Shares and dividends

The individual recommendation from the Polish Financial Supervision Authority regarding the dividend payment for 2023

On 21 February 2024 the Bank received the 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.

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

PFSA presented the position that the amount of the interim dividend, paid out from the portion of the profit earned in 2022 allocated to the reserve capital created for dividend payment (including interim dividends) may not reduce the amount indicated in the PFSA's position.

As a result, the Bank fulfils the criteria for the payment of dividend up to 75% of the profit for 2023, without decreasing this amount by the amount of the paid, interim dividend (PLN 1,600,000,000) 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 (in the amount of PLN 1,624,430,283 at standalone level and PLN 1,697,253,857 at consolidated level).

Recommendation of the Management Board regarding 2023 profit distribution and allocation of the undistributed profit from previous years as undistributed profit

The Management Board decided to submit to the Bank's Annual General Meeting a recommendation for the distribution of the net profit achieved in 2023 in the amount of PLN 4,868,360,037.30, out of which the amount of PLN 3,237,500,000 is allocated for distribution to shareholders (66.50% of the net profit from 2023) ("Distributable Profit").

The Bank’s Management Board recommends a decision to pay a dividend from the net profit for 2023 (after deduction of the interim dividend) in the amount of PLN 2.59 per share. It is proposed that the dividend date will be 8 August 2024 and the dividend payment date will be 22 August 2024.

Taking into account that on February 1, 2024, the Bank paid an interim dividend for the financial year 2023 in the amount of PLN 1,600,000,000, an amount of PLN 1,600,000,000 is allocated for distribution among shareholders in the form of dividend, apart from the Distributable Profit, from the reserve capital established on the basis of the resolution of the Bank’s Annual General Meeting on the distribution of the profit of PKO Bank Polski S.A. achieved in 2022, intended for the payment of dividends, including the interim dividend that has already been paid. The sum of these amounts is. PLN 4,837,500,000.

The remaining part of the profit achieved in 2023 in the amount of PLN 1,630,860,037.30 is recommended to be allocated to the reserve capital for the payment of dividends, including interim dividends in accordance with § 30 of the Bank's Articles of Association, which would provide for a possible decision of the Bank's Management Board to pay profit to shareholders as an interim dividend and to use the reserve capital for this purpose, subject to the authorization to use this capital granted by the Bank’s Annual General Meeting. Any decision of the Bank's Management Board to make an interim dividend payment also requires the approval of the Bank's Supervisory Board. Furthermore the payment of the interim dividend will depend on the Bank's positive position of the Polish Financial Supervision Authority and the current economic and market situation.

In addition, the Bank's Management Board recommends that the undistributed profit from previous years in the amount of PLN 9,437,974,386.73 remains undistributed profit.

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.