Group Directors’ Report of PKO Bank Polski S.A. for 2020
prepared jointly with the PKO Bank Polski S.A. Directors’ Report
This document is a translation of a document originally issued in Polish. The only binding version is the original Polish version.
Contents
1.1 Characteristics of operations of the PKO Bank Polski S.A. Group
1.2 The PKO Bank Polski S.A. Group – History
1.3 Main events and financial results achieved in 2020
1.4 The PKO Bank Polski S.A. Group development paths
1.5 The PKO Bank Polski S.A. Group Market Position
2. External Business Conditions
2.2 Situation on the financial market
2.3 Position of the Polish banking sector
2.4 Position of the Polish non-banking sector
2.6 Regulatory and Legal Environment
2.7 Factors with an impact on the financial results of the Bank’s Group in 2021
3. Organization of the PKO Bank Polski S.A. Group
3.1 Entities covered by the financial statements
3.2 Key changes to the structure of the Bank’s Group in 2020
3.3 Transactions with subordinated entities
4. Financial position of the PKO Bank Polski S.A. Group
4.2 Consolidated income statement
4.3 Consolidated statement of financial position
5. Financial standing of the PKO Bank Polski S.A.
5.3 Statement of financial position
7. Equity and capital adequacy measures
8. Activities of the PKO Bank Polski S.A. Group
8.1 Activities related to the COVID-19 pandemic
8.2 Operating segments of the Bank’s Group
8.2.2 Corporate and investment segment
8.3 IT projects and other services
8.4 Distribution network and access channels
8.7 Operations of selected subsidiaries
8.8 Prizes and awards granted to the PKO Bank Polski S.A. Group
9.1 Principles of Risk Management
9.2 Discussion of the Bank’s lending policy
9.3 Comprehensive stress-testing
10. Benefits for managers and supervisors
10.1 Principles for remunerating Members of the Bank’s Management Board
10.4 Principles for remunerating Members of the Bank’s Supervisory Board
10.5 Agreements concluded between the Bank and management members
10.6 Liabilities due to pensions for former supervisors and managers
11.1 Information for investors
11.1.1 Share capital and ownership structure of PKO Bank Polski S.A.
11.1.2 Quotations of shares of PKO Bank Polski S.A. on the Warsaw Stock Exchange
11.1.3 Restrictions imposed on shares of PKO Bank Polski S.A.
11.2 Statement of compliance with the corporate governance principles
11.2.1 Corporate governance principles and scope of application
11.2.2 Controls in the process of preparing financial statements
11.2.3 Articles of Association of PKO Bank Polski S.A.
11.2.4 General Shareholders’ Meeting of PKO Bank Polski S.A.
11.2.5 Supervisory Board of PKO Bank Polski S.A. during the reporting period
11.2.6 Management Board of PKO Bank Polski S.A. during the reporting period
11.3 Shares of PKO Bank Polski S.A. and its related entities held by the Bank’s authorities
11.4.1 Principles of equal treatment, anti-discrimination and respect for human rights
11.4.3 Diversity in the composition of the Management and Supervisory Boards of the Bank
13. Statement on non-financial information
13.1 The process of the Statement preparation
13.2 Non-financial areas of the Bank’s operations and KPI
13.3.1 Direct environmental impact
13.3.2 Indirect environmental impact
13.4.1 Impact on the social environment
13.4.3 Human rights, including children's rights
13.4.4 Cooperation with suppliers
13.4.5 Employment and employee benefits
13.4.6 Relations with the employees
13.4.7 Occupational health and safety (OHS)
13.5.1 Business model and development strategy
13.5.3 Preventing corruption and money laundering
13.5.4 Product safety and Customer security
Characteristics of operations of the PKO Bank Polski S.A. Group
History
Main events and financial results achieved in 2020
The PKO Bank Polski S.A. Group development paths
Market position
1.1 Characteristics of operations of the PKO Bank Polski S.A. Group
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 one of the largest financial groups 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, deposits, number of Customers and size of the distribution network. The Bank’s Group stands out on the Polish market due to its high financial results, which ensure its stable and safe development.
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 PKO Bank Polski S.A. Group also provides financial 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) and the Czech Republic (Czech Branch) as well as through its subsidiaries in Ukraine. In 2020, PKO Bank Polski S.A. opened a branch in the Slovak Republic (Slovak Branch).
11 million of the Bank’s Customers |
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5.2 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 (18.3%), in loans (17.6%) and the market for investment funds for individuals (19.2%). PKO Bank Polski S.A. is the leader in terms of current accounts and payment cards.
The PKO Bank Polski S.A. Group offers modern and comprehensive services through digital service channels and it is being transformed into a technological institution with a banking licence. Customers use iPKO and IKO as means of modern banking outside the traditional financial area. PKO Bank Polski S.A. was committed to the development of a modern approach to e-administration services based on state-of-the-art technologies. In 2018, PKO Bank Polski S.A. started on its path towards cloud computing with the help of a newly established company – Operator Chmury Krajowej sp. z o.o. Within the next three years the Bank’s IT systems are to operate in a computing cloud based on hybrid architecture. The first cloud solutions implemented using global cloud service providers and Operator Chmury Krajowej sp. z o.o. already support the Bank’s employees and Customers.
As at the end of 2020 the branch network of PKO Bank Polski S.A. was the largest such network in Poland and covered 1 004 outlets (i.e. Branches, offices and centres) and 492 agencies. The Customers of PKO Bank Polski S.A. have at their disposal a highly developed network of ATMs (which as at the end of 2020 comprised three thousand ATMs).
The PKO Bank Polski S.A. Group is one of the largest and best assessed employers in Poland. As at the end of 2020, the PKO Bank Polski S.A. Group employed 25.9 thousand FTEs.
The PKO Bank Polski S.A. Group between 2016 and 2020
|
2020 |
2019 |
2018 |
2017 |
2016 |
Statement of financial position (in PLN million) |
|
|
|
|
|
Total assets |
376,966 |
347,897 |
324,255 |
296,912 |
285,573 |
Total equity |
39,911 |
41,578 |
39,101 |
36,256 |
32,569 |
Financing granted to Customers |
235,781 |
244,083 |
230,438 |
214,361 |
208,987 |
Customer deposits |
282,356 |
256,170 |
238,723 |
217,306 |
200,404 |
Net profit/loss |
-2,557 |
4,031 |
3,741 |
3,104 |
2,874 |
Financial ratios |
|
|
|
|
|
Net ROA |
-0.7% |
1.2% |
1.2% |
1.1% |
1.1% |
Net ROE |
-6.0% |
10.0% |
10.0% |
9.0% |
9.1% |
Net ROTE |
-6.5% |
10.9% |
11.0% |
10.0% |
10.2% |
C/I1) |
41.0% |
41.3% |
44.2% |
46.0% |
47.4% |
Interest margin |
3.0% |
3.4% |
3.4% |
3.3% |
3.2% |
Share of impaired exposures |
4.4% |
4.3% |
4.9% |
5.5% |
5.9% |
Cost of credit risk |
0.78% |
0.46% |
0.59% |
0.71% |
0.75% |
Total capital ratio |
18.18% |
19.88% |
18.88% |
17.37% |
15.81% |
Number of Customers of PKO Bank Polski S.A. (in thousands), including: |
11,006 |
10,933 |
10,653 |
10,330 |
10,080 |
Individuals (in thousands) |
10,463 |
10,427 |
10,179 |
9,877 |
9,648 |
Companies and enterprises (in thousands) |
526 |
491 |
459 |
438 |
418 |
Corporate Customers (in thousands) |
16 |
16 |
15 |
15 |
15 |
Operational data |
|
|
|
|
|
Number of branches of PKO Bank Polski S.A. |
1,004 |
1,115 |
1,155 |
1,194 |
1,238 |
Number of employees (in FTEs) |
25,859 |
27,708 |
27,856 |
28,443 |
29,163 |
Number of current accounts with the Bank (in thousands) |
8,257 |
8,012 |
7,697 |
7,362 |
7,034 |
Information on shares |
|
|
|
|
|
Stock exchange capitalization (in PLN million) |
35,900 |
43,075 |
49,338 |
55,388 |
35,175 |
Number of shares (in million) |
1,250 |
1,250 |
1,250 |
1,250 |
1,250 |
Share price (in PLN) |
28.72 |
34.46 |
39.47 |
44.31 |
28.14 |
Dividend per share (in PLN) |
0.00 |
1.33 |
0.55 |
0.00 |
0.00 |
1) Data for the years 2016-2018 does not take into account presentation changes made in 2020 which could have had an impact on the amount of the result on business activities and operating expenses. |
The definitions of particular items of the statement of financial position and the income statement are described in Section 14: Glossary.
1.2 The PKO Bank Polski S.A. Group – History
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.
1919–1938 |
1. |
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. |
2. |
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. |
The first local branch of Pocztowa Kasa Oszczędności was opened in Poznań. |
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4. |
Pocztowa Kasa Oszczędności began running School Savings Unions (Szkolne Kasy Oszczędności). |
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5. |
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. |
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. |
1946–1990 |
1. |
Pocztowa Kasa Oszczędności was transformed into Powszechna Kasa Oszczędności. |
2. |
The Banking Law Act introduced a privilege for saving deposits held in Powszechna Kasa Oszczędności; they were covered by a State guarantee. |
|
3. |
Powszechna Kasa Oszczędności introduced a modern product: a current account. |
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4. |
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. |
|
1991–2001 |
1. |
The first Internet information portal of the Bank and the first e-PKO Internet branch were launched. |
2. |
PKO Towarzystwo Funduszy Inwestycyjnych S.A. (PKO TFI S.A.) began its operations. |
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3. |
PKO BP BANKOWY PTE S.A. was formed. |
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4. |
Bankowy Fundusz Leasingowy S.A. (currently PKO Leasing S.A.) was formed which provides operating and finance leases of non-current assets and property. |
|
5. |
PKO BP, 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. |
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 |
1. |
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). |
2. |
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. |
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. |
PKO BP Faktoring S.A. (currently PKO Faktoring S.A.) began operating. |
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2010–2015 |
1. |
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. |
2. |
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. BLIK became the Polish market standard. |
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3. |
PKO Bank Polski S.A. 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. |
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. |
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. |
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. |
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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2016–2020 |
1. |
PKO Bank Polski S.A. realized two years in advance the financial goals set for 2020 and announced an updated strategy for the years 2020–2022 “PKO Bank of the Future. We support the development of Poland and the Poles”. |
2. |
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. |
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. |
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. |
PKO Bank Polski S.A. 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. |
PKO Bank Polski S.A. continued its development abroad and formed the second foreign branch – the corporate branch in Prague (the Czech Republic) and in Bratislava (the Slovak Republic). The Slovak branch started operating in 2021.
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1.3 Main events and financial results achieved in 2020
The PKO Bank Polski S.A. Group’s functioning during the pandemic
In March 2020, the World Health Organization announced the outbreak of the COVID-19 pandemic. A state of epidemic threat was introduced in Poland, and then a state of epidemic. The effect of the pandemic was the freezing of the economy. State institutions implemented amendments to laws in order to restrict the spread of the virus and state aid packages for enterprises and individuals. The Monetary Policy Council (MPC) lowered interest rates and the mandatory reserve, capital requirements for banks were also reduced. The Polish Financial Supervision Authority (PFSA) recommended that banks not pay out dividend. After the slowdown of the pandemic in vacation time and the resumption of business activities, in the fourth quarter of 2020 the number of infected people increased and restrictions were once again introduced in many industries.
The PKO Bank Polski S.A. Group engaged in battling the pandemic from the very start. Many actions were taken to ensure the uninterrupted functioning and safety of the Customers and employees. The Group also supported local and countrywide actions. The digital transformation strategy pursued by PKO Bank Polski S.A. facilitated operations in the conditions of the coronavirus pandemic.
The Bank’s Group:
• supported hospitals and the medical personnel throughout Poland – in total, it transferred over PLN 23 million for fighting the pandemic. This comprised, among other things, donations to hospitals, purchasing tests for the presence of the virus and on virus protection measures, as well as provision of vehicles for medical facilities, sanitary and military services; employees participated in development and implentation countrywide vaccination reservation system;
• actively engaged in saving enterprises and the jobs they create; offered moratoria on loan and lease repayments; and introduced fast and simplified decision-making paths;
• supported Customers by making available to them state aid programmes under the so-called Anti-crisis Shields using instruments of Polski Fundusz Rozwoju S.A. (Polish Development Fund) (PFR) and guarantee programmes and State co-financing through Bank Gospodarstwa Krajowego (BGK);
– PKO Bank Polski S.A. engaged in work on the distribution system for the subsidies from PFR for micro-, small- and medium-sized enterprises via electronic banking; the Bank also organized issues of PFR bonds which enabled financing the programme. PKO Bank Polski S.A. is the sole bank which services liquidity and preferential loans under the PFR Financial Shield for large enterprises;
– PKO Bank Polski S.A. had the largest share in the distribution of subsidies from the PFR Financial Shield1.0 for micro-, small- and medium-sized enterprises. Subsidies totalling PLN 10.5 billion were transferred via the Bank. The subsidies were received by approx. 67 thousand enterprises which employ over 0.5 million staff;
• Introduced organizational solutions and tools which enable performing work remotely, facilitate communication with Customers and ensure their smooth service;
• Accelerated digitization and developed remote channels which allows the Customers easier access to the services offered.
During the lockdown, the bank maintained full accessibility of service for customers via the Contact Center and the largest network of own ATMs, which allowed for ensuring comfort in banking.
The Bank’s Group conducted operations related to the improvement of cost-effectiveness and protection of the quality of the credit portfolio. The liquidity ratios of PKO Bank Polski S.A., both on a separate and consolidated basis, remained at safe levels, with a strong capital base.
PKO Bank Polski S.A. as the European leader of digital banking
PKO Bank Polski S.A. won the Finnoscore 2020 ranking and became the European leader of digital banking. It was rated highly in the following categories: online banking, social media, mobile application, omnichannel communication and innovation strategy. The leading position in the ranking is due among other things to the Bank’s strategy which is based on digital transformation.
300 criteria in 12 selected segments were examined. 200 banks from 26 European and North American countries were analysed.
PKO Bank Polski S.A. accedes to the European Payments Initiative
PKO Bank Polski S.A., as the only bank from Poland, acceded to the European Payments Initiative (EPI). EPI is an alliance of leading European banks aimed at building the European payments system with its own cards for consumers and companies, a digital wallet, immediate payments and transfers over the phone. EPI will support European public institutions by creating a European payments solution.
Development of services and tools, including those supporting operations during the pandemic
The Group developed remote services offered:
• The number of active IKO applications provided to Customers by the Bank reached a record high of 5.2 million on the Polish banking market.
• The Bank jointly with PKO Leasing S.A. and Prime Car Management S.A. launched the Automarket.pl platform which ensures the safe purchase of new and second-hand cars with a documented mileage.
• A personal account may be opened in the IKO mobile application using a selfie, and a company account with simultaneous registration of the business with the Central Registration and Information on Business (CEIDG). The application also allows checking the balance of an account with another bank and the use of services of a voice assistant.
• The Bank prepared a sales model for elderly Customers and for persons who had never used electronic channels for banking services. The model included educating the Customer in using the intuitive application, and adapted sales processes in branches so as to enable Customers to sign contracts with the assistance of an advisor for cash loans, a current account overdraft or a credit card directly in IKO, without the need to print the documents.
• KREDOBANK S.A., basing on PKO Bank Polski S.A.’s experience, as the first bank on the Ukrainian market, implemented a video advisor solution. The “Online Video Consultant” service is based on the infrastructure of Operator Chmury Krajowej sp. z o.o.
• The Bank introduced the option to remotely activate the travel voucher, and to open an investment account totally online using the e-Podpis (e-signature) service mSzafir (iPKO).
• The Bank launched its first cloud applications. Within the project for building its Future Service Points, it virtualized working stations in retail branches. The Project is being performed in cooperation with Operator Chmury Krajowej sp. z o.o.
New term of office of the Bank’s Management and Supervisory Boards
In May 2020 the Bank’s Supervisory Board appointed the former members of the Management Board for another joint term of office, which included appointing Mr Zbigniew Jagiełło to the position of President of the Management Board.
In August 2020 the Bank’s Ordinary General Shareholders’ Meeting appointed ten members of the Bank’s Supervisory Board for a new joint term of office, which included appointing seven of its former members. The former Secretary of the Supervisory Board – Mr Zbigniew Hajłasz – was appointed Chairman of the Supervisory Board.
Record year for the Bank’s Brokerage Office
The year 2020 was a record year for the Brokerage Office of PKO Bank Polski (the Bank’s Brokerage Office). Turnover on the secondary market of shares reached PLN 72.6 billion, which accounted for 11.2% of the market turnover, and placed the Brokerage Office in the leading position in the ranking of brokerage offices.
PKO TFI S.A. The leader on the Employee Capital Plans on the market
As at the end of 2020, PKO Towarzystwo Funduszy Inwestycyjnych S.A., after completing the three stages of creating the Employee Capital Plans (PPK), remained the leader in terms of managed assets. As at the end of 2020, the total number of contracts for asset management was 18,970, including 1,384 contracts with enterprises employing 250 and more staff. On the PPK accounts managed by the Company there were assets worth PLN 962 million, which comprised 41.1% of all assets serviced by investment fund management companies and 34.1% of all PPK market assets.
Financial results
Recognition of the costs of legal risk of mortgage loans in convertible currencies, the COVID-19 pandemic and reductions in interest rates by the MPC had a significant effect on the results achieved by the PKO Bank Polski S.A. Group in 2020.
Table 1. Basic financial data of the Bank’s Capital Group (PLN million)
|
2020 |
2019 |
Change (y/y) |
-2,557 |
4,031 |
-163.4% |
|
Net interest income |
10,346 |
10,290 |
+0.5% |
Net fee and commission income |
3,904 |
3,731 |
+4.6% |
Result on business activities |
14,604 |
14,579 |
+0.2% |
Operating expenses |
-5,983 |
-6,021 |
-0.6% |
Tax on certain financial institutions |
-1,055 |
-1,022 |
+3.2% |
Net allowances and impairment |
-9,277 |
-1,748 |
+430.9% |
Total assets |
376,966 |
347,897 |
+8.4% |
Total equity |
39,911 |
41,578 |
-4.0% |
Net ROE |
-6.0% |
10.0% |
-16.0 p.p. |
Net ROTE |
-6.5% |
10.9% |
-17.4 p.p. |
Net ROA |
-0.7% |
1.2% |
-1.9 p.p. |
C/I (cost to income ratio) |
41.0% |
41.3% |
-0.3 p.p. |
Interest margin |
3.03% |
3.41% |
-0.38 p.p. |
Share of impaired exposures |
4.4% |
4.3% |
+0.1 p.p. |
Cost of credit risk |
0.78% |
0.46% |
+0.32 p.p. |
Total capital ratio |
18.18% |
19.88% |
-1.70 p.p. |
Common equity Tier 1 (CET1) |
16.99% |
18.61% |
-1.62 p.p. |
In 2020 the PKO Bank Polski S.A. Group incurred net loss of PLN -2 557 million, which is a drop in its results of PLN 6 588 million y/y. The negative change in the net result was caused by a combination of the following factors:
1) material deterioration in net write-downs and impairment of PLN 7 530 million as a result of:
• an increase in the legal risk of mortgage loans in convertible currencies of PLN 6 101 million, which was reflected in the decision of the Extraordinary General Shareholders’ Meeting held on 23 April 2021 relating to concluding settlement agreements with Customers;
• deterioration in net write-downs for expected credit losses of PLN 1 147 million, mainly resulting from COVID-19-related write-downs;
• deterioration of net impairment of non-financial assets of PLN 282 million.
2) improvement in the result on business activities which amounted to PLN 14 604 million (0.2% y/y), mainly due to:
• an increase in net fee and commission income of 4.6% y/y caused by an increase in net income on margins on foreign exchange transactions and by an increase in net loans, insurance and operating lease income;
• Increase in volumes (deposits, debt securities) and increase in revenues from hedge accounting, what partly compensated negative impact of fall in interest rates on net interest income.
3) a drop in operating expenses of 0.6% y/y, mainly costs of employee benefits;
In 2020 the scale of the Bank's Group's operations increased significantly:
• total assets reached the level of almost PLN 377 billion (+PLN 29 billion y/y);
• amounts due to Customers increased to PLN 282 billion (+PLN 26 billion y/y).
1.4 The PKO Bank Polski S.A. Group development paths
Who we are – our mission
PKO Bank Polski S.A.’s Strategy for the years 2020–2022
Pursuit of the Strategy
The paths for the development of PKO Bank Polski S.A. are set out in the Strategy for the years 2020–2022 “PKO Bank of the Future. We support the development of Poland and the Poles” (Strategy), approved by the Supervisory Board on 17 November 2019.
Who we are – our mission
“We support the development of Poland and the Poles”.
For 100 years we have been delivering financial solutions to our Customers; therefore, we understand the needs of Poles and Polish firms.
We are consistently changing, investing in development, and we responsibly implement modern technologies to enable easy finance management at any place or time. We are proud of our history and of our Polish roots.
We wish to continue exerting a positive influence on Poland – its people, firms, culture and the environment. As one of the largest banks in Central and Eastern Europe we responsibly care for the interests of the shareholders, Customers, employees, and local communities
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PKO Bank Polski S.A.’s Strategy for the years 2020– 2022
The Strategy focuses on four pillars which PKO Bank Polski S.A. intends to develop and reinforce.
1. Accessible, mobile and personal. A digital banking model which uses advanced analytics to ensure personalized experience in Customers’ everyday life.
2. Open and innovative. Using open banking possibilities, strategic partnerships and cloud solutions to propose innovative solutions to Customers.
3. Digital and effective. Digitized processes with minimal manual service requirements, paperless. A fast and safe cloud-based Bank.
4. Shaping the competence of the future. A motivated and committed team with competences adapted to the new business challenges, working smoothly, using state-of-the-art technologies.
The Strategy takes into account non-financial factors (ESG) relating to the environment, society and corporate governance.
PKO Bank of the Future:
• is aware of the challenges resulting from climate change;
• gradually eliminates actions that are harmful to the environment;
• supports environmental education;
• is driven by the principle of social responsibility;
• takes into account the impact of its activities on society, Customers, suppliers, employees and shareholders;
• improves its corporate governance;
• ensures transparency of the principles of the Bank’s management.
The Bank’s (consolidated) financial goals defined for 2022 are as follows:
• net profit over PLN 5 billion;
• target ROE at the level of 12%;
• C/I ratio at the level of approx. 41%;
• cost of risk in the 0.60% – 0.75% bracket;
• capability to pay out dividend.
Pursuit of the Strategy
The financial goals set out in the Strategy for 2022 remain under strong pressure from the pandemic and changes in the economic and regulatory environment, among other things, a drop in interest rates, limited demand for loans, increase in the legal risk of foreign currency mortgage loans. Despite functioning in a more difficult economic environment, in 2020 PKO Bank Polski S.A. maintained strict cost discipline and operating effectiveness, and had a strong equity position.
The Bank’s efficiency in reacting to the challenges related to the COVID-19 pandemic reflects the speed and scope of implementations made in 2020 in three areas of priority.
1. Accelerating digital sales.
• Remote Advisor – implementing remote support in the sales of banking products thanks to the reverse virtualization processes and assisted sales.
• A “selfie” account – implementing a fully remote checking account process in the IKO mobile application using remote verification using a “selfie”.
• New stage of iPKO – a single transaction service irrespective of the hardware used by the Customer (responsive – adapted to different monitor sizes).
• A new cash loan process in IKO – implementing a standard cash lending process in IKO, available to all of the Bank’s Customers and implementing a new remote cash loan sales process to Customers without a relationship with the Bank.
• A new PKO Zero Account for mobile (Konto za Zero dla mobilnych) – an offer of an account aimed at acquiring Customers aged 25-45 who use the Bank’s services remotely.
• A new company account for start-ups and small and medium enterprises – the possibility of opening an account online (iPKO, IKO), for those who are planning to start business operations, opening and simultaneous registration of the company in CEIDG with one application.
• Investment account with iPKO – possibility of opening an account remotely thanks to a qualified electronic signature.
• Aggregation of accounts within the open banking system (implemented with respect to seven banks: BNP Paribas, Millennium, Pekao, mBank, Santander, Alior and T-Mobile Usługi Bankowe).
• Making available Autenti services/implementing “mSzafir” – to enable the remote signing of documents.
• Cards with a multicurrency function for entrepreneurs – possibility to make foreign currency payments directly from a foreign currency account.
• Developing the iPKO business function, including “Superwniosek zdalny” – possibility of submitting remote applications for over 25 different orders (among other things, cash management, ordering cards, opening auxiliary accounts, access to the Internet currency exchange desk).
• Lending solutions related to the coronavirus pandemic – credit holidays for Customers and an option to apply remotely for aid packages (under the State Financial Shield).
2. Increase in revenues.
• Launching the New Insurance Speed project (Nowa Prędkość Ubezpieczeń) – expanding the insurance offer and sales model.
• Enabling the conclusion of life insurance contracts with respect to loans and mortgage loans online using the Autenti platform.
• Sales of motor insurance policies in iPKO and IKO – an offer of motor insurance in the Internet service and mobile application of the Bank.
• PKO Inwestomat for Private Banking Customers – enables integrating Customer services in branches and through the remote channel.
• New functions of e-Kantor (e-currency exchange desk) – purchasing currencies in the Internet currency exchange desk using the BLIK code and the possibility of exchanging currencies in Bank accounts to PLN directly from accounts with other banks (using PSD2).
• Marketplace for the automotive platform Automarket – implementing the first Internet platform for purchasing cars in Poland.
3. Operating effectiveness.
• Using Artificial Intelligence (AI) in banking processes and tools:
– development of the voice assistant in IKO;
– improving the efficiency servicing and sales processes – among other things – implementing the information both on the helpline, which helps Customers during the coronavirus pandemic, and tools facilitating sales of cash loans;
– supporting the soft debt collection process;
• Implementing touchscreens in consecutive branches; making available new functions and educating Customers to use digital channels.
• The Road2Cloud Project:
– Strategic partnership of Operator Chmury Krajowej sp. z o.o. with Microsoft – expanding the Bank’s offer by cloud solutions, among other things with respect to the network infrastructure services, databases, analytics, AI and the Internet of Things (IoT);
– Transferring the first seven banking applications to the cloud,
– Virtualization and assurance of a flexible work environment in the branches,
– Automation of test environments for initiatives in which the Bank engages;
– Implementing the Microsoft Teams application that enables remote communication for thousands of employees.
In the coming years, PKO Bank Polski S.A. will follow its path of digital transformation. It will focus in particular on the following areas and activities:
• Customer-centric approach – a segmented approach to the service offer and model, personalized experiences of the Customer and building long-term relationships, further transforming the network into an advisory centre and digital education for the Customers.
• Digitization – ensuring that Customers have an omnichannel access to banking products and services, increasing sales through remote channels, developing functions and innovations in IKO mobile banking, enhancing CRM and advisor tools, intensifying the use of advanced data analytics, the Road2Cloud Project and constructing a modern platform for electronic channels, including its high accessibility, scalability and security.
• Autonomous Bank – accelerating the automation and robotization of processes, increasing the number of processes performed fully digitally, “slim” outlets and an effective service model, simple and convenient offer and communication with the Customers, increasing the use of AI in sales and service processes, and in the organization’s internal processes.
The Bank will also continue searching for sources of recovering revenues. In particular, it will implement new innovative services and products while continuing to ensure cost discipline and operating effectiveness (C/I), a stable and safe capital base (TCR, CET1) and an optimal level of the cost of risk. The pandemic and changes in the market environment will result in a review of the financial goals defined for 2022.
1.5 The PKO Bank Polski S.A. Group Market Position
In 2020, the Bank’s Group: • maintained a high share in the loan market both in terms of volume and sales of selected products; • maintained its position on the savings market, both for individuals and institutional entities; • maintained its position as leader on the market of investment funds for individuals.
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31.12.2020 |
31.12.2019 |
31.12.2018 |
31.12.2017 |
31.12.2016 |
Change 2020/2019 |
Loans for: |
17.6% |
17.9% |
17.6% |
17.7% |
17.8% |
-0.3 p.p. |
private individuals, of which: |
22.4% |
22.8% |
22.9% |
23.0% |
22.8% |
-0.4 p.p. |
housing |
24.9% |
25.8% |
26.1% |
26.1% |
25.7% |
-0.9 p.p. |
PLN |
26.3% |
27.6% |
28.3% |
28.6% |
28.6% |
-1.3 p.p. |
foreign currency |
20.8% |
21.0% |
21.0% |
21.2% |
21.4% |
-0.2 p.p. |
consumer and other, of which: |
16.5% |
16.3% |
15.8% |
15.9% |
15.8% |
0.2 p.p. |
in current account |
32.7% |
32.4% |
32.1% |
32.0% |
32.6% |
0.3 p.p. |
institutional entities |
12.6% |
13.1% |
12.7% |
12.8% |
12.9% |
-0.5 p.p. |
Non-Treasury debt securities (indebtedness) |
30.2% |
30.7% |
32.4% |
29.3% |
29.2% |
-0.5 p.p. |
Mortgage loans (sales) |
19.7% |
25.7% |
28.9% |
29.6% |
31.9% |
-6 p.p. |
Total savings1) |
18.3% |
18.3% |
18.4% |
17.3% |
16.1% |
0 p.p. |
savings of individuals2) |
24.3% |
22.6% |
22.0% |
21.1% |
20.7% |
1.7 p.p. |
Deposits: |
17.3% |
17.9% |
18.1% |
17.9% |
17.3% |
-0.6 p.p. |
private individuals |
21.9% |
20.8% |
20.2% |
20.4% |
20.7% |
1.1 p.p. |
institutional entities |
11.5% |
13.8% |
15.2% |
14.5% |
12.4% |
-2.3 p.p. |
TFI assets - funds of individuals |
19.2% |
19.6% |
21.6% |
17.1% |
14.2% |
-0.4 p.p. |
Brokerage activities - transactions on secondary market3) |
11.2% |
7.5% |
7.7% |
14.7% |
9.4% |
3.7 p.p. |
Source: NBP, WSE, ZBP, Analizy Online |
Macroeconomic environment
Situation on the financial market
Position of the Polish banking sector
Position of the Polish non-banking sector
Ukrainian market
Regulatory and legal environment
Factors with an impact on the financial results of the Bank’s Group in 2021
Macroeconomic factors which shaped the national economy in 2020:
Recession caused by the outbreak of the pandemic and the fast rebound
In 2020 economic processes were determined by the pandemic and the scope of pandemic restrictions. The crisis the pandemic caused led to a decrease in GDP of -2.7% during the year for the first time since the transformation. The highest drop in GDP took place in Q2 (8.4% y/y, accompanied by a two-digit drop in consumption and investments), in Q3 a rapid increase in activity took place (GDP: -1.5% y/y and +7.9% q/q) achieved thanks to the discontinuation of restrictions. The lack of material restrictions allowed the “unfreezing” of consumer demand (individual consumption increased by 0.4% y/y) and reinstated the functioning of international added value chains which translated into the regrowth of exports. The pandemic did not stop the expansion of Polish exporters. Exports grew throughout the second half of 2020, and Poland’s share in the European trade grew systematically. The clear increase in coronavirus infections in Q4 and the reintroduction of anti-epidemic restrictions once again led to limiting business activities, but to a lesser degree than in spring. GDP dropped by 0.7% q/q sa and 2.8% y/y. At the end of the year a clear rift was visible between the very good condition of the industrial sector and the distinctly worse condition of services. The crisis caused by the pandemic which encompassed nearly the whole economy in spring, covered selected branches at the end of the year, mainly the travel, accommodation, catering and culture sectors.
