Commercial Companies Code, the General Shareholders’ Meeting also has the right to dismiss or suspend a Management Board member.
The rights of the Management Board members, including those relating to decisions concerning the issue or redemption of shares, are described in section 11.2.9.
An amendment to the Articles of Association of PKO Bank Polski S.A. (the Bank’s Articles) requires a resolution of the General Shareholders’ Meeting of PKO Bank Polski S.A., the approval of the PFSA and entry in the National Court Register.
Pursuant to the provisions of the Commercial Companies Code, resolutions on amendments to the Bank’s Articles require a qualified majority of three-fourths of the votes. Resolutions regarding an amendment to the Bank’s Articles increasing benefits for shareholders or limiting the rights granted personally to the individual shareholders require the consent of all the shareholders concerned.
Amendments introduced to the Bank’s Articles in 2023
On 21 June 2023, the Bank's Annual General Meeting adopted Resolution No 32/2023 on amendments to the Bank's Articles pursuant to which the Bank's Articles were amended as follows:
• the following point e is added in § 4(2)(15) after point d:
“e) executing orders to buy and/or sell financial instruments on behalf of the principal,”,
The amendment resulted from the need to bring internal regulations into line with the requirements of Recommendation A of the Polish Financial Supervision Authority of October 2022 on management of risk related to derivative operations by banks. In accordance with the aforesaid recommendation, the conclusion by an investment firm of a transaction service on its own behalf, referred to in Article 69(2)(3) of the Act on trading in financial instruments, should be considered execution of clients’ orders. The Bank was obliged to implement such a service.
• § 7(4) shall read as follows:
“4. Purchase of own shares by the Bank for cancellation shall require a resolution of the General Meeting and consent of the Polish Financial Supervision Authority.”.
The amendment resulted from the need to bring the regulations into line with the recommendations of the PFSA Office, as set out in its letter of 27 May 2022, in which the PFSA Office obliged banks operating in the form of joint-stock companies to review their articles of association with regard to the presence of provisions concerning the acquisition of own shares for cancellation. The PFSA Office placed special emphasis on the need to reflect, in the wording of the statutes of banks, the obligation to obtain the consent of the Polish Financial Supervision Authority for the purchase of the bank’s own shares for cancellation. In response to the said letter from the PFSA Office, the Bank declared that it would take action to make the necessary changes to the Articles.
On 23 January 2024, the District Court for the capital city of Warsaw in Warsaw, 13th Commercial Division of the National Court Register entered the aforementioned amendments to the Bank's Articles in the Register.
The General Shareholders’ Meeting of PKO Bank Polski S.A. is the highest authority of the Bank. The rights of the General Shareholders’ Meeting, the manner of convening it and the principles for participation in the General Shareholders’ Meeting are set out in: the Code of Commercial Companies, the Bank’s Articles (in particular, § 9-10) and the Rules and Regulations of the General Shareholders’ Meeting. The text of the Bank’s Articles and the Rules and Regulations of the General Shareholders’ Meeting are available on the Bank’s website in the Investor relations section at Corporate governance principles - PKO Bank Polski (pkobp.pl).
The General Shareholders’ Meeting of PKO Bank Polski S.A. is held as the annual or extraordinary meeting, in accordance with the provisions of the Commercial Companies Code, the Bank’s Articles and the Rules of the General Shareholders’ Meeting.
An amendment to the Rules and Regulations of the General Shareholders’ Meeting requires a resolution of the General Shareholders’ Meeting passed by an absolute majority of the votes in a vote by open ballot. Amendments are applied for the first time during the General Shareholders’ Meeting convened after the GSM that introduced such amendments, unless the resolution provides otherwise.
On 21 June 2023, the Annual General Meeting of PKO Bank Polski S.A. adopted new Rules of the General Meeting of Powszechna Kasa Oszczędności Bank Polski Spółka Akcyjna. The Regulations, in addition to amendments of an editorial, updating and organising nature, provide for changes resulting from the amendment of the Commercial Companies Code made by the Act of 18 November 2020 on electronic delivery.
The General Shareholders’ Meeting is convened by the Management Board, the annual GSM is convened once a year within six months of the end of the year. The Supervisory Board may convene the Annual General Shareholders’ Meeting if it has not been convened by the Management Board within the statutory deadline and it may convene the Extraordinary General Shareholders’ Meeting as it sees fit. In the situations defined in the Commercial Companies Code, also the shareholders have the right to convene the Extraordinary General Shareholders’ Meeting or demand that it be convened.
The principles of functioning and competences of the General Shareholders’ Meeting
In addition to matters stipulated in generally binding legal regulations, the competences of the General Shareholders’ Meeting include passing resolutions on:
• appointing and dismissing members of the Supervisory Board;
• approving the Rules of the Supervisory Board;
• purchasing shares of the Bank for the purpose of their redemption and determining consideration for the shares redeemed;
• establishing and releasing special funds created from net profit;
• disposal of real estate, share in real estate or perpetual usufruct right by the Bank if the value of the real estate or the right being subject to such an act exceeds 25% of the share capital; such consent is not required if the real estate, share in real estate or perpetual usufruct right has been purchased within the framework of enforcement, bankruptcy or restructuring proceedings, or based on another agreement with the Bank’s debtor;
• issuance of convertible bonds, bonds with a pre-emptive right or subscription warrants;
• laying down the principles for remuneration of members of the Management Board and Supervisory Board;
• approval of: financial statements (of the Bank and the Bank’s Group), Directors’ Reports (on the operations of the Bank and the Bank’s Group) and reports on the activities of the Supervisory Board;
• approving the proper discharge of duties by members of the Management Board and the Supervisory Board;
• profit distribution or offset of loss;
• determining the dividend day and the date of dividend payment;
• disposal and leasing out of the enterprise or an organized part thereof and creation of a limited property right thereon;
• amendments to the Bank’s Articles of Association;
• increase or decrease in the Bank’s share capital.
Unless the Commercial Companies Code provides otherwise, the General Shareholders’ Meeting is valid irrespective of the number of shares represented.
In accordance with the Bank’s Articles and within the scope specified in the Rules of the Supervisory Board, the Supervisory Board should express an opinion on matters placed on the agenda of the General Shareholders’ Meeting, and the shareholders should be given enough time to understand that opinion.
Resolutions of the General Shareholders’ Meeting shall be passed by an absolute majority of votes unless generally binding legal provisions or provisions of the Bank’s Articles of Association provide otherwise.
In accordance with the Bank’s Articles:
• removing a matter from the agenda or desisting from further consideration of a matter placed on the agenda at the request of shareholders shall require a resolution of the General Shareholders’ Meeting passed by a three-quarter majority of the votes after obtaining the consent of all shareholders present at the General Shareholders’ Meeting who requested that the matter be placed on the agenda;
• resolutions of the General Shareholders’ Meeting on share preferences and issues concerning the Bank’s merger by transfer of all of its assets to another company, its liquidation, decrease of the share capital by redeeming a part of the shares without a simultaneous share capital increase or changing the scope of the Bank’s activities resulting in the discontinuation of its banking activities require a 90% majority of the votes cast.
The General Shareholders’ Meeting may adjourn sessions by a majority of two-thirds of the votes. Such adjournment may not exceed a total of thirty days.
The General Shareholders’ Meeting passes resolutions in an open vote, with the reservation that a secret ballot shall be ordered in respect of:
• elections of members of the Bank’s authorities;
• motions to bring members of the authorities or liquidators of PKO Bank Polski S.A. to justice;
• personnel matters;
• at the request of at least one shareholder present or represented at the General Shareholders’ Meeting;
• in other situations, specified in generally binding legal regulations.
The General Shareholders’ Meeting is convened by announcement published on the Bank’s website and in the manner specified for the disclosure of current information by public companies. An announcement, including the materials presented to the shareholders, is available on the Bank’s website in the section “Investor relations” at General meeting - PKO Bank Polski (pkobp.pl) from the date of convening the General Shareholders’ Meeting
The General Shareholders’ Meetings are held in the registered office of PKO Bank Polski S.A. or in another location in Poland, which is indicated in the announcement on convening the meeting. The meetings are broadcast online in real time. Representatives of the media are allowed to participate in the General Shareholders’ Meetings.
The General Shareholders’ Meetings may be recorded with the use of devices recording sound or sound and image. Personal data is processed in compliance with the principles defined in the announcement on convening the General Meeting. The recordings of the General Shareholders’ Meetings are published by the Bank on its website in the section “Investor relations” at Video and teleconferences - PKO Bank Polski (pkobp.pl).
Rights of the shareholders
The most important rights of the shareholders of PKO Bank Polski S.A. include:
• participation in profit recognized in the Bank’s financial statements (audited by a registered auditor) and earmarked by the General Shareholders’ Meeting for payment to the shareholders;
• the possibility of participation in the General Shareholders’ Meeting, including the right to vote, put forward motions, make objections and ask questions.
Shareholders representing at least half of the share capital or the total number of votes at the Bank can convene the Extraordinary General Shareholders’ Meeting.
A shareholder or shareholders representing at least one-twentieth of the total number of votes or the total number of shares may request that the Extraordinary General Shareholders’ Meeting be convened and certain matters be placed on its agenda. They also may, before the date of the General Shareholders’ Meeting, submit to the Bank in writing or via electronic means of communication draft resolutions on matters placed on the agenda or matters which are planned to be placed on the agenda.
Additionally, during the General Shareholders’ Meeting the shareholders have the right to present draft resolutions or propose amendments or supplements to draft resolutions included in the agenda of the General Shareholders’ Meeting.
Each shareholder’s right to vote is limited to 10% of the total number of votes existing at the Bank on the day on which the General Shareholders’ Meeting is held. The exemptions from this limitation and its principles are described in § 10 of the Bank’s Articles.
The right to participate in the General Shareholders’ Meeting is granted to the persons who were shareholders of the Bank sixteen days before the date of the GSM.
Pledgees and users with voting rights have the right to participate in the General Shareholders’ Meeting if the limited property right established in their favour is registered in the securities account on the date of registering participation in the General Shareholders’ Meeting.
Shareholders may participate in the General Shareholders’ Meeting and exercise their voting rights in person (or, in the case of shareholders who are not natural persons, through a person authorized to make statements of intent on their behalf) or by proxy.
A power of attorney to participate in the General Shareholders’ Meeting and exercise voting rights must be given in writing or in an electronic form.
A Member of the Management Board, a member of the Supervisory Board, a liquidator and an employee of PKO Bank Polski S.A. or a member of the governing bodies or an employee of a company or cooperative which is a subsidiary of the Bank may act as the shareholders’ proxies at the General Shareholders’ Meeting of PKO Bank Polski S.A.
A shareholder may not, either personally or by proxy, or as a proxy of another person, vote on resolutions concerning his/her liability to PKO Bank Polski S.A. on whatever account, including the acknowledgement of the fulfilment of his/her duties, exemption from any duty towards PKO Bank Polski S.A., or any dispute between him/her and PKO Bank Polski S.A.
Members of the Bank's Management Board and the Bank's key registered auditor, within the limits of their competence and to the extent necessary for the resolution of the matters discussed by the General Meeting, are required to answer a question concerning information about the Bank to a participant in such a meeting if this is justified for the assessment of a matter on the agenda.
If there are compelling reasons for doing so, the Bank's Management Board may provide the participant in the General Meeting with the information in writing, no later than two weeks from the date of the request at the General Meeting.
The questions asked at the Annual General Shareholders’ Meeting on 21 June 2023 and the answers to these questions are published on the website in the section “Investor relations” at Report no 18/2023 – answers to shareholder's questions raised at the Annual General Meeting on 21 June 2023 (pkobp.pl)
[GRI 2-9] The Supervisory Board of PKO Bank Polski S.A. consists of 5 to 13 members appointed for a three-year joint term of office.
The number of Supervisory Board members is set by the Eligible Shareholder (as defined below), also in the case of putting forward a motion for electing the Supervisory Board by voting in separate groups.
The State Treasury, as the Eligible Shareholder, pursuant to § 11(1) of the Bank’s Articles of Association, set the number of members of the Supervisory Board at 11.
[GRI 2-10] A shareholder having the right to exercise the biggest number of votes arising from the shares in the Bank’s share capital at the General Shareholders’ Meeting electing the Supervisory Board members, hereinafter called “the Eligible Shareholder”, shall present the candidates for the number of Supervisory Board members determined in accordance with the formula described below. The candidates for the other seats on the Supervisory Board may be presented by all shareholders, including the Eligible Shareholder.
The number of seats on the Supervisory Board reserved for the candidates presented by the Eligible Shareholder shall be calculated in accordance with the following formula:
N = 13*S, where:
N - is the number of seats on the Supervisory Board reserved for candidates presented by the Eligible Shareholder. If N is not a whole number, the number of seats on the Supervisory Board is equal to N rounded up to the nearest whole number; at the same time, the total number of seats on the Supervisory Board reserved for the candidates presented by the Eligible Shareholder must not exceed 8 (eight);
S - is the share of the Eligible Shareholder in the share capital of the Bank, calculated as the quotient of the number of shares from which the Eligible Shareholder may vote at the General Shareholders’ Meeting electing the Supervisory Board members and all shares in the Bank’s share capital outstanding as at the date of the General Shareholders’ Meeting.
If the General Shareholders’ Meeting appoints a smaller number of Supervisory Board members than the number resulting from the above formula, the Eligible Shareholder shall have the right to present and put to the subsequent votes at the same General Shareholders’ Meeting a number of candidates not bigger than twice the difference between the number of Supervisory Board members calculated in accordance with that formula and the number of members appointed from among the candidates previously presented by the Eligible Shareholder.
Members of the Supervisory Board shall be appointed and dismissed by the General Shareholders’ Meeting.The process of their selection shall ensure the appointment of competent persons and guarantee their suitability and proper performance of their obligations. The Supervisory Board members shall be selected taking into account the requirements of the individual and collective suitability assessment described in the “Policy for the suitability assessment of candidates for members and members of the Supervisory Board of Powszechna Kasa Oszczędności Bank Polski S.A.” (the “Supervisory Board Suitability Policy”) and taking into account the principle of diversity in the composition of the Supervisory Board.
The suitability assessment of the candidates and members of the Supervisory Board is performed taking into account in the first place the requirements of Article 22aa of the Banking Law.
The General Shareholders’ Meeting performs the suitability assessment of the individual Supervisory Board members and the collective assessment of the whole Supervisory Board each time a new Supervisory Board member is appointed and once a year as part of the periodical assessment. The General Shareholders’ Meeting may also perform an additional suitability assessment in other, justified situations, which affect the requirements addressed to the Supervisory Board or its individual members. Such additional assessments shall be initiated by the Bank.
The suitability criteria set out in the Supervisory Board Suitability Policy include an assessment of their qualifications, understood as knowledge, experience and skills in terms of their suitability for their functions and duties assigned, as well as in terms of the principles for supervising the Bank's activities, and potential conflicts of interest that may be related to their functions and duties assigned, and an assessment of their reputation.
In addition, the assessment criteria include, among others, an assessment of the integrity and ethicality of conduct, the ability to form independent judgement and the ability to devote sufficient time to the responsibilities assigned.
No amendments were made to the Supervisory Board Suitability Policy in 2023.
[GRI 2-11] The Chair and Deputy Chair of the Supervisory Board shall be appointed by Eligible Shareholder from among the appointed Supervisory Board members, also if the Supervisory Board has been elected by voting in separate groups.
The Supervisory Board's term of office began on 26 August 2020 and ran for three consecutive full financial years (i.e. ended 31 December 2023). The term of office of a Supervisory Board member expires not later than on the day of the General Shareholders’ Meeting approving the financial statements for the last full financial year of his/her term.
