Shares and dividends

Opinion of the PFSA Office concerning the possibility of disbursing by PKO Bank Polski S.A. a part of the profit from reserve capital

As a result of consultations undertaken by the Bank with the Polish Financial Supervision Authority Office ("PFSA Office") regarding the possibility of disbursing a part of the profit from reserve capital, the Bank received a negative opinion of the PFSA Office in this respect.

The PFSA Office emphasizes that taking into account numerous risks, including among others the continuing high uncertainty related to the potential costs of legal risk related to mortgage loans in CHF, possible deterioration of the credit quality of the portfolio driven by increased inflation, possible limitation of economic growth, as well as high costs of debt servicing by borrowers as well as aiming at ensuring the stability of the Bank's operations in subsequent periods, and  its further development, the PFSA Office maintains a cautious approach towards the dividend policy and actions that may result in a reduction of the capital base and does not consider the possibility of accepting actions resulting in a reduction in the Bank's capital base at the level of PLN 1.6 billion or less.

Decision of the Annual General Meeting regarding 2022 profit distribution and allocation of the undistributed profit from previous years as undistributed profit

The Annual General Meeting decided on 2022 net profit distribution in the amount of PLN 3,258,276,027.00 as following:

1. the amount of PLN 1,629,138,013.50 - to increase the reserve capital earmarked for the dividend, including interim dividend payments,
2. the amount of PLN 1,629,138,013.50 - to remain undistributed.

Additionally, the shareholders decided that the undistributed profit from previous years in the amount of PLN 7,808,836,372 should still remain as the undistributed profit.

The profit distribution will not preclude the Bank’s Management Board's potential decision to distribute profit to the shareholders in the form of interim dividend and to use the reserve capital for that purpose.

It will be contingent in particular on the positive opinion of the PFSA as well as economic situation and market conditions.

The Bank’s Management Board's potential decision to pay an interim dividend will also require the approval of the Bank’s Supervisory Board.

The individual recommendation from the Polish Financial Supervision Authority regarding the dividend payment for 2022

On 17 March 2023 the Bank received the recommendation from the Polish Financial Supervision Authority in which the PFSA confirmed that the Bank fulfils the criteria for the payment of dividend up to 50% of the net profit for 2022.

PFSA also recommends that the Bank should limit the risk occurring in its activity by:

1. limiting the amount of dividend that can be paid from the profit earned in the period from 1 January to 31 December 2022 to 50% of such profit,
2. not paying by the Bank a dividend from the profit earned in the period from 1 January to 31 December 2022 until The Court of Justice of the European Union issues a judgment on the return of additional funds over and above those paid out while executing an agreement canceled on the basis of unfair terms of contract (abusive clauses) of the CHF loan agreement (in connection with the question of the District Court for Warsaw-Śródmieście in Warsaw – case C-520/21),
3. not paying by the Bank a dividend from the profit earned in the period from 1 January to 31 December 2022 after issuing the judgment of the Court of Justice of the European Union, referred to in point 2, without prior consultation with the PFSA,
4. not conducting any other activities, in particular those beyond the scope of current business and operating activities, which may result in a reduction of own funds, including possible dividend payments from undistributed profits from previous years and buybacks or buyouts of own shares, without prior consultation with the supervisory authority.

Dividend policy of PKO Bank Polski S.A.

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.

The objective of the Dividend policy is to optimize the capital structure of the Bank and the Bank's 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).

In line with the adopted Dividend policy, an additional tool for capital redistribution is the purchase of own shares aimed at their redemption. The Dividend policy indicates that the General Meeting shall 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 acquisition of own shares may also be made in a situation in which the book value of shares is lower than their current market price.

The conditions for the Bank's ability to pay dividends have been adjusted according to the PFSA’s requirements in the Recommendation Z. These requirements also apply to the purchase of own shares by the Bank.