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Labour market protected by shields
The labour market’s reaction to the recession caused by the pandemic was measurably limited by the Anti-Crisis Shield introduced by the government in cooperation with the National Bank of Poland (NBP) and the Financial Shield provided by PFR. The shields offered the possibility of asking employees to be on standby, shortening working hours (with additional payment towards salary), and conditioned the scale of non-reimbursable aid on maintaining stable employment. In effect, despite the significant drop in business activity the unemployment rate increased only slightly and it stabilized at 6.2% (5.2% as at the end of 2019), after a higher than the seasonal benchmark increase in the number of unemployed in spring (of 120 thousand in Q2). Average employment in the enterprise sector dropped to a minimum in June when it was 3.3% lower y/y. Employment data accounted for, among other things, the option used by employers to temporarily reduce the number of working hours. In effect the scale of decrease in the number of persons employed (and in consequence the increase in unemployment) was much lower. In further months the drop in employment was smaller, in December the number of FTEs was 1.0% lower than in the corresponding period of the previous year. The strategy of maintaining the employment level despite the drop in demand adopted by companies had a negative impact on the rate of growth of remuneration – the average salary in the industry sector grew by 5.4% y/y in Q4 – approx. 1.5 p.p. slower than before the outbreak of the pandemic.
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Slow drop in inflation
Despite the unprecedented scale of economic slowdown, throughout the year CPI inflation exceeded the NBP target inflation rate and only dropped to 2.4% y/y in December compared with 3.4% y/y at the end of 2019 and 4.7% in the peak period in February 2020. Base inflation, after eliminating food and energy prices, increased almost throughout the year and amounted to 4.3% y/y in November. In December it fell to 3.7% y/y compared with 3.1% y/y at the end of 2019. The increase in base inflation reflected the increase in administered prices and higher prices of services connected, among other things, with transferring costs of anti-epidemic actions to consumers. The form of inflation processes (persistently high base inflation despite the disinflationary environment, low fuel prices and dropping food prices) is what makes Poland different from the Euro Area, where they were also fighting deflation.
Public finances in a good shape before the outbreak of the pandemic
Polish public finance entered the crisis in good condition compared to other EU countries, and Poland responded with one of the largest direct fiscal packages in Europe, the implementation of which forced amendments to the Budget Act (in place of a balanced budget, a deficit of PLN 109.3 billion was planned). The anti-crisis actions and the cyclic decrease in income increased the fiscal deficit (ESA) in 2020 to 6.9% of GDP from 0.7% in 2019. In this context, the State budget results (for the year) and local government budget results came as a positive surprise. Estimated data shows that the budget deficit was PLN 85 billion, and the excess amount in local government budgets was PLN 5.6 billion and was PLN 7.3 billion higher than in 2019 (to the cost of capital expenditure made by local governments which dropped by 5% y/y). In 2020 public debt (ESA) was 57.5% of GDP.
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Anti-crisis actions of the Central Bank
During the pandemic, in coordination with fiscal actions, the Monetary Policy Council (MPC) significantly reduced interest rates. The NBP also implemented additional tools supporting the economy. The reference rate was reduced three times, by 140 bp. in total, to a new historical minimum of 0.1%. Among the remaining tools, the introduction of the option to repurchase Treasury bonds and securities guaranteed by the State Treasury on the secondary market had the largest impact on the economy. Under the QE programme, by the end of 2020, the NBP repurchased bonds (issued by the State Treasury, PFR and BGK) with a value of PLN 107 billion (including PLN 3.2 billion in Q4). As of June, in the communiques following the meetings of the MPC, the opinion prevailed that the lack of strong reaction of the foreign exchange rate to the crisis caused by the pandemic and quantitative easement restricts economic revival. The currency interventions conducted in the second half of December (for the first time since 2010) which led to the weakening of the PLN confirm the fact that the NBP prefers a weaker zloty. According to NBP estimations the anti-crisis actions conducted by the NBP limited the scale of the drop in GDP in 2020, and in 2021 the scale of their positive impact on the economy will grow to 1.1 p.p.
2.2 Situation on the financial market
Interest rate market
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In 2020 returns on Polish Treasury bonds dropped significantly – 2-year by 99 b.p. to 0.05%, and 10-year by 88 b.p. to 1.24%. The factors that led to the decrease in returns were the anti-crisis actions of the Central Bank described above. The global increase in liquidity of the financial systems as a result of quantitative easement by key central banks throughout the world also had an impact on the drops in returns on bonds. The construction of the so-called bank tax contributed to the high demand for Treasury bonds on the part of domestic banks. |
Currency Market
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In 2020 the zloty weakened against the euro. The deterioration in the exchange rate of the Polish currency was the result of the global economic crisis which caused the flow of capital from emerging markets to safe havens. The reductions in the NBP interest rates did not contribute to the value of the PLN either. After accounting for inflation which exceeded 3% the rates remained deeply negative in real terms. This discouraged foreign investors from maintaining short-term financial assets denominated in the Polish currency in their portfolios, thus reducing demand for them. At the end of the year the zloty showed a tendency to appreciate due to the global improvement of investor sentiments accompanying the better perspectives of the global and Polish economy. In effect, in December the NBP decided to intervene to weaken the zloty for the first time since 2010.
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Stock Market
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The main index on the Warsaw Stock Exchange – WIG – ended the year with a 1% drop. The deep drop from the first quarter was fully compensated in the further part of the year. After a period of panic selling which led to a 36% drop in the index on 12 March compared with the beginning of the year, investors saw that the condition of the economy and of the companies traded on the Warsaw Stock Exchange (WSE) should gradually improve thanks to the decisive anti-crisis actions of the government and the Central Banks. Stock exchanges were supported in particular by the monetary policy. Extremely low interest rates, negative if inflation was to be accounted for, discouraged investors from keeping funds in bank accounts and bonds, causing savings to move to riskier assets, including stocks. The results of particular industries were not affected to the same degree by the pandemic. The financial sector was affected rather more, which is reflected in the prices of the banks’ shares.
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2.3 Position of the Polish banking sector
Net profit and returns
(Calculations of PKO Bank Polski S.A, based on the last available PFSA data.)
The information does not take into account the loss of PKO Bank Polski S.A. which arose as a result of the decision of the Extraordinary General Shareholders’ Meeting held on 23 April 2021 to conclude settlement agreements with Customers.
In 2020 the impact of the pandemic on the banking sector was reflected by the significant drop in net profit (-48% y/y) and the return on equity (ROE decreased to 3.2% from 6.7% in 2019).
Net interest income dropped y/y – mainly in consequence of the MPC’s reductions in interest rates. Tightening of credit policies by banks and deteriorating consumer sentiments also had a negative impact on net interest income, causing a drop in demand for loans. The drop in the result of the banking sector was further deepened by the provisions for the legal risk of foreign currency housing loans and growing costs of risk. Despite the fact that the quality of the loan portfolio has not deteriorated suddenly since the beginning of the year (an increase in the share of stage 3 loans in the total loan portfolio of 0.2 p.p.), banks increased write-downs taking into consideration the less favourable macroeconomic forecasts and smaller possibilities of accurately forecasting losses. Against the background of deteriorating results in the banking sector the net commission income was a positive feature. It increased thanks to the larger number of transactions performed by customers (mainly in the area of brokerage activities and Forex transactions) and in connection with the changes in the fee and commission tariffs (mainly in the corporate segment).
The capital position of banks was good. The total capital ratio was 21%. The revoking of the obligation to use the systemic risk buffer (3%) had a positive impact on capital adequacy.
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The change in net commission income and the result on other business activities – estimation of PKO Bank Polski S.A. The PFSA does not adjust retroactively the manner of presenting results by banks. In 2020 two banks in the banking sector reclassified some of their income statement items. To ensure comparability, data for 2019 was adjusted.
In December 2020 one of the commercial banks was subjected to compulsory resolution, which should have a positive effect on the stability of the banking sector.
Loan and deposit market
(Based on NBP data and the Analizy Online service site)
At the end of 2020 the annual pace of growth in total loans (net of changes in exchange rates) was negative at -0.8% (compared with an increase of 4.8% as at the end of 2019). With respect to deposits, the annual rate of growth accelerated to 13.9% compared with 8.2% at the end of 2019, remaining among other things under the influence of the strong increase in retail and corporate current deposits. The Anti-Crisis Shields contributed to the increase in corporate deposits.
The rate of growth of housing loans in PLN dropped to 10.1% y/y (12.2% y/y as at the end of December 2019). Consumer loans dropped by 2.2% y/y (compared to the increase of 8.2% y/y as at the end of 2019 – with no changes to the foreign exchange rates).
The rate of growth of corporate loans was negative (-6.1% y/y – with no change in exchange rates – compared with 2.6% y/y as at the end of 2019) due to the enterprise using its own funds and the overall deterioration in economic conditions and the investment environment in Poland.
The rate of growth of deposits of individuals dropped to 8.1% y/y (compared with 9.3% y/y as at the end of 2019), accompanied by a continuous growth in current deposits (28.6% y/y compared with 15.4% y/y as at the end of December 2019) and by a sharper drop in term deposits (-28.6% y/y compared with -0.2% y/y as at the end of 2019). As at the end of 2020 the investment fund assets of individuals increased by 3.6% y/y, and the balance of cash in circulation was 36.9% higher y/y (10.3% y/y as at the end of 2019). The strong increase in cash in circulation was caused among other things by the conservative stance of society on the access to their funds during the pandemic and low interest on deposits in consequence of generally low interest rates (in 2020 the reference rate was reduced thrice, to the level of 0.1%). A high rate of growth has also been maintained in corporate deposits (19.3% y/y compared with 9.7% as at the end of December 2019).
The liquidity position of the banking sector remained very good – the loan to deposit ratio dropped to 83% as at the end of 2020: (-11 p.p. y/y).
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2.4 Position of the Polish non-banking sector
Investment Funds Market
In 2020, assets managed by the Investment Funds Management Companies increased to PLN 280.8 billion (+4.3% y/y), including assets of individuals which increased to PLN 167.9 billion (+3.6% y/y). As at the end of 2020 the amount on deposit with PPK Defined Maturity Date Funds was PLN 2.3 billion.
The total balance of payments and redemptions was just above zero as at the end of 2020 and amounted to PLN 0.4 billion. Individuals paid in PLN 0.3 billion, net.
The balance of payments and redemptions in 2020 was strongly influenced by the crunch on the labour market which occurred in March, when investors withdrew over PLN 20.5 billion, net, and by increased demand for investment products in subsequent months. The level of average annual rates of return had a positive impact on investor interest. In the popular and safe debt funds segment they were at a level many times exceeding the interest on new term deposits in the banking sector, which decreased after the decisions of the MPC to reduce interest rates in the period from March to May 2020.
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Open Pension Funds Market
In 2020 assets of Open Pension Funds (OFE) decreased by 4.0% (PLN -6.2 billion) to PLN 148.6 billion. At the same time the number of OFE participants dropped (by -240 thousand, to 15.4 million).
The OFE market was affected by the deteriorating conditions on the labour market and on the Warsaw Stock Exchange (in 2020 the WIG index dropped by 1.4%) as a result of the crisis caused by the COVID-19 pandemic. Shares continued to dominate OFE assets (approx. 86%).
Lease Market
(based on Polish Leasing Association data)
In 2020 the lease industry financed assets of PLN 70.1 billion, compared with PLN 78.0 billion in 2019, which is a drop of 10.1% y/y. The decreases related to most of the key segments and to a material extent were the result of the state of epidemic in Poland.
The heavy vehicle lease segment (i.e. covering trucks over 3.5 tonnes, tractors, semitrailers/trailers, buses, ships, airplanes, trains and other) noted the largest drop. The value of assets financed in this segment amounted to PLN 13.9 billion (-25.7% y/y), which was approx. 20% of total financing granted by lease companies.
In the period analysed entrepreneurs most often leased light vehicles (passenger cars and trucks up to 3.5 tonnes). The value of assets financed in this segment amounted to PLN 33.3 billion (-5.7% y/y), which was approx. 47% of total financing granted by lease companies.
In the plant and machinery segment the value of leased assets was PLN 20.4 billion (-5.0% y/y).
Only the property segment noted an increase of +4.1% y/y, but its share in the market structure was marginal (1.2%).
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Insurance Market
(Calculations of PKO Bank Polski S.A, based on the last available PFSA data.)
In 2020 insurers earned net profit of PLN 6.1 billion (-15.7% y/y), and their technical profit was 1.5% lower y/y (down to PLN 6.1 billion). The decrease in the amount of revaluation of term deposits (an extraordinary event related to the revaluation of interest in subordinated entities) had a negative impact on the results of insurers, while the decrease in the costs of claims and benefits paid (-2% y/y to PLN 37.9 billion) accompanied by a drop in gross written premium of 1% y/y (to PLN 63.4 billion y/y) had a positive impact.
In the life insurance segment, gross written premium dropped by -2.4% y/y (to PLN 20.7 billion). Premiums in the group of insurance linked, among other things, to Insurance Capital Funds – UFK dropped to a level which was not balanced by increases in premiums in the group of sickness and accident insurance, as well as in the group of life insurance. The drop in claims paid in the life insurance segment was 5.8% y/y (PLN 17.3 billion), which was due to the pandemic conditions in Poland (among other things, a smaller number of claims reported as a result of a smaller number of planned hospitalizations and surgeries). Costs of insurance activities in the life insurance segment were stable y/y (PLN 5.0 billion).
The segment of other personal and property insurance noted a small y/y increase in gross written premium of +0.3% (to PLN 42.7 billion), with a small increase in the cost of claims paid of 1.3% y/y (to PLN 20.7 billion). Costs of insurance activities in the other personal and property insurance segment increased by +4.1% (to PLN 10.4 billion).
Factoring Market
In 2020 the high demand for factoring services prevailed. sales of companies associated in the Polish Factors Association increased by 3.0%, to PLN 290.1 billion, and the number of business entities using factoring companies was 18.4 thousand (+2.6% y/y).
The largest demand on the part of enterprises was for factoring without recourse, whose share in sales of factoring firms was approx. 49%. The share of the second largest market segment, i.e. recourse factoring, was 30%. Manufacturing and distribution companies, mainly from the food, chemical and metal industries, continued to be the entities that used factoring services the most often.
2.5 Ukrainian market
In 2020 business processes in Ukraine (similarly to the rest of the world) were determined by the coronavirus pandemic and the subsequent waves of increased numbers of infections. As a result, Ukrainian GDP dropped by 3.8% in 2020 (compared to +3.6% in 2019).
The drop was already noted in the first quarter (-1.3% y/y), which on the one hand reflected the quarantine imposed in March and on the other a weakening of the business activity trend visible even before the pandemic struck (the rate of growth of GDP started falling already in mid-2019). The lowest point of the market cycle was noted in the second quarter (-11.1% y/y), and the tempering of the pandemic (and thus easement of restrictions) in the summer resulted in mitigating the scale of GDP decreases to -3.6% y/y in the third quarter and -0.6% y/y in the fourth quarter of 2020.
The outbreak of the pandemic brought about two-digit drops in industrial production in April and May, however, in November and December the first year-on-year increases were noted since September 2019. After a deep fall in retail sales in April (-11.6% y/y), which coincided with a sharp slowdown in nominal wages and salaries growth to 1.6% y/y, retail sales once again noted two-digit increases in September, similarly as wages and salaries, which also started growing quickly.
In 2020 imports dropped as a result of the drop in demand for raw materials and semi-finished products, and the depreciation of the hryvnia, whose rate of exchange dropped from 23.81 UAH/USD as at the end of 2019 to 28.34 UAH/USD as at the end of 2020. CPI dropped to 2.7% y/y from 7.9% on average in 2019. At the same time, inflationary pressure increased at the end of the year due to increases in regulated prices (water, gas, electricity).
To stimulate the economy, the National Bank of Ukraine (NBU) reduced interest rates four times (by 550 b.p. in total, to 8.0%) in the first half of 2020. The anti-crisis fiscal actions increased budgetary expenses, therefore, the deficit of the public sector increased to 5.2% of GDP compared with 2.1% in 2019. In connection with the weakening of the hryvnia, this led to an increase in the ratio of the public debt to GDP to 60.8% as at the end of 2020 from 50.2% as at the end of 2019.
Ukrainian Banking Sector
In accordance with the data from the NBU the number of banks which engaged in operations in Ukraine dropped to 74 in December 2020 (compared with 75 in December 2019).
The value of total assets in the Ukrainian banking system in 2020 increased to UAH 1.82 trillion from UAH 1.49 trillion (as at the end of 2019). Equity increased to UAH 210.6 billion from UAH 200.9 billion and as at the end of 2020 they comprised 11.6% of the balance sheet total compared with 13.4% as at the end of December 2019. The Ukrainian Banking Sector is well capitalized (the sector’s capital adequacy ratio is 22.0% compared with the minimum required of 10%), although differences may be noted between public banks (less capitalized) and private ones. The improvement in capital adequacy is the result of limiting the loans portfolio and purchasing Treasury bonds.
The volume of loans dropped (by UAH 45.5 billion to UAH 978.7 billion), with a drop in the value of foreign currency loans of UAH 31.4 billion. Two-thirds of this drop was caused by foreign customers (a drop of UAH 21.2 billion), and one-third by domestic borrowers (a drop of UAH 10.3 billion).
The value of deposits went up by UAH 279.0 billion (up to UAH 1 370.6 billion). The depreciation of the hryvnia translated into an increase in the value of foreign currency deposits (of UAH 82.0 billion). Household deposits increased by UAH 154.2 billion, and corporate deposits by UAH 115.8 billion. The loan to deposit ratio dropped to 71.4% as at the end of 2020, from 93.8% as at the end of 2019 and was the lowest since at least 2005 (scope of available data).
ROA and ROE ratios deteriorated (2.54% in 2020 compared to 4.26% in 2019 and 19.97% in 2020 compared to 33.45% in 2019 respectively).
2.6 Regulatory and Legal Environment
The following new legal and regulatory solutions, which became binding in 2020, had an impact on the financial and organizational position of the PKO Bank Polski S.A. Group and on the financial sector, including in particular:
Solution |
Impact |
Impact of COVID-19 on the regulatory environment, Anti-Crisis Shields and other supporting actions |
|
Resolution of the Minister of Health: - dated 13 March 2020 on announcing the state of epidemic threat in the Republic of Poland (Journal of Laws of 2020, item 433); and - dated 20 March 2020 on announcing the state of epidemic in the Republic of Poland (Journal of Laws of 2020, item 491, as amended). Package of Acts on the so-called Anti-Crisis Shield, including: - the Act of 31 March 2020, of 17 September 2020 and of 9 December 2020 on amending the act on specific solutions related to the prevention and counteracting of COVID-19, other contagious diseases and the crisis situations caused by them, and certain other acts (Journal of Laws of 2020, items 568, 1639, and 2255); - the Act of 16 April 2020 on specific supporting instruments in view of the proliferation of the SARS-CoV-2 virus (Journal of Laws of 2020, item 695); - the Act of 14 May 2020 on amendments to certain Acts in respect of protective measures in view of the proliferation of the SARS-CoV-2 virus (Journal of Laws of 2020, item 875); - the Act of 19 June 2020 on additional payments with respect to interest on bank loans granted to entrepreneurs affected by the effects of COVID-19 and on simplified procedures for approving debt composition proceedings in connection with COVID-19 (Journal of Laws of 2020, item 1086); Regulation of the Minister of Finance, Funds and Regional Policy dated 10 November 2020 amending the regulation on granting aid using financial instruments under the operational programmes for the years 2014-2020 to support the Polish economy in connection with the COVID-19 pandemic (Journal of Laws of 2020, item 2002); |
Limiting the operations of specific institutions or workplaces, including of the Bank’s Customers and counterparties as well as the companies of the Bank’s Group.
A drop in net interest income (“credit holidays”)
An increase in the volume of corporate deposits
A drop in corporate credit risk
A decrease or change in tax charges and principles of discharging tax duties
|
The PFSA communique dated 20 March 2020 on BGK entrusting other banks with assessing the ability to repay liabilities and analyse the risk of paying liabilities with respect to loans guaranteed by BGK (performance of one of the elements of the Anti-Crisis Shield). |
Increased security against credit risk |
Potential implementation of a package of quick fixes adopted by the European Commission on 28 April 2020 (and by the European Parliament on 18 June 2020) of the CRR (CRR quick fix). They are aimed at facilitating lending by banks to households and corporate entities in the European Union and thus at significantly reducing the negative impact of the coronavirus pandemic on its economy. |
Increased the capital adequacy ratio |
Risk |
|
#PIN – a Supervisory Impulses Package for safety and Development in the area of the capital market announced by the Office of the PFSA and the Position of the Office of the PFSA under the Supervisory Impulses Package on the financing of corporate Customers by banks during the coronavirus pandemic. |
Easing regulatory obligations, postponing reporting deadlines, ensuring the continuation of insurance cover granted to Customers based on the insurance contracts concluded |
Communique of the Management Board of the NBP dated 16 March 2020 with reference to the coronavirus epidemic in Poland, informing among other things of implementing operations to supply banks with liquidity, purchasing Treasury bonds on the secondary market, introducing bill of exchange credit for banks. |
Increase in the Bank’s liquidity |
Regulation of the Minister of Development and Finance dated 18 March 2020 repealing the regulation on the systemic risk buffer (Journal of Laws of 2020, item 473); |
Drop in the minimum capital adequacy ratio |
PFSA decisions recommending that the Bank retain own funds to cover the additional capital requirement to hedge the risk following from foreign currency mortgage loans at an individual level, in the amount of 0.27 p.p. above the total capital ratio (0.40 p.p. to date) and at the Bank Group’s level in the amount of 0.24 p.p. above the total capital ratio (0.36 p.p. to date). |
Lowering the minimum supervisory requirements with regard to capital ratios |
Interest rates |
|
The MPC decisions dated 17 March 2020, 8 April 2020 and 28 May 2020 as a result of which the NBP reference rate was reduced by a total of 1.4 p.p., i.e. to 0.10%. The Council also decided to reduce the rate of the mandatory reserve from 3.5% to 0.5%, and to reduce interest on funds kept for mandatory reserve purposes from 0.5% to the level of the NBP reference rate. |
Decrease in net interest income |
Contributions to the Bank Guarantee Fund |
|
Resolutions of the BGF Board of February 2020 (15/2020 and 17/2020), which implemented a change in the charges payable by the banking sector to the system of protection of bank deposits and compulsory resolution. |
Increase in operating expenses, drop in profit, lower profitability |
BGF Communique dated 26 March 2020 on MREL actions taken in response to the events relating to the COVID-19 pandemic (i.e. the planned updating of the amount of MREL required from banks, determining the first binding interim MREL target as at 1 January 2022 and applying an extended (as a result of the implementation of BRRD2) target deadline for meeting the MREL requirement (extending it by one year, to 1 January 2024). |
Change in regulatory requirements relating to MREL |
2.7 Factors with an impact on the financial results of the Bank’s Group in 2021
The following external factors may have a material impact on the operations of the Bank’s Group in 2021:
• risk of a further wave of infections with the coronavirus (in effect of the proliferation of a more infectious mutation of the virus), the economic effects of which, however, should be less severe than in spring (the effect of adaptations in the economy and the gradually growing effect of the vaccinations); • the process of the global economy recovering from the deep recession caused by the pandemic including the countries which were the main export markets for Polish entrepreneurs; • further resurgence of the global trade exchange related to the economic reconstruction in China and high global investment activity (among other things, ecological investments, consequences of fiscal aid programmes); • continuation of the anti-COVID-19 vaccination programme which began in Europe, the USA and the Middle East, which gives hope that in the second half of the year economic activity, uninterrupted by further lockdowns, will return; • the positive effects of the easement of monetary policy in 2020 by the key central banks, mainly using non-standard tools, such as asset purchase programmes and credit action support programmes for the non-financial sector, at the end of the year gradual normalization of the monetary policy is possible; • the positive effects of the fiscal rescue actions announced by particular governments and by the European Commission, targeted at maintaining employment, protecting companies’ liquidity and stimulating demand, gradual extinguishing of national actions; • the risk of a wave of insolvencies of some countries; • political and economic conditions in Ukraine. |
In the Polish economy: |
• fast revival of economic activity after the sudden drop caused by the pandemic observed in 2020, supported by the nature of the fiscal impulse and a decrease in savings caused by the pandemic; • effects of the hibernation of the labour market in 2020 and potential deterioration of the situation after the PFR Financial Shield structures expire; • the process of adapting the economy to the post-pandemic reality – employment and operations restructuring in industries most afflicted by the chronic negative effects of the pandemic. Thanks to the resurgence of demand at a macro level the process should have the character of “creative destruction”, but temporarily may cause turbulences on local labour markets; • probable stabilization of NBP interest rates at a record low, possible further activity of the NBP on the currency market to reduce the appreciation of the PLN; • after a drop at the beginning of 2021 an increase in inflation is probable, on average it will probably exceed 3% in 2021; • rebuilding of trade and foreign exchange after the crisis drop, probably at a much lower scale of trade in the international travel and tourist industry (at least in the first half of the year) accompanied by a clear increase in exports of goods; • maintained high uncertainty (among other things, with respect to the further development of the pandemic and its impact on the economy) leading to risk aversion and increased volatility (on the market and in economic trends); • probable gradual resurgence of investment activity related, among other things, to inflows of funds from the EU reconstruction programme and ecological investments; • maintained weak demand for loans accompanied by a higher volume of deposits (effect of anti-crisis actions). |
New regulatory solutions: |
• further solutions under the Government Anti-Crisis Shields (including: PFR Financial Shield 2.0); • draft act on amending the Act on the Bank Guarantee Fund, deposit guarantee scheme and compulsory resolution, and certain other acts, transposing BRRD2 to the Polish legal system; • drafting amendments to the Regulation of the Minister of Finance on the criteria and method of performing the supervisory review and evaluation process in banks. The purpose of the draft is to make the necessary amendments to the Polish legal system in connection with the EU legal regulations relating to capital requirements for financial institutions (the so-called CRD V/CRR II package) entering into force; • potential statutory solutions relating to the transfer of funds accumulated in Open Pension Funds (OFE) to individual pension accounts or to the Social Insurance Institution (ZUS); • potential regulatory solutions which apply to foreign currency housing loans for households. They relate both to those resulting from the judgment of EUCoJ of 3 October 2019, and from potential further court judgments determining the line of interpretation in the case of Polish courts finding abusive provisions in loan agreements. |
New tax solutions |
As at 1 January 2021 regulations amending the income tax acts became binding which, among other things, introduced the duty to prepare and show on their websites information on the pursued tax strategy for taxpayers with annual revenue exceeding EUR 50 million and for Tax Groups. This duty has to be performed by the end of the twelfth month following the end of the fiscal year (pursuant to the communique of the Ministry of Finance the first such information has to be prepared for 2020). |
Entities covered by the financial statements
Key changes to the structure of the Bank’s Group in 2020
Related-party transactions
3.1 Entities covered by the financial statements
[GRI 102-45] Pursuant to the International Financial Reporting Standards (IFRS) as at 31 December 2020 the Bank’s Group comprised PKO Bank Polski S.A. as the parent and 38 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:
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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 2020 (hereinafter: financial statements of the Bank’s Group for 2020) are accounted for using the acquisition accounting method.
A full list of the Bank’s subsidiaries, associates and joint ventures is presented in the 2020 financial statements of the Bank’s group (Note 1).
3.2 Key changes to the structure of the Bank’s Group in 2020
In 2020 there were no significant changes in the structure of the Group.
The following companies merged: PKO Leasing Nieruchomości sp. z o.o. as the acquiree and PKO Leasing S.A. as the acquirer and ZenCard sp. z o.o. as the acquiree and PKO BP Finat sp. z o.o. as the acquirer.
The liquidation of Molina spółka z ograniczoną odpowiedzialnością 3 S.K.A. was finalized and liquidation proceedings were started of Molina spółka z ograniczoną odpowiedzialnością 5 S.K.A. and Molina spółka z ograniczoną odpowiedzialnością 6 S.K.A.
At the beginning of July 2020, in connection with the closing of the securitization of lease receivables of PKO Leasing S.A. conducted in cooperation with the special purpose vehicle ROOF Poland Leasing 2014 DAC, action was taken to liquidate the SPV.
Work was conducted on the reverse merger of “CENTRUM HAFFNERA” sp. z o.o. as the acquiree and its subsidiary “Sopot Zdrój” sp. z o.o. as the acquirer. The reverse merger was conducted on 14 January 2021 – the change was registered with the National Court Register (KRS) with jurisdiction over the acquirer. After the merger NEPTUN – fizan holds 62 944 shares in “Sopot Zdrój” sp. z o.o., which represent 72.98% of the Company’s share capital and are attached to 72.98% votes at the General Shareholders’ Meeting.
3.3 Transactions with subordinated entities
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 2020 is presented in the Financial Statements of PKO Bank Polski S.A. for the year ended 31 December 2020 (Note 48).
Key financial indicators
Consolidated income statement
The consolidated statement of financial position
Any differences in sums, shares or growth rates arise from the rounding of amounts to full PLN millions and rounding of percentage shares in structures to two digital spaces.