Changes in the composition of the Supervisory Board in 2023
The following changes in the composition of the Supervisory Board of the Bank took place in 2023:
• with effect from 24 March 2023, Mr Maciej Łopiński resigned as Chair of the Bank’s Supervisory Board,
• The Minister of State Assets, acting as an Authorised Shareholder within the meaning of § 11(2) of the Bank's Articles of Association, in consideration of § 35(1) of the Bank's Articles of Association, in accordance with § 12(1) of the Bank's Articles of Association, appointed Mr Robert Pietryszyn as Chair of the Bank's Supervisory Board as of 24 March 2023.
• Mr Krzysztof Michalski resigned as a member of the Bank's Supervisory Board with effect from 20 December 2023. The resignation of a member did not adversely affect the collective suitability of the entire body.
In accordance with the Policy on the Assessment of Suitability of Candidates for Members and Members of the Supervisory Board of Powszechna Kasa Oszczędności Bank Polski S.A., on 21 June 2023, the Bank’s Annual General Meeting conducted a periodic assessment of the suitability of the Bank’s Supervisory Board, confirming the individual suitability of the Supervisory Board members and the collective suitability of the entire body.
Pursuant to section 2.3 of “Best Practices for WSE Listed Companies 2021”, at least two Supervisory Board members satisfy the independence criteria referred to in the Act on registered auditors, audit firms and public oversight of 11 May 2017 and have no real and significant relationships with any shareholder holding at least 5% of the total number of votes.
Due to adopting the aforementioned principle by the Bank, as part of the assessment of individual suitability, each Supervisory Board member made a declaration of compliance or non-compliance with such independence criteria. According to these declarations, in the composition of the Supervisory Board as at 31 December 2023: eight Supervisory Board members (i.e. Mariusz Andrzejewski, Andrzej Kisielewicz, Rafał Kos, Maciej Łopiński, Tomasz Kuczur, Robert Pietryszyn, Bogdan Szafrański, Agnieszka Winnik–Kalemba) satisfy the independence criteria set out in the Best Practice 2021, and two Supervisory Board members (i.e. Wojciech Jasiński, Dominik Kaczmarski) do not satisfy the independence criteria. Krzysztof Michalski did not meet the independence criterion as at the date of resignation as a member of the Bank's Supervisory Board.
As at 31 December 2023, the Supervisory Board consisted of 10 persons.
Composition of the Supervisory Board of PKO Bank Polski S.A. as at 31 December 2023
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Robert Pietrzyszyn – Chair of the Supervisory Board
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On 18 October 2022 he was appointed to the Supervisory Board for the current term of office.
On 24 March 2023, the Bank's Management Board received a letter from the Minister of State Assets informing, that the Minister of State Assets, acting as an Authorised Shareholder within the meaning of § 11(2) of the Bank's Articles of Association, in consideration of § 35(1) of the Bank's Articles of Association, in accordance with § 12(1) of the Bank's Articles of Association, appointed Mr Robert Pietryszyn as Chair of the Bank's Supervisory Board as of 24 March 2023.
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He graduated in law from the University of Wrocław and MBA from the Wrocław Academy of Economics.
Experienced manager, entrepreneur. He started his career in the investment boutique Profes. In the years 2006-2008 he was cooperating with the KGHM Group, then until 2011 he conducted consulting activities. Since 2011, he has been responsible for the largest investment in the post-war history of Wrocław.
In his professional career, he was a member of the Management Board of PZU S.A., PZU Życie S.A. and the President of Lotos Group.
At present, he is a partner in a consulting company.
Lecturer in strategic management, member of many Supervisory Boards.
Independent member of the Supervisory Board.
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Year of birth: 1979
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Wojciech Jasiński – Deputy Chair of the Supervisory Board
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Member of the Supervisory Board since 25 February 2016.
On 26 August 2020, he was appointed to the Supervisory Board for the current term of office.
On 7 June 2021 he was appointed Deputy Chair of the Supervisory Board by the State Treasury.
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A graduate of the Faculty of Law and Administration of the University of Warsaw (1972).
From 1972 to 1986, he worked in Płock, among other things, at the National Bank of Poland, the Branch in Płock, at the Town Hall, as legal counsel in the Tax Chamber. In 1990-1991, he organized the local government structures in the Płockie Voivodeship, as a Representative of the Government Plenipotentiary for Local Government Reform. From 1992 to 1997 he worked in the Supreme Audit Office (NIK) as director of the NIK Branch Office in Warsaw, Finance and Budget Team, and State Budget Department. In 1997-2000, he was a member and then President of the Management Board of Srebrna, a company with its registered office in Warsaw. He was a member of the Supervisory Board of Bank Ochrony Środowiska S.A. in 1998-2000. From September 2000 to July 2001 he was Undersecretary of State at the Ministry of Justice. In 2006-2007, he was Minister of the State Treasury.
Since 2001, he has been a member of the Polish Parliament (during the 4th, 5th, 6th, 7th and 8th terms) where he was Chairman of the Standing Subcommittee for the Banking System and Monetary Policy, Chairman of the Economy Committee, and Chairman of the Public Finance Committee. He was also a member of the State Treasury Committee in the Sejm.
President of the Management Board of PKN ORLEN S.A. from 16 December 2015 to 5 February 2018. From June 2018 to July 2019 – plenipotentiary of the Management Board of Energa S.A. for the development of investments and energy markets.
He was a Chair of the Supervisory Board of PKN ORLEN S.A.
From 1 July 2022, adviser to the President of the NBP.
Dependent member of the Supervisory Board.
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Year of birth: 1948
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Dominik Kaczmarski – Secretary of the Supervisory Board
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On 7 June 2021, he was appointed to the Supervisory Board for the current term of office.
On 8 June 2021 he was appointed Secretary of the Supervisory Board.
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Dominik Kaczmarski graduated from the Faculty of Law and Administration of the University of Warsaw with a Master of Arts degree in law and a Master of Science degree in quantitative methods in economics and information systems from the Warsaw School of Economics. He has a tax advisor qualification. He has an MBA in Finance & Technology from the School of Business of the Warsaw University of Technology. He passed the second level of the CFA programme in November 2022.
He gained professional experience working in the largest international advisory firms (PwC in 2012-2014 and Deloitte in 2014-2016) as an expert in taxation of the financial sector.
From February 2016 to January 2020, he worked at the Ministry of Finance as Deputy Director of the Sectoral, Local and Gambling Taxes Department, and subsequently as the Deputy Director and Department Director of the Tax System Department. He dealt with tax on certain financial institutions and participated in the sealing of the tax system in the area of CIT and VAT, among others through the STIR (Clearing House Data Communications System) regulation.
He performed the following functions: Secretary of the Anti-Tax Avoidance Council, member of the State Examination Board for Tax Advisors, member of the General Tax Law Codification Commission, and member of the team of corporate law experts working as part of the Commission for Corporate Governance Reform.
From March 2020 to June 2021, Mr Kaczmarski was a member of the Supervisory Board of PKN Orlen S.A., and since June 2020 he has been a member of the Supervisory Board of Giełda Papierów Wartościowych w Warszawie S.A. (the Warsaw Stock Exchange) (and its chair since July 2020).
He performed the function of Director of the Analyses and Reporting Department at the Ministry of State Assets.
Dependent member of the Supervisory Board.
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Year of birth: 1989
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Mariusz Andrzejewski – Member of the Supervisory Board
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Member of the Supervisory Board since 22 June 2017.
On 26 August 2020, he was appointed to the Supervisory Board for the current term of office.
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He works as a university professor at the Kraków University of Economics, where he also serves as the head of the Department of Financial Accounting. He served as Dean of the Faculty of Finance and Law from 2016 to 2019 and as Dean of the College of Economics, Finance and Law from 2019 to 2020. He holds a full doctoral degree in economics. In 2013-2019, he worked as associate professor at the School of Banking and Management in Kraków. In 2003-2013, he worked in the Bielsko-Biała School of Finances and Law, where he was also head of the Finance Department.
He graduated from three faculties, studied accounting at the Faculty of Management at the Kraków Academy of Economics, automatics and robotics, specializing in artificial intelligence, and computer science at the Faculty of Electrical Engineering, Automatics and Electronics at the AGH University of Science and Technology in Kraków. During his studies, he received a scholarship of the Minister of National Education three times. In 2001, during the execution of a grant by the State Committee for Scientific Research, he wrote and defended his doctoral thesis, which was published as a book by Wydawnictwo Naukowe PWN under the title “Accounting and Disclosure of Information by Listed Companies”.
He obtained business experience while sitting on supervisory boards of companies including: Zakłady Chemiczne Alwernia S.A., Kombinat Koksochemiczny Zabrze S.A., Północ Nieruchomości S.A. (a company listed on NewConnect), PolRest S.A. (a company listed on the WSE), Media Nieruchomości S.A., Przedsiębiorstwo Inżynierii Miejskiej sp. z o.o. w Czechowicach–Dziedzicach, AWSA Holland II BV. He was also President of the Management Board of Altair Sp. z o.o., member of the Management Board in charge of finance of TBS Złocień Sp. z o.o. and advisor to the Management Board at the Institute of Business Law and Foreign Investments (Instytut Prawa Spotek i Inwestycji Zagranicznych – IPSiZ Sp. z o.o.). He was an Arbitrator at the Arbitration Court at the Polish Financial Supervision Authority. Currently he is the Chair of the Supervisory Board of PKP Polskie Linie Kolejowe S.A., Chair of the Supervisory Board of INSTAL Kraków S.A. and Deputy Chair of the Supervisory Board of Tauron Sprzedaż sp. z o.o. He holds a professional title of registered auditor. In 2005-2006 he was Undersecretary of State in the Ministry of Finance.
He is a member of the European Accounting Association (EAA) and the International Association for Accounting Education & Research (IAAER). He also is a member of the Polish Economic Society (PTE) and the Scientific Council of the Accountants Association in Poland.
Author or co-author of over 150 academic publications and several dozen expert opinions on economics.
Independent member of the Supervisory Board.
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Year of birth: 1971
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Andrzej Kisielewicz – Member of the Supervisory Board
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Member of the Supervisory Board since 25 February 2016.
On 26 August 2020, he was appointed to the Supervisory Board for the current term of office.
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Professor of mathematical sciences. He works at the Wrocław University of Technology, at the Faculty of Mathematics. He obtained his full doctoral degree from the University of Wrocław, and was awarded a PhD. in mathematics from the Polish Academy of Sciences. A graduate of the University of Wrocław. He gained his professional experience in various academic centres, including: Vanderbilt University (Nashville, USA), Polish Academy of Sciences, Technische University (Darmstadt, Germany), The University of Manitoba (Winnipeg, Canada), Blaise Pascal University (Clermont-Ferrand, France). He has experience as a member of supervisory boards. At present he is also a member of the Supervisory Board of KGHM Polska Miedź S.A.
He is the author of more than 85 academic publications in foreign journals on mathematics, logic and computer science as well as many books (e.g. Sztuczna inteligencja i logika [Artificial Intelligence and Logic], Wprowadzenie do informatyki [An Introduction to Computer Science], etc.). He is also the author of many opinions, reviews and expert opinions, including for the National Science Centre and the European Commission. His professional interests include the application of mathematics, logic and computer science in practice, artificial intelligence, business intelligence, digitization and argumentation theory.
Independent member of the Supervisory Board.
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Year of birth: 1953
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Rafał Kos – Member of the Supervisory Board
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On 26 August 2020, he was appointed to the Supervisory Board for the current term of office.
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Attorney at Law, partner in the law office Kubas Kos Gałkowski. Doctor of Laws (Jagiellonian University), studied International Business Law at UC Davies (California), completed postgraduate studies in American Business Law at CUA Columbus School of Law (Washington, DC).
Vice-President of the Court of Arbitration at the Lewiatan Confederation in Warsaw. Appointed a Permanent Arbitrator and Conciliator of the Court of Arbitration at the General Counsel to the Republic of Poland (since 2020). Member of The Board of Visitors Columbus School of Law, CUA in Washington DC (since 2017). Expert of the Parliamentary Committee on Justice and Human Rights on the draft law on the enforcement of claims in class actions (2009), member of the Team for amendments to the Bankruptcy and Reorganization Law of the Minister of Justice (2012), Team for systemic solutions in the field of amicable methods of resolving economic disputes, facilitating the performance of economic activity of the Minister for the Economy (2013), the Team for Economic Law of the Minister for Development (2015) and the Commission for Corporate Governance Reform and the Expert Teams to the Minister of State Assets: on increasing the efficiency of supervisory boards and on corporate law (2020).
Recommended as an expert in litigation and arbitration by, among others, Who’s Who Legal, Chambers and Partners, Rzeczpospolita daily.
Independent member of the Supervisory Board.
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Year of birth: 1971
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Tomasz Kuczur – Member of the Supervisory Board
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On 12 October 2021, he was appointed to the Supervisory Board for the current term of office.
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Lawyer and expert in political science. A graduate of the Faculty of Law and Administration of the University of Warmia and Mazury and the Bydgoszcz Academy (now the Kazimierz Wielki University in Bydgoszcz). He obtained a PhD in law from the Faculty of Law and Administration of the University of Warmia and Mazury. He obtained a full doctorate in social science at the University of Wrocław. Professor in social sciences. Head of the Department of Contemporary Political and Administrative Systems. Professor at the Kazimierz Wielki University in Bydgoszcz.
Independent member of the Supervisory Board.
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Year of birth: 1973
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Maciej Łopiński – Member of the Supervisory Board
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Appointed to the Supervisory Board for the current term of office on 7 June 2021 and on the same day the State Treasury appointed him Chair of the Supervisory Board.
On 24 March 2023, Mr Maciej Łopiński announced his resignation as Chair of the Bank's Supervisory Board as of that date. Notwithstanding his resignation from the aforementioned function, Mr Maciej Łopiński remained a member of the Supervisory Board
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A graduate of the University of Wrocław. Editor-in-chief of Tygodnik Gdański, journalist at Głos Wybrzeża and Tygodnik Czas. Deputy to the Sejm (the Polish Parliament) of the 7th term. In the years 2005-2010, Secretary of State at the Chancellery of the President of Poland, Lech Kaczyński, and in the years 2015-2016 – at the Chancellery of the President of Poland, Andrzej Duda. Mr Łopiński has many years of experience in corporate law and corporate governance gained at the supervisory bodies of various companies, including PZU S.A., KGHM Polska Miedź S.A., PZU Asset Management S.A., Telewizja Polska S.A.
Independent member of the Supervisory Board.
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Year of birth: 1947
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Bogdan Szafrański – Member of the Supervisory Board
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On 12 October 2021, he was appointed to the Supervisory Board for the current term of office.
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An economist and Americanist, expert in strategic financial management, capital market, US politics and economy and Polish-American relations. He obtained a PhD in management science at the Faculty of Management of the Warsaw University and passed the Chartered Financial Analyst (CFA) exam at level 2.
A graduate of the University of California Irvine (UCI), where he obtained an MBA in finance from the Merage School of Business. Before that he studied at the Faculty of Management of the University of Warsaw and the Faculty of Foreign Trade of the Warsaw School of Economics (SGH). He also took a PhD course in economics at the University of California Los Angeles (UCLA).
He worked in California, USA for high tech companies, such as Digital Corporation, Advanced Photonics, Inc. ans Xsirius Superconductivity, Inc. He was a member and then the chair of the Supervisory Board of Polam Credit Union in Los Angeles (the Polish credit unions SKOK are based on the CU model).
Subsequently, he was President of the ZEM Celma S.A. Group, Vice-President for Finance and Administration of Kapsch Telecom Sp. z. o.o., Vice-President of the Management Board for Strategic Shareholder Cooperation at a telecommunications joint venture Energis Polska Sp. z o.o. (National Grid, Energis, PKP), Strategy and Development Director at Tel-Energo S.A., Vice-President for Finance of PKP Cargo S.A., advisor to the Management Board of Petrolot Sp. z o.o. for financial restructuring, and Management Board member for Finance and Business at PLK S.A.
