Report No. 31/2016

Legal basis:

Article 56 item 1 pt. 1 of the Act on Public Offerings and the Conditions for Admitting Financial Instruments to the Organised System of Trading and on Public Companies of 29 July 2005 read together with Article 154 par.1 of the Act on Trading in Financial Instruments of 29 July 2005 and § 38 item 1 pt. 11 of the Ordinance of the Minister of Finance of 19 February 2009 on current and periodic information published by issuers of securities and on conditions under which such information may be recognised as being equivalent to information required by the regulations of law of a state which is not a member state

Content of the Report:

The Management Board of PKO Bank Polski S.A. (the “Bank”) announces that on 2 June 2016 it adopted a resolution and decided to submit a recommendation to the Annual General Meeting of the Bank on the distribution of profit earned by the Bank in the period from 1 January 2015 till 31 December 2015 in the amount of PLN 2 571 142k and the unappropriated profit of previous years (in the amount of PLN 1 250 000k) of the total amount of PLN 3 821 142k proposing the following distribution:

1)     for the dividend for shareholders PLN 1 250 000k,

2)     for the supplementary capital in the amount of PLN 2 500 000k,

3)     for reserve capital in the amount of PLN 71 142k.

The Management Board recommends that the distribution of profit in the manner specified above is subject to the following conditions being fulfilled not later that on 8 December 2016 (inclusive):

1)     The Bank shall not take over control of a bank or other entity of the financial sector by a direct or indirect acquisition of a block of shares and shall not acquire a right or incur an obligation to take over control in the manner specified above, and

2)     There shall not occur any regulatory changes or changes of the supervisory recommendations affecting the requirements for the Bank’s own funds that – according to the level of capital adequacy ratios recognised in the financial statements of the Bank for Q3 2016 – would cause a lack of possibility to pay dividend in accordance with the regulatory requirements and supervisory recommendations (the fulfilment of both conditions is hereinafter jointly referred to as the ”Fulfilment of the Dividend Conditions”).

If there is no Fulfilment of the Dividend Conditions, the Management Board proposes the net profit of the Bank of the period from 1 January 2015 till 31 December 2015 in an amount of PLN 2 571 142k and unappropriated profit of previous years in an amount of PLN 1 250 000k, in the total amount of PLN 3 821 142k, to be distributed in the following way:

1)     for supplementary capital in the amount of PLN   3 750 000k,

2)     for reserve capital in the amount of PLN   71 142k.

In accordance with the proposed resolution of the Annual General Meeting, the Management Board of the Bank will be obliged to adopt a resolution on the establishment of the Fulfilment of the Dividend Conditions or the lack of the Fulfilment of the Dividend Conditions not later than on 9 December 2016 (inclusive).

This date is proposed to be set in a manner that allows the Bank to carry out the necessary analysis, as well as taking into account possible time limits for announcement of new supervisory requirements for own funds, and allowing for a determination of their impact on the levels of capital adequacy ratios recognised in the financial statements of the Bank for Q3 2016, which is necessary in order to establish the Fulfilment of the Dividend Conditions or a lack thereof.

Information on the resolution of the Management Board establishing the Fulfilment of the Dividend Conditions or lack thereof shall be publicly announced by the Bank in the form of a report.

Subject to the Fulfilment of the Dividend Conditions, the dividend record date is proposed to be 30 September 2016 and the dividend payment date is proposed to be 20 December 2016. Dividend is to be paid in cash in an amount of PLN gross 1.00 per one share.

The recommendation of the Management Board concerning distribution of the profit for 2015 is consistent with the Bank’s decision on following the recommendation of the Polish Financial Supervision Authority on the expected level of capital adequacy ratio, about which Bank informed in current report No. 28/2016.

The recommended distribution of the profit for 2015 aims to make the manner of distribution of the profit earned in 2015 dependent upon potential factors influencing the capital needs of the Bank. They include possible activity of the Bank relating to a potential engagement in the processes of acquisitions of entities operating in the banking sector or other entities of the financial sector, as well as external factors relating to possible regulatory changes or supervisory recommendations, influencing the requirements for the Bank’s own funds.

The Management Board’s recommendation concerning the distribution of Bank’s profit for 2015 year presented in this report has obtained a positive opinion from the Bank’s Supervisory Board.