The results of the PKO Bank Polski S.A. Group led to obtaining the key financial effectiveness ratios at the levels presented in the table:
Table 3. Financial indicators of the PKO Bank Polski S.A. Group.
31.12.2020 |
31.12.2019 |
Change |
|
Net ROE (net profit/(loss)/average equity) |
-6.0% |
10.0% |
-16.0 p.p. |
Net ROTE (net profit/(loss)/average equity less intangible assets) |
-6.5% |
10.9% |
-17.4 p.p. |
Net ROA (net profit/(loss)/average assets) |
-0.7% |
1.2% |
-1.9 p.p. |
C/I (cost to income ratio) |
41.0% |
41.3% |
-0.3 p.p. |
Interest margin (net interest income/average interest-bearing assets) |
3.03% |
3.41% |
-0.38 p.p. |
Share of impaired exposures |
4.4% |
4.3% |
+0.1 p.p. |
Cost of credit risk1) |
0.78% |
0.46% |
+0.32 p.p. |
Total capital ratio (equity/total capital requirement*12.5) |
18.18% |
19.88% |
-1.7 p.p. |
Common equity Tier 1 (CET1) |
16.99% |
18.61% |
-1.62 p.p. |
1) After excluding the impact of COVID-19 the cost of credit risk as at 31 December 2020 would be -0.39%. (-0.08 p.p. y/y). |
4.2 Consolidated income statement
Net interest income
Net fee and commission income
Other net income
Operating expenses
Net write-downs and impairment
The consolidated net result of the PKO Bank Polski S.A. Group in 2020 amounted to PLN -2 557 million and was PLN 6 588 million lower than in 2019.
The result on business activities of the PKO Bank Polski Group for 2020 amounted to PLN 14 604 million and was PLN 26 million (i.e. 0.2%) higher y/y, mainly as a result of an increase in net interest income and in fee and commission income, and a decrease in net other income and expenses.
Table 4. Income statement of the PKO Bank Polski S.A. Group (in PLN million)
|
2020 |
2019 |
Change |
Change |
Net interest income |
10,346 |
10,290 |
56 |
0.5% |
Net fee and commission income |
3,904 |
3,731 |
173 |
4.6% |
Net other income |
354 |
558 |
-203 |
-36.5% |
Dividend income |
15 |
14 |
1 |
9.5% |
Result on financial transactions |
236 |
356 |
-120 |
-33.7% |
Net foreign exchange gains/(losses) |
182 |
104 |
78 |
75.0% |
Net other operating income and expenses |
-79 |
84 |
-163 |
x |
Result on business activities |
14,604 |
14,579 |
26 |
0.2% |
Operating expenses |
-5,983 |
-6,021 |
38 |
-0.6% |
Tax on certain financial institutions |
-1,055 |
-1,022 |
-33 |
3.2% |
Net operating result |
7,566 |
7,536 |
31 |
0.4% |
Net write-downs and impairment |
-9,277 |
-1,748 |
-7,530 |
5,3x |
Share in profits and losses of associates and joint ventures |
16 |
31 |
-15 |
-49.4% |
Profit before tax |
-1,695 |
5,819 |
-7,514 |
x |
Income tax expense |
-865 |
-1,787 |
922 |
-51.6% |
Net profit (including non-controlling shareholders) |
-2,561 |
4,032 |
-6,593 |
x |
Profit (loss) attributable to non-controlling shareholders |
-4 |
1 |
-5 |
-503.6% |
Net profit |
-2,557 |
4,031 |
-6,588 |
x |
Net interest income
Net interest income for 2020 amounted to PLN 10 346 million, i.e. PLN 56 million more than in the previous year. The increase in the y/y net interest income was caused by an increase in interest income on hedge accounting and an increase in income from securities in effect of an increase in their volume, as well as a decrease in interest expense on Customer deposits. At the same time income from borrowings granted to Customers dropped as a result of the changes which resulted from the decision of the MPC on reductions of interest rates in the first half of 2020.
|
|
Interest income amounted to PLN 11 801 million and was 6.6% lower than in 2019. This was mainly the effect of:
• a decrease in income from financing granted to Customers of PLN 1 574 million y/y – resulting mainly from the drop in average market interest rates on financing granted to Customers of 0.8 p.p., partly compensated by an increase in the average volume of financing of PLN 10 billion, accompanied by a change in its structure (an increase in the share of PLN housing loans accompanied by a decrease in the share of business and foreign currency housing loans);
• higher income on securities (PLN +345 million y/y), mainly as a result of an increase in their average volume of PLN 36 billion, which related mainly to Treasury bonds.
• higher income from hedge accounting (PLN +449 million y/y), as a result of an increase in the volume of IRS PLN transactions and an increase in spreads between interest income received and paid on transactions and accounting for the designated CIRS transactions;
In order to maintain comparability of data, the interest income was adjusted: income on non-Treasury bonds which is recognized in the financial statements in income from debt securities was transferred to income on financing granted to Customers. In 2020 interest income went down by PLN 233 million in connection with the judgment of the Court of Justice of the European Union in respect of the consumer’s right to reduce the cost of the loan in the event of repayment of the loan before the deadline specified in the loan agreement.
Interest expense amounted to PLN 1 455 million and was PLN 892 million lower compared with 2019. The lower interest expense was mainly the effect of a drop in the costs of the deposit base of PLN 775 million y/y, which in particular was the effect of lower PLN interest rates after the decisions of the MPC.
The interest margin decreased by 0.38 p.p. y/y and amounted to 3.03%. The decrease in the margin was mainly the result of lower returns on assets following from a change in the structure of interest-bearing assets (the share of securities with the lowest interest rates increased mainly at the expense of the share of amounts due from Customers bearing the highest interest rates). Additionally, the decrease in returns was impacted by the decrease in market rates in Poland which to a larger degree translated into a drop in interest on assets than on liabilities. In 2020 the average interest rate on PKO Bank S.A.’s loans was 4.0%, and the average interest rate on total deposits was 0.3%, compared with 4.7% and 0.7% respectively in 2019.
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Net fee and commission income/(expense)
In 2020 net fee and commission income amounted to PLN 3 904 million, i.e. PLN 173 million more than in the previous year. The level of the net commission income was determined – among other things – by:
• higher net income on margins in Forex transactions (+PLN 106 million y/y) in effect of an increase in the number of transactions and active management of the level of the spreads in the tables;
• higher net income on loans, and insurance and operating leases (PLN +73 million y/y), mainly in effect of an increase in commission on business loans and leases, and a drop in costs of granting the loans;
• higher net income on payment and credit cards (PLN +15 million y/y) due to the higher number of cards and higher volumes of non-cash transactions;
• higher net income from maintaining bank accounts and other net income (PLN +13 million y/y), among other things as a result of an increase in commissions for maintaining bank accounts and domestic bank transfers in the corporate segment;
• lower net income from investment funds, pension funds and brokerage activities (PLN -34 million y/y), caused mainly by outflows of fund assets in the second quarter of the year, a change in their structure and a decrease in the commission for managing funds.
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Other net income earned in 2020 amounted to PLN 354 million and was PLN 203 million lower than in 2019, among other things, as an effect of:
• lower net income on financial operations
(PLN -120 million y/y) – mainly as a result of lower net income on the remeasurement of the Bank’s investment securities and on embedded derivatives;
• other net operating income PLN 163 million y/y lower – among other things as a result of:
– recognizing the gain on the bargain purchase of Prime Car Management S.A. of PLN 102 million in 2019;
- partially releasing, in 2019, the provision for proceedings before the President of the Office for Competition and Consumer Protection concerning practices which violate the collective interests of consumers (PLN 58 million), which was set up in 2018 in the amount of PLN 62.5 million (the information on setting up the provision was published in current report no. 24/2018 dated 27 June 2018).
• higher net foreign exchange gains/(losses) (PLN +78 million y/y) – mainly as a result of an improvement in the results from the ineffective portions of CIRS hedging transactions in hedge accounting (lower volatility – high negative result in 2019) and results on Treasury operations and other differences.
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Operating expenses
In 2020 operating expenses amounted to PLN 5 984 million and were 0.6% y/y lower. Their level was mainly determined by:
• a PLN 242 million, i.e. 7.5% decrease in employee benefit costs, mainly as a result of a drop in the number of the Bank Group’s employees of 1 849 FTE in 2020, including 1 700 FTEs in the Bank itself;
• a decrease in tangible costs of PLN 94 million, i.e. of 7.0%, mainly in connection with a decrease in the following expenses:
- promotion and advertising (of PLN 87 million), mainly in the Bank in effect of changes in dates or cancelling sponsor and image projects (as a result of the epidemic situation in Poland) and in consideration of the high costs related to the Bank’s centenary celebrations in 2019;
- other tangible costs (of PLN 24 million), mainly in the “CENTRUM HAFFNERA” sp. z o.o. Group caused by limiting the operations of the hotel as a result of the restrictions following from the COVID-19 pandemic;
- accompanied by higher IT expenses (of PLN 28 million), mainly in the Bank (of PLN 21 million) in connection with an increase in outsourcing expenses;
• an increase of PLN 159 million, i.e. of 31.3% in contributions to the Bank Guarantee Fund (BGF) – BGF costs amounted to PLN 668 million, of which PLN 350 million constituted the contribution to the mandatory deposit guarantee fund. In 2019 costs in respect of the BGF were PLN 509 million, of which the contribution to the mandatory deposit guarantee fund was PLN 161 million;
• an increase of PLN 88 million in the costs of withheld tax on the issue of foreign bonds; this increase was related to adjustments in gross-ups of interest for the years 2017-2019 in 2019 and accounting for the 3% tax on interest paid for the period 2014-2019 following amendments to the tax regulations;
• an increase of PLN 57 million, i.e. 6.2% in amortization and depreciation as a result of the amortization of intangible assets related to the computerization of the Bank, and depreciation of buildings and structures.
The effectiveness of operations of the PKO Bank Polski S.A. Group measured with the C/l ratio on an annual basis was 41.0% and it improved by 0.3 p.p. y/y in consequence of better results on business activities (+0.2% y/y), accompanied by lower operating expenses (-0.6% y/y).
|
|
|
Net write-downs and impairment
In 2020, net write-downs and impairment jointly with the costs of the legal risk of mortgage loans in convertible currencies amounted to
PLN -9 277 million and were PLN 7 530 million lower than in 2019.
In 2020 the Bank recognized the costs of legal risk of mortgage loans in convertible foreign currencies of PLN -6 552 million (an increase of PLN 6 101 million compared with 2019).
The legal risk is connected with the portfolio of mortgage loans in convertible currencies granted to households in the years 1999-2012 and is related to potential Customer claims.
A detailed description of the costs of legal risk is included in the Bank Group’s financial statements for 2020, in the part referring to the cost of legal risk of mortgage loans in convertible currencies (Note 23).
In 2020 net write-downs for credit risk and non-financial assets were PLN -2 725 million and deteriorated by PLN 1 429 million compared with 2019, mainly as a result of write-downs recorded in connection with COVID-19 and impairment of: the shares in Bank Pocztowy S.A., goodwill (which arose as a result of acquiring Nordea Bank Polska S.A. and PKO Leasing Pro S.A.) and real estate.
The share of impaired loans amounted to 4.4% as at the end of 2020 (a 0.1 p.p. increase compared with 2019).
The cost of credit risk was 0.748% at the end of 2020, which is a 0.31 p.p. deterioration compared with the prior year.
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4.3 Consolidated statement of financial position
Main items of the Statement of financial position
Financing granted to Customers
Sources of financing operations
Amounts due to Customers
External financing
Main items of the Statement of financial position
As at the end of 2020 the PKO Bank’s Group total assets amounted to nearly PLN 377 billion and increased by approx. PLN 29 billion as of the beginning of the year. Thus, the PKO Bank’s Group reinforced its leading position on the Polish banking market.
On the assets side, the Bank’s Group noted an increase, mainly in the securities portfolio, and on the side of sources of finance the increase was determined mainly by the increase in the deposit base.
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Financing granted to Customers
As at the end of 2020, financing granted to Customers of the Bank’s Group was PLN 235.8 billion which represents a decrease of PLN 8.3 billion y/y.
The volume of retail and private banking loans dropped by PLN 2.9 billion, mainly as a result of the adjustment to the gross carrying amount of mortgage loans introduced pursuant to IFRS 9 for the expected potential impact of settlement agreements with Customers, accompanied by an increase in consumer loans.
In 2020, a drop in corporate loans was also noted (PLN -4.3 billion) and in loans to firms and enterprises (PLN -1.1 billion), which resulted both from a lower volume of working capital loans and current account overdrafts used and from increasing the allowances for business loans.
Retail and private banking loans were the main items in the structure of financing by type, with a share of 59.1% as at the end of 2020.
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Sources of financing operations
The PKO Bank Polski S.A. Group finances its operations with domestic and foreign sources which are derived from deposits (also from the interbank market), equity and borrowings from the wholesale market. Borrowings from the wholesale market comprise liabilities with respect to the issue of securities, subordinated liabilities and loans and advances from monetary and non-monetary institutions. The main source of financing of the Bank’ Group’s operations are Customer deposits, comprising ¾ of all sources of finance.
Due to its optimum structure of financing, the PKO Bank Polski S.A. Group has full capacity to perform its investment plans, including capital investments. In order to carry out capital investments, the Bank’s Group utilizes mainly resources derived from its equity and issue of securities.
Customer deposits constitute the basic source of financing the Bank’s Group’s assets. As at the end of 2020 amounts due to Customers amounted to PLN 282.4 billion, which is an increase of PLN 26.2 billion since the beginning of the year. The main factor that contributed to the increase in the deposit base was an increase in retail and private banking deposits (PLN +22.8 billion) and deposits of business entities (PLN +12.2 billion), accompanied by a decrease in deposits of corporate entities (PLN -8.8 billion).
In the structure of Customer deposits by type, the main items are the retail and private banking deposits (70.3% as at the end of 2020).
The share of current deposits in the break-down of total deposits increased and amounted to 81.6% (+11.8 p.p. compared with the end of 2019).
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External financing
As at the end of 2020: the level of non-current sources of financing was PLN 37 billion. The following factors had an impact on the unchanged level of financing:
• premature redemption of EMTN Bank bonds with a nominal value of EUR 250 million and of the PKO Finance AB issues with a nominal value of USD 195.41 million;
• sale of bonds with a nominal value of PLN 0.64 billion issued under the lease receivables securitization in 2019 by PKO Leasing S.A. outside the Bank’s Group;
• issue and redemption of bonds with a total nominal value of PLN 1.0 billion and PLN 0.3 billion respectively by PKO Leasing S.A.;
• issue and redemption of bonds with a total nominal value of PLN 4.2 billion and PLN 3.8 billion respectively by PKO Bank Hipoteczny S.A.;
• repayment of instalments on loans received from international financial institutions in accordance with the payment schedule;
• higher exchange rates of the EUR (PLN +0.36) and CHF (PLN +0.34), accompanied by a drop in the exchange rate of the USD (PLN -0.04).
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Key financial indicators
Income statement
Entertainment costs and expenses on legal and marketing, PR and social communication services, and management advisory services
Statement of financial position
Any differences in sums, shares or growth rates arise from the rounding of amounts to full PLN millions and rounding of percentage shares in structures to two digital spaces.
The results achieved by PKO Bank Polski in 2020 enabled the key financial efficiency indicators to achieve the levels shown in the table below.
Table 5. Financial ratios of PKO Bank Polski S.A.
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5.2 Income statement
Net interest income
Net fee and commission income
Other net income
Operating expenses
Net write-downs and impairment
In 2020 the PKO Bank Polski S.A. Group incurred net loss of PLN -2 944 million (i.e. a drop in its results of PLN 6 779 million). This was mainly the effect of a decrease in net write-downs and impairment at a higher result on business activities and lower operating expenses.
In 2020 the result on business activities was PLN 12 875 million and it was PLN 54 million, i.e. 0.4% higher than in 2019. This was mainly the effect of an increase in net fee and commission income of PLN 273 million y/y, and a decrease in net interest income of PLN 105 million y/y and net other income of PLN 114 million y/y.
Table 6. Income statement of PKO Bank Polski S.A. (in PLN millions)
|
2020 |
2019 |
Change |
Change |
Net interest income |
9,184 |
9,290 |
-106 |
-1.1% |
Net fee and commission income |
3,101 |
2,828 |
273 |
9.6% |
Net other income |
590 |
704 |
-114 |
-16.2% |
Dividend income |
332 |
561 |
-229 |
-40.8% |
Result on financial transactions |
213 |
365 |
-151 |
-41.5% |
Net foreign exchange gains/(losses) |
133 |
106 |
27 |
25.0% |
Net other operating income and expenses |
-88 |
-328 |
240 |
-73.1% |
Result on business activities |
12,875 |
12,822 |
54 |
0.4% |
Operating expenses |
-5,180 |
-5,237 |
57 |
-1.1% |
Tax on certain financial institutions |
-957 |
-931 |
-26 |
2.8% |
Net operating result |
6,738 |
6,654 |
84 |
1.3% |
Net write-downs and impairment |
-9,004 |
-1,536 |
-7,468 |
5,9x |
Profit/loss before tax |
-2,266 |
5,118 |
-7,384 |
x |
Income tax |
-678 |
-1,283 |
605 |
-47.2% |
Net profit/loss |
-2,944 |
3,835 |
-6,779 |
x |
|
|
Net interest income
Net interest income for 2020 amounted to PLN 9 184 million, i.e. PLN 106 million less than in the previous year. The lower y/y result was mainly determined by a decrease in income from financing granted to Customers, which was caused by the decision of the MPC to reduce interest rates, taken in the first half of 2020. This drop was partly compensated by a drop in interest expense on Customer deposits, an increase in income on securities as a result of an increase in their volumes and an increase in income from hedge accounting.
|
|
|
|
Interest income in 2020 amounted to PLN 10 332 million and was 9.0% lower than in 2019, mainly in effect of:
• a decrease in income from financing granted to Customers of PLN 1 456 million y/y – related mainly to the drop in the average interest rate on financing granted to Customers of 0.8 p.p., partly compensated by an increase in the average volume of loan receivables of PLN 10 billion, accompanied by a change in their structure (an increase in the share of PLN housing loans accompanied by a decrease in the share of foreign currency housing loans);
• higher income on securities (PLN +372 million y/y), mainly as a result of an increase in the average volume of PLN 36 billion, which resulted mainly from purchases of Treasury bonds;
• higher income from hedge accounting (PLN +252 million y/y) in effect of an increase in the volume of the IRS PLN transactions, an increase in the spreads between the interest received and paid on the transactions and recognizing the valuation of designated CIRS transactions.
And in order to maintain comparability of data, the interest income was adjusted: income on non-Treasury bonds which is recognized in the financial statements in income from debt securities was transferred to income on financing granted to Customers.
In 2020 interest income went down by PLN 232 million in connection with the judgment of the Court of Justice of the European Union in respect of the consumer’s right to reduce the cost of the loan in the event of repayment of the loan before the deadline specified in the loan agreement.
Interest expense amounted to PLN 1 148 million and was PLN 797 million lower than in 2019. The lower interest expense was mainly the effect of a drop in the costs of the deposit base of PLN 751 million y/y, which resulted from lower PLN interest rates after the decisions of the MPC.
The interest margin decreased by 0. 44 p.p. y/y and amounted to 2.95% as at the end of 2020. The decrease in the margin results from lower returns on assets in effect of changes in the structure of interest-bearing assets (the share of securities with the lowest interest rates increased mainly at the expense of the share of amounts due to Customers bearing the highest interest rates). Additionally, interest margin decreased as a result of a drop in net interest income due to the decrease in market rates in Poland which to a larger degree translated into a drop in interest on assets than on liabilities. In 2020 the average interest rate on PKO Bank Polski S.A. loans was 3.8%, and the average interest rate on total deposits was 0.3%. In 2019 it was 4.6% and 0.6% respectively.
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Net fee and commission income/(expense)
In 2020 net fee and commission income amounted to PLN 3 101 million and was PLN 273 million higher than in the previous year. The level of the net fee and commission income was determined – among other things – by:
• higher net income on margins in Forex transactions (PLN +106 million y/y) in effect of an increase in the number of transactions and active management of the level of the spreads in the tables;
• higher net income from investment funds and brokerage activities (PLN +101 million y/y), caused mainly by an increase in net income from trading on the stock exchange resulting from playing the role of an issuing agent in respect of the sales of Bonds;
• higher net income on loans and insurance (PLN +29 million y/y), mainly in effect of an increase in commission on business loans and leases, and a drop in the costs of granting the loans;
• higher net income on payment and credit cards (PLN +15 million y/y) due to the higher number of cards and higher volumes of non-cash transactions;
• higher net income from maintaining bank accounts and other net income (PLN +22 million y/y), among other things as a result of an increase in commissions for maintaining bank accounts and domestic bank transfers in the corporate segment.
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Other net income
In 2020 other net income amounted to PLN 590 million and was PLN 114 million lower than that earned in 2019, among other things due to:
• lower dividend income (PLN -229 million);
• lower net income on financial operations (PLN -151 million y/y) – mainly as a result of a lower net income on the remeasurement of the Bank’s investment securities and net income on embedded derivatives;
• higher net foreign exchange income (PLN +27 million y/y) – mainly due to a better result on Treasury activities and limiting the volatility of other differences;
• higher net other operating income and expenses (PLN +240 million y/y), among other things as a result of:
- recognizing income of PLN 24 million in 2020 from reducing the commitment to inject capital in a subsidiary, compared with respective costs of PLN 274 million which were recognized in 2019;
- partially releasing, in 2019, the provision for proceedings before the President of the Office for Competition and Consumer Protection concerning practices which violate the collective interests of consumers (PLN 58 million), which was set up in 2018 in the amount of PLN 62.5 million (the information on setting up the provision was published in current report no. 24/2018 dated 27 June 2018).
- recognizing the cost of refunds to Customers for prepayments of consumer and mortgage loans at an amount which is PLN 22 million lower y/y;
- setting up a provision for potential proceedings before the President of the Office for Competition and Consumer Protection of PLN 41 million.
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Operating expenses
In 2020 operating expenses amounted to PLN 5 180 million and were 1.1% y/y lower. Their level was mainly determined by:
• a PLN 261 million, i.e. 9.4% decrease in employee benefit costs, in effect of a drop in the number of employees of 1 700 FTEs in 2020, mainly in the retail segment outlets (of 1 261 FTEs).
• a decrease in tangible costs of PLN 66 million, i.e. of 5.8%, mainly in connection with lower expenses on the costs of promotion and advertising as a result of the high costs incurred in 2019 related to the celebration of the Bank’s centenary.
• an increase of PLN 159 million, i.e. 32.6% in contributions to the Bank Guarantee Fund (BGF);
• an increase of PLN 88 million in the costs of withheld tax on the issue of foreign bonds related to adjustments in gross-ups of interest for the years 2017-2019 in 2019 and accounting for the 3% tax on interest paid for the period 2014-2019 following amendments to the tax regulations.
• an increase of PLN 33 million, i.e. 4.0% in amortization and depreciation, mainly in amortization of intangible assets related to the computerization of the Bank, and depreciation of buildings and structures.
The effectiveness of operations of the PKO Bank Polski S.A. measured with the C/l ratio on an annual basis was 40.2% and improved by 0.6 p.p. y/y in consequence of lower operating expenses (+1.1% y/y) and a higher result on business activities (+0.4% y/y).
|
|
|
Net write-downs and impairment
In 2020, net write-downs and impairment with costs of the legal risk of mortgage loans in convertible currencies amounted to PLN -9 004 million and was PLN 7 468 million less than in 2019.
In 2020 the Bank recognized the costs of legal risk of mortgage loans in convertible currencies of
PLN -6 552 million (an increase of PLN 6 101 million compared with 2019).
The legal risk is connected with the portfolio of mortgage loans in convertible currencies granted to households in the years 1999-2012 and is related to potential Customer claims.
The net write-downs for credit risk and non-financial assets were PLN -2 451 million and were PLN 1 367 million higher than in 2019, mainly as a result of write-downs recorded in connection with COVID-19 and impairment of: the shares in Bank Pocztowy S.A., goodwill (which arose as a result of acquiring Nordea Bank Polska S.A) and real estate.
The share of impaired loans amounted to 4.5% as at the end of 2020 (a 0.1 p.p. increase compared with 2019).
The cost of credit risk was 0.77% as at the end of 2020, which is a 0.31 p.p. deterioration compared with the prior year.
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5.3 Statement of financial position
Main items of the Statement of financial position
Financing granted to Customers
Amounts due to Customers
External financing
Main items of the Statement of financial position
Total assets, and total equity and liabilities of PKO Bank Polski S.A. amounted to PLN 345 billion as at the end of 2020 and increased by PLN 28 billion since the beginning of the financial year. Therefore, PKO Bank Polski S.A. reinforced its position as the largest financial institution in the Polish banking sector.
On the assets side, the Bank noted an increase, mainly in the securities portfolio, and on the side of sources of finance the increase was determined mainly by the increase in the deposit base.
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Financing granted to Customers
As at the end of 2020 financing granted to the Bank’s Customers amounted to PLN 207.0 billion, which is a decrease of PLN 7.8 billion y/y.
The volume of retail and private banking loans decreased by PLN 1.8 billion and related to real estate loans, with a lower level of corporate loans (PLN -4.7 billion) and loans to firms and enterprises (PLN -1.1 billion).
Retail and private banking loans, and corporate loans were the main items in the structure of financing by type, with shares of 54.9% and 37.0% of the portfolio as at the end of 2020 respectively.
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Amounts due to Customers
Amounts due to Customers constitute the basic source of financing of the Bank’s assets. As at the end of 2020 amounts due to Customers amounted to PLN 278.9 billion, which is an increase of PLN 26.0 billion since the beginning of the year. The main factor that contributed to the increase in the deposit base was an increase in retail and private banking deposits (PLN +23.0 billion) and deposits of business entities (PLN +12.1 billion), accompanied by a decrease in deposits of corporate entities (PLN -9.1 billion).
In the structure of Customer deposits by type, the main items are the retail and private banking deposits (70.3% as at the end of 2020).
The share of current deposits in the break-down of total deposits increased to 82.2% (+11.8 p.p. compared with the end of 2019).
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|
External financing
PKO Bank Polski S.A. has been an active participant of the debt securities market for many years, which enables it to diversify the sources of financing its operations and to adapt them to the regulatory requirements regarding long-term financial stability.
In 2020 borrowings decreased by PLN 0.9 billion, as a result of:
• premature redemption of EMTN Bank bonds with a nominal value of EUR 250 million;
• repayment of loan instalments received from international financial institutions in accordance with the payment schedule;
• higher exchange rates of the EUR (PLN +0.36) and CHF (PLN +0.34), accompanied by a drop in the exchange rate of the USD (PLN -0.04).
Detailed information on the issues conducted by PKO Bank Polski S.A. and loans received is provided in Note 39 to the Financial Statements of PKO Bank Polski S.A. for the year ended 31 December 2020.
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The report was prepared on the basis of the provision of § 11.1.10a 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 2020 the Bank incurred entertainment costs, expenditure on legal services, marketing services, public relations and social communication services, and advisory services related to management totalling PLN 132 million, which represented 1.05% of the Bank’s Result on Business Activities (RBA).
Table 7. PKO Bank Polski S.A. entertainment costs, 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 |
2020 |
Share in RBA (%) |
Marketing services |
82 |
0.65% |
Legal services |
31 |
0.24% |
Public relations and social communication services |
10 |
0.08% |
Costs of management advisory services |
8 |
0.07% |
Entertainment costs |
1 |
0.01% |
Total |
132 |
1.05% |
Equity and return on equity
Capital adequacy measures
Dividend
7.1 Equity
Equity of the PKO Bank Polski S.A. Group went down by 4.0% y/y.
Table 8. Total equity and total capital adequacy ratio of the PKO Bank Polski S.A. Group (in PLN million)
|
31.12.2020 |
31.12.2019 |
Change |
Change |
Total equity, including: |
39,911 |
41,578 |
-1,667 |
-4.0% |
Share capital |
1,250 |
1,250 |
0 |
0.0% |
Supplementary capital |
29,519 |
29,429 |
90 |
0.3% |
General banking risk fund |
1,070 |
1,070 |
0 |
0.0% |
Other reserves |
3,138 |
3,237 |
-99 |
-3.1% |
Accumulated other comprehensive income |
1,363 |
469 |
894 |
2,9x |
Retained earnings |
6,142 |
2,101 |
4,041 |
2,9x |
Net profit for the period |
-2,557 |
4,031 |
-6,588 |
x |
Non-controlling interests |
-14 |
-9 |
-5 |
51.2% |
Own funds |
41,516 |
42,330 |
-814 |
-1.9% |
Total capital ratio |
18.18% |
19.88% |
|
-1,70 p.p. |
As at 31 December 2019, own funds and the total capital ratio account for the adjustment related to retrospective accounting for the 2019 profit. The impact of this adjustment on own funds in relation to the amounts published for 2019 was PLN 2.9 billion.
The capital adequacy of the PKO Bank Polski S.A. Group in 2020 remained significantly above the supervisory limits.
As at the end of 2020 the total capital ratio of the PKO Bank Polski SA Group amounted to 18.18% and compared with the end of 2019 it dropped by 1.70 p.p., and the core capital T1 ratio amounted to 16.99% and dropped by 1.62 p.p.
The drop in the capital ratios was determined by a decrease in own funds of approx. PLN 0.8 billion with the capital requirements being PLN 1.3 billion higher.
In 2020, there was an increase in the own funds requirement for operational risk by PLN 0.8 billion, mainly due to the growing costs of legal risk related to the portfolio of mortgage loans in convertible currencies. Due to the quarterly shift of data included in the AMA method, the cost level from 3rd quarter of 2020 is included in the requirement at the end of 2020. Starting from 2021, provisions reducing the gross carrying amount of loans (i.e. credit risk related losses) will be included in the AMA method by the Group at a constant value from the 3rd quarter of 2020.
The increase in the requirement for market risk is mainly due to the requirement for currency risk in the amount of PLN 1.2 billion, resulting from creation of write-offs for legal risk related to foreign currency loans. The currency position is limited in the first half of 2021.
Own funds dropped mainly as a result of accounting for the Bank Group’s net loss for 2020 of PLN 2.6 billion. The loss was partially compensated for by an increase in the fair value of financial assets measured at fair value through other comprehensive income and a positive impact of the IFRS 9 adjustment on own funds.