In 1994, he passed the exam for candidates for supervisory board members, and since then he has been a member of a number of supervisory boards, including the supervisory boards of companies with the participation of the State Treasury (PFR S.A., Lotos Terminale S.A., ZEM Celma S.A., KWB Konin S.A., PKP PLK S.A.).
He carried out independent consulting activities at MetaStrategy Consulting in the area of strategic management, economic value added (EVA) management, valuation of enterprises and M&A consultancy.
He is a lecturer in finance at the Faculty of Management and the Centre for American Studies at the University of Warsaw and at the Lazarski University. He is a commentator of economic and political events in TVP Info, TVN24 BiŚ and author of articles on management, privatization and finance. A member of the Polish-US think tank Polonia Institute.
Independent member of the Supervisory Board.
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Year of birth: 1958
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Agnieszka Winnik-Kalemba – Member of the Supervisory Board
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On 7 June 2021, she was appointed to the Supervisory Board for the current term of office.
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Ms. Winnik-Kalemba graduated from the Faculty of Law and Administration of the University of Wrocław in 1995. In 1995-1997, she participated in the post-graduate scholarship programme funded by the US government at Gergeotown University in Washington D.C. and the University of Kentucky the James W. Martin School of Public Policy and Administration. In the years 1999-2003, she trained to become an attorney-at-law.
Since 2003, she has run her own law firm – Kancelaria Adwokacka Adw. Agnieszka Winnik-Kalemba. In 1986-1989, she cooperated with the Regional Executive Committee of the “Solidarity” Trade Union – the Lower Silesia Region (Regionalny Komitet Wykonawczy NSZZ Solidarność Region Dolny Śląsk) and the “Solidarity” Committee for Interventions and the Rule of Law (Komisja Interwencji i Praworządności NSZZ Solidarność) run by Zofia and Zbigniew Romaszewski. In 1989-2000, she worked for: the Executive Office of the “Solidarity” Trade Union - the Lower Silesia Region; the Law Offices of Bowles, Keating, Matuszewich & Fiordalisi a Partnership of Professional Corporation, Chicago USA (as a legal assistant); the Chairman of the Chamber of Regions of the Council of Europe (as a legal assistant); the Vivodeship Sejmik of Wrocław Voivodship; the Legal Office of the Lower Silesian Marshal Office in Wrocław (as its director).
In 2006-2008, Ms. Winnik-Kalemba was a member of the Supervisory Board of PKO Bank Polski S.A., and in 2016 she was Deputy Chair of the Supervisory Board of PKO Bank Polski S.A.
She was the Chair of the Supervisory Board of KGHM Polska Miedź S.A.
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Year of birth: 1969
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Principles of functioning of the Supervisory Board
The Supervisory Board functions based on generally applicable legal regulations, the Articles of Association and the Rules passed by the Supervisory Board and approved by the General Shareholders’ Meeting. Meetings of the Supervisory Board are held at least once a quarter.
On 21 June 2023, the Annual General Shareholders' Meeting of PKO Bank Polski S.A. approved the Rules of Procedure of the Supervisory Board of Powszechna Kasa Oszczędności Bank Polski Spółka Akcyjna adopted by the Supervisory Board. The new Regulations of the Supervisory Board, include, in particular, the following amendments vs. the previous Regulations of the Supervisory Board:
• § 3 item 1 – introduction of the provision on the Supervisory Board issuing opinions on matters put on the agenda of the General Meeting, consistent with Best Practices for WSE listed companies 2021;
• § 7 – taking into account the standard resulting from Article 3821 of the Code of Commercial Companies, governing the cooperation of the Supervisory Board with external advisors;
• § 8 (2) – adjusting the time limit for convening meetings at the request of a Member of the Supervisory Board or the Management Board to the time limit of 2 weeks required by the Code;
• § 8 (5) added – introduction of the possibility for the Supervisory Board to hold meetings also without formal conveying, in accordance with Article 389 § 6 of the Code of Commercial Companies;
The Supervisory Board performs its duties collectively.
The Supervisory Board passes resolutions by an absolute majority of votes, in the presence of at least half of the members, including the Chair or Deputy Chair, except for resolutions specified in the Bank’s Articles, which require (apart from the quorum indicated) a qualified majority of 2/3 of the votes. The members of the Supervisory Board to whom the given voted matter relates do not participate in the vote.
The work of the Supervisory Board is managed by the Chair, and in his/her absence – by the Deputy Chair. The Chair represents the Supervisory Board before the other authorities of PKO Bank Polski S.A., regulatory authorities and other persons.
Meetings of the Supervisory Board are convened by the Chair or, in his/her absence, by the Deputy Chair on his/her own initiative or at the request of a member of the Supervisory Board or at the request of the Management Board.
Meetings of the Supervisory Board may be convened with the possibility of participation (and passing of resolutions) via remote communication channels, in accordance with the “Rules for participation in a meeting of the Supervisory Board of Powszechna Kasa Oszczędności Bank Polski Spółka Akcyjna by means of direct remote communication” adopted by the Supervisory Board (the Rules of e-meetings).
With the exception of matters specified in the Bank’s Articles of Association, the Supervisory Board may also pass resolutions outside the meeting in writing (by circulation) or using means of direct remote communication, in particular e-mail.
In 2023 the Supervisory Board held 11 meetings and passed 171 resolutions.
The participation of the Supervisory Board members in the meetings in 2023 is presented in the following table.
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Table 29. Attendance of members of the Supervisory Board of the Bank in 2023
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Full name
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Attendance*
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Mariusz Andrzejewski
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11/11
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Wojciech Jasiński
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11/11
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Dominik Kaczmarski
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9/11
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Andrzej Kisielewicz
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9/11
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Rafał Kos
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10/11
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Tomasz Kuczur
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11/11
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Maciej Łopiński
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9/11
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Krzysztof Michalski
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11/11
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Robert Pietryszyn
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10/11
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Bogdan Szafrański
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11/11
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Agnieszka Winnik-Kalemba
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9/11
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* Attendance at meetings / number of meetings in the period of performing the function.
All absences were considered justified by resolutions of the Supervisory Board.
Competences and responsibilities of the Supervisory Board
The Supervisory Board exercises continuous supervision over the Bank’s activities in all areas of its operations.
In addition to other powers and duties stipulated by generally applicable legal regulations and the provisions of the Articles of Association of PKO Bank Polski S.A., the competences of the Supervisory Board include passing resolutions pertaining, in particular to:
• approving the following documents adopted by the Management Board: policies, rules and regulations, including: the Bank’s strategy, the risk management strategy, the Bank management strategy, the dividend policy, the remuneration policy, the policy for internal capital assessment and capital management, and review of strategies and procedures for internal capital assessment and capital management, the compliance policy of the Bank, internal control system, regulations of the Management Board, regulations for the management of special funds created from net profit, organizational rules of the Bank, compliance and internal audit unit regulations;
• approving the annual financial plan adopted by the Management Board;
• approving the overall risk tolerance level determined by the Management Board;
• appointing an audit firm to conduct the audit or review of the Bank’s financial statements and the consolidated financial statements of the Bank’s Group;
• passing the Rules:
– of the Supervisory Board;
– for granting loans, advances, bank guarantees and warranties to members of the Management Board and Supervisory Board, persons holding managerial positions in the Bank and to entities related to these persons by capital or organizational links;
• appointing and dismissing, by secret ballot, the President of the Management Board, the Vice-Presidents and the members of the Management Board;
• suspending, for important reasons, individual or all members of the Management Board and delegating members of the Supervisory Board, for a period of no more than three months, to temporarily perform the duties of members of the Management Board who have been dismissed, have resigned or are unable to perform their duties for other reasons;
• giving its prior consent for actions fulfilling statutory criteria, including, among other things, disposal of fixed assets (intangible assets, tangible fixed assets, long-term investments), taking up, the purchase or sale of shares in another company, subscription or purchase of bonds convertible to shares, concluding a material agreement by PKO Bank Polski S.A. with a shareholder holding at least 5% of the total number of votes in the Bank or with a related entity, concluding a contract for legal services, marketing services, public relations and social communication services or management consultancy services, donation agreements or similar agreements, debt release agreements and other similar agreements whose value exceeds the amount indicated in the Bank’s Articles;
• applying to the Polish Financial Supervision Authority for consent for the appointment of the President of the Management Board and a Management Board member supervising the management of risk material to the Bank’s activities, and for entrusting the function of Management Board member supervising the management of risk material to the Bank’s activities to a current Management Board member who has not supervised the management of this risk to date;
• evaluation of the functioning of the Bank’s remuneration policy and presentation of a relevant report to the Annual General Shareholders’ Meeting;
• opinion on the application of the “Principles of corporate governance for supervised institutions” by the Bank;
• granting approval for opening or closing a foreign branch.
• issuing opinions on the matters put on the agenda of the General Meeting by the Management Board, whereas the Supervisory Board must not issue opinions with reference to those which refer solely to the Supervisory Board or Supervisory Board Members;
• considering information received from the Management Board on all important matters concerning the activities of the Bank and risk relating to the activities conducted and the manner of managing such risk;
• preparing annual reports presented to the Annual General Meeting in compliance with the Best Practices or with the Corporate Governance Principles.
The Supervisory Board also presents an annual report on the activities of the Supervisory Board to the General Meeting, which includes, among other things, an assessment of the Directors' Report on the activities (of the Bank's Group, including the Bank) and the financial statements (of the Bank and the Bank's Group) for the previous year in terms of their conformity with the books, documents and facts, and an assessment of the Management Board's proposals for the distribution of profit or coverage of loss.
In order to fulfil its duties, the Supervisory Board may, in particular, examine all documents of the Bank, review the Bank's assets and request the Bank to prepare or submit any information, documents, reports or explanations concerning the Bank (in particular its activities or assets) and information, reports or explanations concerning its subsidiaries or related companies. The Management Board may not restrict the members of the Supervisory Board from accessing information, documents, reports or explanations requested by them.
The Supervisory Board may use the services of external advisors, experts or consultants at the Bank’s cost.
In the performance of their duties, members of the Supervisory Board should exercise the diligence required by the professional nature of their activities and maintain their loyalty to the Bank.
Members of the Supervisory Board are not in breach of their duty of care arising from the professional nature of their activities if, in acting loyally towards the company, they act within the limits of reasonable economic risk, including on the basis of information, analyses and opinions that should be taken into account in the circumstances in making a careful assessment.
Committees of the Supervisory Board
In accordance with the Bank’s Articles, the Supervisory Board appoints from among its members committees which it is required to appoint under the binding legislation. The Supervisory Board may also appoint other committees from among its members. The committees of the Supervisory Board act on the basis of Rules adopted by the Supervisory Board.
The Supervisory Board, in accordance with its rules, appoints in particular a nomination and remuneration committee, a risk committee, an audit committee and a strategy committee.
The Nominations and Remuneration Committee appointed by the Supervisory Board functions in accordance with the provisions of Annex I to the Commission Recommendation 2005/162/EC on the role of non-executive or supervisory directors of listed companies and on the committees of the (supervisory) board.
In 2023, all rules of the Supervisory Board committees were amended.
Committees appointed by the Supervisory Board.
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Audit Committee of the Supervisory Board
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Tasks
• monitoring the financial reporting process, including the review of interim and annual financial statements (separate and consolidated);
• monitoring the adequacy, effectiveness and efficiency of the internal control system, including with respect to financial reporting, and the quality of the internal audit work in assessing the adequacy of the internal control system;
• monitoring the effectiveness of the risk management system with respect to financial reporting, in particular by analyzing information received from the Risk Committee;
• monitoring the audit activities, in particular performance of the audit by the audit firm, taking into account all conclusions and findings of the Polish Agency for Audit Oversight, which is referred to in the Act on registered auditors, resulting from inspections carried out in the audit firm;
• controlling and monitoring the independence of the registered auditor and the audit firm carrying out the audit of the financial statements, in particular when the audit firm also provides services other than audit to the Bank’s Group;
• informing the Supervisory Board of the audit results and explaining how the audit contributed to the fairness of the Bank’s financial reporting and explaining the role of the Committee in the audit process;
• assessing the independence of the registered auditor and consenting to the provision of permissible services other than audit to the Bank and the Bank’s Group by the audit firm’s related entities or a member of the audit firm’s network, in accordance with the policy;
• developing a policy for selecting the audit firm to conduct an audit and providing the Supervisory Board with recommendations as to adopting the policy;
• developing a policy for the provision of services other than audit by the audit firm performing the audit, its related entities and a member of the audit firm’s network, and providing the Supervisory Board with recommendations as to adopting the policy;
• developing a procedure for selecting an audit firm to conduct an audit and providing the Supervisory Board with recommendations as to adopting the policy;
• providing the Supervisory Board with recommendations as to the appointment of the audit firm to conduct the audit;
• submitting recommendations aimed at ensuring the fairness of the Bank’s financial reporting to the Supervisory Board;
• submitting recommendations to the Supervisory Board with regard to the statement concerning the audit firm conducting the audit of the annual financial statements of the Bank and consolidated financial statements of the Bank’s Group;
• developing the rules for the process of disclosing and exchanging data and information between the PFSA, the audit firm, the key registered auditor and the Bank, and recommending their adoption to the Supervisory Board;
• presenting to the Supervisory Board, at least once a year, issues that may have a significant impact on the financial performance of future periods or the position of the Bank and the Bank’s Group.
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As at 31 December 2022, The Audit Committee consisted of:
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Date of the apointment to the Committee*
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Chair:
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Agnieszka Winnik-Kalemba
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15 June 2021
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Deputy Chair:
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Mariusz Andrzejewski
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24 September 2020
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Members:
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Dominik Kaczmarski
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15 June 2021
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Rafał Kos
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24 September 2020
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Bogdan Szafrański
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16 December 2021
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* During the present term of the Supervisory Board
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Independence criteria and competences
In 2023, as part of the periodic suitability assessments of members of the Supervisory Board carried out in June, it was assessed whether the candidate and members of the Supervisory Board meet the requirements necessary to serve on the Audit Committee of the Supervisory Board.
According to the aforementioned assessments, the members of the Audit Committee jointly meet the conditions of independence and qualifications in accordance with the Act on registered auditors, audit firms and public oversight of 11 May 2017.
Including as at 31 December 2023:
• Chair of the Audit Committee Agnieszka Winnik-Kalemba and Mariusz Andrzejewski, Rafał Kos and Bogdan Szafrański are independent, i.e. the majority of the Audit Committee members, are independent;
• The following members have the most adequate knowledge and experience in the scope of the Audit Committee’s activity, including competences in accounting and auditing of financial statements:
– Mariusz Andrzejewski – competences confirmed by a PhD. in economics and qualifications of a registered auditor; member of Polish and international accounting and bookkeeping associations; additionally, skills resulting from professional experience related to performing management and supervisory functions and working as a registered auditor;
– Dominik Kaczmarski – competences resulting from knowledge and skills gained within the educational programme connected with the title of tax advisor and with applying for the title of Chartered Financial Analyst, completed MBA Finance & Technology studies and a master's degree in quantitative methods in economics and information systems at the SGH Warsaw School of Economics; in addition, he has professional experience in bank tax reviews and calculations, as well as in the process of auditing financial statements (with regard to tax components);
– Bogdan Szafrański – knowledge and skills gained within the educational programme at the University of California Irvine (UCI), where he completed MBA studies at the Merage School of Business in the area of finance, as well as resulting from his experience as a lecturer in the Faculty of Finance and Banking of the Lazarski University in Warsaw (mainly in the area of financial and management accounting);
• all members of the Audit Committee collectively have knowledge and skills in the area of banking resulting from, among other things, their education, professional experience and functions performed (as more fully described in the biographical notes in this chapter).
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Number of meetings There were 8 Audit Committee meetings in 2023.
Attendance of members of the Audit Committee of the Supervisory Board at committee meetings in 2023.