As at the end of 2020 the application of the regulations mitigating the impact of the COVID-19 pandemic also had an impact on the level of capital ratios (elimination of the impact of the write-downs set up since 1 January 2020 on the Tier 1 capital and reducing the amount of intangible assets relating to software which reduced own funds), the effect of which was among other things an increase in own funds of approx. PLN +1.6 billion and an impact on the total capital ratio of approx. 89 b.p. and on the core capital Tier 1 ratio of approx. 89 bp.
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As at 31 December 2020 compared with 31 December 2019 the total capital ratio of PKO Bank Polski S.A. dropped by 2.43 p.p. to 19.78%, and the core capital T1 ratio went down by 2.31 p.p. to 18.45%. The drop in capital ratios results mainly from the drop in own funds as a result of accumulating the Bank’s net loss incurred in 2020 accompanied by higher capital requirements with respect to market risk (refres to the requirement for currency risk in the amount of PLN 1.2 billion at the end of 2020) and higher capital requeirements due to operational risk (PLN 0.8 billion at the end of 2020) as a result of of costs incurred with respect to legal risk.
Due to the quarterly shift of data included in the AMA method, the cost level from 3rd quarter of 2020 is included in the requirement at the end of 2020. Starting from 2021, provisions reducing the gross carrying amount of loans (i.e. credit risk related losses) will be included in the AMA method by the Group at a constant value from the 3rd quarter of 2020.
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7.3 Dividend
On 26 August 2020 the Bank’s Ordinary General Shareholders’ Meeting passed a resolution on retaining the whole net profit earned by the Bank in previous years:
• with respect to the profit for 2019 – to earmark PLN 2 155 113 to reserves and to leave PLN 3 832 348 976 in retained earnings.
• to leave profit from prior years of PLN 1 667 651 024 in retained earnings.
The resolution complied with the recommendation of the Polish Financial Supervision Authority submitted to the Bank on 26 March 2020.
Dividend policy
In 2020, the dividend policy of the Bank and the Bank’s Group was specified in the “Principles for management of capital adequacy and equity in PKO Bank Polski S.A. and in the PKO Bank Polski S.A. Group”.
In March 2021 the Bank’s Supervisory Board adopted a new “Dividend policy of PKO Bank Polski S.A. and of the PKO Bank Polski S.A. Group”.
The dividend policy assumes that the Bank's intention is to distribute dividend in a stable manner in the long term, pursuant to the principle of prudent management of the Bank and the Bank’s Group pursuant to the law and in accordance with the PFSA’s position on the assumptions for dividend policies of commercial banks. The aim of the dividend policy is to optimally shape the capital structure of the Bank and the Bank’s Group, in consideration of the return on equity and the cost of capital, as well as respective requirements related to development, while ensuring an appropriate level of capital adequacy ratios.
The Bank may (accounting for the position of the PFSA) distribute dividend if it has excess funds over the minimum capital adequacy ratios specified in Article 92.1 of the 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 and amending Regulation (EU) No 648/2012 (CRR) taking into consideration the Regulation of the Minister of Finance dated 18 March 2020 revoking the regulation on the systemic risk buffer, Article 55.4 of the Act on macro-prudential supervision over the financial system and on crisis management in the financial system, and Article 138.1.2a of the Banking Law.
According to the dividend policy adopted on 18 March 2021, repurchase of treasury shares for the purpose of their redemption is an additional tool for the redistribution of capital; the shares may be repurchased when their book price is higher than the current market price, after the PFSA gives its consent for their repurchase.
PFSA recommendations as to distribution of dividend in 2021
On 16 December 2020 the PFSA took a stand on the dividend policy of commercial banks in 2021.
Taking into consideration:
• material uncertainty as to the further development of events related to the COVID-19 pandemic;
• the temporary nature of the solutions used by the banks to improve their capital position during the pandemic;
• the maintained prudent supervisory position of the European Union with respect to dividend restrictions and other forms of reducing capital resources;
• a change in the guidelines of the European Banking Oversight Authority extending moratoria
The PFSA considered it necessary to suspend payment of dividend by commercial banks in the first half of 2021 and not to take other actions, in particular those outside the everyday business and operational activities which could lead to a reduction in the capital base without prior consultations with the supervision authority. This relates to potential dividend distribution from retained earnings and redemption of treasury shares. The Authority expects that any potential realization of such actions will each time be preceded by prior consultation with the supervision authority and will depend on its positive result.
The PFSA’s position on commercial banks’ dividend policy in the second half of 2021 will be presented separately after an analysis of the financial position of the banking sector in the first half of the year is performed.
On 14 January 2021 PKO Bank Polski S.A. received an individual recommendation from the PFSA, in which the PFSA recommended that the Bank:
• suspend payment of dividend in the first half of 2021 (including also from retained earnings);
• will not undertake in the first half of 2021, without prior consultation with the supervision authority, any other actions outside the scope of everyday business and operational activity, which could lead to reducing the capital base, including redemption of treasury shares.
The Bank’s Management Board and Supervisory Board passed resolutions that within their competences they will oversee the realization of the above recommendation of the PFSA.
Pursuant to Article 395 § 2.2 of the Commercial Companies Code the decision on the distribution of profit remains within the competences of the Bank’s Ordinary General Shareholders’ Meeting.
Activities related to the COVID-19 pandemic
Operating segments of the Bank’s Group
IT projects and other services
Distribution network and access channels
Operational area
Sources of financing operations
International cooperation
Operations of selected PKO Bank Polski S.A. Group companies.
Prizes and awards for the PKO Bank Polski S.A. Group.
8.1 Activities related to the COVID-19 pandemic
Since the beginning of the COVID-19 pandemic the Bank’s Group has supported Poles and participates in actions to prevent the virus from spreading. The main objective is to ensure safety to the Bank’s Customers and employees and to support local communities, hospitals and medical personnel.
Actions on behalf of the communities
With respect to supporting communities, the Bank’s Group:
• transferred monetary donations exceeding PLN 6 million in total to hospitals, including COVID-19-dedicated hospitals and laboratories, helping in the purchase of medical and protective equipment;
• transferred in-kind donations to hospitals, medical facilities, social assistance centres and orphanages throughout Poland, including, among other things, 360 thousand protective masks, almost 10 thousand articles of protective clothing, 142 vehicles for hospital purposes, the Main Sanitary Inspectorate (GIS) and the Territorial Defence Forces;
• based on an agreement concluded between the PKO Bank Polski Foundation and Warsaw Genomics, it purchased and commissioned the conduct of diagnostic tests for the presence of SARS-CoV-2, in addition the Foundation made available its account number to the employers’ coalition and financed another pool of diagnostic tests from the funds collected from firms and individuals;
• started cooperation with government institutions, including:
– co-created the application system for the Anti-Crisis Shield;
– the Bank’s employees supported helplines and development of the GIS systems and the Ministry of Development in respect of the Anti-Crisis Shield;
– Operator Chmury Krajowej sp. z o.o (jointly controlled by PKO Bank Polski S.A.) prepared a solution which enables patients to use video consultations with medical personnel without leaving home;
• supported humanitarian aid convoys organized by the Ministry of Foreign Affairs to Kazakhstan, Uzbekistan and Ukraine (PKO Bank Polski Foundation);
• equipped its branches in personal protective equipment to protect employees and Customers in the branches;
• started educating Customers to encourage them to use remote channels;
• conducted the action “Donate plasma – help battle COVID-19” to encourage employees of PKO Bank Polski S.A. to donate their blood plasma.
Institutional commitment to counteracting COVID-19 was supplemented by the actions of volunteers – employees of the Bank’s Group.
The total value of the aid provided by PKO Bank Polski S.A. and its Polish subsidiaries exceeded PLN 23 million (net of the costs of purchasing protection materials for employees and Customers).
In addition KREDOBANK S.A. supported Ukrainian citizens. The Bank Group Company transferred donations to Lviv Oblast hospitals for the purchase of medical and personal protection equipment.
PKO Bank Polski S.A. was awarded in the 4th edition of the Polish Radio Business Awards in the category “Polish Philanthropist” and in the Rzeczpospolita journal ranking “Firms most important for Poland” for fighting the COVID-19, saving Polish economy and health services.
Actions on behalf of Customers
The Bank’s Group supports Customers during the COVID-19 pandemic.
In 2020 the Bank’s Group offered special solutions which helped to maintain the Customers’ financial liquidity (e.g. by temporary reductions in financial charges and facilitations in extending or concluding agreements). The scope of aid changed and was adapted to the pandemic conditions, and restrictions in business activities, and it accounted for the guidelines of the regulators. The actions of PKO Bank Polski S.A. and its subsidiaries with their registered offices in Poland comply with the guidelines of the European Banking Authority (EBA).
• The Bank, PKO Bank Hipoteczny S.A., PKO Leasing S.A. and Prime Car Management S.A. enabled the borrowers and lessees, at their request, to suspend or extend instalment payments (principal, or principal and interest or interest – depending on the form of financing) for a maximum period of six months. They offered, respectively:
– to retail Customers with housing loans, mortgage loans and advances – suspending the payment of instalments and to retail Customers with cash borrowings or lease contracts – suspending the payment of instalments with the option to extend the lending period;
– to firms, enterprises and corporate Customers (including local government and central government entities) – suspending payment of instalments with the option of extending the lending period (this, among other things, related to working capital loans, current account overdrafts, investment and investor loans, lease contracts).
• The Bank’s Group facilitated applying for suspension of payments and implemented a more comfortable, remote process of concluding annexes.
• The Bank introduced simplified procedures in the process financing firms, enterprises and corporations for extending selected renewable products and internal Customer limits and restructuring agreements. The Customers could extend the products for a period no longer than six months or renew them for a contractual borrowing period. The simplified principles covered, among other things, automated or simplified decision-making processes. The extensions and renewals were made on the Bank’s initiative or at the Customer’s request.
• KREDOBANK S.A. used programmes of credit reliefs providing. At the Customer’s request, KREDOBANK S.A. could suspend all or part of the instalments or principal instalments for a maximum period of three months. KREDOBANK S.A. also implemented fast track decision-making procedures for renewals of credit lines.
• The Bank enabled temporary suspension of credit card repayments for retail Customers. Firms and enterprises could temporarily suspend repayment of “Biznes” cards. The Bank’s Group companies enabled early return of vehicles on preferential conditions under the lease and subscription contracts (companies from the Prime Car Management S.A. Group) and introduced facilitations with respect to factoring payments (PKO Faktoring S.A.).
Applications relating to loan repayments with the Bank and PKO Bank Hipoteczny S.A. could be filed until 30 September 2020.
The Bank took into consideration the effects of the second wave of the pandemic and the related restrictions and at the end of 2020 it started to prepare to resume the provision of aid tools. In particular this related to supporting the groups of borrowers most affected by COVID-19.
In 2020 Customers of the Bank’s Group could avail themselves of statutory moratoria, and in particular:
• the Customers of the Bank and of PKO Bank Hipoteczny S.A. who lost their jobs or key source of income after 13 March 2020 could, as of 24 June 2020, , suspend the performance of agreements with respect to mortgage loans and consumer loans for a maximum period of three months. During the suspension period the banks did not accrue interest or collect any other fees related to the performance of the agreements apart from insurance premiums;
• the Bank’s Customers who had preferential student loans in the repayment period could – as of 30 July 2020 and without additional fees – suspend the repayment of the loan with interest. Repayment could be suspended for a maximum period of six months while at the same time extending the repayment period. Interest payable in the suspension period was fully covered by funds from the Student Loan Fund.
In 2020 over 206 thousand Customers of the Bank’s Group in total availed themselves of the voluntary and statutory moratoria with respect to loans and advances pursuant to the European Banking Authority (EBA) guide, and the total carrying amount, gross, of loans and advances covered by the moratoria amounted to PLN 32.7 billion. As at the end of 2020 the gross carrying amount of active moratoria was PLN 3.0 billion.
Detailed data on the amounts of moratoria granted is in the financial statements of the Bank’s Group for 2020 – in Note 62.
Customers of the Bank’s Group could also avail themselves of the aid tools introduced under the anti-crisis shields offered by BGK and PFR:
• the Bank’s Customers (micro- and small- and medium-sized enterprises) could use the guarantees securing repayment of loans or advances under the de minimis portfolio guarantee line with the BGK. As of March 2020 the guarantee was offered in higher amounts and on more favourable terms. In addition, in December 2020 the Bank concluded an annexe to the agreement with BGK. The annexe allows Customers to use such security also for foreign currency loans. The total amount of the de minimis guarantees granted in 2020 amounted to PLN 4.2 billion.
• The Bank’s Customers could use the BGK Liquidity Guarantee Fund created to help medium and large companies damaged by the effects of the pandemic. The Bank initiated more favourable changes to the guarantee conditions. An option was introduced to cover foreign currency loans with the guarantees was introduced and the minimum amount of individual guarantees was cancelled. The Bank concluded a cooperation arrangement for granting loan repayment guarantees made available under syndicate financing. In December 2020 it signed an annexe to the agreement extending the possibility of using guarantee instruments to 30 June 2021. The total amount of guarantees granted to the Bank’s Customers in 2020 was PLN 2.1 billion (of the PLN 18 billion available).
• Until the end of July 2020 the Bank’s Customers could apply for a financial subsidy from the PFR Financial Shield 1.0 earmarked for micro-, small- and medium-sized enterprises using the Bank’s transaction services. Via the Bank, approx. 67 thousand enterprises employing 0.5 million people received funds totalling PLN 10.5 billion. The Bank had the largest participation share in distributing this form of aid.
• From June 2020 entrepreneurs could file applications for preferential interest on liquidity and preferential loans earmarked for large enterprises from the PFR Financial Shield 1.0 directly with the PFR. The total amount of both financial instruments is PLN 17.5 billion. The Bank is the only bank which services these loans. The Bank’s role is, among other things, maintaining accounts for the payment of funds granted under the programme, registering and monitoring the loans and security and operational handling of the loans and security. The applications may be filed until 30 April 2021.
• Businesses could file applications for the Bank’s co-financing interest on working capital loans with the Bank. The support is earmarked for businesses which pursuant to the economic conditions caused by the COVID-19 pandemic lost financial liquidity or are threatened with such loss. One business may avail itself of co-financing of interest payments only on one working capital loan – a new or already extended one. BGK covers a portion of interest on the loan for a period not exceeding 12 months. Businesses could apply for support until the end of 2020 or until the pool of funds of PLN 565 million for all banks cooperating with BGK is exhausted. In February 2021 the Bank signed an annexe to the agreement with BGK extending the co-financing programme to 30 June 2021.
• PKO Faktoring S.A., as one of first the factors in Poland, concluded a portfolio guarantee line with BGK. Pursuant to the agreement as of September 2020 the Company has been offering its Customers the option to secure up to 80% of the amount of the factoring limit granted under quasi-factoring or reverse factoring contracts. The maximum guarantee that PKO Faktoring S.A. may grant based on the guarantee line is PLN 200 million. By 31 December 2020 the total amount of guarantees granted to the Company’s Customers was PLN 135 million. The option of concluding an agreement with a BGK guarantee will be offered until 30 June 2021.
• Small- and medium-sized enterprises, PKO Leasing S.A.’s and the Bank’s Customers may avail themselves of liquidity reverse leases with a Cosme-Covid guarantee granted by the European Investment Fund, as of October 2020. The offer is addressed to owners of passenger cars or delivery trucks of up to 3.5 tonnes (with a value up to PLN 150 thousand) who have had an active lease contract or company account with the Bank for at least six months. Under the lease, Customers may recover funds expended on the purchase of the vehicle while retaining the ability to use it further. The Lessor finances the value of the asset for up to 80% of its assessed value. The offer is valid until 30 June 2021 or until the total amount of the guarantee is exhausted (PLN 500 million).
• In November 2020 PKO Leasing S.A. signed an arrangement to cooperate with ARP Leasing sp. z o.o., a company of the Agencja Rozwoju Przemysłu S.A. The arrangement relates to the principles of refinancing lease contracts for businesses from the transport and bus sector afflicted by COVID-19 by ARP Leasing sp. z o.o. Small- and medium-sized enterprises may avail themselves of a maximum 12-month holiday in repayment of their lease contract liabilities. The arrangement is for an indefinite period and the first applications were examined in November 2020.
• The Bank’s Customers could file applications for subsidies from the PFR Financial Shield 2.0 in the internet services iPKO and iPKO biznes until the end of the first quarter of 2021. The PFR Financial Shield 2.0 was earmarked for micro- small- and medium-sized enterprises from 54 industries which had to limit business activity due to the COVID-19 epidemic.
PKO Bank Polski S.A. has purchased bonds financing anti-crisis shields of PFR and aid tools of BGK. Bank’s representatives participated in the process of creation of multiple systemic solutions for suporting borrowers.
Actions on behalf of the employees
In 2020 the Bank conducted the following actions to ensure that the employees were safe:
• equipping the employees with necessary means of personal protection, such as disinfecting gels and liquids, masks, gloves and protective visors, and introducing safety procedures in branches which include Customer traffic and disinfection od Customer service points.
• protecting the advisors’ workspaces with special plastic protections, ensuring that the branches are cleaned using disinfectants and if necessary, ozoned;
• implementing various work systems (remote, office, rotational) and adapting them to the epidemic conditions, and specifically protecting employees whose health is especially threatened;
• providing the employees with company cars to travel between the work place and home, enabling parking the cars in parking places or in places assigned to the Bank, and launching refunds of costs incurred for parking private cars close to the workplace during increased restrictions;
• adapting the healthcare model for employees and enabling constant access to telemedicine and psychological support, and to be vaccinated against flu;
• launching a special information campaign on the pandemic for employees;
• making available on an internal portal materials facilitating remote work, sets of good practices and instructions relating to work organization;
• making available to approx.13 thousand employees licences to the communication tool Microsoft Teams;
• implementing digitization of employee documentation;
• launching and developing an offer of remote development actions;
• performing systematic pulse checks, gathering current information from employees on: their physical and mental state, remote work and areas which require support;
• making available the solution #CzasNaFeedback which supports teams in building commitment and open relations in transferring feedback.
In 2020 the Bank’s expenses on employees related to functioning during the pandemic and mitigating its effects amounted to PLN 75.7 million.
Other Bank Group’s entities took similar actions adapted to the nature of their operations and employment structure. The actions included mainly completing tasks in various work systems and keeping to the rule of keeping a safe distance, ensuring an appropriate healthcare model and making available equipment and various communication tools.
In 2020, total expenses on behalf of employees in relation to functioning during the pandemic in the Bank’s subsidiaries amounted to PLN 7.1 million.
8.2 Operating segments of the Bank’s Group
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.
The management reporting data of the Bank is presented in this subsection; any differences in the sums, shares and dynamics arise from rounding.
The offer of the PKO Bank Polski S.A. Group for individuals covers a wide range of credit, deposit and insurance products, as well as electronic banking services.
In 2020 in the retail segment the PKO Bank Polski S.A. Group built strong and long-term relations with Customers and supported them during the pandemic, 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, mortgage loans, revolving loans, credit cards and housing loans. Investment and investor loans, revolving loans, leases and factoring are available to companies and enterprises.
The deposit and investment offer comprises, among other things, regular saving products, term deposits, investment products of PKO TFI S.A., and Treasury savings bonds.
The Bank Group’s offer provides 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 and the OnkoPlan oncological insurance policy, and insurance of leased assets.
Customers of the segment
As at the end of 2020 the Retail segment serviced nearly 11 million Customers, including: • almost 10.5 million individuals, including 16.3 thousand of Private Banking Customers; • over 0.5 million companies and enterprises. Since the beginning of 2020 the number of Customers serviced by the segment increased by 72 thousand.
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Business volumes
As at the end of 2020:
• the aggregate financing of retail segment Customers amounted to nearly PLN 177 billion and went down by over PLN 3.1 billion (i.e. 1.7%) in 2020. The decrease in the foreign currency mortgage banking portfolio (of PLN -6.0 billion) was the main contributing factor.
• retail savings amounted to nearly PLN 312 billion and went up by PLN 48.7 billion (i.e. 18.5%) in 2020. An increase in retail and private banking deposits (of 13.2%), Treasury savings bonds (of 50.5%) and deposits of firms and enterprises (of 40.1%) were the main contributing factors.
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The Bank’s Group reinforced its position as market leader in terms of the number of checking accounts maintained (ROR). This number amounted to almost 8.3 million and went up by 245 thousand during the year. It covers all active accounts, which constitutes growth potential for further cooperation with Customers.
In 2020, the Bank’s Group sold nearly 284 million Treasury savings bonds (i.e. 64% more than in 2019), and the debt in respect of the Treasury savings bonds issued to the domestic market amounted (at nominal value) to PLN 40 billion and was more than PLN 13.4 billion higher than at the end of the prior year.
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The Bank’s Group offers its retail and private banking Customers 57 funds and subfunds for individuals in which assets amounting to PLN 32.2 billion have been accumulated (according to the Analizy Online service).
Activities in 2020
In 2020, the PKO Bank Polski S.A. Group:
• with regard to housing loans:
– granted loans to individuals for a total of PLN 11.7 billion, which allowed it to maintain top position on the market with a share of 19.7% throughout 2020;
– extended the offer to support borrowers with CHF mortgage loans until 31 December 2020 to limit the negative effects following from the changes in the exchange rate of CHF;
– enabled concluding annexes to agreements for changing interest rates from fluctuating to fixed over a period of five years for the MIX mortgage loans and mortgage advances;
– offered a “green mortgage” option according to which, based on an energy performance certificate for the property constituting collateral for the loan Customers may be charged a lower margin;
• with regard to consumer loans:
– introduced new cash loan insurance packages for high amounts of loans (over PLN 100 thousand net of the amount applied for);
– increased the maximum available amount of the loan for basic segment Customers to PLN 200 thousand;
– introduced the option of individualizing the price of cash loans;
– introduced a new offer “Ekopożyczka” – loans for the purchase of photovoltaic (solar) panels and other ecological equipment and vehicles, available without the need to have an account with the Bank;
– introduced a new offer of external consolidation with a flexible price in the Bank’s branches;
– improved the process of remote sales with the participation of advisors;
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• with regard to loans for firms and enterprises:
– introduced a new special offer for financing photovoltaic equipment addressed to those Customers of the Bank’s Group who are entrepreneurs;
– in cooperation with Operator Chmury Krajowej sp. z o.o. made available, as a pilot service, to Customers who are firms and enterprises, the Cloud Disk service. The service allows saving files to an Internet disk (with a capacity of 100 GB), which allows the user unlimited access to those filed from a computer, smartphone or tablet, with ensured full privacy and security, and intuitive handling;
– introduced new services, which include the automation and digitization of applications for granting the de minimis BGK guarantees through remote channels, a multiple signature mechanism consisting of certifying documents using an SMS code, the payment gate of eService which allows Customers to pay with their cards, the BLIK code, make pay-by-link transfers and an e-wallet;
• with regard to the transactions and savings offer:
– it introduced Nowe PKO Konto za Zero (Zero-cost Account) to the offer addressed to those Customers who use their accounts intensively, pay by phone or card and wish to use new technologies. The account provides the following free-of-charge services: maintaining the account, withdrawals from all ATMs in Poland using the BLIK code and abroad using the card, and free-of-charge multi-currency debit card at five non-cash transactions a month;
– as of November 2020 it made available a new offer of company accounts with multicurrency debit cards. The cards are issued for accounts in 22 currencies. The new offer promotes active Customers who chose PKO Bank Polski S.A. to be their key financial partner, and it fully replaces the former business account offer;
– adapted the product offer to the current market conditions following, among other things, from the MPC’s decision to reduce interest rates, and among other things, it optimized the deposit product offer for firms and enterprises – it withdrew standard term deposits, negotiated deposits and automatic deposits from the offer;
• with regard to the investment offer:
– made available to the Personal Banking Customers an investment advice service provided by advisors;
• with regard to the insurance offer:
– for participants of the Employee Capital Plans and Employee Pension Plans maintained by PKO TFI S.A. it introduced a system of discounts in OnkoPlan and Bezpieczny Plan insurance (10%) and a system of discounts for purchases of Moje Podróże24 and Mój Dom24 insurance through the iPKO Internet service (20% and 30% respectively);
– made available an offer for insuring children PKO Ubezpieczenie Dziecka.
Customers of the segment
As at the end of 2020 the Corporate Segment and the Investment Segment serviced over 16.5 thousand Customers, including:
• 8.6 thousand corporate Customers;
• 1.3 thousand strategic Customers;
• almost 5.2 thousand local and central government institutions plus budgetary and related entities;
• nearly 1.1 thousand foreign Customers;
• over 0.3 thousand financial Customers.
Since the beginning of 2020 the number of Customers serviced in this segment increased by over 0.6 thousand. The Bank maintains its position as market leader for servicing the largest local government units: it handles the budgets of 9 voivodeships and 9 voivodeship capital cities. The Bank has been systematically reinforcing its leading position in the financing of the Polish economy, both on its own and as a major member of banking syndicates, with a share commensurate with its market position.
Under the Bank’s subsidiaries’ offer Customers from the corporate segment may use lease and factoring products and services. Any fixed asset 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.
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Business volumes
The Bank supports the Polish economy and participates in the financing of strategic investment projects and local government investments. Such financing takes the form of syndicated and bilateral loans or securities issues.
As at the end of 2020 total financing of Customers from the corporate segment, including loans, bonds issued and lease receivables amounted to PLN 71 billion and decreased since the beginning of the year by PLN 2.6 billion (i.e. 3.5%).
The Bank maintains securities accounts for Customers and facilitates Polish and foreign market transactions, and acts as a depositary for pension and investment funds.
The PKO Bank Polski S.A. Group offers wide access to funds to its Customers for the financing of complex investment projects, and the services of advisors focused on selecting optimum forms of financing and repayment terms.
The level of savings of Customers from the corporate segment as at 31 December 2020 amounted to PLN 46 billion and decreased by more than PLN 4.3 billion from the beginning of the year, mainly due to a drop in the largest Customers’ sector current and term deposits. This drop was partly offset by investing more than PLN 4.5 billion in bonds issued by the Bank Group’s companies.
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Activities in 2020
In 2020, the PKO Bank Polski S.A. Group:
• with regard to Customer service and transaction banking:
– implemented regulatory and functional changes, which enable opening and closing subsidy accounts for PFR financing of the “Large Enterprises” and “Micro-, Small- and Medium-sized Enterprises” programmes;
– implemented regulatory changes to enable the signing of documents provided under the Cash Management products for corporate segment Customers using a qualified electronic signature;
– adapted the product offer to the current market conditions following, among other things, from the MPC’s decision to reduce interest rates, and optimized the deposit product offer which included withdrawing the term deposits product;
– introduced new Cash Deposit Machines (Wpłatomaty) in Customer locations, which accept cash in PLN and EUR, which are accounted for on-line;
– automated the SEPA Card Clearing service and implemented collective bookkeeping for the SEPA Direct Debit service for the purpose of the German branch;
• with respect to financing and banking services for public entities, it concluded:
– agreements for the comprehensive servicing of budgets of Kraków, Katowice and Rzeszów;
– 143 communal bond issue agreements with the total value of PLN 1.55 billion;
• with regard to financing the corporate segment Customers in the form of banking syndicates and organization of bond issues, it concluded:
– 21 loan agreements in the form of a banking syndicate for a total of PLN 24.5 billion EUR 3.8 billion and USD 0.7 billion, in which the Bank’s share amounted in total to PLN 4.7 billion, EUR 0.4 billion and USD 0.1 billion;
– two agreements relating to the organization of corporate bond issues without guaranteeing the closing of the issues in the total amount of PLN 2.0 billion;
• with regard to brokerage activities (conducted by Biuro Maklerskie Banku):
– as a joint offeror and joint bookbuilder it conducted the IPO of Allegro.eu S.A. with a value of PLN 10.6 billion;
– as an intermediary, it completed the subscription for the sale of shares of Energa S.A., announced by PKN ORLEN S.A., totalling nearly PLN 3.2 billion;
– as the global coordinator and joint bookbuilder, it completed a transaction on the primary market according to the ABB procedure relating to CCC S.A. shares with a value of approx. PLN 506.9 million and a transaction according to the ABB procedure relating to X-Trade Brokers Dom Maklerski S.A. shares with a value of approx. PLN 111 million;
– on behalf of Ghelamco Invest sp. z o.o., as part of its operations on the debt securities market, it completed in total issues of bonds with a value of PLN 350 million;
– it maintained nearly 135 thousand securities and cash accounts and over 252.8 thousand registration accounts – in terms of the number of securities accounts (according to the data of the National Depository for Securities) the Bank’s Brokerage Office ranked third among 36 participants in the market;
– it provided services concerning units in 432 funds and sub-funds managed by 11 fund management companies.
The Bank's Capital Group supported clients by making funds available from government aid programs offered under anti-crisis shields, including PFR and BGK. Detailed information in chapter 8.1.
8.3 IT projects and other services
New functions and remote services
New technologies
New functions and remote services
IKO Voice Assistant – “Talk2IKO” |
The voice assistant appeared in the IKO mobile application in May 2020. Since mid-August, it has been available to all users of smartphones, both with the Android and iOS system.
It can, for example, be used to order an ordinary money transfer to a defined recipient or a bank account number, transfer money to a phone number, check an account balance, search the account history, top up the phone, and pay with a BLIK code.
The Assistant uses advanced analytics and artificial intelligence algorithms to understand the Customer’s words and respond to them. The system understands natural language and does not require any special method of communication.
By the end of 2020, the system talked to Customers 330,000 times. The Customers transferred PLN 1.9 million via the voice assistant.
Coronabot |
In the second quarter of 2020, PKO Bank Polski S.A. implemented a voicebot in its call centre. The bot helps find answers to the most frequently asked questions relating to the effects of coronavirus on the Bank’s operations, concerning e.g. requests for suspending loan repayments, checking the opening times of branches, preparing the Bank for the epidemic threat, using ATMs, ordering cards and changing the limits, creating a trusted profile, changes of personal data, times of executing money transfers, regaining access to systems.
Video adviser |
PKO Bank Polski S.A. implemented the video adviser function for Customers in cooperation with Operator Chmury Krajowej sp. z o.o. and Google. The cloud technology used in the project allows Customers to maintain a continuous relationship with their bank advisor irrespective of the external circumstances.