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Name and Surname
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Attendance *
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Mariusz Andrzejewski
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8/8
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Dominik Kaczmarski
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7/8
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Rafał Kos
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8/8
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Bogdan Szafrański
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8/8
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Agnieszka Winnik-Kalemba
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6/8
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* Attendance at meetings / number of meetings in the period of performing the function.
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The policy for the appointment of an audit firm and the policy for the provision of services
The main purpose of the Policy for selecting the audit firm to audit the financial statements of the Bank and the Bank’s Group (hereinafter: the Selection Policy) and the Policy for the provision of permissible services other than audit to the Bank and the Bank’s Group companies by the audit firm performing the audit, its related entities or members of its network (hereinafter: the Policy for providing the services), is to ensure the compliance of the audit firm selection process and the provision of services by this firm to the Bank and the Group with the applicable laws and recommendation L of the Polish Financial Supervision Authority, in particular in terms of ensuring the audit firm’s independence and objectivity and satisfaction of the requirements concerning mandatory rotation and cooling off periods.
The Selection Policy defines the following principles of mandatory rotation and cooling off periods with respect to the audit firm and the key registered auditor.
• the maximum period of uninterrupted performance of statutory audit engagements by the same audit firm, an audit firm related to that firm or any member of a network operating in the European Union of which these audit firms are members is 10 audited financial years. This period may be extended (with PFSA’s approval) by two years, to a maximum of 12 audited financial years, if more than one audit firm is engaged in the joint audit formula, provided that the statutory audit results in the preparation of a joint audit report;
• an agreement for audit of the financial statements shall be concluded for a period not shorter than 2 financial years and not longer than 3 financial years, with an option of extending it for the following audited period of at least two financial years;
• after the end of the maximum period of uninterrupted performance of engagements referred to in item 1, the audit firm may perform a statutory audit again not earlier than 4 years after the end of the previous audit of the financial statements of the Bank and the Bank’s Group;
• a key registered auditor must not perform a statutory audit of the financial statements for a period longer than 5 audited financial years;
• a key registered auditor may perform a statutory audit of the financial statements again not earlier than three years after the end of the last statutory audit of the financial statements of the Bank and the Bank’s Group.
In accordance with the Selection Policy, the Supervisory Board conducts the proceedings for signing an agreement for the audit of the financial statements of the Bank and the Bank’s Group in the form of an open tender. Having completed the selection procedure organized by the Bank, the Audit Committee provides to the Supervisory Board a recommendation concerning the audit firm selection. Unless it is recommended to renew the audit engagement, the recommendation presents at least two audit firms to be selected from and an indication of the preferred one (with a justification). The Supervisory Board selects the audit firm based on the Audit Committee’s recommendation. Clear and unbiased criteria are applied in the selection of the audit firm on the basis of the proposals submitted. These criteria include in particular:
• approach to the activities, internal arrangements to ensure independence and compliance with other applicable provisions of law, professional standards, quality control standards and principles of professional ethics, and the reputation of the audit firm;
• the audit approach, including the proposed audit methodology, areas of particular interest, the overall audit plan, the communication strategy, the IT tools used;
• professional experience in the industry in which the Bank and the Bank's Group operate, experience in cooperation with the Bank and the Bank's Group companies and geographical reach taking into account the scope of the Bank's Group's activities;
• assessment of the members of the team assigned to carry out the audit, their qualifications and training, team management, customer relationship management and interpersonal skills;
• the amount of remuneration expected and the estimated labour intensity;
• auditor and audit firm insurance and liability coverage.
The Audit Committee recommendations for the selection of the audit firm to audit the financial statements for the years 2020-2021 and 2022-2023 satisfied the applicable requirements and were prepared based on the selection procedures organized by the Bank, which satisfied the applicable criteria.
In accordance with the Policy for providing the services, the provision of permissible services other than audit by the audit firm performing the audit, its related entities or members of its network to the Bank requires approval of the Audit Committee of the Supervisory Board of the Bank. The approval of the Audit Committee of the Supervisory Board is also required in the case of permissible services other than audit provided to a company of the Bank’s Group (on the request of such company). The company requesting such approval must present the approval of its Audit Committee or its Supervisory Board.
In 2023, the audit firm PricewaterhouseCoopers Polska spółka z ograniczoną odpowiedzialnością Audyt sp. k. provided permissible non-audit services to the Bank. Before concluding the agreement on providing permissible non-audit services, the Supervisory Board Audit Committee conducted evaluation of the independence of the audit firm and approved providing such services. The remuneration of the audit firm is presented in section 11.2.2 of this report.
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Nominations and Remuneration Committee of the Supervisory Board
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Tasks
[GRI 2-20] Expressing opinions and monitoring the remuneration rules set out in the Remuneration Policy adopted by the Bank on an ongoing basis and supporting the Bank’s authorities in developing and implementing this policy.
In particular, the Committee is responsible for the performance of the following tasks:
• expressing opinions on the general rules for remunerating persons whose professional activities have a material impact on the Bank’s risk profile to be approved by the Supervisory Board;
• conducting periodical reviews of the Remuneration Policy and presenting their results to the Supervisory Board;
• presenting to the Supervisory Board proposals of principles for hiring and remunerating members of the Management Board;
• presenting or giving an opinion on the remuneration decisions to be taken by the Supervisory Board - in particular on the remuneration of members of the Management Board, including severance payments for members of the Management Board;
• assessing the MbO targets set for and pursued by the members of the Management Board, their value and importance, and providing an opinion to the Supervisory Board in this regard;
• assessing tools and systems adopted to guarantee that the remuneration system in the Bank’s Group properly accounts for all types of risk, liquidity and equity levels and that the Remuneration Policy complies with the proper and effective risk management principles, supports such management and is consistent with the business strategy, goals, corporate culture and values, and the long-term interests of the Bank’s Group;
• overseeing the fixed remuneration of heads of units performing independent control functions, including the compliance, internal audit and risk management units;
• providing opinions and monitoring variable remuneration components of leaders of the compliance, internal audit and risk management units;
• presenting opinions to the Supervisory Board on the settlement of MbO targets for members of the Management Board for a given assessment period approved by the Supervisory Board;
• reviewing the report of the internal audit function's review of the implementation of the remuneration policy;
• preparing a draft report on the evaluation of the functioning of the Remuneration Policy in the Bank, which is presented by the Supervisory Board to the General Shareholders’ Meeting.
Additionally, the Committee’s tasks include:
• expressing opinions on the diversity policy relating to the composition of the Management Board;
• assessing the suitability of and recommending to the Supervisory Board candidates for the Management Board, including taking into account the necessary knowledge, competence and experience of the Management Board as a whole necessary to manage the Bank and taking into account diversity in the composition of the Management Board;
• defining the scope of duties for the candidate to the Management Board approved by the Supervisory Board, as well as defining the requirements concerning the knowledge and competences and the expected involvement in terms of the amount of time necessary to perform the function of a Management Board member;
• determining the target representation of the gender which is under-represented in the Management Board, to be approved by the Supervisory Board;
• periodically (at least once a year) assessing the structure, size, composition and effectiveness of the functioning of the Management Board and recommending respective changes to the Supervisory Board;
• periodically (at least once a year) assessing the suitability, including assessing the knowledge, competences and experience of the Management Board as a whole and of its individual members, and informing the Management Board of the results of the assessment;
• periodically assessing the Management Board’s policy in respect of the selection and appointment of persons to managerial positions at the Bank having a significant impact on the Bank’s risk profile and submitting respective recommendations to the Management Board;
• giving an opinion on, including an annual review of the suitability policy concerning the Management Board members and key officers of the Bank and suitability assessment at the Bank’s Group companies and recommending amendments to this policy to the Supervisory Board;
• giving an opinion on policy on assessing the suitability of candidates for members and members of the Bank’s Supervisory Board as part of its review by the Supervisory Board.
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As at 31 December 2022, the Nominations and Remuneration Committee consisted of:
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Date of the appointment to the Committee*
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Chair:
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Wojciech Jasiński
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24 September 2020
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Deputy Chair:
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Dominik Kaczmarski
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8 June 2021
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Members:
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Andrzej Kisielewicz
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24 September 2020
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Tomasz Kuczur
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14 October 2021
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Robert Pietryszyn
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9 November 2022
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Bogdan Szafrański
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14 October 2021
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* During the present term of the Supervisory Board
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Number of meetings There were 9 meetings of the Nominations and Remuneration Committee in 2023.
Attendance of members of the Nominations and Remuneration Committee at committee meetings in 2023.
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Name and Surname
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Attendance *
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Wojciech Jasiński
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9/9
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Dominik Kaczmarski
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7/9
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Andrzej Kisielewicz
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7/9
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Tomasz Kuczur
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9/9
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Robert Pietryszyn
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8/9
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Bogdan Szafrański
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9/9
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* Attendance at meetings / number of meetings in the period of performing the function.
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Risk Committee of the Supervisory Board
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Tasks
• evaluating the overall current and future readiness of the Bank to take risks, taking into account the risk profile of the Bank Group, including, in particular, the strategic tolerance limits adopted by the Management Board on particular risks for the Bank and the Bank's Group;
• expressing opinions on the Bank’s operational risk management strategy adopted by the Management Board and information on the implementation of this strategy submitted by the Management Board, as well as other periodic reports on risk management and capital adequacy, taking into account the annual assessment of the adequacy and effectiveness of the risk management system, information on the implementation of the risk management strategy, a review of scenarios, including stress scenarios (to determine the response of the Bank's risk profile to external and internal events) and findings from stress tests;
• expressing opinions on the approval policy for new products adopted by the Management Board and recommending its approval to the Supervisory Board;
• expressing opinions on the disclosure policy adopted by the Management Board and recommending its approval to the Supervisory Board;
• expressing opinions on other resolutions of the Management Board in respect of risk management and capital adequacy which are subject to approval by the Supervisory Board;
• supporting the Supervisory Board in overseeing the implementation of the Bank’s operational risk management strategy;
• reviewing whether the prices of assets and liabilities offered to customers fully envision the Bank’s business model and its strategy in terms of risk and suggesting corrective actions to the Management Board;
• assessing the risks associated with the financial products and services offered;
• expressing opinions on solutions for reducing business risk with the use of the Bank’s property insurance and civil liability insurance for members of the Bank’s authorities and proxies;
• ongoing monitoring of the risk management system and providing the Supervisory Board with information on the results of this monitoring;
• expressing opinions on the information on the risk management strategy and risk management system disclosed by the Bank to the general public;
• carrying out an annual review of the remuneration policy for employees of the Bank and the Bank’s Group, and in particular evaluating whether incentives arising from this policy and remuneration practice take into account risk, capital and liquidity, as well as the probability and time perspective of generating profits by a company of the Group, as well as approving the report on this review, submitted for information to the Supervisory Board;
• ongoing monitoring of the implementation of risk management strategy and making recommendations to the Supervisory Board on necessary adjustments to the risk strategy resulting, inter alia, from changes in the Bank's business model, market events or recommendations made by the Risk Management unit;
• advising on the selection of external advisors, experts and consultants in the event that the Supervisory Board wishes to use their services;
• evaluating recommendations of external and internal auditors and follow-up in the form of appropriate implementation of the respective measures;
• cooperating with the Nominations and Remuneration Committee in connection with the Committee's opinions on the suitability policy concerning the Management Board members and key officers of the Bank and suitability assessment at the Bank’s Group companies to maintain this policy in line with effective and sound risk management;
• performing other tasks specified by the Supervisory Board with regard to risk management at the Bank.
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As at 31 December 2022, the Risk Committee consisted of:
|
|
date of appointment to the Committee*
|
|
Chair:
|
Mariusz Andrzejewski
|
24 September 2020
|
|
Deputy Chair:
|
Dominik Kaczmarski
|
15 June 2021
|
|
Members:
|
Wojciech Jasiński
|
24 September 2020
|
|
|
Andrzej Kisielewicz
|
24 September 2020
|
|
|
Bogdan Szafrański
|
14 October 2021
|
* During the present term of the Supervisory Board.
Krzysztof Michalski was also a member of the Risk Committee until 20 December 2023 (date of resignation).
|
|
Number of meetings There were 8 meetings of the Risk Committee in 2023.
Attendance of members of the Risk Committee at committee meetings in 2023
|
Name and Surname
|
Attendance *
|
|
Mariusz Andrzejewski
|
8/8
|
|
Wojciech Jasiński
|
8/8
|
|
Dominik Kaczmarski
|
6/8
|
|
Andrzej Kisielewicz
|
6/8
|
|
Krzysztof Michalski
|
8/8
|
|
Bogdan Szafrański
|
8/8
|
|
* Attendance at meetings / number of meetings in the period of performing the function.
|
|
|
Strategy Committee of the Supervisory Board
|
Tasks
• expressing opinions on the Bank’s strategy adopted by the Management Board, the approval of which is the competence of the Supervisory Board;
• supporting the Supervisory Board in overseeing the implementation of the strategy, in particular by analyzing periodic information on the implementation thereof presented by the Management Board;
• expressing opinions on strategic activities of the Bank, which require the prior consent of the Supervisory Board, in particular on their compliance with the binding strategy of the Bank;
• performing other tasks specified by the Supervisory Board with regard to the implementation of the strategic goals and key projects of the Bank.
|
As at 31 December 2022, the Strategy Committee consisted of:
|
|
|
date of appointment to the Committee*
|
|
Chair:
|
Dominik Kaczmarski
|
15 June 2021
|
|
Deputy Chair:
|
Bogdan Szafrański
|
14 October 2021
|
|
Members:
|
Mariusz Andrzejewski
|
24 September 2020 roku
|
|
|
Andrzej Kisielewicz
|
24 September 2020 roku
|
|
|
Tomasz Kuczur
|
14 October 2021
|
|
|
Robert Pietryszyn
|
9 November 2022
|
|
* During the present term of the Supervisory Board.
Krzysztof Michalski was also a member of the Strategy Committee until 20 December 2023 (date of resignation).
|
|
|
Number of meetings There were 3 meetings of the Strategy Committee in 2023.
Attendance of members of the Strategy Committee at committee meetings in 2023.
|
Name and Surname
|
Attendance *
|
|
Mariusz Andrzejewski
|
3/3
|
|
Dominik Kaczmarski
|
3/3
|
|
Andrzej Kisielewicz
|
3/3
|
|
Tomasz Kuczur
|
3/3
|
|
Krzysztof Michalski
|
3/3
|
|
Robert Pietryszyn
|
1/3
|
|
Bogdan Szafrański
|
3/3
|
|
* Attendance at meetings / number of meetings in the period of performing the function.
|
|
[GRI 2-9] The Management Board of PKO Bank Polski S.A. consists of three to nine members. The Management Board members are appointed by the Supervisory Board for a joint three-year term. [GRI 2-11] Appointing the President of the Management Board and the Board member responsible for overseeing the management of material risk in the Bank’s operations requires the consent of the PFSA.
The current term of office of the Management Board began on 3 July 2020.
Changes in the composition of the Management Board
In 2023, composition of the Bank's Management Board changed as follows:
• Mr Andrzej Kopyrski joined the Bank’s Management Board on 1 January 2023, pursuant to a decision of the Bank’s Supervisory Board of 15 December 2022;
• Mr Paweł Gruza resigned, effective at the end of 12 April 2023, from managing the work of the Bank’s Management Board and from applying for the position of President of the Bank’s Management Board; the resignation submitted did not mean Mr Paweł Gruza’s resignation from participation in the composition of the Management Board of the Bank or from the function of the Vice-President of the Management Board of the Bank;
• Mr Mieczysław Król resigned as a member of the Bank's Management Board with effect from 13 April 2023;
• The Bank's Supervisory Board dismissed Mr Maks Kraczkowski from the Bank's Management Board with effect from 13 April 2023;
• The Supervisory Board appointed Mr Dariusz Szwed as Vice-President of the Bank's Management Board, effective 14 April 2023, for the current joint term of office of the Bank's Management Board, which commenced on 3 July 2020, and at the same time appointed Mr Dariusz Szwed as President of the Bank's Management Board, subject to the approval of the Polish Financial Supervision Authority and as of the date of such approval;
• The Polish Financial Supervision Authority unanimously approved the appointment of Mr Dariusz Szwed as President of the Bank's Management Board effective 31 August 2023;
Due to the above changes in the composition of the Bank's Management Board, the Supervisory Board approved amendments to the internal division of responsibilities on the Bank's Management Board, which came into effect on 14 April 2023. In addition, in 2023 the Bank's Supervisory Board approved changes to the internal division of responsibilities unrelated to the change in the composition of the Bank's Management Board, which came into effect on 1 July, 1 September and 4 October 2023.