Autenti electronic signature |
In cooperation with Autenti sp. z o.o., PKO Bank Polski S.A. introduced electronic signatures in the contacts between the Bank and the Customer. Autenti sp. z o.o., as a trusted third party, enables the verification of electronic signatures and electronic stamps. Additionally, Autenti enables satisfying the legal requirement of preserving the document so that it can be saved, reproduced in an unchanged form and read (a durable medium). Every signed document receives an Autenti certificate, which confirms the authenticity of the origin and integrity of the document.
Automarket |
PKO Bank Polski S.A., in cooperation with PKO Leasing S.A. and Prime Car Management S.A., launched the Automarket.pl platform which offers safe purchases of new and used cars with documented mileage. All cars undergo thorough technical checks. The Customer can choose from a range of different forms of financing, and the vehicle can even be delivered to the Customer’s door.
At the end of 2020 there were approx. 1,600 offers on the platform. From its launch to 31 December 2020, Automarket was visited more than 3 million times by 1.4 million users who made more than 15 000 inquiries about the vehicles presented on the platform.
Invoice Financing |
In cooperation with PKO Faktoring S.A., the Bank launched the online factoring service, which is available on the iPKO transactional platform (the service can be activated and an invoice can be submitted for financing remotely without the need to visit a branch of the Bank). “Invoice Financing” is a product for small- and medium-sized enterprises that allows the Customer to sign an agreement and obtain financing for up to 100% of the value of an invoice online – PKO Faktoring S.A. makes the payment to the issuer of the invoice before its due date and charges a commission for such service. The money is credited to the business account of the issuer of the invoice on the same day. By the end of 2020, 824 entities used this form of financing and the value of the financed invoices was PLN 5 million.
e-Kantor |
The Bank’s customers may sell foreign currencies in the PKO Bank Polski S.A. currency exchange office though iPKO and transfer the PLN amounts immediately to their accounts with other banks. This service is free of charge and in order to use it a Customer must add a personal account with another bank to the IKO mobile application.
Online currency exchange is a simple and intuitive tool, which makes it possible to exchange currencies online safely and fast. The currency exchange service handles 10 foreign currencies – EUR, GBP, USD, CHF, DKK, NOK, SEK, CZK, HRK, HUF.
The currency exchange service is one of the elements of the “three-in-one” currency package. The package also includes a foreign currency account and a multi-currency card. Online currency exchange is available 24/7 in the IKO mobile application and on the iPKO platform.
Its functions include online tracking of foreign currency rates, sending text messages/alerts and push notifications when a given currency rate reaches a specified level, ordering automatic currency exchange when the rate has reached the required level and setting up standard orders to exchange currency on a specified day. Customers who have accounts with other banks may also buy foreign currencies from PKO Bank Polski S.A. paying with a BLIK code. No extra fees are charged for currency exchange transactions.
7.5 million transactions have been concluded since the opening of the currency exchange service, i.e. since January 2018.
Inwestomat |
In November 2019, PKO Bank Polski S.A. was the first entity to launch an innovative service of investment advice based on full automation of the purchase process in remote channels. Inwestomat is characterized by intuitive navigation and simple communication with the Customer. It helps understand difficult concepts and risks related to investing. Inwestomat presents possible market development scenarios and the recommended product, and in a simple way shows how to select appropriate funds which may help the Customers attain their goal. The proposal takes into account the risk acceptance level, the expected rate of return and investment duration. Customers can use Inwestomat to invest funds starting from just PLN 100.
Two new functions were introduced in 2020: an online investment advisor and the opportunity to benefit from the PKO TFI S.A. retirement package.
Personal banking Customers may use the service through iPKO and through their advisor at a branch. As a result, Customers using Inwestomat have already invested more than PLN 1 billion in the funds managed by PKO TFI S.A. PKO Bank Polski S.A. is the first bank to offer investment advice as part of the integrated customer service at branches and through a remote channel to such a wide range of users.
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The Bank also offered e-services implemented in 2019: e-Księgowość (e-accounting), e-Prawnik (e-lawyer), e-Windykacja (e-cash collection), and e-Tożsamość (e-identity).
New technologies
In 2018 PKO Bank Polski S.A. initiated the establishment of Operator Chmury Krajowej sp. z o.o., a company which is being developed by the Bank jointly with the other shareholder, Polski Fundusz Rozwoju S.A. The strategic partnerships between the company, Google and Microsoft enable the Bank’s comprehensive transition from the traditional IT model to the provision of cloud services. PKO Bank Polski S.A. plans to ultimately operate in a hybrid cloud.
In 2020, the Bank implemented a range of services based on cloud computing.
Implementation of a durable medium 2.0 |
PKO Bank Polski S.A. implemented durable medium 2.0. Due to the development of the technological infrastructure used in the previous version of durable medium, it will be possible to use the medium to deliver not only public documents (such as price lists, service rules and regulations) but also private documents assigned to specific persons. Credit card statements are already delivered on durable media. At the next stage, it will be used to deliver cash loan documentation.
Durable medium 2.0 was developed by PKO Bank Polski S.A. in cooperation with Krajowa Izba Rozliczeniowa S.A., Operator Chmury Krajowej sp. z o.o. and technological companies. The solution is based on a combination of blockchain technology and the WORM matrix. It meets the highest data security standards.
a bank service desk of the future – a bank services desk based on VDA model |
PKO Bank Polski S.A. launched a modern virtual application and terminal (VDA) solution, which is based on cloud technology provided by Operator Chmury Krajowej sp. z o.o. The VDA solution comprises:
• a cloud drive for storage of all data which is now stored on the employees’ desktop computers – by the end of 2020 the data of nearly 9 000 users was migrated to the central repository;
• unlimited mail – vault service, i.e. automatic archiving of emails to the cloud, which is now available to all employees of the Bank;
• a virtual workstation/terminal in place of a computer – in the PKO Bank Polski S.A. network of branches desktop computers have been replaced with terminals with access to cloud services; in total, 8 888 desktop and 3 246 mobile terminals have been installed as part of this implementation.
Microsoft Teams |
Due to the transition to the remote model of work, PKO Bank Polski S.A. launched Microsoft Teams – a cloud-based Internet solution comprising a set of tools and services for team work. Microsoft Teams is available on Azure, a cloud computing service, as part of Microsoft 365. As at the end of 2020, Microsoft Teams, integrated with tools that support remote work, was used by more than 13 thousand employees of the Bank.
Recording of advisors’ conversations |
PKO Bank Polski S.A. launched cloud recording of the advisors’ conversations. The service is addressed to retail sector advisors and it makes it possible to store recordings of conversations with the Bank’s Customers made on any device, e.g. a notebook or a mobile phone. It is used to provide remote services to the Customers when it is impossible to meet in a branch.
8.4 Distribution network and access channels
IKO mobile banking
iPKO Internet banking
PKO Bank Polski S.A.’s Contact Centre
Network of branches and agencies
Private Banking Centre
Corporate Banking Centre
IKO mobile banking
PKO Bank Polski S.A. 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 PKO Bank Polski S.A. is strongly supported by the IKO mobile application, which was voted by users the best mobile application in the world for two years in a row. The IKO application also won in the category “Internauts’ Special Award” in the last edition of the Mobile Trends Awards. It was voted for over 17 000 times.
The number of active IKO applications has exceeded 5 million. In 2020 alone, the users logged in to the application 1 150 million times, and the total number of logins since IKO’s launch in March 2013 until the end of 2020 exceeded 2.9 billion. IKO is the most popular banking application in Poland, with the biggest number of reviews in mobile stores (620 thousand) and a very high average score of 4.8 out of 5.
The youngest Customers of PKO Bank Polski S.A., under 13 years of age, can use the PKO Junior mobile application to access their accounts.
In 2020 the IKO application was expanded, among other things, by:
• opening an account on the basis of remote verification – a Customer may open a PKO Konto za Zero, PKO Konto dla Młodych or PKO bez Granic account online from home, and his/her identity is verified based on the photograph on his/her ID and a selfie;
• open banking, which allows adding the Customer’s bank account with another bank to the application, so that IKO shows the balances of both accounts. At present the accounts with the following banks can be added: Inteligo, Santander Bank, Alior Bank, Bank Pekao, mBank, BNP Paribas, Bank Millennium, ING Bank Śląski;
• combining the registration of a business with CEIDG (the Central Registration and Information on Business) with opening a business account with the Bank;
• an offer of insurance for Customers’ children up to the age of 20 who permanently reside in Poland; the insurance cover is provided by PKO Towarzystwo Ubezpieczeń S.A.;
• payment for motorways – Customers who have entered the details of their cars can pay for driving on a motorway from their account with the Bank;
• the possibility to buy gift cards for popular platforms: Allegro, Google Play, PlayStation, Xbox, Spotify, Netflix, CDA Premium, Nintendo, Microsoft.
The application allows automatic authentication of the Customers calling the PKO Bank Polski S.A. call centre, as well as recovery and change of the password to the iPKO Internet platform and the telephone service.
iPKO Internet banking
The Bank’s Customers can use iPKO and iPKO biznes services as part of the electronic banking services. These services provide Customers with access to information on their accounts and products, and enable them to effect transactions through the Internet.
iPKO
The Bank constantly promotes iPKO Internet banking among retail Customers and small- and medium-sized enterprises. It includes remote self-management of accounts, banking products and other services. The Customers have fast, safe and easy access to their funds (also those entrusted to some other companies of the Bank’s Group). Fees for using iPKO banking services are lower than the commissions and fees charged for the operations in the traditional channels of contact with the Bank.
In 2020, PKO Bank Polski S.A. introduced the following new features to iPKO to make it easier for Customers to use banking services:
• the possibility to add documents to an application filed through a remote channel for a cash loan, renewable credit limit or a credit card;
• remote signing (by the Customer) of offers processed by an advisor at a branch as part of credit pre-limits under the Fabryka Ofert (Offer Factory) project; the agreement is automatically sent to the Customer for signature through iPKO;
• new operations for business Customers – loan activation or early repayment, appointment and cancellation of the appointment of a proxy for a business account, closing an auxiliary account, waiver of a credit limit, or filing an application to simultaneously register a firm and open a business account;
• activation of tourist vouchers;
• the “Moje aktywa” (My assets) function, which gives the Customers access to a transparent list of all their financial assets (e.g. deposits, bonds, funds) in one place;
• the possibility to use iPKO by Customers who do not have accounts with the Bank, but who have Employee Capital Plans (PPK) or Employee Pension Plans (PPE) with PKO TFI S.A. or a cash loan with the Bank;
• the function of checking PPK and PPE register balances and the transaction history on such registers, provided that the registers are maintained by PKO TFI S.A.;
• informing about the estimated total amount of transfer in the currency of the account from which the transfer is sent before the payment transaction is authorized. The information also includes all transaction fees and fees for currency translation.
The appearance of the iPKO home page and the log-in screens of the e-Tożsamość (e-Identity) platform and the ZUS (Social Insurance Institution) Electronic Service Platform was changed.
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iPKO biznes system
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.
In 2020 PKO Bank Polski S.A. made new functionalities available to the iPKO biznes users, such as:
• a virtual account module and the possibility to make orders for transactions from virtual accounts;
• digitization of orders for e.g. cards or secure envelopes, activation of modules and sending e-Documents through iPKO biznes;
• a card module, which allows ongoing control of transaction history, available funds and limits on a business card; the application also allows setting up/changing PIN and card activation or blocking.
The Bank also expanded the existing functions – bank statements, reports, white lists of counterparties, and simplified ordering transfers abroad.
The Bank’s Customers could also file applications (and appeal against negative decisions) for PFR Financial Shield subsidies for micro-, small- and medium-sized enterprises through iPKO and iPKO biznes.
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PKO Bank Polski S.A.’s Contact Center
The Contact Center of PKO Bank Polski S.A. plays an important role in serving retail segment Customers. Its purpose is to sell the Bank’s products during incoming and outgoing calls and to provide efficient and effective Customer service via a phone or the Internet.
PKO Bank Polski S.A.’s hotline employs several hundred consultants who remain at the Customers’ service 24 hours a day. The consultants not only handle telephone calls but also answer Customers’ questions and requests electronically – e-mails and website requests. Customers may also send messages in the iPKO or Inteligo transaction service.
As part of the robotization of the Customer service process, since 2019 Contact Center consultants have been using the support of a robot, which presents responses to the verification questions during a call. This reduces the duration of conversations between the consultant and the Customer by up to 20 seconds.
Due to increase activitity of Clients using remote channels the number of incoming calls to the Contact Center increased by 17.8%, and e-mails by 72.8%.
Network of branches and agencies
PKO Bank Polski S.A., 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 optimization 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 of that micro-market (retail branches) and optimization of the coverage of business areas (corporate branches).
As at the end of 2020, the network of PKO Bank Polski S.A.’s branches comprised:
• 943 retail branches organized into 10 regional divisions, 8 private banking offices and 11 corporate banking offices;
• 23 regional corporate centres organized into 7 regional corporate branches, as well as the branches located in the Federal Republic of Germany and the Czech Republic.
In relation to the end of the year 2019, the total number of retail units decreased by 101, including 100 retail branches, and the number of corporate units decreased by 10 regional corporate centres.
The costs of liquidating branches in 2020 amounted to PLN 5.5 million. This amount mainly includes the costs of restoring the premises to their original condition and the costs of compensations resulting from the agreements signed with the property owners. The compensation costs do not increase the value of the lease agreements; they only change the dates of charging the costs to the Bank’s financial result due to the earlier payment of rents.
The decrease in the number of branches is a result of the digital transformation, which is one of the key elements of the consistently implemented development strategy of PKO Bank Polski S.A. The digital transformation supports Customers switching to remote service channels and at the same time implements the assumptions of the government project “Od papierowej do cyfrowej Polski” (From a Paper to a Digital Poland).
Table 9. Operating data of the retail and corporate segment*
|
2020 |
2019 |
2018 |
2017 |
2016 |
Number of branches in the retail segment |
972 |
1 073 |
1 113 |
1 153 |
1 198 |
regional retail branches |
10 |
11 |
11 |
11 |
11 |
retail branches |
943 |
1 043 |
1 083 |
1 132 |
1 179 |
private banking branches |
8 |
8 |
8 |
8 |
8 |
corporate banking branches |
11 |
11 |
11 |
2 |
0 |
Number of branches in the corporate and investment segment: |
32 |
42 |
42 |
41 |
40 |
regional corporate branches |
7 |
7 |
7 |
7 |
7 |
regional corporate centres |
23 |
33 |
33 |
32 |
32 |
foreign branches |
2 |
2 |
2 |
2 |
1 |
Number of ATMs |
3 022 |
3 080 |
3 133 |
3 190 |
3 206 |
Number of agencies |
492 |
538 |
577 |
745 |
837 |
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* In 2020, the Bank established a Corporate Branch in the Slovak Republic, which started operating in March 2021 – the branch is not included in the above table.
The branch and ATM network is complemented by the agency network. As at the end of 2020, PKO Bank Polski S.A. collaborated with 492 agencies.
The Bank is constantly improving Customer service conditions in the branches as part of the so-called Nowy Format Oddziałów (New Format of Branches; NFO) model. The model assumes creating a modern bank facility which is friendly to Customers and the Bank employees. The new standard is supported by new technologies – the WIFI zone, self-service cash desks, possibility of topping up mobile phones, LCD monitors, tablets, authorization of selected Customer orders using text messages. All these technologies strongly support educating the Customers and changing their habits.
Private Banking Centre
PKO Bank Polski S.A. is constantly developing Private Banking and enables Customers to access a wide range of financial products and instruments.
The Private Banking Offices serve Customers in the largest Polish cities: Warsaw, Gdańsk, Kraków, Katowice, Poznań, Wrocław, Łódź, Szczecin, Bydgoszcz (the branch is a part of the Private Banking Office in Szczecin), Białystok and Lublin (the branches are a part of the Private Banking Office in Warsaw). As at the end of 2020, the Private Banking Centre managed a portfolio of assets with a value of nearly PLN 45 billion. During 2020, the number of the Customers served by the Private Banking Centre increased by more than 6% to 16 300 at the end of the year.
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Corporate Banking Centre
The Corporate Banking Centre of PKO Bank Polski S.A. is an optimum environment created for the development of businesses with revenues ranging from PLN 5 million to PLN 30 million and similar product and service needs. In 2020, the number of Customers served by the Corporate Banking Centre increased by nearly 13% to 13 400 at the end of the year.
A separate Corporate Banking Centre makes it possible to build the image of PKO Bank Polski S.A. as a reliable business partner for Polish businesses, thanks to:
• its service team;
• creating a specialized group of nearly 150 mobile advisors cooperating directly with credit analysts;
• improving the advisors’ credit competence, better matching of the product offer and price range to the Customer’s needs, and reducing the waiting time for a credit decision due to improvements in the lending process;
• limiting paper documentation in relations with the Bank, remotely communicating with Customers, as well as automating the processes using iPKO biznes.
8.5 Operations
During the pandemic prevailing in 2020, PKO Bank Polski S.A. demonstrated high operational efficiency and cost efficiency in the area of settlements, Customer service and cash turnover.
Having in mind the health and safety of its employees and Customers, in March 2020 the Bank introduced the possibility of remote work for all operational teams. Moreover, in order to improve work efficiency and optimize costs, 81% y/y more robotic processes using RPA (Robotic Process Automation) technology were implemented. In effect, the number of tasks executed by robots increased sixfold. In 2020, the Customers were offered new types of orders through the transaction service iPKO which could previously be made in the branches and through the Contact Center.
The cash management model adopted by the Bank is very effective. During the pandemic, the Bank ensured that large amounts of cash were available to Customers in ATMs and branches. It also supported the whole banking sector by supplying the necessary currencies. Despite a significant increase in the amount of cash in circulation (34.8% y/y), the average level of cash in hand at the Bank decreased by 13.4%.
In connection with the epidemic, the Bank supported the actions taken by the government for the Bank’s Customers and the general public. To support the PFR Financial Shield for micro-, small- and medium-sized enterprises, the Bank’s backoffice staff prepared processes, provided telephone support for the Bank’s Customers applying for subsidies and verified the documentation needed to obtain the subsidies.
As part of the Bank’s social responsibility, its employees supported the service of government, NFZ (the National Health Fund) and the Chief Sanitary Inspectorate call centres and actively supported those institutions in swift preparation of the processes for servicing the patients in matters relating to COVID-19.
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) and participates in guarantee programmes (including of the European Investment Fund). Detailed information about loans received under the international cooperation is given in Note 41 to the financial statements of the Bank’s Group for 2020.
PKO Leasing S.A. cooperates with international development banks, so it can present a preferential offer for small- and medium-sized enterprises. The funds obtained in the previous years for this purpose came from the Development Bank of the Council of Europe and the European Investment Bank. Moreover, PKO Leasing S.A. participates in portfolio guarantee programmes of the European Investment Fund. These programmes, COSME and InnovFin, were expanded by a special COVID edition in 2020, which allows financing of the working capital of enterprises. This external protection of the PKO Leasing S.A.’s portfolio makes it possible for the Company to grant leases and loans to enterprises with lower creditworthiness, without the risk of deterioration in the quality of its portfolio.
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.
8.7 Operations of selected subsidiaries
In addition to strictly banking activities, the PKO Bank Polski S.A. Group provides services related to leases, factoring, investment funds, pension funds and insurance, as well as car fleet management services, transfer agent services, technological solutions, IT outsourcing, debt collection, business support services, and real estate management.
The activities and financial results of the Bank’s Group were affected by the COVID-19 pandemic. The direct effects of the pandemic included mainly lower sales and an outflow of the Customers’ assets or a decrease in their value. In the case of banking and leasing entities, the effect was an increase in write-downs due to the expected deterioration in the Customers’ financial position.
The majority of the companies (including all significant providers of financial services) maintained the continuity of their operations and financial liquidity throughout 2020.
Characteristics of the 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 (in the case of the KREDOBANK S.A. Group, in accordance with the policies applicable in the PKO Bank Polski S.A. Group), and in respect of insurance companies, according to Polish Accounting Standards.
PKO Bank Hipoteczny S.A. |
PKO Bank Hipoteczny S.A. is the leader of the Polish market of mortgage banks in terms of total assets and the portfolio of mortgage loans. The company is also the biggest issuer of mortgage covered bonds in Poland.
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, 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.
In 2020 PKO Bank Hipoteczny S.A. earned a net profit of PLN 81.5 million (vs. PLN 89.2 million in 2019). The total gross value of the PKO Bank Hipoteczny S.A.’s loan portfolio as at the end of 2020 was PLN 25 billion, including PLN 12.7 billion of mortgage housing loans purchased from PKO Bank Polski S.A.
As at the end of 2020, the total nominal value of mortgage covered bonds issued by PKO Bank Hipoteczny S.A. and outstanding as at the end of 2020 was PLN 17.2 billion. This included green mortgage covered bonds worth PLN 500 million. In 2020, the Company redeemed the issues of mortgage covered bonds with a nominal value of PLN 30 million and did not issue any mortgage covered bonds.
Domestic issues of mortgage covered bonds are listed on the parallel market of the Warsaw Stock Exchange and on BondSpot, and issues of foreign mortgage covered bonds are listed on the Luxembourg Stock Exchange and the Warsaw Stock Exchange (the WSE parallel market).
PKO Towarzystwo Funduszy Inwestycyjnych S.A. |
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).
The net asset value of the funds managed by the Company at the end of 2020 was PLN 33.8 billion, which represents a decrease of 0.25% in relation to the balance as at the end of 2019.
PKO TFI S.A. is ranked second in terms of the net asset value, with an over 12% share in the market of investment funds, and first in terms of assets of individuals under management with a market share of 19.2%*.
As at 31 December 2020, PKO TFI S.A. managed 72 investment funds and sub-funds.
In 2020, the Company introduced the following sub-funds to its offer: Subfundusz Obligacji Samorządowych, Subfundusz Zabezpieczenia Emerytalnego 2070 and Subfundusz PKO Gamma Plus.
PKO TFI S.A. continued its efforts to find companies that are interested in Employee Capital Plans (PPK). At the end of 2020, it was the leader of the Polish market in terms of the value of assets under management with more than 34% of the total PPK assets.
* Source: Analizy Online, March 2021
PKO BP BANKOWY PTE S.A. |
The Company manages PKO BP Bankowy Otwarty Fundusz Emerytalny and PKO Dobrowolny Fundusz Emerytalny, which offer the Individual Retirement Account (Indywidualne Konto Emerytalne – IKE) and Individual Retirement Security Account (Indywidualne Konto Zabezpieczenia Emerytalnego – IKZE).
In 2020 the Company incurred a net loss of PLN 32.6 million (in 2019 it earned a net profit of PLN 8.6 million). The loss was due to recognizing an allowance for the irrecoverable acquisition costs and the right to manage the acquired OFE fund.
Results of operations of the Open Pension Fund (OFE)*:
As at the end of 2020, the net asset value of PKO BP Bankowy OFE managed by PKO BP BANKOWY PTE S.A. amounted to PLN 6.5 billion, representing a 5.5% decrease in relation to the balance as at the end of 2019.
PKO Bankowy OFE had 889.8 thousand participants as at the end of December 2020 (901.4 thousand as at the end of 2019).
PKO BP Bankowy OFE is ranked 9th on the pension fund market in terms of the net value of assets and 9th in terms of the number of participants*.
* Source: www.knf.gov.pl
PKO Leasing S.A. Group |
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 155.2 million in 2020. The net profit for the year 2019 was PLN 282 million, including the settlement of the acquisition of Prime Car Management S.A. (PCM) of PLN 101.9 million.
PKO Leasing S.A. and its subsidiaries offer leases and loans. Customers may use these services to finance their fixed assets, such as cars, delivery vehicles and trucks, machines, equipment, technological lines, medical equipment, computer hardware and software.
As at 31 December 2020, 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 19.6 billion.
The PKO Leasing S.A. Group is the leader of the Polish lease market in terms of the sales volume with a market share of 12.4% according to 2020 data. The Company’s strategic objective is to consolidate its leading position on the lease and long-term rental market by increasing its market share.
PKO Faktoring S.A. provides domestic and export factoring services with and without recourse, reverse factoring and a factoring programme service for suppliers.
In 2020, the value of factoring turnover was PLN 18.6 billion (in 2019: PLN 20.7 billion). As at 31 December 2020, the Company ranked 8th (in terms of turnover) among the factoring companies associated in the Polish Factors’ Association, with a market share of 6.4%.
PKO Życie Towarzystwo Ubezpieczeń S.A. Group |
The PKO Życie Towarzystwo Ubezpieczeń S.A. Group earned a net profit of PLN 45.1 million in 2020 (in 2019, the Group’s net profit was PLN 30.5 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.
In 2020, the Company introduced life insurance for the Bank’s borrowers to its offer: “Ochrona dla Ciebie” and “Ochrona dla Ciebie+” and modified the life insurance with monthly premium for the Customers of the Bank and of PKO Bank Hipoteczny S.A. having agreements for mortgage loans or advances.
Gross written premiums under the insurance contracts concluded by the Company in 2020 amounted to PLN 318.9 million. As at the end of 2020, the Company insured 994 thousand people (1 012 thousand people as at the end of 2019).
PKO Towarzystwo Ubezpieczeń S.A. |
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In 2020 the Company earned a net profit of PLN 56.04 million (vs. PLN 57.0 million in 2019). 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 has offered automotive insurance since 2019. In 2020, the Company implemented insurance for the PKO Bank Polski S.A.’s borrowers against the loss of a source of income, serious illness or hospital treatment due to an accident “Ochrona dla Ciebie”. The other new product is PKO Ubezpieczenie dziecka – accident insurance for children up to the age of 20, which provides specialist medical assistance in the event of injury (e.g. medical tests, consultations, procedures, rehabilitation, private lessons). Gross written premiums under the insurance contracts concluded by the Company in 2020 amounted to PLN 517.9 million. As at the end of 2020, the Company insured 1 060 thousand people (1 003 thousand people as at the end of 2019). |
KREDOBANK S.A. Group |
The KREDOBANK S.A. Group consists of KREDOBANK S.A. and its subsidiary, Finansowa Kompania “Idea Kapitał” sp. z o.o.
KREDOBANK S.A. is a universal bank, focused on providing services to retail customers and small- and medium-sized enterprises operating mainly in the western part of Ukraine and in Kiev. At the same time, KREDOBANK S.A. strives to attract corporate customers with high creditworthiness.
In 2020, the KREDOBANK S.A. Group earned a net profit of UAH 523 million (PLN 75 million). In 2019, the KREDOBANK S.A. Group’s net profit amounted to UAH 606.5 million (PLN 91 million).
The loan portfolio of the KREDOBANK S.A. Group (gross) in 2020 increased by UAH 1 780 million (14.4%) to UAH 14 165 million (PLN 1 878 million). The increase in the value of the loan portfolio in UAH is mainly due to the sales of new loans.
In 2020, the value of the term deposits of the KREDOBANK S.A. Group Customers increased by UAH 24 million (0.4%) to UAH 6 503 million (PLN 862 million).
As at 31 December 2020, the network of KREDOBANK S.A. branches comprised the Head Office in Lviv and 82 branches in 22 out of 24 provinces of Ukraine. In 2020, four new branches were opened, the locations of three branches were changed and eight branches were closed down.
PKO BP Finat sp. z o.o. |
PKO Finat sp. z o.o. provides comprehensive services to financial sector companies, e.g. in respect of providing technical solutions, transfer agent, fund and company accounting services and outsourcing skilled IT specialists, project teams and IT processes.
The Company also offers marketing tools based on innovative technologies and maintains the Employee Capital Plans (PPK) Records System.
In 2020 PKO BP Finat sp. z o.o. earned a net profit of PLN 35.3 million (vs PLN 38.0 million in 2019).