Following changes in the composition of the Bank’s Management Board and changes in the division of responsibilities, the Nominations and Remuneration of the Bank’s Supervisory Board carried out an assessment, as a result of which it confirmed:
• the individual suitability of the new member of the Bank's Management Board, Mr Dariusz Szwed, and the collective suitability of the entire Management Board;
• the individual suitability of the members of the Bank’s Management Board affected by the above change in responsibilities, including: Maciej Brzozowski (in April and in June), Marcin Eckert (in April), Paweł Gruza (in April) and Andrzej Kopyrski (in April and in August), Dariusz Szwed (in October).
The suitability assessment was approved by the Bank’s Supervisory Board.
Additionally, in connection with the Vice-President Marcin Eckert taking up a function in the Supervisory Board of Bank Pocztowy, as well as with the change in the structural assignment of the Bank's organisational entity in the supervision of corporate and strategic corporate clients, the Nominations and Remuneration Committee of the Bank’s Supervisory Board carried out an assessment of the impact of the above circumstances on the individual assessment of suitability of the Vice-Presidents, as a result of which the continued suitability of the Vice-Presidents to perform the function in the Bank’s Management Board was confirmed. The suitability assessment was approved by the Bank’s Supervisory Board.
Taking the above into account, in 2023 the Nominations and Remuneration Committee of the Supervisory Board carried out:
• preliminary suitability assessment - related to the appointment of a new member to the Management Board (April);
• additional suitability assessment - related to the change in the division of competences in the Bank's Management Board and to the occurrence of the aforementioned other circumstances that may affect the individual suitability assessment of the members of the Bank's Management Board (February, April, June, August and October);
• periodical suitability assessments – related to the annual assessment of the suitability of the members of the Bank's Management Board (December);
• collective suitability assessments of the Management Board (additional assessment related to the change in the composition of the Management Board and periodic assessment) – taking into account the personnel changes made and changes in the internal division of competences within the Management Board (April and December).
The suitability assessments were performed in accordance with the “Suitability policy concerning the Management Board members and key officers of the Bank and suitability assessment at the Bank’s Group companies”.
As a result of the above assessments, the Nominations and Remuneration Committee of the Supervisory Board confirmed the individual suitability of the members of the Bank’s Management Board and the collective suitability of the Management Board. The above suitability assessments were approved by the Supervisory Board.
As at 31 December 2023, the Bank’s Management Board consisted of 8 people.
Composition of the Management Board of PKO Bank Polski S.A.
|
Composition of the Management Board as at 31 December 2023.
|
|
Dariusz Szwed - President of the Management Board supervising the Management Board President area
|
|
Member of the Management Board since 14 April 2023.
The Supervisory Board of the Bank appointed Mr Dariusz Szwed (with effect from 14 April 2023) as the President of the Bank’s Management Board, subject to the consent of the PFSA and upon obtaining such consent. Until that consent was obtained, Mr Dariusz Szwed was the Vice President of the Bank’s Management Board managing the work of the Bank’s Management Board. On 31 August 2023, the Polish Financial Supervision Authority unanimously approved the appointment of Mr Dariusz Szwed as President of the Bank's Management Board.
|
Dariusz Szwed has got almost 30 years’ experience in the financial sector. Since 2021, he was the Member of the Management Board of Bank Gospodarstwa Krajowego in which he recently supervised the area of business and banking operations, following supervising earlier the areas of IT, European funds and implementation of the internal pillar “Digital and process transformation, within bank’s strategy 2021-2025”.
In the years 2019-2021 he was the Vice President of the management board of Alior Bank, where he supervised the entire bank's business - sales and products for retail and business customers, treasury activities, private banking area and a brokerage office. At the same time, he was the president of the management board of Alior TFI. He was also a member of several committees, including the credit committee. Previously, since 1995, he worked in Santander Bank Polska, recently as the director of the private banking department, where he was responsible for supervision over comprehensive business activities, including operational, credit and reputational risk in this area. He also supervised the retail activity of the bank's brokerage office. He was also a member of the team managing the merger of Santander Bank Polska and the separated part of Deutsche Bank, where he was responsible for the analysis and implementation of business solutions in the merged bank.
Graduate of the banking and finance faculty of WSB University of Poznan and management faculty of Czestochowa University of Technology. He also holds a diploma from the SGH Warsaw School of Economics.
|
|
Year of birth: 1973
|
|
|
Functions performed
in the Bank's standing committees in 2023
|
Risk Committee (Chair) - since 31 August,
Transformation Committee (Chair) - since 31 August,
IT Security Committee (Chair) - since 31 August,
Asset and Liability Management Committee (Chair) - since 31 August,
Asset and Liability Management Committee (member) - from 14 April to 30 August,
Sustainable Development Committee (Chair) - since 10 July,
Strategy Committee (Chair) - from 14 April,
|
|
Maciej Brzozowski – Vice-President of the Bank’s Management Board in charge of the Retail and Corporate Banking Area,
|
|
Member of the Management Board since 25 March 2022.
|
He graduated from the Faculty of Management at the University of Warsaw. He holds the Master of Business Administration title.
Maciej Brzozowski has been working in the banking sector since the beginning of his professional career. He started his career in 1996 at PKO Bank Polski S.A.
Since 1999 he was involved in sales and risk area at Kredyt Bank S.A. He also coordinated the optimization of business processes in the organization. He participated in works related to building models determining the risk of default for corporate entities and calculating capital requirements.
Since 2008 to 2012 he held managerial functions in the Risk Assessment Department and the Inspection Department in the Polish Financial Supervision Authority Office, where he was responsible, among others, for the area of banking regulations and validation of advanced credit risk models for calculating banks' capital requirements.
In 2017-2020, he has dealt with the issues of risk and stability of the financial system and influence of EU regulations on functioning of the banking sector at the National Bank of Poland as deputy director of the Financial Stability Department. His responsibilities also included cooperation with the European Systemic Risk Board in the area of systemic risk.
Member of the Management Board of Alior Bank S.A. until 24 March 2022, responsible for risk management (obtained approval from the Polish Financial Supervision Authority). He oversaw the areas of credit, debt recovery and restructuring, market, liquidity and operational risks and capital requirements. He chaired and was a member of the relevant committees in this regard.
He was a member of the Supervisory Boards of Alior TFI S.A. and Alior Leasing Sp. z o.o.
Member of the Management Board of PKO Bank Polski S.A. since 25 March 2022. He also serves as Chair of the Supervisory Board of PKO Towarzystwo Funduszy Inwestycyjnych S.A. and Deputy Chair of the Supervisory Board of PKO Bank Hipoteczny S.A.
He lectured on the basics of financial risk at the Social College of Entrepreneurship and Management in Łódź.
|
|
Year of birth: 1973
|
|
|
Functions performed
in the Bank's standing committees in 2023
|
Credit Committee of the Bank (Member);
Risk Committee (Member);
Strategy Committee (Member);
Asset and Liability Management Committee (Member);
Sustainable Development Committee (Member).
|
|
Marcin Eckert – Vice-President of the Management Board of the Bank in charge of the Finance and Accounting Area
|
|
Member of the Management Board since 8 June 2021.
|
Graduate of the Advanced Management Program at the Harvard Business School. He also completed the Leadership Academy for Poland programme and graduated from the Faculty of Law and Administration at the Nicolaus Copernicus University in Toruń.
Previously he worked for the PZU Group as the Managing Director for Corporate Matters (from 2017). In the years 2019-2021, he was a member of the Management Board of PZU S.A. and PZU Życie S.A. At the PZU Group, he was responsible for the strategy and projects, the Administration Office, the Corporate Governance Office, the Office of Supervision of Foreign Companies and the Information Technology Function. In 2018-2020, he was a member and Deputy Chair of the Supervisory Board of Alior Bank S.A. and Chair of the Supervisory Board of PZU Zdrowie S.A., from June 2020 to June 2021 he was Deputy Chair of the Supervisory Board of Bank Pekao S.A. At present, Mr Eckert is the Chair of the Supervisory Board of Totalizator Sportowy sp. z o.o. and PKO BP BANKOWY PTE S.A. and Deputy Chair of the Supervisory Board of Bank Pocztowy S.A.
He has been an attorney-at-law since 2001, specializing in commercial law, tax law and labour law. Before joining the PZU Group he worked as Senior Associate at Bird & Bird Szepietowski i Wspólnicy (as the Benefits & Compensation practice leader). Before that, he worked for TGC Tax Advisers sp. z o.o. (as director of the Tax Department), Mazars Audyt Sp. z o.o. (as director of the Tax and Legal Department) and Ernst & Young (Senior Manager).
|
|
Year of birth: 1971
|
|
|
Functions performed
in the Bank's standing committees in 2023
|
Data Quality Committee (Deputy Chair);
Risk Committee (Member);
Operational Risk Committee (Member);
Strategy Committee (Member);
Transformation Committee (Member);
Assets and Liabilities Management Committee (Member);
Sustainable Development Committee (Member).
|
|
Paweł Gruza – Vice-President of the Bank’s Management Board in charge of the Operations and International Banking Area
|
|
Member of the Management Board since 10 August 2022.
|
He graduated from the University of Warsaw’s Faculty of Law and Administration.
From 10 September 2018 he held the position of the Vice President of the Management Board (International Assets) in KGHM Polska Miedź S.A. An Undersecretary of State in the Ministry of Finance since November 2016. Co-author of the tax reform. An Undersecretary of State in the Ministry of the State Treasury from April to November 2016. He managed a portfolio of companies with State Treasury ownership and state legal entities. He worked on reforming supervision over State Treasury companies. An expert and a management board member of Fundacja Republikańska (Republican Foundation) from 2007 to 2016. As a representative of the minister responsible for financial institutions he was also a member of the Polish Financial Supervision Authority.
He was a partner and a management board member of MMR Consulting sp. z o.o., as well as a partner in the tax consultant office GWW Tax from 2007 to 2016. In 2000-2006 he worked in consultancy companies, Arthur Andersen and Ernst & Young. He managed interdisciplinary consultant projects for Polish and international companies from the industrial and financial sector.
Author and co-author of numerous publications on taxes and social security.
|
|
Year of birth: 1977
|
|
|
Functions performed
in the Bank's standing committees in 2023
|
Risk Committee (Member) – since 26 May;
Operational Risk Committee (Member) – since 27 April;
Strategy Committee (Member);
Asset and Liability Management Committee (member) - from 1 February to 12 April;
Sustainable Development Committee (Member).
|
|
Wojciech Iwanicki – Vice-President of the Management Board of the Bank in charge of the Administration Area
|
|
Member of the Management Board since 14 October 2021.
|
He graduated from the Faculty of Philosophy and Sociology of the Maria Curie-Skłodowska University (UMCS) in Lublin. He obtained the Executive Master of Business Administration title.
He has several years of professional experience in the management of administration, logistics, infrastructure, human resources and IT.
In 2017 he joined the PZU Group, where he performed the functions of director of the Administration Office at PZU S.A., PZU Życie S.A., PZU Centrum Operacji S.A., TUW PZUW. He was also a director in charge of administration and finance in the Public Procurement Office. In the years 2014-2016, director of the Office of the President of the General Counsel to the State Treasury. From 2006 to 2010, deputy director in the office of the President of the Republic of Poland.
Deputy Chair of the Supervisory Board of Sigma BIS S.A. since October 2019.
|
|
Year of birth: 1974
|
|
Functions performed
in the Bank's standing committees in 2023
|
Risk Committee (Member) – since 26 May;
Strategy Committee (Member);
Sustainable Development Committee (Member).
|
|
Andrzej Kopyrski – Vice-President of the Bank’s Management Board in charge of the Corporate and Enterprise Banking Area
|
|
Member of the Management Board since 1 January 2023.
|
He is a graduate of Warsaw University of Technology and University of Strathclyde in Glasgow.
He started his banking career in Bank Pekao S.A. in 1992. In 1993-1996 he worked in corporate banking in ING Bank Polska S.A. and later he headed structured finance operations in Deutsche Bank Polska S.A. and since 1997 till 2001 he was Director in ABN Amro Bank (Polska) in charge of structured finance and capital markets.
Since 2001 he held a position of Member of the Management Board in HSBC Financial Services (Poland). Since April 2002 he worked in Bank BPH S.A. as Managing Director responsible for Sales, Structured Finance and Capital Markets Area and after merger with Bank Pekao S.A. he took the responsibility for Investment Banking and Structured Finance Department.
In 2008-2018 he was the Vice President of the Management Board of Bank Pekao S.A. managing the corporate and investment banking operations. Then he worked at the Polish Development Fund (PFR), where he was responsible for the Investment Division, supervising capital investments and the support program for large companies.
|
|
Year of birth: 1965
|
|
Functions performed
in the Bank's standing committees in 2023
|
Credit Committee of the Bank (Member);
Risk Committee (Member);
Strategy Committee (Member);
Asset and Liability Management Committee (member) - since 27 April;
Sustainable Development Committee (Member).
|
|
Artur Kurcweil - Vice-President of the Bank’s Management Board in charge of the Technology Area
|
|
Member of the Management Board since 14 September 2021.
|
Artur Kurcweil has more than 20 years of experience in IT management. In the years 2011-2021 he worked for the PZU Group: until 2019 as IT director, and from 2020 as the managing director for digitization. He was in charge of digital transformation of the PZU Group services, IT projects, ensuring business continuity and cyber security implementations. He also performed the function of director in charge of the Innovations Lab, a unit of the PZU Group dealing with cooperation with international start-ups, testing and implementing innovations.
Before 2011, he worked at IBM for 5 years and at the Siemens Group for 8 years. During three years of work in the Siemens head office in Munich he gained international project experience and knowledge of consulting and international IT management.
In his work, Artur Kurcweil is focused on innovation, digitization and effectiveness of processes and dynamic development of multi-channel business. Thanks to his professional experience gained both as a customer and a service provider, he understands the needs of the market and fast changes in the area of new technologies.
He graduated from the SGH Warsaw School of Economics, where he completed studies in cyber security management, and from the West Pomeranian Business School in Szczecin, where he obtained BSc in information technology and econometrics and M.A. in economics.
He is a member of the Supervisory Board of Krajowa Izba Rozliczeniowa S.A. and is a member of the Electronic Banking Council of the Polish Bank Association.
|
|
Year of birth: 1973
|
|
Functions performed
in the Bank's standing committees in 2023
|
IT Architecture Committee (Chair);
Data Quality Committee (Chair);
IT Security Committee (Deputy Chair);
Risk Committee (Member);
Operational Risk Committee (Member);
Strategy Committee (Member);
Transformation Committee (Member);
Sustainable Development Committee (Member).
|
|
|
Piotr Mazur - Vice-President of the Bank’s Management Board in charge of the Risk Management Area
|
|
Member of the Management Board since 8 January 2013.
|
He is Vice-President of the Management Board of PKO Bank Polski S.A. in charge of the Risk Management Area, upon the approval of the PFSA granted on 8 January 2013.
He graduated from the Faculty of Organization and Management at the Academy of Economics in Wroclaw.
He has more than 30 years of experience in banking – mainly in the areas of risk, restructuring and loans, and in international financial groups operating in Europe, the USA and South America. A member of supervisory boards, creditors’ committees, a member and chairman of key risk management committees. He participated in the development of the strategy of Bank Zachodni WBK S.A., was directly responsible for risk management, optimization of debt collection and restructuring processes, and cooperated with the regulators in Poland and abroad.
He started his professional career in 1991 at Bank BPH S.A., in the loans area. In 1992, he joined Bank Zachodni S.A. and, following the merger with Wielkopolski Bank Kredytowy S.A., with BZ WBK S.A. In 1992-2000, he worked in the Capital Investments Department and in 2000-2005 he held the position of Director of the Credit Quality Control Department. In the years 2005-2008 he was the Director of Business Intelligence and Risk Management Area, and in the years 2008-2010 - Deputy Chief Risk Officer. From January 2011 he was Chief Credit Officer and from March 2012 also Deputy Chief Risk Officer. Moreover, he was Chair of the Credit Committee at BZ WBK S.A., Deputy Chair of the Credit Risk Forum, and Deputy Chair of the Risk Model Forum.
He was a member of the Supervisory Boards of the following PKO Bank Polski S.A. Group companies: PKO Bank Hipoteczny S.A., PKO Leasing S.A. and PKO Faktoring S.A.
He is a member of the Supervisory Board of Biuro Informacji Kredytowej S.A. and System Ochrony Banków Komercyjnych S.A.
|
|
Year of birth: 1966
|
|
Functions performed
in the Bank's standing committees in 2023
|
The Bank’s Credit Committee (Chair);
Operational Risk Committee (Chair);
Risk Committee (Deputy Chair);
Sustainable Development Committee (Deputy Chair);
IT Security Committee (Member);
Data Quality Committee (Member);
Strategy Committee (Member);
Asset and Liability Management Committee (Member).
|
|
|
|
|
Principles of operation of the Management Board
The Management Board of the Bank operates on the basis of generally applicable laws, the Bank’s Articles and the Rules of the Management Board adopted by the Management Board and approved by the Supervisory Board.
The Management Board manages the Bank’s affairs and represents the Bank. The Bank informs the Supervisory Board of all significant issues concerning the Bank’s operations.
The Management Board performs its activities at the Management Board meetings. The Management Board meetings are organized on an as needed basis, not less frequently than once a week.
The President of the Management Board manages the work of the Management Board, i.e. convenes the Management Board meetings and presides over them and presents the Management Board’s position to other bodies of the Bank and third parties.
The Management Board makes decisions in the form of resolutions at meetings or outside meetings by circulation (in writing). The Management Board may make decisions with the use of the means of direct remote communication, including in particular e-mail.
Resolutions of the Management Board are required with respect to all matters exceeding the scope of the Bank’s ordinary business. Resolutions concerning risk management may be passed in the absence of the Management Board member in charge of material risk in the Bank’s operations in exceptional cases only. If the vote of the Management Board member in charge of the material risk in the Bank’s operations on a resolution concerning risk management is different from the vote of a majority of the Management Board members or from the preliminary proposal included in the draft resolution, such member should provide a written explanation of his/her decision. The Management Board shall be obliged to notify the Supervisory Board of this fact immediately and provide it with a written explanation of the reasons behind the votes of the Management Board and the Management Board member in charge of the material risk in the Bank’s operations.
Resolutions of the Management Board are passed by an absolute majority of votes. In the event of an equal number of votes, the President of the Management Board has the casting vote.
The Management Board’s working procedures and matters that require a Management Board resolution are specified in the Rules of the Management Board.
By Resolution No 33/2023 of the Supervisory Board of 9 March 2023, the Supervisory Board approved the Regulations of the Management Board of Powszechna Kasa Oszczędności Bank Polski Spółka Akcyjna adopted by the Management Board.
The amendment to the Regulations of the Management Board was intended to streamline the process of preparing Management Board meetings and to clarify and adapt the provisions of the Regulations to current practice with regard to the preparation and approval of materials for Management Board meetings, their placement on the meeting agenda and the signing of resolutions and minutes.
The powers of the President of the Management Board have also been clarified and it has been indicated that regulations issued by the President of the Management Board apply to the preparation and approval of meeting materials and the placing of topics on the agenda of Management Board meetings. The catalogue of amendments also includes provisions adapting the scope of the information contained in the minutes of the Management Board meeting to the current practice of the body. In addition, the possibility for the Management Board to receive information material using the electronic communication systems in place at the Bank was sanctioned.
Declarations on behalf of the Bank may be made by:
• the President of the Management Board acting independently;
• two members of the Management Board acting jointly or one member of the Management Board acting jointly with a proxy;
• two proxies acting jointly;
• attorneys acting independently or jointly, within the framework of the power of attorney granted.
As at 31 December 2023, there were four proxies at the Bank. One proxy was revoked in 2023.
In 2022, the Bank’s Management Board held 55 meetings and passed 690 resolutions.
The participation of the Bank's Management Board members in the meetings in 2023 is presented in the following table.
|
Table 30. Attendance of Management Board members in 2023
|
|
Name and Surname
|
Attendance *
|
|
Dariusz Szwed
|
38/39
|
|
Maciej Brzozowski
|
51/55
|
|
Marcin Eckert
|
45/55
|
|
Paweł Gruza
|
50/55
|
|
Wojciech Iwanicki
|
51/55
|
|
Andrzej Kopyrski
|
45/55
|
|
Artur Kurcweil
|
47/55
|
|
Piotr Mazur
|
48/55
|
* Attendance at meetings / number of meetings in the period of performing the function.
Competences and responsibilities of the Management Board
The competences of the Management Board include all matters related to managing the affairs of PKO Bank Polski S.A. that do not fall within the competences of the General Shareholders’ Meeting or the Supervisory Board in accordance with the provisions of the generally applicable law or the Bank’s Articles.
In accordance with the Management Board Rules, the competences of the Bank’s Management Board include in particular:
• defining the Bank’s strategy and the Bank management strategy, taking into account the risk of the operations and the principles of prudent and stable management of the Bank;
• defining the risk management strategy and the overall risk tolerance level;
• establishment and liquidation of the Bank’s standing committees and defining their characteristics;
• establishing, transforming and liquidating the Bank’s entities in Poland and abroad;
• defining the Rules for managing special funds created from net profit, the Bank’s Organizational Rules and the Management Board Rules;
• appointing proxies and defining the rules for appointing attorneys at the Bank;
• defining the principles for the functioning of the management system, including in particular: the principles for the functioning of the internal control system, the principles for management of specific risks, the non-compliance risk management policy assumptions, the principles of the information policy with respect to capital adequacy, the principles for capital adequacy and equity management concerning the processes of internal capital estimation, capital planning and dividend policy;
• defining the annual financial plan for the Bank and the Bank’s Group;
• defining the principles for the identification of business models and performing tests of contractual cash flow characteristics;
• defining accounting policies;
• adopting annual and interim financial statements of the Bank, consolidated financial statements of the Bank’s Group and quarterly reports of the Bank’s Group;
• defining bancassurance policies;
• defining the remuneration policy, which is also applicable to the Bank’s subsidiaries;
• defining bank products and other banking and financial services;
• defining the principles of the Bank’s participation in companies and other organizations;
• making decisions on the payment of interim dividend to the shareholders.
Decisions on the acquisition of the Bank’s shares for the purposes of their redemption and determining the value of remuneration for shares redeemed, and on increasing or reducing the Bank’s share capital are not within the competences of the Management Board – they are taken by the General Shareholders’ Meeting.
Members of the Management Board supervise the areas of activities allocated to them and make decisions on matters of ordinary management within the areas supervised by them.
As at the end of 2023, the internal division of responsibilities within the Bank's Management Board is as follows:
• [GRI 2-12] The President of the Management Board (overseeing the President's Area) is in particular in charge of matters related to supervision of the operation of the Bank's bodies, supervision of the operation of the Bank's standing committees, macroeconomic strategy and analysis, internal audit, security, compliance risk, conduct risk, reputation risk, legal services, human resources management, communication and marketing as well as corporate governance and coordination of ESG activities;
• The Vice-President of the Management Board in charge of the Retail and Corporate Banking area is responsible in particular for matters relating to the development of the product offering for private individuals, including the design of the investment banking and insurance offering, product sales and services to private individuals and companies;
• The Vice-President of the Management Board in charge of the Corporate and Enterprise Banking Area is responsible in particular for matters relating to institutional banking, the development of the Bank's treasury product offering and its own activities in the financial market, the development of the product offering for companies, enterprises and corporate and public sector banking customers, the sale of products to these customers, excluding companies;
• The Vice-President of the Management Board in charge of the Finance and Accounting Area is responsible in particular for the following matters: financial planning and controlling, accounting and financial reporting, and taxes;
• The Vice-President of the Management Board in charge of the Administration Area is responsible in particular for the Bank's property management and procurement matters;
• The Vice-President of the Management Board in charge of the Operations and International Banking area is responsible, in particular, for the handling of operations, the customer advocacy function, the provision of fiduciary services, the sale of products and the servicing of international banking customers, the servicing of customers via means of remote communication, product administration and cash management;
• The Vice-President of the Management Board in charge of the Technology Area is responsible in particular for telecommunications and IT matters;
• The Vice-President of the Management Board in charge of the Risk Management Area is responsible in particular for the management of all risks relating to the Bank's activities, excluding compliance risk, conduct risk and reputation risk, as well as matters relating to the restructuring and recovery of the Bank's receivables.
The current organisational chart of the Bank, including the areas of responsibility of individual members of the Management Board, is available on the Bank's website in the Investor Relations section at Corporate governance principles - PKO Bank Polski (pkobp.pl).
In the performance of their duties, members of the Management Board should exercise the diligence required by the professional nature of their activities and maintain their loyalty to the Bank.
Members of the Management Board are not in breach of their duty of care arising from the professional nature of their activities if, in acting loyally towards the company, they act within the limits of reasonable economic risk, including on the basis of information, analyses and opinions that should be taken into account in the circumstances in making a careful assessment.
Bank committees comprising members of the Management Board
As at the end of 2023, the following standing committees functioned in the Bank with the participation of members of the Management Board:
|
Asset and Liability Committee
|
|
Purpose
|
Managing assets and liabilities by influencing the structure of the balance sheet of the Bank and its off-balance sheet items in a manner conducive to achieving the optimum financial result.
|
|
Tasks
|
Supporting the Management Board in the following activities of the Bank and its Group:
– shaping the structure of the Bank’s balance sheet;
– capital adequacy management;
– managing profitability, taking into account the specific nature of the individual areas of activity and the respective risks;
– managing financial risk, including market and liquidity risks, business risk, and credit risk (settlement and pre-settlement risk) of the transaction on the wholesale market.
|
|
Risk Committee
|
|
Purpose
|
Setting strategic directions and tasks with respect to banking risk in the context of the Bank’s strategy, the macroeconomic situation and the regulatory environment, analyzing periodic reports related to banking risks and developing appropriate guidance based thereon, as well as preparing the banking risk management strategy and its periodic reviews.
|
|
Tasks
|
Monitoring the integrity, adequacy and effectiveness of the banking risk management system, capital adequacy and allocation of internal capital to individual business lines and implementing the risk management policy pursued as part of the Bank’s Strategy.
Analysing and evaluating the utilization of strategic risk limits set in the Banking Risk Management Strategy.
Expressing opinions on periodic risk reports submitted for approval to the Supervisory Board and taking into account information from these reports when issuing opinions.
|
|
Credit Committee
|
|
Purpose
|
Management of credit risk occurring when taking lending decisions or decisions concerning liabilities managed by responsible units of the Bank, as well as management of the risk of incurring losses as a result of taking wrong business decisions on the basis of the credit risk models.
|
|
Tasks
|
Making decisions on the segregation of duties to make credit or sales decisions and claims management decisions.
Making lending decisions concerning the biggest matters of the Bank’s Customers, as well as issuing recommendations for the Bank’s Management Board in lending matters.
Making decisions in matters concerning restructured receivables.
Setting industry limits, limits concerning appetite for portfolio credit risk and exposure concentration risk.
Making decisions concerning the implementation of credit risk models and anti-fraud models in lending processes, in particular with respect to scoring or rating.
Making decisions on the implementation of a model for determining allowances for expected credit losses on financial assets.
Accepting reports on the monitoring or review of models and loan portfolio quality, in which credit risk models are used.
Accepting monthly and quarterly credit risk reports.
|
|
Operational Risks Committee
|
|
Purpose
|
Effective management of operational risk to improve the safety of the Bank’s operations.
|
|
Tasks
|
Determining the directions of operational risk management development.
Supervising the functioning of operational risk management, including the tasks concerning continuity of the Bank’s operations.
Coordination of operational risk management.
Determining measures to be taken in the event of an emergency which exposes the Bank to reputational risk and results in operating losses.
Making decisions about implementing and changing the model for legal risk related to mortgage loans.
|
|
Transformation Committee
|
|
Purpose
|
Ensuring the effective transformation of the Bank in line with its development directions, including ensuring the consistency of business objectives and maximization of the business value of changes in the Bank (e.g. within formations and projects).
|
|
Tasks
|
Operational management of the Bank’s Strategy implementation.
Performing key roles in the New Management Model (NMM) in accordance with the Bank’s internal regulations concerning the New Model of Work and the New Management Model.
Making decisions on the implementation of and changes to projects, as well as decisions pertaining to tangible costs and other operating costs.
Allocation of funds for urgent purchases resulting from the business continuity plan in the event of a crisis.
Overseeing projects and development initiatives, particularly work progress, project budgets, financial and non-financial benefits.
Initiating activities enhancing the Bank’s effectiveness.
Managing the annual financial limit for the implementation of projects; and development initiatives.
Solving disputes within the area of competences of the Committee, on lower decision-making levels
|
|
Strategy Committee
|
|
Purpose
|
Oversight of the strategic planning process and management of the Bank’s strategy.
|
|
Tasks
|
Managing the activities relating to Strategy development and implementation.
Making decisions, recommendations, recommendations or opinions on strategic planning and management of the Strategy.
Oversight of the implementation of the Strategy and the achievement of the strategic objectives.
Resolving any disputes arising during the development and implementation of the Strategy.
|
|
IT Architecture Committee
|
|
Purpose
|
Development of the IT architecture ensuring the implementation of the Bank’s Strategy.
|
|
Tasks
|
Development of key assumptions of the IT architecture of the Bank (principles).
Periodic evaluation of the IT architecture functioning at the Bank.
Development of a target architecture model.
Initiating activities aimed at implementing the target architecture model.
|
|
IT Security Committee
|
|
Purpose
|
Increasing the effectiveness of supervision and control over the IT system safety at the Bank (SIB).
|
|
Tasks
|
Issuing recommendations on the SIB safety, in particular related to:
– coordination and monitoring of work related to the SIB safety;
– setting the directions of the activities of the Bank with respect to SIB safety;
– specifying actions, which should be taken in the event of emergency situations which put the Bank’s image at risk and cause operating or financial losses in the area of SIB safety;
– monitoring the risk related to SIB safety.
|
|
Data Quality Committee
|
|
Purpose
|
Setting strategic directions of the activities relating to data quality management and data architecture at the Bank in the context of the Data Management System (DMS), oversight of its functioning and assessment of its effectiveness and the activities undertaken by the individual organizational units of the Bank.
|
|
Tasks
|
Taking decisions on data management in the Bank, including in particular decisions pertaining to:
– DMS development directions;
– determining the conditions for non-compliance with data quality requirements, in particular in cases justified by the continuity of the Bank's operations.
Making recommendations to the Bank's units on data management, in particular with regard to:
– activities carried out by the Bank's units;
– introducing new or changing existing data management solutions;
– preparing drafts of new internal regulations or amendments to existing regulations of the Bank;
– prioritization of activities within the DMS and prioritisation of action plans.