8.8 Prizes and awards granted to the PKO Bank Polski S.A. Group
In 2020 the PKO Bank Polski S.A. Group received many prizes and awards. The most important are listed below:
Dynamic development and excellent financial results |
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Bank of the Year 2020 |
PKO Bank Polski S.A. was awarded the title of “Bank of the Year in Poland” for the sixth time. This prestigious award in the financial sector confirms that the digital transformation strategy pursued by the Bank is the right direction of development. The “Bank of the Year” competition is organized by The Banker monthly, which is owned by the Financial Times. The magazine analyses the financial results of banks, their development strategies and projects performed in specific years in the context of the position of the financial sector in a given country. |
Banking Stars |
In the 6th edition of the Banking Stars ranking, PKO Bank Polski S.A. was awarded in four categories, i.e.: “Stability Star”, “Growth Star”, “Effectiveness Star” and in the main category – overall operations. The Bank’s position in this ranking was due to its results for 2019. Customers’ opinions and the innovations implemented were also considered. The Banking Stars ranking is organized by Dziennik Gazeta Prawna with the factual support of PwC. |
Modern technology leader |
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The Heart Corporate Innovation Awards 2019 |
PKO Bank Polski S.A. won an award in the New Digital Venture category of the 3rd edition of The Heart Corporate Innovation Awards for the establishment of the technological company Operator Chmury Krajowej sp. z o.o. The Company implements the multi cloud concept, supports the transformation of the IT infrastructure and the migration of data and tools to the cloud environment. The competition jury also appreciated the Bank’s Let’s Fintech team and the acquisition of a start-up Masterlease by PKO Leasing S.A. The Heart Corporate Innovation Awards is a competition for enterprises which cooperate with the start-up ecosystem, develop innovative solutions and create new market trends. |
Mobile Trends Award |
PKO Bank Polski S.A.’s mobile application IKO won two awards in the 9th edition of the Mobile Trends Awards. In the “mobile banking” category, it was appreciated for innovation and user-friendly solutions. Moreover, it won the biggest number of votes and the special prize in the Internet vote. The competition is organized by ClickMaster Polska. The winners are selected by the competition jury, which consists of experts in the mobile sector, and by internauts who participate in the voting. |
Best products and services, CSR |
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Best Private Banking |
PKO Bank Polski S.A.’s Private Banking received the highest score (5 stars) in the annual Forbes ranking. This score reflects the fact that the Customers appreciate the comfortable service model and the products and services offered by the Bank and the Bank’s Group companies. The ranking confirms the fact that the Bank maintains its leading position in another business area on the financial services market. |
Golden Banker 2020 |
In the Golden Banker 2020 ranking, PKO Bank Polski S.A. was awarded in six categories. The Bank was ranked third in the multi-channel service quality survey for its high level of service at the branches and ergonomic solutions of both the IKO mobile application and the iPKO transactional service (the best among all analysed banks). The Bank ranked second in all three categories of this poll based on the votes of Internet users. They appreciated: the “Młodym dużo się wydaje” commercial, the 5th PKO Charity Run and the Bank’s activity in the social media. At the same time, PKO Bank Polski S.A. took three third places based on the comparison of price-based and other parameters of product offers performed by industry experts; two in the categories: personal account (PKO Konto dla Młodych, PKO Konto bez Granic and PKO Konto za Zero) and in the mortgage loan category: “Własny Kąt hipoteczny”. |
Best Direct Service Quality |
PKO Bank Polski S.A. won in the first stage of the survey of Customer service at branches, conducted as part of the Institution of the Year 2021 project. As many as ten of the Bank’s branches (i.e. the largest number among banks participating in the survey) reached the next level of the competition for the Best Bank Branch in Poland title. In terms of the service provided to a new Customer interested in opening a personal account, PKO Bank Polski S.A. was the best among the 14 banks that were surveyed. Its success was not only a result of the quality of the advisors’ work, but also of the organization of service at the branches and their adequate preparation for the SARS-CoV-2 pandemic. |
The Newsweek and Forbes rankings |
PKO Bank Polski S.A. took second place in the Traditional Banking category of the Newsweek’s Friendly Bank ranking. It was also second in the Forbes’ ranking of the best corporate banks. It was appreciated for the quality of services offered, the high customer service standards, the knowledge, involvement and competence of its advisors and their pro-active approach to sales. The Newsweek and Forbes rankings are based on a survey conducted by Kantar using the “mystery shopper” method. |
CSR White Leaf |
In the 9th run of the CSR Leaves of the Polityka weekly, PKO Bank Polski S.A. was awarded the White Leaf. It was rewarded for doing business responsibly, supporting sustainable development and social engagement. The high opinion of the Bank was a result of an analysis of its corporate governance policies, behaviour towards employees, approach to environmental protection, caring about the Customer, business integrity and its pro-active approach to social matters. The Polityka CSR Leaves ranking is prepared in collaboration with the consulting firm Deloitte and the Responsible Business Forum. |
brand |
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Trustworthy Brand |
Entrepreneurs participating in the My Company Polska survey awarded the Trustworthy Brand title to PKO Bank Polski S.A. in the “loans and advances for businesses” category. The survey is aimed at identifying the brands, products and services addressed to and trusted by business. It was conducted with the participation of nearly 20 000 respondents. The presidents and managers of enterprises pointed out specific brands on the basis of their own preferences, knowledge and experience. |
Top Marka 2020 |
In the 13th edition of the Top Marka (Top Brand) ranking organized by the Press magazine and Press-Service Monitoring Mediów, PKO Bank Polski S.A. took first place in the “banks” category and maintained its position as the strongest brand in the sector in terms of its image in the media. It was third in the general ranking comprising 500 brands. The ranking was prepared based on an analysis of more than 500 thousand publications on PKO Bank Polski S.A. performed from 1 July 2019 to 30 June 2020. Nearly 60% of them were published in the social media, and more than 37% on Internet portals. |
PKO Bank Polski S.A. – leader among employers |
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PKO Bank Polski S.A. among the TOP Employers 2020 |
PKO Bank Polski S.A. received a certificate and the prestigious title of Top Employer Polska 2020. This certificate confirms that the conditions of work offered by the Bank and the solutions supporting continuous development and building of employee commitment are among the best on the market. The certificate is granted on the basis of an independent survey of human resources management conducted by the Top Employers Institute among Polish employers. Top Employers Institute evaluates and certifies employers with regard to their strategy, personnel policy, and the monitoring of its effects and actions relating to employee development. |
Universum Attractive Employer |
PKO Bank Polski S.A. was listed among the Top 10 most attractive employers according to students of business and law, in the ranking prepared by Universum Poland. Due to the scale of its business, development of new technologies and the highest profits in the sector, PKO Bank Polski S.A. is the only commercial bank among the Top 10 employers in the business and law categories. In Poland, the Universum Most Attractive Employers ranking was based on the opinions of more than 16 000 students from 71 universities and 112 faculties. The respondents were asked about their career preferences and expectations from employers. |
The best specialists on the market |
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BrandMe CEO |
Zbigniew Jagiełło, President of the Management Board of PKO Bank Polski S.A., won the 3rd edition of the BrandMe CEO ranking organized under the title “Leader in the time of (forced) transformation”. The jury appreciated the style, strategy and effects of management, observing the values and the courage in taking risks and making unobvious choices. The BrandMe CEO poll is organized by Forbes magazine. Its aim is to identify top class managers who carry out their mission with passion. |
Market Visionary 2020
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Zbigniew Jagiełło, President of the Management Board of PKO Bank Polski S.A., received the Market Visionary 2020 award in the 15th edition of the IT@Bank ranking. The jury appreciated his involvement in the Bank’s transformation from a financial institution to a technological institution with a banking licence. The IT@Bank ranking is an initiative of Miesięcznik Finansowy BANK. Its aim is to award the persons, technological solutions and firms associated with the financial sector that make it more innovative. |
Złoty Herold |
Adam Marciniak, Vice-President of the Management Board of PKO Bank Polski S.A., received the Złoty Herold award. In this way the Programme Board of the 26th ICT Forum (XXVI Forum Teleinformatyki) appreciated the many years of his activity and involvement in the implementation and development of information and communication technologies supporting the digital state. An award was also granted to PKO Bank Polski S.A. for its involvement in building a modern state based on the universal use of ICT. The Bank creates advanced IT solutions and makes them widely available not only to the financial sector, but also to public administration. |
Awards received by the brokerage office and the companies of the Bank’s Group |
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Bulls and Bears and Golden Wallet |
In the 26th edition of the Parkiet Gazeta Giełdy i Inwestorów, PKO TFI S.A. won two statuettes: a Bull and Bear in the Employee Capital Plans (PPK) category and a Golden Wallet for the PKO Akcji Rynku Złota fund. The success of PKO TFI S.A. in the PPK category was a result of the number of Customers who joined the PPK programme and the value of assets accumulated in the programme. The “PKO Akcji Rynku Złota” fund offered by PKO TFI S.A. won the award for its high rate of return (55.2%) in 2019. |
Broker of the Year |
The Bank’s Brokerage Office received the Broker of the Year 2019 prize, the most important one awarded by the WSE. It was awarded for the highest turnover on session and block trades in shares on the Main Market and on NewConnect, Treasury bonds and other bonds traded on the regulated market, the WSE alternative market and BondSpot, as well as for supporting liquidity on the largest number of categories of WSE-listed assets. The Bank’s Brokerage Office also won prizes for the biggest share in trading in bonds on the Catalyst market and the biggest number of real-time stock market data subscribers. The Bank’s Brokerage Office was elected Broker of the Year for the third time in a row. |
Principles of Risk Management
Discussion of the Bank’s lending policy
Comprehensive stress-tests
Capital adequacy
9.1 Principles of Risk Management
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 PKO Bank Polski S.A. Group identifies, measures and assesses, controls, forecasts, monitors and reports risk, and performs management actions.
The risk management system covers:
• organizational structure, allocation of duties and responsibilities;
• internal regulation system;
• tools, including information databases.
|
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;
• the area of risk management remains organizationally independent from business activities;
• 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 regularly, at least annually, assesses the materiality of the identified risks. 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 2020, the catalogue of risk types regarded as material was not extended.
Below is a list of all risks regarded as material in PKO Bank Polski S.A.
• 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. This risk includes legal risk, i.e. 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. Operational risk excludes reputation risk and business risk.
• 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.
• model risk – the risk of incurring losses resulting from incorrect business decisions made based on the models in place.
A detailed description of the principles of managing material risks, including risk mitigation techniques, hedges used and the hedging accounting policy is provided in the financial statements of the Bank’s Group for the year 2020 (in the section on the risk management principles and objectives, and in Note 29 on hedging accounting) and in the Capital Adequacy Report, as well as other disclosures of the PKO Bank Polska S.A. Group as at 31 December 2020.
specific activities in the area of risk management within the Bank’s Group undertaken in 2020
PKO Bank Polski S.A. monitors the situation of its Customers on an ongoing basis and adjusts its credit policy to mitigate the effects of COVID-19 for the Customers and to secure good quality of the Bank’s loan portfolio.
In 2020, the Bank:
• developed the tools and techniques for credit risk management, among other things:
– implemented a new tool for assessing the quality of the branches’ work, based on the loan portfolio quality, audit results and verification of the quality of processes;
– implemented a Stability Rating, which evaluates the individual Customers on the basis of daily behavioural data;
– digitalized lending processes;
– calibrated the credit risk models, also in connection with COVID-19 pandemic;
– in connection with a new credit risk factor (COVID-19), increased the frequency of monitoring and adjusted the lending policy on an ongoing basis;
• introduced special solutions in credit processes in connection with COVID-19, in particular concerning simplifications in risk assessment processes (automatic or semi-automatic extensions/suspensions of loan repayments); in the third quarter of 2020, these solutions were gradually phased out;
• maintained a safe level of liquidity, allowing for a quick and effective response to potential threats;
• with respect to interest rate risk, the Bank entered into IRS hedging transactions and shaped the structure of assets and liabilities accordingly;
• in the area of operational risk management, it put emphasis on counteracting risks resulting from the pandemic, in particular:
– appointed a Crisis Management Board, which coordinated all activities of the Bank’s Group on an ongoing basis during the COVID-19 pandemic to ensure the safety of Customers and employees and the continuity of business processes;
– identified risks related to COVID-19 on an ongoing basis, and these risks were periodically monitored and reported to the Operational Risk Committee
– took actions to mitigate the identified risks, in particular with regard to the mode and conditions of work, ensuring adequate resilience of the IT infrastructure and its security; implemented: new methods of monitoring cybersecurity directed towards threats arising from remote work, reviewing the existing safeguards in order to adapt to the new working conditions, penetration tests related to remote work, periodic scanning of vulnerabilities of stations connected via VPN and analysing the effect of the vulnerabilities on maintaining the acceptable level of security;
• periodically conducted educational campaigns for Customers and employees in the area of cybersecurity, which is particularly important in connection with the growing use of remote channels in Customer service processes.
9.2 Discussion of the Bank’s lending policy
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. As part of the credit risk assessment of corporate Customers, ESG risks are assessed to identify projects that do not meet the growing environmental, social and corporate governance requirements.
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.
In 2020, the Bank continued its credit policy attempting to mitigate the negative effects of adverse market and economic conditions. The objective was to maintain the expected level of profitability and value of the loan portfolio. At the same time, the Bank has implemented ESG risk assessment into its corporate lending process to support the financing of environmentally sustainable and socially responsible projects.
9.3 Comprehensive stress-testing
Comprehensive Stress Testing (CST) is used to determine the sensitivity of the Bank’s capital adequacy measures and the Group’s results to a negative scenario of changes in the environment and functioning of the Bank’s Group. They are conducted jointly for credit risk and concentration risk, market risk, liquidity risk, operational risk, business risk, excessive leverage risk and capital inadequacy risk.
Calculations are made using the Bank’s internal models, taking into account the macroeconomic assumptions adopted.
Comprehensive stress tests include periodic tests and supervisory tests. Periodic tests are carried out once a year and are used to evaluate the risk of macroeconomic changes, and for the purposes of preparing recovery plans. Supervisory tests are carried out at the request of external supervision authorities, in accordance with their assumptions.
Reverse stress tests (RST) complement the results of the comprehensive stress tests and are aimed at assessing the Bank’s resilience to macroeconomic changes. Reverse stress tests have the form of sensitivity analyses and consist in defining potential adverse scenarios, and then identifying events which contribute to their materialization.
In 2020, the Bank carried out periodical tests, supervisory tests and reverse stress tests.
As part of the periodical tests, the Bank analysed:
• a baseline scenario resulting from the Bank’s forecasts, financial plans and Strategy; and
• stress scenario constructed on the basis of guidelines from the PFSA.
As part of the supervisory tests performed, the Bank analysed two scenarios:
• reference scenario, which was based on the central macroeconomic projection path developed by the NBP from the “Inflation Report July 2020”;
• a shock scenario assuming a significant deterioration in the economic outlook in Poland and globally as a result of a strong increase in COVID-19 infections.
Both types of stress tests conducted in 2020 demonstrated the strong capital resilience of PKO Bank Polski S.A. and the Bank’s Group to potential adverse changes in the macroeconomic environment.
9.4 Capital adequacy
• the level of risk assumed by the Bank’s Group when developing its business activity may be covered with the possessed capital;
• the level and structure of its capital are adequate to the supervisory requirements, the defined risk tolerance level and the adopted time horizon.
The process of managing capital adequacy comprises, in particular:
• compliance with the regulations of the supervisory and control authorities;
• compliance with the risk tolerance level determined within the Bank and the Bank’s Group;
• the capital planning process, including the policy concerning the sources of acquisition of capital.
The objective of capital adequacy management is to maintain own funds at all times at a level that is adequate for the scale and risk profile of the business of the Bank’s Group.
In 2020, the PKO Bank Polski S.A. Group maintained a safe capital base exceeding the supervisory and regulatory limits.
A detailed description of capital adequacy management is provided in the financial statements of the Bank’s Group for the year 2020, in the part related to capital adequacy (Note 70) and in the Capital Adequacy Report, and other disclosures of the PKO Bank Polski S.A. Group as at 31 December 2020.
Principles for remunerating Members of the Bank’s Management Board
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 Bank’s Supervisory Board
Agreements concluded between the Bank and management members
Liabilities due to pensions for former supervisors and managers
10.1 Principles for remunerating Members of the Bank’s Management Board
The system for remunerating 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 BP S.A. Group, approved by resolution No. 41/2020 of the Bank’s Supervisory Board dated 21 May 2020;
c) Principles of employment and remuneration of Members of the Bank’s Management Board, adopted by the Bank’s Supervisory Board in 2017 and amended by the resolutions of the Bank’s Supervisory Board dated 12 August 2019 (No. 71/2019) and 25 June 2020 (No. 65/2020); the principles implement 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).
In accordance with these Principles, Members of the Bank’s Management Board are entitled to:
• fixed remuneration in the amount specified in the resolution of the Supervisory Board, separately for the President of the Management Board, Member of the Management Board in charge of the risk management area who substitutes the President of the Management Board and the remaining Management Board Members;
• 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).
The fixed remuneration is determined as a specific amount in the service agreement and may not be higher than:
• in the case of the President of the Management Board: 15-times,
• in the case of the Member of the Management Board in charge of the risk management area who substitutes for the President of the Management Board: 14.5-times,
• in the case of the remaining Members of the Management Board: 14-times,
the base salary referred to in the Act of 9 June 2016 on the terms of setting the remuneration of managers of certain companies.
Employee benefits for Members of the Management Board of PKO Bank Polski S.A. received and due from PKO Bank Polski S.A.
Table 10. Employee benefits for Members of the Management Board of the Bank paid by PKO Bank Polski S.A. (in PLN ’000)
|
Fixed remuneration paid |
Variable remuneration |
Other benefits* |
Total remuneration paid and benefits provided in 2020 |
|
Benefits paid in cash |
Share-based payments settled in cash |
||||
Zbigniew Jagiełło |
793 |
388 |
632 |
63 |
1 876 |
Rafał Antczak |
740 |
172 |
187 |
39 |
1 138 |
Rafał Kozłowski |
740 |
159 |
204 |
39 |
1 142 |
Maks Kraczkowski |
740 |
263 |
317 |
46 |
1 366 |
Mieczysław Król |
740 |
266 |
329 |
47 |
1 382 |
Adam Marciniak |
740 |
171 |
216 |
39 |
1 166 |
Piotr Mazur |
766 |
316 |
496 |
55 |
1 633 |
Jakub Papierski |
740 |
303 |
477 |
53 |
1 573 |
Jan Emeryk Rościszewski |
740 |
255 |
313 |
46 |
1 354 |
Management Board of the Bank |
6 739 |
2 293 |
3 171 |
427 |
12 630 |
|
|
|
|
|
|
Members of the Management Board who ceased to perform their functions in previous years |
- |
281 |
729 |
28 |
1 038 |
|
|
|
|
|
|
Total |
6 739 |
2 574 |
3 900 |
455 |
13 668 |
* Payments to the Employee Pension Programme (PPE).
|
Fixed remuneration paid |
Variable remuneration |
Other benefits** |
Total remuneration paid and benefits provided in 2019 |
|
Benefits paid in cash |
Share-based payments settled in cash |
||||
Zbigniew Jagiełło |
793 |
914 |
753 |
22 |
2 482 |
Rafał Antczak |
705 |
287 |
101 |
2 |
1 095 |
Rafał Kozłowski |
705 |
206 |
- |
2 |
913 |
Maks Kraczkowski |
705 |
617 |
370 |
- |
1 692 |
Mieczysław Król |
705 |
618 |
369 |
5 |
1 697 |
Adam Marciniak |
705 |
269 |
53 |
2 |
1 029 |
Piotr Mazur |
749 |
754 |
584 |
14 |
2 101 |
Jakub Papierski |
705 |
730 |
586 |
16 |
2 037 |
Jan Emeryk Rościszewski |
705 |
598 |
350 |
5 |
1 658 |
Management Board of the Bank |
6 477 |
4 993 |
3 166 |
68 |
14 704 |
Members of the Management Board who ceased to perform their functions in previous years |
- |
1 161 |
1 333 |
46 |
2 540 |
Total |
6 477 |
6 154 |
4 499 |
114 |
17 244 |
* The remuneration of the Members of the Bank’s Management Board in 2019, in accordance with the resolution of the Supervisory Board, takes into account the payment of non-deferred variable remuneration (cash and instrument-based) for 2017, which, according to the standard variable remuneration schedule resulting from the rules for remuneration of Members of the Bank’s Management Board (cash part), should be paid in 2018.
** Payments to PPE (made from December 2019).
The values shown in the table above do not include refunds of overpaid Social Security contributions, which were disclosed in the column “other received in 2019” in the report for 2019 as part of cash benefits.
Table 11. Employee benefits for Members of the Bank’s Management Board due from PKO Bank Polski S.A. approved for payment (in PLN’000)
|
Variable remuneration for 2016-2019 approved for payment as of 31.12.2020 |
Variable remuneration for 2015-2018 approved for payment as of 31.12.2019* |
|
||
Zbigniew Jagiełło |
- |
632 |
Rafał Antczak |
- |
187 |
Rafał Kozłowski |
- |
204 |
Maks Kraczkowski |
- |
317 |
Mieczysław Król |
- |
329 |
Adam Marciniak |
- |
216 |
Piotr Mazur |
- |
496 |
Jakub Papierski |
- |
477 |
Jan Emeryk Rościszewski |
- |
313 |
Management Board of the Bank |
- |
3 171 |
Members of the Management Board who ceased to perform their functions in previous years |
- |
729 |
Total |
- |
3 900 |
* The difference in the amount of variable remuneration compared to the amount published in the Directors’ Report of the PKO Bank Polski S.A. Group for 2019 is due to a change in rounding.
Table 12. Remuneration of the Members of the Bank’s Management Board received from related entities (in PLN ’000)
|
2020 |
2019 |
Rafał Kozłowski* |
188 |
453 |
Jan Emeryk Rościszewski |
29 |
85 |
Total |
217 |
538 |
* The values presented include, among others, the variable remuneration for 2016-2017 and 2015-2017, respectively, paid for performing the function of the President of the Management Board of PKO Bank Hipoteczny S.A.
10.2 Variable remuneration components for Members of the Bank’s Management Board and key managers who have a significant impact on the Bank’s risk profile
The Bank updates the rules for determining the variable components of remuneration on an ongoing basis. This is performed in accordance with the requirements of CRD IV and the Commission Delegated Regulation (EU) No 604/2014 of 4 March 2014 supplementing Directive 2013/36/EU of the European Parliament and of the Council with regard to regulatory technical standards with respect to qualitative and appropriate quantitative criteria to identify categories of staff whose professional activities have a material impact on an institution’s risk profile.
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 13. 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 assessment period |
– in equal instalments over the next years after the first year following the assessment 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 calendar 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, deferred in subsequent settlement periods. This is possible when:
• 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 the years 2019-2020, no such demand occurred.
Material Risk Takers (except Members of the Bank’s Management Board) may benefit from health care services financed by the Bank and the social benefits fund. Material Risk Takers (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.
In the first half of 2020, the Bank amended the Rules for Employment and Remuneration of Members of the Bank’s Management Board, the Remuneration Policy for Employees of the Bank and the PKO BP S.A. Group and the Rules for Remunerating the Bank’s Employees whose activities have a material impact on the Bank’s risk profile - Material Risk Takers in the Bank. The Bank did so in connection with the announcements of the European Banking Authority (EBA) of 31 March 2020 and the Polish Financial Supervision Authority (PFSA) of 17 April 2020 regarding the expected actions of banks and insurance companies in response to a pandemic outbreak, including those relating to the payment of variable remuneration components.
In particular, the Remuneration Policy for Employees of the Bank and the PKO BP S.A. Group was amended. In the event of extraordinary and unforeseen circumstances requiring a conservative approach to variable remuneration, the Bank may temporarily:
a) change the proportion of deferred and non-deferred variable remuneration in favour of increasing the deferred variable remuneration;
b) extend the deferral periods for payment of variable remuneration and extend the dates from which:
• the base value of the variable remuneration is converted into the value of financial instruments;
• the value of financial instruments will be the basis for the conversion of a financial instrument into cash to be paid;
c) change the proportion between variable remuneration in the form of cash and in the form of a financial instrument to increase the portion of variable remuneration in the form of a financial instrument.
In May 2020, the Bank’s Management Board adopted a resolution regarding the payment in 2020 of variable remuneration components awarded to Material Risk Takers in the Bank. In June 2020, the Bank’s Supervisory Board adopted a resolution on approval of the amount of variable remuneration components to be paid to the Members of the Bank’s Management Board in 2020. The resolutions of the Management Board and the Supervisory Board (in connection with the announcement of the COVID-19 epidemic in the country and the above-mentioned EBA and PFSA announcements) decided to change the proportion and payment dates of variable remuneration.
Table 14. Changes in the proportion and dates of payment of variable remuneration
Description |
Amount arising from internal regulations |
Amount arising from extraordinary resolutions adopted |
||||
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 the amount arising from converting the phantom shares to cash amount for non-deferred remuneration for 2019 in the form of a financial instrument |
MBM |
2 January 2021 |
MBM |
1 July 2021 |
||
MRT |
15 November 2020 |
MRT |
31 May 2021 |
|||
Date of payment of deferred variable remuneration with reference to outstanding instalments for the years 2016-2019 |
MBM |
cash |
1 July |
MBM |
cash |
1 July (unchanged) |
Financial instrument |
2 January |
Financial instrument |
1 July |
|||
MRT |
cash |
30 April |
MRT |
cash in hand |
31 May |
|
Financial instrument |
15 November |
Financial instrument |
31 May of the next year |
* 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%.
10.3 Information on non-financial remuneration components due to individual Members of the Bank’s Management Board and key managers
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.
10.4 Principles for remunerating Members of the Bank’s Supervisory Board
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 Art. 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.
|
Fixed remuneration paid in 2020 |
Fixed remuneration paid in 2019* |
Mariusz Andrzejewski |
115 |
116 |
Mirosław Barszcz |
86 |
116 |
Adam Budnikowski |
86 |
116 |
Grzegorz Chłopek |
30 |
- |
Grażyna Ciurzyńska** |
139 |
145 |
Dariusz Górski |
19 |
65 |
Zbigniew Hajłasz |
137 |
131 |
Marcin Izdebski |
38 |
- |
Wojciech Jasiński |
115 |
116 |
Andrzej Kisielewicz |
115 |
116 |
Rafał Kos |
30 |
- |
Elżbieta Mączyńska - Ziemacka |
86 |
116 |
Krzysztof Michalski |
115 |
23 |
Janusz Ostaszewski |
- |
50 |
Piotr Sadownik |
147 |
160 |
Total |
1 258 |
1 270 |
* In relation to the data published in the Directors’ Report of the PKO Bank Polski S.A. Group for 2019, the presentation of the Supervisory Board’s remuneration has changed. The report for 2019 presented remuneration received for the reporting year, while the current report presents remuneration received in the reporting year.
** Other benefits not included in fixed remuneration: use of a company car for private purposes, including PLN 17 thousand in 2020 and PLN 19 thousand in 2019.
10.5 Agreements concluded between the Bank and management members
In 2020, 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.
10.6 Liabilities due to pensions for former supervisors and managers
In 2020, 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 clause 7 point 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
Diversity policy
11.1 Information for investors
Share capital and ownership structure of PKO Bank Polski S.A.
Quotations of shares of PKO Bank Polski S.A. on the WSE
Restrictions imposed on shares of PKO Bank Polski S.A.
Ratings
Investor relations
As at 31 December 2020, the share capital of PKO Bank Polski S.A. amounted to PLN 1 250 000 000 and comprised 1 250 000 000 shares with a par value of PLN 1 each. The structure of the Bank’s share capital is presented in Table 16 below. The shares are fully paid. The share capital of the Bank remained unchanged compared with its status as at the end of 2019. The issued shares of the Bank are not preference shares.
Table 16. Structure of the share capital of PKO Bank Polski S.A.
Series |
Type of shares |
Number of shares |
Nominal value |
Series value |
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 PKO Bank Polski’s best knowledge, as at 31 December 2020, three shareholders: the State Treasury, Nationale-Nederlanden Open Pension Fund, and Aviva Open Pension Fund held, directly or indirectly, significant blocks of shares (at least 5%).
Table 17. Shareholding structure of PKO Bank Polski S.A.
|
As at 31.12.2020 |
As at 31.12.2019 |
Change in the share in number of votes at GM |
|||
Number of shares |
Share in number of votes at GM |
Number of shares |
Share in number of votes at GM |
|||
State Treasury |
367 918 980 |
29.43% |
367 918 980 |
29.43% |
- |
|
Nationale-Nederlanden Open Pension Fund1) |
107 198 023 |
8.58% |
94 500 000 |
7.56% |
1.02 p.p. |
|
Aviva Open Pension Fund1 |
93 610 319 |
7.49% |
88 010 319 |
7.04% |
0.45 p.p. |
|
Other shareholders2) |
681 272 678 |
54.50% |
699 570 701 |
55.97% |
-1.47 p.p. |
|
Total |
1 250 000 000 |
100.00% |
1 250 000 000 |
100.00% |
|
|
1) Calculation of shareholdings as at the end of the year published by Universal Pension Fund Management Companies (Powszechne Towarzystwa Emerytalne) in annual information about the structure of fund assets and quotation from the securities exchange official list (Ceduła Giełdowa).
2) Including Bank Gospodarstwa Krajowego which, as at 31.12.2020 and as at 31.12.2019, held 24 487 297 shares, constituting a 1.96% share of the votes at the General Shareholders’ Meeting.
The Bank is not aware of any agreements concluded in 2020, based on which any changes could occur in the future in the proportions of the shares held by the current shareholders or bond holders.
In 2020, the price of shares of PKO Bank Polski S.A. decreased by 17%, and as at the end of 2020, it was PLN 28.72, while WIG20 and WIG Banki indices dropped by 8% and 30% respectively.
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The main decline in the quotations took place in March 2020. The reason for the repricing of the Bank’s shares was the reduced earnings outlook as a result of the pandemic. As a result, investors expected an increased cost of risk and a decline in interest margins. The increase in costs of legal risk of foreign currency mortgage loans and the recommendation of the PFSA on suspending dividend payments to shareholders were additional factors contributing to the decline in quotations.
The emergence of positive information on COVID-19 vaccines improved the Bank’s valuation towards the end of the year by accelerating expectations for a strong economic rebound in Poland and worldwide. The PFSA’s proposal in December 2020 to resolve the issue of foreign currency mortgage loans through voluntary settlements with customers also had a positive impact on the price of shares.
As at the end of 2020, PKO Bank Polski S.A. was the second largest company listed on the Warsaw Stock Exchange. At the end of the last session in 2020, investors valued it at over PLN 36 billion.
Price of shares and capitalization of PKO Bank Polski S.A. compared to competitive banks
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All the 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 (1 share gives 1 vote) or dividend. The Articles of Association of PKO Bank Polski S.A. limit the voting rights 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 from 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. Conversion into bearer shares or transfer of A-series registered shares, after obtaining such approval, results in the expiry of restrictions in respect of 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.
Ratings of PKO Bank Polski S.A.
The creditworthiness of PKO Bank Polski is assessed by Moody’s Investors Service rating agency which awards a paid rating to the Bank.
Table 18. Ratings of PKO Bank Polski S.A. as at 31 December 2020 (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 |
(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 19. ESG ratings of PKO Bank Polski S.A. as at 31 December 2020
FTSE Russell |
3.1 |
MSCI |
BBB |
Sustainalytics |
25.7 (Medium) |
Ratings of PKO Bank Hipoteczny S.A.
Table 20. Ratings of PKO Bank Hipoteczny S.A. as at 31 December 2020 (paid rating)
Moody’s Investors Service |
|
Long-term issuer rating |
Baa1 with stable outlook |
Short-term issuer rating |
P-2 |
Counterparty risk assessment - long-term |
A3 |
Counterparty risk assessment - short-term |
P-2 |
Opinion on counterparty risk (CR) - long-term |
A3(cr) |
Opinion on counterparty risk (CR) - short-term |
P-2(cr) |
Rating for PLN mortgage bonds issued |
Aa1 |
Rating for EUR mortgage bonds issued |
Aa1 |
The ratings for PLN- and EUR-denominated mortgage bonds were upgraded in December 2020.
Ratings of the PKO Leasing S.A. Group
As at 31 December 2020, bonds issued by Polish Lease Prime 1 DAC, a special purpose vehicle established within the PKO Leasing S.A. Group for the purposes of the asset securitization programme, had the following ratings:
Table 21. Ratings of bonds of Polish Lease Prime 1 DAC as at 31 December 2020 (paid rating)
Rating obligacji klasy A |
|
Agencja Scope |
AAA |
Agencja ARC |
AA- |
Rating obligacji klasy B |
|
Agencja Scope |
BB- |
Agencja ARC |
BB+ |
The ratings were awarded in September 2019 and confirmed in September 2020.
Ratings of KREDOBANK S.A.