Making recommendations to the Bank's Management Board on data management, in particular:
– on the strategic directions of the development of the DMS;
– the adoption of Management Board resolutions that affect data quality.
|
|
Sustainable Development Committee
|
|
Purpose
|
Making or developing the decisions needed to achieve the Bank's and the Bank Group's strategic objectives in terms of sustainability and overseeing the operation of an integrated system for managing the impact of ESG (Environmental, Social, Governance) factors on the Bank and the Bank's Group (ESG Governance);
|
|
Tasks
|
Oversight of the implementation of ESG policies, strategies, regulations and standards at the Bank and the Bank's Group to ensure compliance with sustainability regulations, including in particular:
- Regulation (EU) 2020/852 of the European Parliament and of the Council on the establishment of a framework to facilitate sustainable investment (taxonomy);
- Regulation (EU) 2019/2088 of the European Parliament and of the Council on sustainability-related disclosures in the financial services sector (SFRD);
- Directive 2014/95/EU of the European Parliament and of the Council amending Directive 2013/34/EU as regards disclosure of non-financial and diversity information by certain large undertakings and groups (NFRD);
- Directive (EU) 2022/2464 of the European Parliament and of the Council of amending Regulation (EU) No 537/2014, Directive 2004/109/EC, Directive 2006/43/EC and Directive 2013/34/EU, as regards corporate sustainability reporting (CSRD).
Oversight of the implementation within the Bank and the Bank's Group of the data infrastructure and IT solutions needed for ESG management, including the aggregation and systematisation of data based on the principles arising from the regulations indicated above.
Determination of climate and environmental impact targets for the Bank and the Bank's Group and oversight of their implementation.
Oversight of the classification of assets in terms of Taxonomy (eligible assets).
|
In addition to the aforementioned functions, members of the Bank’s Management Board were also members of non-standing committees established within the framework of projects. The Bank also has the Investment Committee and the Sponsorship Committee. Members of the Management Board are not members of these committees.
The implemented diversity policy
The diversity policy for the members of the Bank’s Management and Supervisory Boards is an important part of the Bank’s suitability assessment policies, i.e.:
• The suitability policy concerning the Management Board members and key officers of the Bank and suitability assessment at the Bank’s Group companies;
• The policy on assessing the suitability of candidates for members and members of the Bank’s Supervisory Board.
The provisions implemented by the Bank set the directions for selecting, appointing and planning succession, including staff resources and suitability assessment of the Management Board members and key officers of the Bank. These persons are assessed in terms of their competences, knowledge and skills, experience adequate to the position and reputation understood as sufficiently unblemished opinion, honesty and ethical behaviour. Based on the regulations implemented, the General Shareholders’ Meeting makes decisions on the selection and suitability assessment of the candidates and members of the Bank’s Supervisory Board, the Supervisory Board makes decisions on the selection and suitability assessment of the Management Board members, and the Management Board members make decisions on the selection and suitability assessment of the MRT (Material Risk Takers). The Bank’s Supervisory Board monitors the effectiveness of the policy applied and, if appropriate, makes changes taking into account the recommendations of the Nominations and Remuneration Committee.
Following the annual review of the Management Board Suitability Policy, in December 2023 the Bank's Supervisory Board adopted amendments to the provisions of the Diversity Policy regarding:
• specifying the deadline and method of achieving the gender diversity objectives on the Management Board by assuming that the target achievement of at least a minimum level of gender diversity (i.e. 30%) in the composition of each Bank's Management Board should take place starting from the appointment of the Bank's Management Board for a new joint term after 31 December 2025, and that the achievement of this target will be achieved by applying the principle of equal opportunities in the selection of Management Board members and fostering a culture of diversity in the organisation.
Equivalent changes to the diversity policy for members of the Bank's Supervisory Board are planned for 2024.
Diversity policy assumptions
• The policies for assessing the suitability of candidates and members of the Bank’s Management Board and candidates and members of the Bank’s Supervisory Board include the Bank’s/General Shareholders’ Meeting’s commitment to take into account the principles of diversity in selecting candidates for members of the aforementioned bodies.
• The principle of diversity in selecting the Bank’s Supervisory Board and Management Board members is based on objective substantive criteria in terms of education, skills and professional experience. The additional criteria which support diversity in the composition of these bodies are age and gender.
• When making changes to the composition of the Bank's Management Board, including the selection of members of the Management Board for a new term of office, the Bank's Supervisory Board shall each time analyse the possibility of taking into account gender diversity objectives.
• The policies contain the commitment to monitor the effectiveness of their application, including in terms of diversity objectives.
• The suitability assessment policy contains an obligation for the Bank’s subsidiaries to introduce regulations regarding the principles of suitability – respective regulations are in place in the Group entities.
Structure of the management and supervisory bodies and MRT (Material Risk Takers)
Table 31. Diversity by gender, age and experience – statistics as at 31 December 2023 [GRI 405-1]
|
Gender
|
Women
|
Men
|
|
Supervisory Board
|
1
|
9
|
|
Management Board
|
-
|
8
|
|
MRT (Material Risk Takers)
|
17
|
58
|
|
Age
|
30-40
|
41-50
|
51-60
|
above 60
|
|
Supervisory Board
|
1
|
2
|
3
|
4
|
|
Management Board
|
-
|
5
|
3
|
-
|
|
MRT (Material Risk Takers)
|
6
|
44
|
24
|
1
|
|
Years of service at the Bank
|
up to 5 years
|
5-10 years
|
10-15 years
|
15-20 years
|
above 20 years
|
|
Supervisory Board
|
7
|
3
|
-
|
-
|
-
|
|
Management Board
|
6
|
1
|
1
|
-
|
-
|
|
MRT (Material Risk Takers)
|
22
|
18
|
12
|
9
|
14
|
Years of service at the Bank: for members of the Management Board and Supervisory Board there are years at the position in the Management Board and Supervisory Board.
Objectives of diversity of the composition of the Management Board and Supervisory Board
• The application of the diversity policy is aimed at ensuring appropriate selection of the Management Board and Supervisory Board members in order to obtain a wide range of competences, knowledge and skills adequate to a particular position and ensure that the Management Board and Supervisory Board members (both individually and collectively) issue top quality, independent opinions and decisions in all areas of the Bank’s operations.
• In their selection of members of the Bank’s bodies, the General Shareholders’ Meeting and the Supervisory Board of the Bank try to achieve gender balance in the composition of the Bank’s Supervisory Board and Management Board, respectively, or at least to achieve a minimum representation of the less numerous gender at 30%, taking into account the results of the suitability assessments.
• The target achievement of at least a minimum level of gender diversity in the composition of each Bank's Management Board should take place starting from the appointment of the Bank's Management Board for a new joint term after 31 December 2025.
• The diversity targets relating to the composition of the Supervisory Board and the Management Board of the Bank are considered in the selection of members of these bodies only to the extent that it does not have an adverse effect on their functioning and suitability.
The table below shows the number of shares in PKO Bank Polski S.A. held by members of the Bank's Management Board as at the date of publication of the Directors' Reports on the activities of the Bank's Group in 2023.
Table 32. Shares of PKO Bank Polski S.A. held by members of the Bank’s Management Board (composition as at the date of publication of the report for 2023)
|
Full name
|
Number of shares held as at the date of publication of the report for:
|
|
2023
|
2022
|
|
Number of shares
|
Total nominal value of shares held in PLN
|
Number of shares
|
Total nominal value of shares held in PLN
|
|
Szymon Midera
|
-
|
-
|
-
|
-
|
|
Maciej Cieślukowski
|
-
|
-
|
-
|
-
|
|
Marek Radzikowski
|
-
|
-
|
-
|
-
|
|
Piotr Mazur
|
8,000
|
8,000
|
8,000
|
8,000
|
As at the date of publication of the Directors' Reports on the activities of the Bank's Group in 2023 and 2022, members of the Bank's Supervisory Board did not hold any shares in PKO Bank Polski S.A.
Members of the Management Board and Supervisory Board and persons closely related to them are required to notify the Bank and the PFSA of any transactions concluded on their own account involving the Bank’s shares, the Bank’s debt instruments or derivative instruments and other related financial instruments of the Bank.
Members of the Management Board and Supervisory Board are also prohibited from concluding transactions on their own account or on the account of a third party, directly or indirectly, concerning the Bank’s shares, the Bank’s debt instruments or derivatives and other related financial instruments during the 30 days prior to the date of publication of its interim report by the Bank (closed period).
As at 31 December 2023, the members of the Management Board and Supervisory Board of the Bank did not hold shares or investment certificates in entities related to PKO Bank Polski S.A., i.e. its subsidiaries, joint ventures and associates.
Purchase and sale of own shares
Information required based on Article 111a of the Banking Law
Published forecasts of financial results for 2022
Employee share plan
Significant agreements and material agreements with the central bank or supervisory authorities
Issues of securities of PKO Bank Polski S.A. in 2022
Underwriting agreements and guarantees granted to subsidiaries
Information on proceedings at court, before a competent arbitration tribunal or a public administration body
Loans incurred and advances, guarantee and surety agreements
Financial liabilities and guarantees granted
Value of collateral set up on accounts or assets of the borrowers
Seasonality of cyclicality of activities in the reporting period
Events that occurred after the date on which the financial statements are prepared
Purchase and sale of own shares
PKO Bank Polski S.A. did not purchase or sell any own shares on its own account during the period covered by the report.
Information required based on Article 111a of the Banking Law
Table 33. Activities of the Bank’s Group by EU member states and third countries
|
in PLN million
|
Turnover (revenues)*
|
Profit/loss before tax
|
Income tax expense
|
Profit/loss after tax
|
Number of employees
in FTEs**
|
|
In EU member states:
|
|
|
|
|
|
|
- Poland
|
39,440
|
8,594
|
2,646
|
5,701
|
23,628
|
|
- Czech Republic
|
61
|
28
|
0
|
34
|
8
|
|
- Germany
|
79
|
23
|
10
|
33
|
7
|
|
- Slovak Republic
|
12
|
0
|
0
|
0
|
5
|
|
- Sweden
|
2
|
-1
|
0
|
0
|
0
|
|
- Ireland
|
57
|
0
|
0
|
0
|
0
|
|
In third countries:
|
|
|
|
|
|
|
- Ukraine
|
746
|
269
|
-121
|
146
|
1,489
|
* turnover (revenues) defined as the sum of interest income, fee and commission income and other operating income.
** Information on the number of employees is provided according to the guidance published by the Central Statistical Office in 2018 in “Methodical principles of labour market and salary statistics”. Number of employees is calculated based on employment contracts, excluding employees on child care leave and unpaid leave granted for periods longer than 3 months continuously.
The above summary includes data of PKO Bank Polski S.A. and subsidiaries included in consolidation within the meaning of Article 4(1)(48) of the European Parliament and Council Regulation No 575/2013 (i.e. in prudential consolidation). Prudential consolidation, unlike consolidation in accordance with the International Financial Reporting Standards, covers only subsidiaries which meet the definition of an institution, a financial institution or an ancillary service undertaking.
PKO Bank Polski S.A. and subsidiaries of the Bank which are included in the prudential consolidation have their registered offices in the territory of Poland (where they mainly conduct the following activities: banking, asset management, investment and pension fund management, leasing and factoring, and provide brokerage and transfer agent services as well as provide technological solutions), Ukraine (banking and debt collection activities), Sweden (leasing and raising funds from bond issues) and Ireland (securitization of lease receivables). PKO Bank Polski S.A. also provides services through its branches in the Czech Republic, Germany, and Slovakia.
The presented values are the sum total of items in the separate financial statements of these entities (according to the data as at the date of the summary).
In 2022, PKO Bank Polski S.A. did not sign any agreements mentioned in Article 141t (1) of the Banking Law, i.e. financial support agreements with entities that are subject to consolidated supervision, which operate within the same holding, or with closely related entities.
Rates of return on assets of the Bank’s Group and the Bank are presented in table No 1 and table No 5, respectively.
Published forecasts of financial results for 2023
PKO Bank Polski SA did not publish forecasts of financial performance for 2023. In current reports, the Bank communicated information on significant events that affected the Bank’s and the Bank’s Group’s results.
Employee share plan
No employee share plan is in place at PKO Bank Polski S.A.
Significant agreements and material agreements with the central bank or supervisory authorities
PKO Bank Polski S.A. is obliged to inform in the current reports about all agreements meeting the definition of confidential information provided in Regulation (EU) No 596/2014 of the European Parliament and of the Council on market abuse.
In 2023, The Bank has entered into and published information about a guarantee agreement entered into on 27 February 2023, which provides unfunded credit protection in respect of the Bank's portfolio of selected corporate credit receivables, in accordance with the CRR. The total value of the Bank's debt portfolio covered by this guarantee is over PLN 12,292 million, and the portfolio consists of the bond portfolio of PLN 1,515 million (“Portfolio A”) and the portfolio of other receivables of PLN 10,777 million (“Portfolio B”). The coverage ratio is 100% for Portfolio A and 80% for Portfolio B, therefore the total Guarantee amount is PLN 10,137 million. The maximum time of coverage under the Guarantee is 60 months, however the Bank is entitled to terminate the Guarantee prior to the expiry of this period.
In March 2023, PKO Bank Polski S.A signed an agreement with the National Bank of Poland for the Bank's participation in the Target-NBP system for euro-denominated payments.
Subsidiaries of PKO Bank Polski S.A. did not conclude any material agreements with the central bank or with the supervisory authorities.
Issues of securities of PKO Bank Polski S.A. in 2023
On 1 February 2023, PKO Bank Polski S.A. issued 3-year Senior Preferred Notes with a total value of EUR 750 million. For details, see chapter 1.3.2. “Issue of Eurobonds to cover the minimum level of own funds and eligible liabilities (MREL) requirement”.
Underwriting agreements and guarantees granted to subsidiaries
On 30 August 2017, PKO Bank Hipoteczny S.A. concluded an agreement with PKO Bank Polski S.A. amending the agreement signed in 2015 on the National Mortgage Covered Bond Issue Programme. In accordance with the amending agreement, Brokerage Office of PKO Bank Polski S.A. had the role of underwriter (until August 2017, mortgage covered bonds were offered as standard issue bonds). In 2023, PKO Bank Hipoteczny S.A. did not issue any mortgage covered bonds under the aforesaid agreement. The aggregate nominal value of issued and outstanding mortgage covered bonds issued as part of firm commitment underwriting was PLN 1,990 million as at 31 December 2023. The Brokerage Office’s portfolio as at the end of 2023 contained mortgage-covered bonds with a total nominal value of PLN 20.0 million.
As at 31 December 2023, issues of bonds of PKO Bank Hipoteczny S.A. under the Bond Issue Programme were governed by the Agreement on the Bond Issue Programme of 30 September 2015, with subsequent annexes, signed with PKO Bank Polski S.A., pursuant to which the maximum value of bonds issued and not redeemed based on the programme is PLN 6 billion, and the Guarantee Agreement of 30 September 2015, with subsequent amendments, pursuant to which PKO Bank Polski S.A. undertakes to be the underwriter of the bonds issue up to a total value of PLN 1 billion. At the same time, on the basis of separate agreements, PKO Bank Hipoteczny S.A. authorized the Bank’s Brokerage Office to act as Issue Agent and PKO Bank Polski S.A. to act as Dealer.
The liability of PKO Bank Hipoteczny S.A. in respect of the bonds issued as part of the aforesaid programme as at the end of December 2023 (in nominal value) amounted to PLN 2.0 billion. As at 31 December 2023, PKO Bank Polski S.A. held no bonds issued by the company.
In 2023, PKO Bank Polski S.A. issued, with regard to activities of its subsidiaries:
• two tender guarantees with a total value of PLN 1 million (up to April 2024);
• one guarantee for the repayment of loans with an aggregate value of EUR 115 million (up to December 2030);
• five guarantees for repayment of liabilities arising from the rental of office space and parking lots with a total value of PLN 1.1 million and EUR 6.8 thousand (up to March 2028).
• one guarantee to secure recourse factoring and reverse factoring agreements concluded in the event of non-payment for financed receivables (Risk Sharing) with a limit of up to PLN 100 million up to 24 November 2025. As at 31 December 2023, the guarantee had been called in the amount of PLN 13 million.