As at 31 December 2020, KREDOBANK S.A. had the following ratings granted by Ukrainian rating agencies:
Table 22. Ratings of KREDOBANK S.A. as at 31 December 2020 (paid ratings)
“Expert-Rating” Rating Agency |
|
Credit rating on national scale |
uaAAA with stable outlook |
Rating on national scale for A- and B-series bonds issued |
uaAAA with stable outlook |
“Standard-Rating” Rating Agency |
|
Credit rating on national scale - long-term |
uaAAA with stable outlook |
Credit rating on national scale - short-term |
uaK1 with stable outlook |
Deposit rating on national scale |
ua1 with stable outlook |
Rating on national scale for A- and B-series bonds issued |
uaAAA with stable outlook |
The ratings were granted in 2016-2017 and confirmed in November 2020.
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.
Key objectives of investor relations
In 2020, the Bank’s investor relation activities focused on:
• strengthening the positive image of PKO Bank Polski S.A. as a reliable and transparent company among existing and potential investors, financial market analysts and rating agencies;
• providing information on the Bank’s financial results and activities, including changes in the market environment, in order to allow a reliable assessment of the Bank’s current situation and perspectives, as well as the correct valuation of its shares;
• providing information on non-financial areas of the Bank’s operations, especially ESG reporting and planned new initiatives that complement conventional financial analysis when making investment decisions;
• fulfilling the information duties by the Bank as an issuer of securities, as required by law;
• arranging the General Shareholders’ Meetings and providing information to the Bank’s shareholders;
• ensuring the Bank’s cooperation with responsible governmental bodies, organizations and capital market institutions in connection with the Bank’s presence on the public securities market.
Activities in 2020
Due to the COVID-19 pandemic, as of mid-March 2020, all investor and analyst communications were conducted remotely via teleconference and video conference. In 2020, a total of 340 investor meetings took place, i.e. 20% less than in 2019.
In 2020:
• eight meetings were held at the Bank’s registered office and 96 video conferences and teleconferences,
• after the end of each quarter, the financial results of the Bank and the Bank’s Group were presented by the Bank’s Management Board in meetings and video conferences with investors and capital market and debt securities market analysts. They were held at the Bank’s registered office, and via teleconferences and video conferences, in each case with the participation of over 60 analysts and investor representatives in total.
Additionally, Members of the Bank’s Management Board answered the investors’ questions during investor conferences held through remote communication channels for investors from all over the world. In 2020, in total, 228 meetings were held during 26 investor conferences with investors.
The Investor Relations Office maintained on-going contacts with analysts as well as institutional and individual investors, and answered numerous telephone or email inquiries pertaining to business operations and the financial performance of PKO Bank Polski S.A.
All information of significant importance to the Bank’s investors and shareholders was immediately published on the Investor Relations website (https://www.pkobp.pl/investor-relations/). In 2020, the Bank once again launched its online annual report in the form of an internet service site in two language versions: Polish and English (http://www.raportroczny2019.pkobp.pl/, http://www.raportroczny2019.pkobp.pl/en/), which facilitates obtaining key financial and business information about the PKO Bank Polski S.A. Group.
11.2 Statement of compliance with the corporate governance principles
Corporate governance principles and scope of application
Controls in the process of preparing financial statements
Articles of Association of PKO Bank Polski S.A.
General Meeting of PKO Bank Polski S.A.
Supervisory Board of PKO Bank Polski S.A. during the reporting period
Management Board of PKO Bank Polski S.A. during the reporting period
Corporate governance principles included in the document titled “Best Practice for WSE Listed Companies 2016”
The Bank has adopted for application the principles and recommendations contained in the collection titled “Best Practice for WSE Listed Companies 2016” (hereinafter: Best Practice), with the reservation that recommendation IV.R.2., which concerns enabling shareholders to participate in the General Shareholders’ Meeting by means of electronic communication, will not be applied. The Bank applies recommendation IV.R.2 only in part concerning the real-time broadcast of General Shareholders’ Meetings.
The text of the Best Practice is publicly available on the official website of the Warsaw Stock Exchange, at https://www.gpw.pl/dobre-praktyki.
The information on the Bank’s application of recommendations and principles included in the Best Practice is available on the Bank’s website (https://www.pkobp.pl/investor-relations/corporate-governance/best-practice-for-gpw-listed-companies-2016/). This information is prepared on the form provided by the Warsaw Stock Exchange and shows the detailed status of compliance or non-compliance with each of the recommendations and principles of the Best Practice. On this website, the Bank also discloses reports on possible, incidental non-application of any rule contained in the Best Practice.
Compliance with the rules contained in the “Best Practice for WSE Listed Companies 2016”
In 2020, the Bank incidentally violated rule II.Z.11 of the Best Practice, which indicates that the Supervisory Board must consider and give its opinion on matters to be the subject of resolutions of the General Shareholders’ Meeting.
In connection with this fact, pursuant to § 29 section 3 of the WSE Rules, the Bank published a report regarding an incidental breach of the above-mentioned rule. The Bank indicated that the breach consisted in the Bank Supervisory Board’s failure to express an opinion on the draft resolutions of the Bank’s General Shareholders’ Meeting in connection with the drafts sent by the Bank’s shareholder two days before the meeting. It became impossible to express an opinion on the drafts sent, due to the very short time for the Supervisory Board to make a formal decision.
Compliance with the recommendations contained in the “Best Practice for WSE Listed Companies 2016”
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 the information policy of PKO Bank Polski S.A. regarding contacts with investors and customers”, which can be found on the Bank’s website.
While implementing this policy the Bank takes special care to enable investors and analysts to ask questions and obtain explanations on issues of interest to them. To this end, cyclical individual meetings of investors with Bank representatives are organized, as well as conferences connected with the presentation of the Bank (among investors and capital market analysts) and conferences and teleconferences every time immediately after the publication of interim reports of PKO Bank Polski S.A. (in 2020 due to the pandemic mainly in electronic form using available applications).
On an ongoing basis, answers are provided to investors’ questions in writing, by e-mail (including a dedicated mailbox) or by telephone.
In order to inform the market about the situation of PKO Bank Polski S.A. as soon as possible, the financial results are published as soon as possible after the end of the reporting period. The successive shortening of publication deadlines in this respect was disrupted in 2020 by the need to determine the impact of the pandemic on the results of the Bank and the Bank’s Group.
The Bank also has recommended internal regulations with regard to providing explanations and rectifications relating to untrue, imprecise or harmful information in the media.
Within the framework of its widely understood information policy, the Bank describes its major policies in respect of its sponsorship and charitable activities in the annual Directors’ Report on the operations of the Bank’s Group. In this Directors’ Report the said information can be found in chapter 13.4.1.
As a confirmation of the quality of the Bank’s information activities, in 2020, in the largest survey of investor relations of WIG30 companies in Poland, prepared by Parkiet and the Chamber of Brokerage Houses (Izba Domów Maklerskich), the Bank was ranked third among companies which, according to institutional investors and analysts, communicate best with the market.
Management Board and Supervisory Board |
Members of the Management Board and Supervisory Board of PKO Bank Polski S.A. are appointed in a manner allowing for the selection of persons having high qualifications and experience.
The above is reflected in the suitability assessment policies for members of both these authorities adopted by the Bank in 2020.
These policies are implemented at the Bank taking into account the principle of diversity of members of both the Management Board and the Supervisory Board.
The diversity principle is designed to ensure that Members of the Management Board or the Supervisory Board are appropriately selected to obtain a broad range of competences, knowledge and skills that are adequate for the position and guarantee that the members of the Management Board or the Supervisory Board, individually and as a body, issue independent opinions and decisions on the whole range of the Bank’s activities. The principle of diversity of selection is based on objective substantive criteria in terms of education and professional experience. Should the need arise, the Bank provides the Supervisory Board with professional, independent advisory services.
Both members of the Management Board and Supervisory Board devote the necessary amount of time to perform their duties. Attendance at meetings of the Supervisory Board is high, and absences are justified in resolutions of the Supervisory Board.
Serving on the Bank’s Management Board is the main area of activity for the members of this body, while membership on the bodies of other entities mainly involves supervisory functions in the companies of the Bank’s Group.
The Bank’s Supervisory Board, as part of succession management, makes decisions regarding the selection of new Members of the Bank’s Management Board keeping in mind the objective to ensure continuity in decision making with regard to the area of the Bank’s operations supervised by a given Member of the Bank’s Management Board and the entire Management Board of the Bank. Following this principle, due to the fact that the term of office of the Board of Executives expires in mid 2020, the Supervisory Board selected the members of this body well in advance.
The Bank’s statutory obligation to maintain the composition of the Supervisory Board is the need to convene the General Shareholders’ Meeting in order to supplement the composition of the Supervisory Board in the event that the number of members of this body decreases below 5.
Internal systems and functions |
The Bank has separated in its structure units responsible for the performance of tasks in particular systems and functions, especially units dealing with internal control, risk management and compliance. The main assumptions of the internal control system and risk management rules at the Bank are presented in chapter 11.2.2 and 9.1 of the Report.
General Shareholders’ Meeting and shareholder relations |
The Bank aims to hold annual general meetings as soon as possible after the publication of the annual report. Over the past five years, this period has shortened by approximately one month. The exception is the date of the 2020 Annual General Meeting of the Bank, which due to the pandemic fell at the end of August 2020.
Each General Meeting is broadcast in real time.
Conflict of interests and related party transactions |
The internal regulations of PKO Bank Polski S.A. guarantee compliance with the recommendations and principles included in the “Best Practice for WSE Listed Companies 2016”. The Bank has internal regulations regarding the management of conflicts of interest. According to those regulations, both a member of the Supervisory Board and a Member of the Management Board should refrain from any professional or non-professional activity that could lead to a conflict of interests or otherwise have an adverse effect on his reputation as a member of the supervisory or management body. There are also rules regarding the obligation to disclose conflicts, abstaining from making decisions and excluding members of these bodies from participating in the consideration of issues with which a conflict of interest is connected.
Remuneration |
The Bank has a remuneration policy for members of the Supervisory Board and the Management Board currently adopted by the 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, implementing the strategy of the Bank and the Bank’s Group and maintaining the market position of the Bank.
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. The remuneration of key managers is directly linked to the Bank’s financial situation and the growth of its value.
The level of remuneration of members of the Bank’s authorities and key managers 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 Nomination and Remuneration Committee, established within the Bank’s Supervisory Board, operates in line with the conditions described in Annex I to the European 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.
Corporate governance principles for supervised institutions issued by the Polish Financial Supervision Authority
The Bank accepted for use the “Principles of Corporate Governance for Supervised Institutions” (adopted by the Polish Financial Supervision Authority on 22 July 2014) 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 provisions of the law and the Bank’s Articles of Association. Nevertheless, the Bank assumed that paragraph 8, clause 4 of the “Principles of Corporate Governance for Supervised Institutions” (hereinafter: the Principles), insofar as it relates to allowing the shareholders the possibility of participating in the meetings of the decision-making authority. 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 Bank’s Supervisory Board adopted for use the “Corporate Governance Principles for supervised institutions” concerning the responsibilities 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.
In its resolution of 2015, the General Shareholders’ Meeting of the Bank declared that, acting in line with its competences, it will follow the “Corporate Governance Principles for supervised institutions” issued by the Polish Financial Supervision Authority, although it ruled out the application of the principles set out in:
• § 8 clause 4 of the Principles, within the scope pertaining to ensuring the possibility of the electronic participation of shareholders in meetings of the decision-making body;
• § 10 clause 2 of the Principles, with respect to the introduction of personal rights or other special rights for shareholders;
• § 12 clause 1 of the Principles pertaining to the responsibility of shareholders for immediate recapitalization of the supervised institution;
• § 28 clause 4 of the Principles with respect to assessing by the decision-making body whether the determined remuneration policy promotes the development and security of the supervised institution.
Waiving the application of the principle set out in § 8 clause 4 was in line with the prior decision of the General Shareholders’ Meeting of PKO Bank Polski S.A. of 30 June 2011. The decision was reflected in not adopting the resolution on amendments to the Articles of Association of the Bank, the aim of which was to enable participation in the General Shareholders’ Meeting through electronic means of communication. The decision not to apply this principle was taken because of the legal and organizational-technical risks, which could jeopardize the proper conduct of the General Shareholders’ Meeting. The application of other Principles specified in the resolution of the General Shareholders’ Meeting was waived based on these proposals by an eligible shareholder of the Bank – the State Treasury.
In accordance with the justification presented by the State Treasury together with the proposed draft resolution of the General Shareholders’ Meeting, waiving the application of the principle specified in §10 clause 2 and §12 clause 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 clause 4 was justified, in accordance with the motion of the State Treasury, by the excessive scope of the remuneration policy in question, subject to the assessment of the decision-making authority. In the opinion of the above-mentioned shareholder, the policy for remunerating employees who perform key functions but who are not members of the supervisory and management authorities, should be assessed by the employer or the principal, i.e. the Bank represented by the Management Board, the activities of which are supervised by the Supervisory Board.
Nevertheless, in 2021 a Report entitled “Evaluation of the Remuneration Policy’s Functioning in PKO Bank Polski S.A. in 2020” will be submitted to the General Meeting.
The text of the Principles is published on the Polish Financial Supervision Authority’s website at the address: https://www.knf.gov.pl/knf/pl/komponenty/img/knf_140904_Zasady_ladu_korporacyjnego_22072014_38575.pdf.
Internal control system
PKO Bank Polski S.A. has an internal control system functioning as part of the Bank’s management system. Designing, implementing and ensuring the functioning of the adequate and effective internal control system is the responsibility of the Bank’s Management Board. The Supervisory Board supervises the implementation and the functioning of the internal control system, and evaluates its adequacy and effectiveness, including the adequacy and effectiveness of the control functions, compliance unit, and the internal audit unit. The assessment of the internal control system is made on the basis of specific criteria and taking into account:
• information provided by the Bank’s Management Board, Audit Committee of the Bank’s Supervisory Board, compliance function and internal audit function;
• findings made by the statutory auditor and resulting from the supervisory activities of authorized institutions;
• other information and documents relevant to the adequacy and effectiveness of the internal control system.
In this respect, the Supervisory Board is supported by the Supervisory Board Audit Committee that is responsible, in particular, for monitoring the effectiveness of the internal control system.
The objectives of the internal control system are to ensure:
• efficiency and effectiveness of the Bank’s operations;
• reliability of the financial reporting;
• compliance with risk management principles in the Bank;
• compliance of the Bank’s activities with the generally binding legal regulations, internal regulations of the Bank, supervisory recommendations and market standards adopted in the Bank.
The internal control system is arranged at the Bank on three independent levels:
• the first level consists of organizational structures of the Bank that carry out operational activities (in particular: sales of products and Customer service), as well as other organizational structures of the Bank that perform risk-generating operational tasks and operate under separate internal regulations of the Bank;
• the second level is composed of activities of the compliance unit, as well as identification, measurement, control, monitoring and reporting of risks, and threats and irregularities – tasks are performed by specialized organizational structures operating under applicable policies, methodologies and procedures. The purpose of these structures is to ensure that the activities implemented at the first level are properly designed and effectively reduce the risk, support risk measurement and analysis and business effectiveness;
• the third level is internal audit, which carries out independent audits of elements of the Bank’s management system, including the risk management system and the internal control system. The internal audit operates separately from the first and second level.
The internal control system in the Bank comprises:
• the control function;
• the compliance unit;
• the independent internal audit unit.
The control function 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 this function.
The control function consists of:
• controls;
• independent monitoring of controls;
• reporting.
PKO Bank Polski S.A. identifies material processes which have a significant impact on the performance of the internal control system objectives and the Bank’s business goals, and ensures periodical reviews of the processes with regard to their materiality.
Controls are embedded in the processes, systems and IT applications in place at PKO Bank Polski S.A. These controls are tailored to the objectives of the internal control system and the specific nature of the Bank’s operations. These controls are subject to independent monitoring including a periodical evaluation of their adequacy and effectiveness.
The compliance unit is an organizationally independent unit. It plays a key role in ensuring compliance and management of non-compliance risk. This risk is understood as risk legal sanctions, financial losses, or loss of reputation, if the Bank, the Bank’s staff or entities acting on behalf of the Bank fail to comply with the universally applicable provisions of the law, internal regulations, or market standards adopted by the Bank. The objective of the compliance unit is developing solutions aimed at ensuring compliance, and non-compliance risk management, as well as identifying, assessing, controlling, monitoring and reporting this risk at the Bank.
The internal audit carries out independent and objective assurance and advisory activities in order to:
• assess the adequacy and effectiveness of the risk management system and the internal control system at the first and the second level of the internal control system, taking into account adequacy and efficiency of risk controls and controls selected for the audit (assurance activities);
• create value and identify potential improvements of processes at the Bank (advisory activities).
The assessment of individual areas of the Bank’s operations is carried out in a systematic and organized manner. Suggestions and recommendations issued under the audit are aimed at eliminating identified gaps and increasing the quality and effectiveness of the functioning of the Bank and entities belonging to the Bank’s Group.
Information on irregularities, assessment results and other material issues identified by individual elements of the internal control system are presented in periodic reports for the Management Board, the Supervisory Board Audit Committee or the Supervisory Board of the Bank.
On its website (www.pkobp.pl), the Bank gave a description of its internal control system which takes into account, in particular, a description of goals: objectives of the internal control system; the role of the Management Board, Supervisory Board and the Audit Committee of the Supervisory Board, three independent levels on which the internal control system is organized and the individual elements of the internal control system.
Other entities of the Bank’s Group have internal control systems adapted to the specific nature of the entities’ operations. These entities develop and implement internal regulations defining, in particular, control tasks performed within the framework of the internal control system, and the allocation of responsibility for these tasks. The manner of functioning of internal control systems depends on the business entity’s size and scope of its operations. The audit units in the Bank’s Group operate on a long-term cooperative model to ensure common standards in internal audits.
The majority of the entities have separated organizational units or positions that report directly to the Management Board or the Supervisory Board of the particular entity. If this is justified by the operating profile of the company and its organizational structure (small entities with a limited scope of business) the internal control functions are performed by the management staff, without structurally separating this function or internal control unit.
Controls in the process of preparing financial statements
In order to ensure the reliability and correctness of the process of preparing the financial statements, the Bank designed and implemented a number of controls. They are embedded in the functions of reporting systems and internal regulations concerning this process. These controls involve among others things the use of continuous verification and reconciliation of reporting data to the accounting records, sub-ledger accounts and other documents providing the basis for financial statements, and with binding accounting and reporting standards.
The process of preparing financial statements is subjected to regular multi-level verification, in particular with regard to the correctness of the account reconciliation, substantive analysis and reliability of the information. The annual financial statements are reviewed by the Audit Committee of the Supervisory Board and adopted by the Supervisory Board, and are then approved for publication by the Management Board of PKO Bank Polski S.A.
The tasks of the Audit Committee of the Supervisory Board include, among other things, monitoring the financial reporting process including the review of separate and consolidated interim and annual financial statements, with particular emphasis on:
• information on substantial changes in the accounting and reporting policy and in the method of making significant management estimates and judgments for the purposes of financial reporting, as well as compliance of the financial reporting process with the applicable law;
• significant adjustments resulting from the audit and the auditor’s report on the audit of the financial statements, discussion of any issues, qualifications and doubts resulting from the audit of financial statements and analysis of the independent auditor’s recommendations addressed to the Management Board, and responses of the Management Board in this regard.
The description of cooperation between the Audit Committee of the Supervisory Board and the external auditor and its assessment is included in the report on activities of the Audit Committee drawn up on an annual basis and attached to the report on activities of the Supervisory Board.
Audit firm
On 13 December 2018, pursuant to § 15 clause 1 point 2 of the Bank’s Articles of Association, the Bank’s Supervisory Board selected PricewaterhouseCoopers Polska spółka z ograniczoną odpowiedzialnością Audyt sp. k. (hereinafter PWC) as the audit firm to audit and review the financial statements of the Bank and of the Bank’s Group for the years 2020-2021. PricewaterhouseCoopers Polska spółka z ograniczoną odpowiedzialnoscią Audyt sp. k. with its registered office in Warsaw, ul. Polna 11 is entered in the list of audit companies maintained by the National Board of Registered Auditors under the number 144. On 24 January 2019, the Bank concluded an agreement with PWC for the audit and review of the financial statements of the Bank and of the Bank’ Group for the years 2020-2021.
The audit and review of the financial statements of the Bank and the Group for 2019 was carried out by the audit firm KPMG Audyt Spółka z ograniczoną odpowiedzialnością spółka komandytowa.
Information on the audit firm’s fees payable for the financial year and the previous financial year, separately for the audit of the financial statements and for other assurance services, including the review of the financial statements is provided in Note 74 of the Financial Statements of the Bank’s Group for the year 2020.
The policy for the appointment of an audit firm and the policy for the provision of other services by the audit firm
In accordance with the policy for the appointment of an audit firm to audit the financial statements of the Bank and the consolidated financial statements of the Bank’s Group, the Bank’s Supervisory Board conducts proceedings relating to commissioning the audit of the financial statements of the Bank and the Bank’s Group under an unlimited tender procedure. All decisions of the Bank’s Supervisory Board as to the selection of the audit firm require a prior recommendation by the Audit Committee. As a result of the selection procedure organized by the Bank, the Audit Committee submits its recommendation with regard to the selection of the audit firm to the Supervisory Board. Unless the recommendation refers to the renewal of the audit engagement, it should contain no less than two choices of an audit firm with justifications, and a justified indication of the preferred firm. The Bank’s Supervisory Board selects the audit firm based on the Audit Committee’s recommendation. Clear and unbiased selection criteria are applied in the assessment of the proposals submitted by the audit firms.
The Audit Committee’s recommendation on the selection of an audit firm to audit the 2020-2021 financial statements met the applicable conditions and was prepared following a selection procedure organized by the Bank that met the applicable criteria.
The policy for performing permissible services other than the audit to the Bank and the Bank’s Group by the audit firm, its related entities and a member of the audit firm’s network assumes that the provision of permissible services other than the audit by the audit company performing the audit, its related entities and a member of the audit company’s network to the Bank require the consent of the Audit Committee of the Bank’s Supervisory Board. The Audit Committee of the Bank’s Supervisory Board consents to the provision of permissible services other than the audit to the Bank’s Group company based on a request of the company. A necessary element of such a request is the consent of the audit committee or the Supervisory Board of the requesting Bank’s Group company.
In 2020, the audit firm PricewaterhouseCoopers Polska spółka z ograniczoną odpowiedzialnością Audyt sp. k. provided permissible non-audit services to the Bank, in particular reviews of financial statements. The Audit Committee of Bank’s Supervisory Board assessed the independence of the audit firm and gave its consent for the performance of those services.
Principles for amending the Articles of Association of PKO Bank Polski S.A.
In accordance with the provisions of the Commercial Companies Code, an amendment to the Articles of Association of PKO Bank Polski S.A. requires a resolution of the General Shareholders’ Meeting and entry in the register. Additionally, pursuant to Article 34, clause 2 of the Banking Law Act, an amendment to the Articles of Association requires the permission of the Polish Financial Supervision Authority.
Pursuant to the provisions of the Commercial Companies Code, resolutions on amendments to the Bank’s Articles of Association require a qualified majority of three-fourths of the votes. Resolutions regarding an amendment to the Bank’s Articles of Association increasing benefits for shareholders or limiting the rights granted personally to particular shareholders, pursuant to Article 354 of the Commercial Companies Code require the consent of all the shareholders concerned.
In accordance with § 10 clause 14 of the Articles of Association of PKO Bank Polski S.A., resolutions of the General Shareholders’ Meeting on amending the Articles of Association, relating to share preference (excluding preference within the scope of voting rights, pursuant to Article 351 § 2 of the Commercial Companies Code), a reduction in the share capital by redeeming some of its shares without a simultaneous increase in the share capital or changing the scope of the Bank’s activities resulting in the Bank ceasing its banking activities require a 90% majority of the votes cast.
Amendments to the Bank’s Articles of Association
In 2020, the District Court for the capital city of Warsaw in Warsaw, 13th Commercial Division of the National Court Register registered amendments to the Bank’s Articles of Association resulting from the resolution No. 3/2019 of the Extraordinary General Shareholders’ Meeting of PKO Bank Polski S.A. of 17 September 2019, excluding the amendment introduced in § 1 point 2 of this resolution, and resulting from resolutions No. 30/2020 and No. 31/2020 of the General Shareholders’ Meeting of PKO Bank Polski S.A. dated 26 August 2020. The amendment to the Bank’s Articles of Association introduced in § 1 point 2 of the resolution No. 3/2019 of the Extraordinary General Shareholders’ Meeting of PKO Bank Polski S.A., which concerns extending the scope of the Bank’s activities to include providing services related to handling Employee Capital Plans, was registered by the Court on 11 February 2021.
The amendments introduced by resolution No. 3/2019 result from the Act of 21 February 2019 on amending the Act on the Principles of State Property Management, which came into force on 29 March 2019 (they concern, among others, the obligations of the Bank’s Management Board to prepare and the Bank’s Supervisory Board to approve additional reports introduced by the Act, changes to the list and parameters of transactions that require the approval of the Bank’s Supervisory Board, and changes to the catalogue of resolutions the adoption of which requires a qualified majority) and are of a formal nature and serve the purpose of aligning the text with the terminology used in generally applicable laws.
The amendments introduced by Resolutions No. 30/2020 and 31/2020 concern the approval by the Bank’s Supervisory Board of the rules of operation of the internal control system, updating the catalogue of resolutions of the Bank’s Supervisory Board which cannot be passed by circulation or using means of direct remote communication, subordinating the compliance unit directly to the President of the Bank’s Management Board, clarifying the rules of creating supplementary capital and changing the rules of creating and allocating the reserve capital, including extension of the possibility to designate the reserve capital for purchasing the Bank’s own shares.
The Polish Financial Supervision Authority has issued decisions permitting the above mentioned amendments to the Bank’s Articles of Association.
Detailed information on the scope of registered amendments to the Bank’s Articles of Association was presented in the Bank’s current reports: No. 33/2020 dated 12 November 2020, No. 37/2020 dated 21 December 2020 and No. 5/2021 dated 15 February 2021.
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 and the Articles of Association of the Bank, in keeping with the principles set out in the Rules of the General Shareholders’ Meeting.
Competences of the General Shareholders’ Meeting
In addition to matters stipulated in generally binding legal regulations, the principal 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 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 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;
• issuing convertible bonds, bonds with a pre-emptive right or subscription warrants;
• laying down the principles for remuneration of Members of the Management Board and the Supervisory Board;
• approving the financial statements of the Bank and the Bank’s Group;
• approving the Directors’ Report (on the Bank’s operations and the operations of the Bank’s Group) and the report on 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 lease of an enterprise or its business unit, or establishing a limited property right thereon;
• amendments to the Bank’s Articles of Association;
• increase or decrease in the Bank’s share capital.
Principles of operation
Persons entitled based on registered shares, as well as pledgees and users entitled to voting rights, entered into the share register on the date of registration, as well as holders of bearer shares provided that they were the Bank’s shareholders on the date of registration and, within the statutory deadline specified in the announcement convening the General Shareholders’ Meeting, they requested that the entity maintaining their securities account issue a registered certificate confirming their right to participate in the General Shareholders’ Meeting, shall be entitled to participate in the General Shareholders’ Meeting. On 1 March 2021, amendments to the rules of participation in the General Shareholders’ Meeting came into force, according to which the holders of shares, 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.
A shareholder being a natural person may participate in the General Shareholders’ Meeting and exercise his/her voting right in person or by proxy. A shareholder, who is not a natural person, may participate in the General Shareholders’ Meeting and exercise its voting right via a person authorized to make a statement of intent on its behalf or by proxy.
A power of attorney should be issued in writing, otherwise null and void, and enclosed with the minutes of the General Shareholders’ Meeting, or issued in electronic form. The right to represent a shareholder, who is not a natural person, shall arise from the original or copy of the excerpt from the relevant register presented possibly with a power of attorney or a chain of powers of attorney. These documents shall be presented upon drawing up the attendance list or sent in electronic form no later than on the day preceding the date of the General Shareholders’ Meeting, to the email address indicated on the announcement convening the General Shareholders’ Meeting.
A person(s) granting the power of attorney on behalf of a shareholder, who is not a natural person, should be listed in an up-to-date excerpt from the relevant register of a given shareholder.
A Member of the Management Board, a member of the Bank’s 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 co-operative dependent on the Bank may act as the shareholders’ proxies at the General Shareholders’ Meeting of PKO Bank Polski S.A.
The Bank shall publish on its website draft resolutions submitted in compliance with the provisions of the Commercial Companies Code by an authorized shareholder or shareholders before the date of the General Shareholders’ Meeting, immediately after their receipt.
A shareholder or shareholders representing at least one-twentieth of the share capital of the Bank may request that certain matters be included on the agenda of the General Shareholders’ Meeting not later than 21 days before the set date of the meeting. The request may be sent in electronic form.
Before the date of the General Shareholders’ Meeting, a shareholder or shareholders of PKO Bank Polski S.A. representing at least one-twentieth of the share capital may submit to the Bank, in writing or using electronic means of communication, draft resolutions on matters included on the agenda of the General Shareholders’ Meeting or matters that are to be included on the agenda. Additionally, during the General Shareholders’ Meeting, shareholders shall have the right to present draft resolutions or propose amendments or additions to draft resolutions on matters included on the agenda of the General Shareholders’ Meeting.
Removing a matter from the agenda or desisting from further discussion on a matter included on the agenda at the request of shareholders shall require a resolution of the General Shareholders’ Meeting. The resolution must be adopted by a three-quarter majority of the votes, after obtaining the prior consent of all shareholders, who requested that the matter be included on the agenda, present at the General Shareholders’ Meeting.
Resolutions of the General Shareholders’ Meeting shall be passed by an absolute majority of votes unless generally binding legal provisions or provisions of the Articles of Association of PKO Bank Polski S.A. decide otherwise.
The General Shareholders’ Meeting shall adopt resolutions in an open ballot, with the reservation that a secret ballot shall be ordered in respect of:
• elections of members of the Bank’s authorities;
• motions to dismiss members of the authorities or liquidators of PKO Bank Polski S.A.;
• 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 instances, specified in generally binding legal regulations.
A shareholder cannot, either personally or by proxy, or while acting as a proxy of another person, vote on resolutions concerning this shareholder’s liability to PKO Bank Polski S.A. on whatever account, including the acknowledgement of the fulfilment of this shareholder’s duties, exemption from any of the shareholder’s duties towards PKO Bank Polski S.A., or any dispute between this shareholder and PKO Bank Polski S.A.