Information on proceedings at court, before a competent arbitration tribunal or a public administration body
Taking into consideration the value of and an increase in the number of court proceedings, PKO Bank Polski S.A. considered as material the court proceedings relating to mortgage loans in convertible currencies. As at 31 December 2023, 30,498 on court proceedings were pending against the Bank (as at 31 December 2022: 19,522) relating to mortgage loans granted in previous years in foreign currency with a total value in dispute of PLN 11,948 million (as at 31 December 2022: PLN 7,725 million), including one group proceeding with 72 loan agreements. The subject matter of the Bank’s customers’ actions are mainly claims for declaration of invalidity of an agreement or for payment of amounts paid by the customer to the Bank in performance of an invalid agreement. Customers allege abusive provisions and/or that the agreements are contrary to the law. None of the clauses used by the Bank in the agreements was entered in the register of prohibited contractual clauses.
Information on the value of all legal proceedings of the Bank and Bank's Group, as well as a description of the main disputes, including those relating to mortgage loans in convertible currencies, is presented in the financial statements of the Bank’s Group and the Bank for 2023 – in Notes 47 “Legal claims” and 29 “Income taxes”, respectively.
Loans incurred and advances, guarantee and surety agreements
In 2023, the Bank’s Group did not incur any loans or advances, and did not receive any guarantees or sureties that would not be related to operating activities.
Financial and guarantee commitments granted
As at 31 December 2023, net financial and guarantee liabilities of the Bank’s Group amounted to PLN 95.2 billion, of which 87.1% were financial liabilities. Overall, the growth rate of financial and guarantee commitments granted was 11.1% y/y, mainly as a result of an increase in financial commitments for real estate credit lines and limits and for factoring, and a decrease in financial commitments for finance lease credit lines and limits.
Table 34. Off-balance sheet liabilities granted (in PLN millions)
|
|
31.12.2023
|
31.12.2022
|
Change
(in PLN million)
|
Change
(%)
|
|
Financial liabilities granted:
|
82,922
|
73,205
|
9,717
|
13.3%
|
|
housing credit lines and limits
|
6,898
|
3,683
|
3,215
|
87.3%
|
|
business credit lines and limits
|
56,333
|
52,455
|
3,878
|
7.4%
|
|
consumer credit lines and limits
|
10,780
|
10,650
|
130
|
1.2%
|
|
factoring credit lines and limits
|
4,289
|
2,749
|
1,540
|
56.0%
|
|
finance lease credit lines and limits
|
738
|
843
|
-105
|
-12.5%
|
|
Other
|
3,884
|
2,825
|
1,059
|
37.5%
|
|
Guarantee commitments granted:
|
12,236
|
12,478
|
-242
|
-1.9%
|
|
financial entities
|
2,810
|
2,806
|
4
|
0.1%
|
|
non-financial entities
|
9,054
|
9,286
|
-232
|
-2.5%
|
|
public sector
|
372
|
386
|
-14
|
-3.6%
|
|
Total
|
95,158
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85,683
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9,475
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11.1%
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Opis gwarancji i poręczeń udzielanych przez Bank
PKO Bank Polski S.A., including foreign branches of the Bank, grant guarantees to secure liabilities resulting from the current activities of customers. These are mainly guarantees for: payment, due performance of contract (performance bond), statutory warranty (rękojmia), tenders (bid bond)), return of advance payment, loan repayment and customs duty guarantee. The Bank also grants counter guarantees and opens standby letters of credit. The guarantees are issued both on paper and in an electronic form.
The guarantees are granted based on the provisions of the Banking Law and Civil Code. Guarantees issued in international trading can be subject to the Uniform Rules for Demand Guarantees (if the parties so decide) or the provisions of a foreign law (if the guarantee is subject to such jurisdiction).
When granting a guarantee, the process of customer evaluation and the scope of information required is analogous to the one applicable to loans. The Bank uses the same approach to the evaluation of the credit risk as in the case of balance sheet exposures.
Value of collateral set up on accounts or assets of the borrowers
At the end of 2023, the value of collateral set up on accounts or assets of the borrowers as part of the PKO Bank Polski S.A. Group was PLN 497 billion. The aforementioned amount concerns loan agreements, leases and loans.
Seasonality of cyclicality of activities in the reporting period
PKO Bank Polski S.A. is a universal bank, which provides services on the whole territory of Poland, and thus its activities are exposed to seasonal fluctuations similar to those affecting the entire Polish economy. The operations of the other PKO Bank Polski S.A. Group companies do not show any material traits of seasonality or cyclicality either.
Events that occurred after the date on which the financial statements are prepared
1. On 20 February 2024, the Management Board of PKO Bank Polski S.A. informed that it had decided to issue senior non preferred bonds ("Bonds") within the framework of the Programme for the issue of own bonds on the domestic market, the establishment of which was announced by the Bank in report No 32/2011 ("Programme"). The Programme has been modified in order to allow the Bonds to be recognised as eligible liabilities of the Bank pursuant to Article 97a(1)(2) of the Act of 10 June 2016 on the Bank Guarantee Fund, the deposit guarantee scheme and compulsory restructuring.
On 23 February 2024 the Bank completed the subscription of 5-year bonds „senior non preferred” of total nominal value PLN 1 bilion made on the domestic market, under the PLN 5 billion Own Bond Issue Programme. The interest rate on the bonds is variable, being the sum of the WIBOR 6M reference rate and the margin of 159 bps. The Bank may be entitled to early redemption of the Bonds, after obtaining the consent of the Bank Guarantee Fund. The issue date is set for 28 February 2024. The bonds will be classified as eligible liabilities of the Bank within the meaning of Article 97a(1)(2) of the Act of 10 June 2016 on the Bank Guarantee Fund, the deposit guarantee scheme and compulsory restructuring.
2. On 21 February 2024, the Bank received the individual recommendation from the Polish Financial Supervision Authority („PFSA”) in which the PFSA confirmed that the Bank fulfils the criteria for the payment of dividend up to 75% of the profit for 2023, whereby the maximum amount of payment may not exceed the amount of the annual profit less the profit generated in 2023 already counted as own funds. The Bank has included in its own funds the net profit, achieved in the first half of 2023, in the amount of PLN 1,624,430,283 at standalone level and PLN 1,697,253,857 at consolidated level.
On 26 February 2024, the Bank received an extra explanation from the PFSA, in which the PFSA states that the amount of the interim dividend paid, derived from the part of the profit generated in 2022, allocated to the reserve capital for the payment of dividends (including interim dividends), may not reduce the amount indicated in the PFSA's position, about which the Bank informed above.
[GRI 2-1] Powszechna Kasa Oszczędności Bank Polski Spółka Akcyjna (PKO Bank Polski S.A. or the Bank) is a household name. The Bank has been listed on the Warsaw Stock Exchange (WSE) since 2004. The Bank is a joint-stock company entered into the National Court Register under number KRS 0000026438. The shareholding structure is presented in Table 27. The Bank's registered office is located in Warsaw.
The Bank, together with its subsidiaries, creates the Powszechna Kasa Oszczędności Bank Polski Spółka Akcyjna Group (the PKO Bank Polski S.A. Group or the Bank’s Group). At the end of 2023, the Bank’s Group comprised the parent entity (the Bank), 12 direct subsidiaries and indirect subsidiaries (see chapter 3.1).
The Bank’s Group operates in the territory of the Republic of Poland. Moreover, through its subsidiaries it operates in the territory of Ukraine, Sweden and Ireland. It also operates branches in the Federal Republic of Germany, the Czech Republic and the Slovak Republic. The Bank also conducts cross-border business in EEA countries (Austria, Belgium, Denmark, France, Spain, the Netherlands, Norway, Portugal, Sweden, Hungary, Italy, Lithuania, Ireland, Slovakia, Romania, the Czech Republic, Germany).
[GRI 2-2] The Powszechna Kasa Oszczędności Bank Polski Spółka Akcyjna Group (the PKO Bank Polski S.A. Group or the Bank’s Group) and Powszechna Kasa Oszczędności Bank Polski Spółka Akcyjna (PKO Bank Polski S.A. or the Bank) have prepared a Statement on the non-financial information (the Statement), which forms a separate part of the Directors’ Report. The individual issues have been presented in the Statement with regard to the Bank’s Group, with the Bank highlighted. The Bank and the Bank’s Group satisfy the criteria of an entity that is required to draw up the Statement.
The Bank and the Bank’s Group report for the period from 1 January to 31 December 2023 in accordance with the GRI Standards (revised Universal Standards 2021, which came into force on 1 January 2023) and in accordance with the non-financial reporting requirements specified in the Accounting Act.
[GRI 2-3] The Bank’s Group publishes such statements and financial reports annually. The Statement presents the operations of the PKO Bank Polski S.A. Group in the period from 1 January to 31 December 2023. The previous Statement was prepared for the year 2022 and published on 10 March 2023. The contact for topics related to the Statement is as follows: esg@pkobp.pl.
The Bank and the Bank Group meet the Accounting Act's criteria for non-financial reporting obligations.
Meeting the criteria for non-financial reporting
Note: Data for 2022 come from the published Management Report for 2002
[GRI 2-4] The Bank reports a data correction to the Statement on non-financial information for 2022: the value of water consumption for the Bank in 2022 was 224.2 Ml instead of 223.5 Ml (calculation error).
[GRI 2-5] The Statement on non-financial information for 2023 is not subject to an external audit.
[GRI 2-14] The Statement was approved by the Management Board and the Supervisory Board of the Bank.
[GRI 2-6] The Bank, creating the value, cooperates with the suppliers of goods and services (upstream). The recipients of the value generated by the Bank are its customers (downstream). The Bank provides services to 11,892.6 thousand retail customers and 18.5 thousand corporate customers. In the process of creating the value, the Bank cooperates with agents and intermediaries and with entities to which it delegates some tasks (outsourcing).
Business partners of the Bank
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Outsourcing
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Suppliers
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Other entities
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Agents
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Intermediaries
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There are more than 5,800 suppliers registered in the Bank's purchasing application. In 2023 more than 489 purchase proceedings were conducted, resulting in more than 700 contracts concluded. The main purchasing categories involved were software, telecommunications, branch refurbishment and upgrades, IT equipment and cash handling equipment.
Most of the contracts are long-term, i.e. their term is 2 years with the possibility of their possible extension.
Almost all Bank's suppliers are Polish companies.
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The Bank outsources various activities to third parties. Examples of such activities include, among others, handling cash withdrawals and non-cash transactions, debt collection, cash processing, document archiving and disposal, support for the sale of movable and immovable property of the Bank's debtors, implementation of marketing activities and research, website maintenance, IT services.
At the end of 2023, the Bank had agreements with 76 external entities cooperating in the execution of agreements for the Bank with 16 subcontractors, and the number of agreements in force was 94.
In 2023, the Bank signed 13 outsourcing agreements with external entities, which concluded agreements for the benefit of the Bank with 2 subcontractors.
On the website, the Bank provides a complete list of enterprises performing activities for the benefit of the Bank through outsourcing (https://www.pkobp.pl/media_files/f59f78aa-01c9-4b11-9204-8f15b96d663a.pdf).
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Agents are entrepreneurs who, on the basis of the agreement concluded with the Bank, provide exclusively, for and on behalf of the Bank, a brokerage service in the scope of banking and actual activities (necessary to sell products and services).
The agreement regulates the scope of services and products for which the agent is remunerated. The list of services and products does not entirely coincide with the scope of services provided by the Bank.
At the end of 2023, the Bank cooperated with 231 agents operating 286 agencies.
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The Bank distributes housing loans, inter alia, through intermediaries.
Mortgage intermediaries are entrepreneurs who, on the basis of the agreement concluded with the Bank, perform actual actions only for and on behalf of the Bank (e.g. customer acquisition, preparation and presentation of the offer to the client, collection of complete documents, submission of the application with the documentation to the Bank's branch, where the process is continued and the credit agreement is concluded). The Bank cooperates only with mortgage credit intermediaries authorised by the PFSA Office to conduct business as an intermediary of a mortgage loan. The agreement regulates the scope of distribution of housing loans for which the intermediary is remunerated. At the end of 2023, the Bank cooperated with 66 mortgage credit intermediaries.
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For a description of relations with business partners, please refer to section 13.7.12.
[GRI 3-1] The Bank monitors on an ongoing basis the impact of its activities on the environment. The following are used for the assessment:
• audit of stakeholders' opinions,
• analysis of topics taken at the General Meetings of Shareholders,
• contacts with investors,
• communication with rating agencies,
• communication with the media and non-governmental organizations,
• opinions of sectoral analysts,
• customer and employee feedback survey,
• analysis of irregularities,
• analysis of complaints,
• collaboration with subsidiaries,
• data analysis tools.
There were no significant changes in business activities, business relationships and the manner of operations conducted in 2023. The list of relevant stakeholders has not changed as well.
As a result of the conducted analyses, 13 topics were identified in which the Bank’s Group has a significant impact on the environment and stakeholders. Following the GRI standard, the criterion for selecting the topics was the economic, environmental and human impact, including human rights. The list of topics did not change compared to the previous year. For each topic, the strength of impact was assessed and the topics were ranked according to the order of impact - from the largest to the lowest impact. Three groups of topics were distinguished according to the influence of:
• critical topics that carry the risk of significant violation of customer interests in a way that may threaten future business conduct,
• topics that pose serious risks to the environment, but do not violate the stability of business,
topics that take into account the impact on stakeholders but are limited to a selected group.
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Significant stakeholder groups [GRI 2-29]
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List of material topics [GRI 3-2]
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1) Customers
2) Business partners in the value chain
3) Shareholders and investors
4) Local communities
5) Employees
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Critical impact
1) Security of customers and their funds
2) Ethics
3) Product compliance
4) Corruption
5) Communication
Significant impact
6) Environment
7) Climate
8) Sustainable development
Limited impact
9) Employees
10) Social environment
11) Human rights
12) Supply chain
13) Occupational health and safety
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Existing governance policies and principles have been reviewed for each topic and described in detail in section 13.6. It was analysed whether the activities conducted by the Bank and subsidiaries belonging to the Bank’s Group may have a significant negative impact on each of the material topics. Where this possibility was identified, the description of potential impact mechanism of actions taken by the Bank was added.
The study of materiality showed that the Bank and most of the subsidiaries have appropriate policies in all areas encompassed by the Statement, while the risks, which are considered to be key, have already been identified in the risk management process. The Statement contains descriptions of the risks identified in the Bank’s Group to which the principle of “comply or explain” was applied: an explanation was added to information on the lack of full coordination of selected policies at the Group level.
The Bank’s Group is a leading financial institution in Central and Eastern Europe. The Bank, the parent entity of the Bank’s Group, is the largest commercial bank in Poland in terms of the value of assets and equity, the value of loans, deposits, and savings, the size of the distribution network, as well as the number of customers served and the number of employees.
The Bank is a universal bank that provides deposit and lending services to individuals and legal entities. It provides financial services and provides customer service in branches, agencies, as well as modern online and mobile banking systems. In 2022, it opened the first branch in the Metaverse. The Bank provides services to the largest number of retail customers, which makes it particularly important in customer education, allowing them to use new products and new channels of access to financial services offered.
Through its subsidiaries, the Bank’s Group offers, among other things, mortgage loans, specialist financial services including leasing, factoring, investment funds, pension funds and insurance, fleet management services, transfer agent services, provides technological solutions and manages real estate. It also conducts banking operations and provides debt collection and financial services in Ukraine.
The Bank earns income from interest, commissions and fees and from other sources. It finances operating costs from the revenue generated. The profit shall be distributed with shareholders to the extent permitted by financial supervision institutions. Apart from financial profits, the Bank is trying to generate benefits for the economy, environment and local communities. The sustainable dimension of activities in all areas has been incorporated into the 2023-2025 strategy.
Value creation model