Shareholders shall have the right to ask questions, through the Chairman of the General Shareholders’ Meeting, to members of the Management Board and Supervisory Board of PKO Bank Polski S.A. and the key statutory auditor of PKO Bank Polski S.A. If it is necessary for assessing a matter placed on the agenda of the General Shareholders’ Meeting, the Management Board (subject to statutory exceptions) shall be obliged to present information about the Bank upon the request of the shareholder.
In the discussion on each point of the agenda, each shareholder shall have the right to one speech and one reply. Shareholders may, during the course of discussion on each point of the agenda, apply to close the list of speakers or to close the discussion on a given point of the agenda.
The course of the General Shareholders’ Meeting may be recorded on electronic data carriers with the use of devices recording sound or sound and picture. Such media shall be archived at the Bank’s registered office according to the rules specified in the announcement on convening the General Shareholders’ Meeting. The recordings of the General Shareholders’ Meeting is made public by the Bank on its website.
In 2020, shareholders used this right and asked a number of questions regarding ESG issues. The video recording of the General Shareholders’ Meeting with the shareholders’ questions and replies by the Management Board is available on the Bank’s website: https://www.pkobp.pl/investor-relations/video-reports/.
The Bank has provided the shareholder with written answers to the questions on environmental issues. Their content is posted on the Bank’s website: https://www.pkobp.pl/investor-relations/current-reports/report-no-31-2020-answers-to-shareholder-s-questions-raised-at-the-annual-general-meeting-on-26-august-2020/.
The State Treasury, as the Eligible Shareholder, pursuant to § 11 clause 1 of the Bank’s Articles of Association, set the number of members of the Supervisory Board at 11.
As at 31 December 2020, the Supervisory Board consisted of 10 persons.
Changes in the composition of the Supervisory Board in 2020
On 26 August 2020, the General Shareholders’ Meeting of the Bank (AGM) adopted the Policy regarding the assessment of the suitability of candidates and members of the Supervisory Board of Powszechna Kasa Oszczędności Bank Polski S.A. Pursuant to Article 385 § 1 of the Commercial Companies Code, the AGM adopted resolutions appointing the following to the Supervisory Board for a joint term of office: Mariusz Andrzejewski, Grzegorz Chłopek, Grażyna Ciurzyńska, Zbigniew Hajłasz, Marcin Izdebski, Wojciech Jasiński, Andrzej Kisielewicz, Rafał Kos, Krzysztof Michalski and Piotr Sadownik, while confirming the adequacy of the appointed body.
The adequacy policy referred to above implements the requirements set forth in: the Banking Law Act (Article 22aa), the Guidelines of the European Banking Authority and the European Securities and Markets Authority on the assessment of the suitability of members of the management body and key function holders, and the Methodology for assessing the suitability of members of the bodies of supervised entities, issued by the PFSA.
In accordance with the “Best Practice for WSE Listed Companies 2016”:
• each of the appointed members of the Supervisory Board has made and delivered to the other members of the Supervisory Board and the Management Board a statement on meeting or not meeting the independence criteria (rule II.Z.5),
• On 3 November 2020, the Supervisory Board made an assessment whether there were any relationships or circumstances which may affect the compliance of a given member of the Supervisory Board with the independence criteria, taking into consideration but not being bound by the content of the statements submitted by individual members (rule II.Z.6).
In accordance with the aforementioned assessment, Mariusz Andrzejewski, Grzegorz Chłopek, Grażyna Ciurzyńska, Zbigniew Hajłasz, Andrzej Kisielewicz, Rafał Kos, Krzysztof Michalski and Piotr Sadownik meet the independence criteria indicated in the Good Practice. The Supervisory Board was not aware of any circumstances that could have a negative impact on these persons’ compliance with the independence criteria. Marcin Izdebski and Wojciech Jasiński do not meet the independence criteria. This assessment was consistent with the content of the statements made by the members of the Supervisory Board.
Until 26 August 2020, the Bank’s Supervisory Board was composed of: Piotr Sadownik (Chairman), Grażyna Ciurzyńska (Deputy Chairman), Zbigniew Hajłasz (Secretary), Mariusz Andrzejewski, Mirosław Barszcz, Adam Budnikowski, Wojciech Jasiński, Andrzej Kisielewicz, Elżbieta Mączyńska-Ziemacka and Krzysztof Michalski.
Dariusz Górski was a member of the Supervisory Board until 29 January 2020.
Composition of the Supervisory Board of PKO Bank Polski S.A. as at 31 December 2020
Zbigniew Hajłasz – Chairman of the Supervisory Board |
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Member of the Supervisory Board since 30 June 2016.
On 26 August 2020, he was appointed to the Supervisory Board for the current term of office, and on the same day, the State Treasury appointed him Chair of the Supervisory Board.
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Expert with hands-on experience and consultant specializing in management and development. Has over 20 years’ experience in managing commercial companies and as an analyst and expert in planning, management and development of financial institutions, industrial restructuring, privatization and international projects. Academic degrees: MPhil in Economics (London University, 2002) and M.Sc. Eng. in Mathematics (Wrocław University of Technology, 1982). In 1993-1996 and since 2005 – academic lecturer (Wrocław University of Technology, University of Wrocław, Academy of Fine Arts in Wrocław), winner in the Business Gazelles ranking in 2015 and 2016. Since May 2018 – President of the Management Board of KGHM TFI S.A. His functions included: director of the Economic Development Department at the Provincial Office in Wrocław (1991-1993), director of the Regional Privatization Office of Bank BWP S.A. (1994-1996), Vice President of the Management Board of Wrocławska Agencja Rozwoju Regionalnego S.A. – Managing Director, President of the Management Board of PRW S.A. in Wrocław, President of the Management Board of TBS sp. z o.o. in Głogów, Director of OPDRO Project Coordination Office and President of the Management Board of Zakład Gospodarki Komunalnej sp. z o.o. in Św. Katarzyna. He was a member of supervisory boards of state-owned companies and companies with the participation of local government authorities, such as: Dolnośląskie Konsorcjum Handlowo-Finansowe S.A. in Wroclaw, Polskie Radio Wrocław S.A. in Wrocław, TBS sp. z o.o. in Głogów (the best social building society in Poland in the BGK ranking), Siechnicka Inwestycyjna Spółka Komunalna sp. z o.o., and Polskie Radio S.A. Author of expert opinions for the Sejm (the Polish Parliament) and Government of the Republic of Poland and for financial institutions. |
Year of birth: 1956 |
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Marcin Izdebski – Deputy Chair 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, and on the same day, the State Treasury appointed him Deputy Chair of the Supervisory Board.
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A graduate of the Warsaw University of Technology and the Warsaw School of Economics. He gained professional practice in the private sector, non-governmental organizations and government administration, with which he has been continuously associated since 2016. During this period he was responsible for the supervision of companies with State Treasury shareholding and for conducting capital transactions involving acquisitions, mergers, spin-offs of assets or companies. He has experience in supervisory bodies of companies. In 2020, he served as the Director of the Supervision Department I in the Ministry of State Assets. Currently (from 15 March 2021) - director of the Fuel and Energy Companies Department in the above-mentioned Ministry. Since August 2018, he has served as Chairman of the Supervisory Board of Polska Grupa Lotnicza S.A. |
Year of birth: 1990 |
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Grażyna Ciurzyńska – Secretary of the Supervisory Board |
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Member of the Supervisory Board since 30 June 2016.
On 26 August 2020, she was appointed to the Supervisory Board for the current term of office. On 24 September 2020 appointed as Secretary of the Supervisory Board.
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She has been working within the banking sector for 25 years. She held higher management positions in the corporate business area supervising, among other things, cooperation with strategic customers and the development of enterprise financing programmes. Subsequently, with regard to retail, she was responsible for retail business strategy, sales and pricing policy, bancassurance development, sales network management, designing and implementing products. She was also an advisor to the President of the Management Board of the Bank. For several years, she was related to the payments market, and was responsible for card activities area, cooperation with international payment organizations and suppliers of technology and bank services. She was a member of the Council of the Polska Bezgotówkowa Foundation, member of the executive committee of the Council of Banking Card Issuers and previously the executive committee of the Council of Cash Management. For many years associated with scientific and didactic work at the Warsaw School of Economics in the field of international economics, foreign direct investment and European integration. She also worked in government administration, responsible for strategic and legislative actions in the area of private investments, for cooperation with investors and financial institutions from Poland and abroad. She managed the instrument of special economic zones and large investment projects. Recently, acting President of the Management Board of the Polish Investment and Trade Agency S.A., where she was responsible in particular for the promotion of the Polish economy, supporting enterprises in their foreign expansion and investment processes, and the inflow of foreign investments. From June 2021, she will join the Management Board of the Polska Bezgotówkowa Foundation, and a month later she will become the President of the Management Board. Deputy Chair of the Supervisory Board of Polski Holding Nieruchomości S.A. Graduated from the Faculty of Foreign Trade at the Warsaw School of Economics and Post-graduate Studies in European Banking Law at the Institute of Law Studies of the Polish Academy of Sciences. |
Year of birth: 1968 |
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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 Cracow 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. Holds a full doctoral degree in economics. In the years 2013-2019 he worked as associate professor at the School of Banking and Management in Kraków. In the years 2003-2013 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 University of Economics (CUE), 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 was a three-time recipient of a scholarship of the Ministry of National Education. 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 in book form 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. (listed on NewConnect), PolRest S.A. (listed on the WSE), Media Nieruchomości S.A., Przedsiębiorstwo Inżynierii Miejskiej sp. z o.o. in Czechowice–Dziedzice, 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 Spółek 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 Chairman of the Supervisory Board of PKP Polskie Linie Kolejowe S.A., Chairman of the Supervisory Board of INSTAL Kraków S.A. and Deputy Chairman 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 is also a member of the Polish Economic Society (PTE) and the Main Board of the Accountants Association in Poland. Author or co-author of over 150 academic publications and several dozen expert opinions on economics. |
Year of birth: 1971 |
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Grzegorz Chłopek- 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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He is a graduate of the Faculty of Electronics and Information Technology at the Warsaw University of Technology. Holder of the CFA title and securities broker licence. He started his professional career in 1994, from the very beginning tying it to the capital market. Until 1998 he worked at the Brokerage Office of Bank Gdański, Commercial Union Towarzystwo Ubezpieczeń na Życie (Polska) and American Bank in Poland. From December 1998, for over 21 years, he worked for Nationale-Nederlanden Powszechne Towarzystwo Emerytalne S.A. managing assets of the biggest open pension fund in Poland. In 2004 he was appointed to the management board of the company and from 2012 he was the President of the Management Board. In the area of asset management, he was responsible for the management of interest rate market instruments and then for the entire investment portfolio, which exceeded PLN 72 billion in 2013. He was also responsible for the corporate governance area of the equity portfolio, which exceeded 5% of the market capitalization of all Polish companies listed on the Warsaw Stock Exchange. Since June 2020, he has been employed at iWealth Management sp. z o.o. as Managing Director, where he is responsible for developing cooperation with wealthy clients and institutions, as well as supporting the free investment advisory services provided to the company’s clients. He has extensive experience in managing large financial institutions, implementing new products in the financial sector, corporate governance of listed companies, analysis of financial statements and capital market instruments. He is an experienced expert in the pension, investment and insurance sectors. |
Year of birth: 1971 |
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Wojciech Jasiński – 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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Graduated from the University of Warsaw’s Faculty of Law and Administration (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, also as legal counsel in the Tax Chamber. In 1990-1991, he established 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 at the Supreme Audit Office, successively as Director of: NIK Delegation in Warsaw, Finance and Budget Team, 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 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 of office) 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. Since 5 March 2020, Chairman of the Supervisory Board of PKN ORLEN S.A. |
Year of birth: 1948 |
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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 Ph.D. in mathematics from the Polish Academy of Sciences. Graduated from 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. Currently, he is Chairman of the Supervisory Board of KGHM Polska Miedź S.A. He is the author of more than 75 academic publications in foreign journals on mathematics, logistics and computer science as well as 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 research interests include the application of mathematics, logic and computer science in practice, artificial intelligence, business intelligence, informatization and argumentation theory. |
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 as a Permanent Arbitrator and Conciliator of the Court of Arbitration at the General Counsel to the Republic of Poland (since 2020). Member of the Commission for Arbitration of the Supreme Bar Council (since 2015) and The Board of Visitors CUA Law (since 2017). Expert of the Parliamentary Committee on Justice and Human Rights on the draft law on the enforcement of claims in group proceedings (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) and the Team for Economic Law of the Minister for the Development (2015). Currently a member of the Commission for Corporate Governance Reform and expert teams of the Minister of State Assets: on increasing the effectiveness of supervisory boards and on corporate law (2020). Member of the Polish delegation to the 73rd session of the Working Group II UNCITRAL - Dispute Resolution/Arbitration and Conciliation (2021). Recommended as an expert in litigation and arbitration by, among others, Who’s Who Legal, Chambers and Partners, Rzeczpospolita daily. |
Year of birth: 1971 |
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Krzysztof Michalski – Member of the Supervisory Board |
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Member of the Supervisory Board since 17 September 2019. On 26 August 2020, he was appointed to the Supervisory Board for the current term of office.
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Graduate of Law and Administration and Political Science faculties at Maria Curie-Skłodowska University in Lublin and Faculty of Economic Sciences at Warsaw University. He was also awarded an MBA diploma – Innovation and Data Analysis – at the Institute of Computer Science of the Polish Academy of Sciences and Woodbury School of Business at Utah Valley University. He started his professional career in a foreign trade company with a global range of operations, and was responsible, among other things, for market research, creating new products, marketing and sales development on foreign markets. From 2017 leader of the investor cooperation team in the Ministry for Development. He was responsible for various operations in the area of private investment, cooperation with Polish and foreign investors and financial institutions and supporting the execution of large investment projects. At present he directs the work of the expert team at the Chancellery of the Prime Minister. He is responsible for analyses and advice on tax, business and financial issues. He is also involved in matters concerning international relations. |
Year of birth: 1985 |
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Piotr Sadownik – Member of the Bank’s 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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Graduated from the University of Warsaw’s Faculty of Law and the University of Paris II Pantheon-Assas. Admitted to the Warsaw Bar in 1996. In 1993, he started his professional career in the Warsaw office of the law firm Gide Loyrette Nouel. Currently, he is a partner in the Warsaw office of Gide Loyrette Nouel where he heads the Litigation and Arbitration, Infrastructural Projects and Public Law, and Intellectual Property departments. He represents the law firm’s customers in court litigation and advises both Polish companies and international investors on infrastructure and public procurement projects. He also specializes in intellectual property law. He is recommended by Legal 500 EMEA and Chambers Europe in court litigation. Legal 500 also recommends him for energy and natural resources as well as intellectual property. Award winner of the “Client Choice 2015” competition organized by Globe Business Publishing in the litigation category. Vice-President of the Amicable Court at the General Counsel to the Republic of Poland (Prokuratoria Generalna RP). |
Year of birth: 1968 |
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Principles of the functioning of the Supervisory Board
The Supervisory Board functions based on generally applicable legal regulations, the Bank’s 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.
The Supervisory Board adopts resolutions by an absolute majority of votes, in the presence of at least half of the Members of the Supervisory Board, including the Chair or Deputy Chair of the Supervisory Board, except for resolutions specified in the Articles of Association of the Bank concerning those matters that are to be accepted by, apart from the quorum indicated, a qualified majority of 2/3 of the total votes. Those members of the Supervisory Board to whom the given voted matter relates are excluded from the vote.
The work of the Supervisory Board is managed by the Chair, and in his absence – by the Deputy Chair. The Chair represents the Supervisory Board before all other authorities of PKO Bank Polski S.A., supervisory authorities and other persons.
Meetings of the Supervisory Board may be convened with the possibility of participating in the meeting via remote communication channels, including adopting resolutions, 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 adopt resolutions outside the meeting in writing (by circulation) or using means of direct remote communication, in particular e-mail.
In 2020, the Bank’s Supervisory Board held 8 meetings and 2 teleconferences by means of direct remote communications and adopted 154 resolutions in total.
Competences of the Supervisory Board
In addition to authorizations 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 Bank’s strategy and annual financial plan passed by the Management Board;
• approving the overall risk tolerance level determined by the Management Board;
• appointing an audit firm to conduct the audit and 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 a Member of the Management Board, the Supervisory Board and a person holding a managerial position in the Bank, and to entities related by capital or organization with these persons;
• appointing and dismissing the President of the Management Board, Vice-Presidents and other Members of the Management Board, as well as suspending Members of the Management Board and delegating Members of the Supervisory Board to temporarily carry out the duties of Members of the Management Board who have been dismissed, resigned or are unable to perform their duties for other reasons;
• approving strategies, policies and rules adopted by the Management Board, such as: Risk management strategy, Bank management strategy, Dividend policy, Remuneration policy, Policy for internal capital assessment and capital management, and review of strategies and procedures for internal capital assessment and capital management, Compliance policy of the Bank, Internal control rules, 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 department regulations;
• giving its prior consent for actions fulfilling statutory criteria, including, among other things, disposal of non-current assets (intangible assets, property, plant and equipment, long-term investments), taking up, purchase or sale of shares in another company, subscription or purchase of bonds convertible into shares, PKO Bank Polski S. A. concluding a material agreement with a shareholder holding at least 5% of the total number of votes in the Bank or with an affiliated entity, the Bank concluding an agreement for legal services, marketing services, public relations and social communication services and management services, donation agreements and debt release agreements;
• applying to the Polish Financial Supervision Authority for consent to 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 to 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;
• evaluation of the functioning of the Bank’s remuneration policy and submission of a report in this regard to the General Shareholders’ Meeting;
• opinion on the application of “Principles of corporate governance for supervised institutions” by the Bank;
• granting approval for opening or closing a branch abroad.
Committees of the Supervisory Board
In accordance with the Bank’s Articles of Association, 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 Supervisory Board has appointed the following committees:
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 effectiveness of the internal control system, including with respect to financial reporting; • monitoring the effectiveness of the risk management system, including with respect to financial reporting, in particular by analysing 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 Audit Oversight Commission, as referred to in the Act on registered auditors, resulting from inspections carried out in the audit firm; • controlling and monitoring the independence of the statutory auditor and the audit firm carrying out the audit of the financial statements, in particular when the audit firm 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 what the role of the Committee was in the audit process; • assessing the independence of the registered auditor and consenting to the provision of permissible services other than the audit to the Bank and the Bank’s Group by the audit company, its related entities and a member of the audit company’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 the audit by the audit company performing the audit, its related entities and a member of the audit company’s network, and providing the Supervisory Board with recommendations as to the adopting the policy; • developing a procedure for appointing the audit company to conduct an audit and providing the Supervisory Board with recommendations with regard to adopting the policy; • submitting to the Supervisory Board recommendations with regard to the appointment of the audit company to conduct the audit; • submitting to the Supervisory Board recommendations aimed at ensuring fairness of the Bank’s financial reporting process; • submitting to the Supervisory Board recommendations 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 Polish Financial Supervision Authority, the audit firm, key auditor and the Bank, and recommending their adoption to the Supervisory Board. |
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Composition of the Committee in 2020
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Independence criteria and competences
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As part of the assessment of the suitability of candidates for membership of the Supervisory Board made in connection with their election for a new term of office (in accordance with the Policy on the assessment of the suitability of candidates and members of the Supervisory Board of Powszechna Kasa Oszczędności Bank Polski S.A.), an assessment of candidates in terms of meeting the requirements necessary to serve on the Audit Committee of the Supervisory Board (Audit Committee) was conducted. According to the assessment, the appointed members of the Audit Committee jointly meet the conditions of independence and qualifications in accordance with the requirements of the Act on Statutory Auditors, Audit Firms and Public Supervision of 11 May 2017. Of which: • Chair of the Audit Committee Grażyna Ciurzyńska and Mariusz Andrzejewski, Grzegorz Chłopek and Rafał Kos, i.e. the majority of the Audit Committee members are independent; • members having the most adequate knowledge and experience in the scope of the Audit Committee’s activity, including competences in accounting and auditing of financial statements are: – Mariusz Andrzejewski – competences confirmed by a Ph.D. in economics and qualifications of a statutory 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 statutory auditor; – Grzegorz Chłopek – competences confirmed by the knowledge gained within the educational programme connected with the title of Chartered Financial Analyst and the title of stockbroker; additionally, skills resulting from professional experience connected with managing a Universal Pension Fund Management Company; • 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). The General Shareholders’ Meeting performs the assessment of the suitability of the members of the Supervisory Board – including the assessment of their independence, in accordance with the aforementioned Policy at the time of selecting the candidates for the Supervisory Board members and periodically once a year. |
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Number of meetings |
In 2020, there were 8 meetings of the Audit Committee of the Supervisory Board and 1 teleconference.
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Nominations and Remuneration Committee |
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Tasks |
• Expressing opinions on monitoring the Remuneration Policy adopted by the Bank 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 an annual review of the Remuneration Policy and presenting the results of the review to the Supervisory Board; • presenting to the Supervisory Board proposals of principles for remunerating Members of the Management Board; • evaluating goals pursued and achieved by the Members of the Management Board; • assessing tools and systems adopted to guarantee that the remuneration system in the Bank’s Group properly account for all types of risk, liquidity and equity levels and that the Remuneration Policy be compliant with the proper and effective risk management principles and support such management, and was consistent with the business strategy, goals, culture and corporate values, and the long-term interests of the Bank’s Group; • supervising fixed remuneration of the leader of the Bank’s compliance unit; • providing opinions and monitoring variable remuneration components of leaders of the legal, compliance, internal audit, risk management and human resources units; • presenting opinions to the Supervisory Board on the settlement of MbO targets for Members of the Management Board approved by the Supervisory Board; • 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 in the composition of the Management Board; • recommending candidates to the Management Board to the Supervisory Board; • recommending the scope of duties for the candidate to the Management Board specified by the Supervisory Board; and the requirements concerning the knowledge and competences and the expected involvement in terms of the amount of time necessary to perform the function; • recommending the target level to be defined by the Supervisory Board for the representation of underrepresented gender in the Management Board; • periodically (at least once a year) assessing the structure, size, composition and effectiveness of the Management Board’s operation, and recommending respective changes to the Supervisory Board; • periodically (at least once a year) assessing the knowledge, competences and experience of the Management Board as a whole, and of the individual Members of the Board, 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 and submitting respective recommendations to the Management Board. |
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Composition of the Committee in 2020
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Number of meetings |
In 2020, there were 7 meetings of the Nominations and Remuneration Committee of the Supervisory Board and 1 teleconference. |
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Risk Committee |
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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’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; • 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 price of assets and liabilities offered to Customers fully envision the Bank’s business model and its strategy in terms of risk, and indicating to the Management Board directions for correcting actions; • assessing the risks related to the 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 authorities and proxies of the Bank; • ongoing monitoring of the risk management system and providing the Supervisory Board with information on the results of this monitoring; • expressing opinions on the Bank’s information on the risk management strategy and risk management system, addressed to the public; • conducting an annual review of the Remuneration Policy of the Bank and the Bank’s Group; • ongoing monitoring of the implementation of the risk management strategy and providing recommendations to the Supervisory Board; • 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 connected with appropriate implementation of the respective measures; • performance of other tasks specified by the Supervisory Board with regard to risk management in the Bank. |
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Composition of the Committee in 2020 |
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Number of meetings |
In 2020, there were 5 meetings of the Risk Committee of the Supervisory Board and 1 teleconference. |
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Strategy Committee |
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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 analysing 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 consistency with the binding strategy of the Bank; • performance of other tasks specified by the Supervisory Board with regard to the implementation of strategic goals and key projects of the Bank. |
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Composition of the Committee in 2020
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Number of meetings |
In 2020, there were 2 meetings of the Strategy Committee of the Supervisory Board and 1 teleconference. |
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The Management Board of PKO Bank Polski S.A. (the Bank’s Management Board or the Management Board) consists of 3 to 9 Members. The Board Members are appointed for a joint three-year term of office. 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.
As at 31 December 2020, the Management Board consisted of 9 persons.
Changes in the composition of the Management Board in 2020
On 27 May 2020, the Bank’ Supervisory Board adopted resolutions appointing the existing members of the Management Board for another joint term of office of the Management Board starting on 3 July 2020, including Zbigniew Jagiełło as President of the Bank’s Management Board and other persons to the positions of Vice Presidents of the Bank’s Management Board.
The nominations of the Management Board Members appointed for the next term of office were assessed for suitability arising from the Policy regarding the suitability of Members of the Management Board and persons holding the most important positions in the Bank, as well as assessing their suitability in companies of the Bank’s Group. As a result of the above assessment, it was confirmed that:
• each of the candidates for Member of the Management Board met the individual suitability requirements;
• the candidates jointly met the collective suitability requirements.
Composition of the Management of PKO Bank Polski S.A. as at 31 December 2020
Zbigniew Jagiełło – President of the Management Board |
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Member of the Management Board since 1 October 2009
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He has been working in banking and finance for over twenty-five years. Before that, for almost 9 years he was President of the Management Board of Pioneer Pekao TFI S.A. Within the global structure of Pioneer Investments he supervised distribution in the CEE region. In the second half of the 1990s, as Vice President of the Management Board, he participated in the process of establishing PKO/Credit Suisse TFI S.A. During more than a decade of working at PKO Bank Polski S.A., he was responsible, among other things, for: • successfully steering PKO Bank Polski S.A. through a critical period of turmoil on the international financial markets, while strengthening the Bank’s position as leader in terms of assets, equity and earnings in Poland and the CEE region; • developing and implementing the strategy for the years 2010-2012, 2013-2015, 2016-2019 and 2020-2022, which resulted in a significant increase in assets and strong business efficiency gains as well as in increased interest in the company among domestic and international investors; • adapting the Bank to the requirements of an increasingly competitive financial market, creating and making available advanced IT solutions on a large scale, changing the Bank into a technology company with a banking licence – PKO Bank of the Future; • involving the Bank in the battle against COVID-19, ensuring security to the Bank’s Customers and employees, and supporting hospitals and medical staff. He is actively involved in the development and promotion of high standards of operations of the financial market in Poland. He is a member of the Board of the Polish Bank Association and of the prestigious Institute International D’Etudes Bancaires, which brings together the international banking community. His previous functions included, among other things, that of Chairman of the Chamber of Fund and Asset Management. He graduated from the Wrocław University of Technology’s Faculty of Computer Science and Management. At present, he is a member of the Court of Governors of the Wrocław University of Technology. He also completed Postgraduate Management Studies at the Gdańsk Foundation for Management Development and the University of Gdansk, with an Executive MBA certified by the Rotterdam School of Management, Erasmus University. He was awarded the Officer’s Cross of the Order of Polonia Restituta by the President of the Republic of Poland, and the Social Solidarity Medal for promoting the idea of corporate social responsibility. He was Chairman of the Programme Council of the PKO Bank Polski’s Foundation that was established on his initiative, in 2010. Recipient of several awards and titles. He was selected CEO of the Year by the stock exchange journal Parkiet in 2011. He was awarded the Wektor 2011 and 2018 prize granted by the Polish Employers’ Committee, and the Golden Banker prize in the Personality of the Year 2011 category. He was a four-time recipient of the Manager of the Year 2011, 2014, 2016 and 2019 awards in a competition organized by Gazeta Bankowa. In 2012, 2014 and 2015, Bloomberg Businessweek Polska singled him out as one of the Top 20 Managers in the Polish Economy. He was honoured by BANK – financial monthly – with the title of “Innovator of the Banking Sector 2012.” He also received the special award of “Man of the Year 2013” from Brief monthly and “Visionary 2013” from Dziennik Gazeta Prawna. In 2014, he received an honourable mention from Gazeta Finansowa as one of “25 Most Valuable Managers in the World of Finance.” In 2015, he received a medal from the Polish Chamber of Commerce (KIG) for supporting the development of economic self-government and entrepreneurship, and he was awarded an eDucat statuette by the Foundation for the Development of Non-cash Payments for his vision of the development of non-cash payments and the effective building of a coalition for the mobile payment standard. The industry service Mediarun.com recognized him as the most pro-marketing president, and the chancellery of Responsible Business Awards awarded him the title of Outstanding CEO Philanthropist. In 2017, he was awarded the Lesław A. Paga Prize for his contribution to the development of the Polish economy and promotion of high standards of operations of the financial market in Poland. In 2019, he was granted the titles of Personality of the Year in the Golden Laurel competition organized by Super Biznes and Finance Visionary in the “Banking and Insurance Leaders” competition; he was also granted the Bulls and Bears award by the stock exchange journal Parkiet and he was elected the most valuable CEO among the managers of listed companies in the ranking published by Rzeczpospolita daily. In 2020, he was awarded in the poll of Gazeta Finansowa Financier of the Year 2019, honoured with the Economic Award of the Warsaw School of Economics and by the Financial Monthly BANK (IT@Bank ranking) with the award of Market Visionary 2020. He was also the winner of the BrandMe CEO plebiscite organized by Forbes monthly under the slogan “Leader in times of (forced) transformation” for the style and strategy of management and their effects, respected values and courage in taking risks and making unobvious choices. Member of the Supervisory Board of PKO Leasing S.A. (from April 2021). |
Year of birth: 1964 |
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Functions performed in Committees as at 31 December 2020 |
IT Security Committee (Chair); Risk Committee (Chair); Strategy Committee (Chair); Transformation Committee (Chair); Assets and Liabilities Management Committee (Chair). |
Rafał Antczak – Vice-President of the Management Board of the Bank in charge of the Enterprise Banking, Analyses and Administration Area |
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Member of the Management Board since 2 July 2017
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He graduated from the Faculty of Economic Sciences at the University of Warsaw – economic cybernetics and computer science (1994) – and a Comprehensive Course in Market Economics at the Joint Vienna Institute (1997). Economist and manager with more than 25 years of experience in international and domestic projects for companies in the financial and real economy sectors, governments and research institutions. From October 2008 to January 2017, he was a Member of the Management Board of Deloitte Consulting S.A., responsible, among other things, for research, micro and macroeconomic projections, strategic and business consulting. From 2006 to 2008, he was Managing Director and Chief Economist of the PZU Group and Member of the Supervisory Boards of PZU Asset Management, PZU-Ukraina, PZU-Ukraina Ubezpieczenia na Życie and UFG. from 2006 to 2008, lecturer at the Faculty of Management and the MBA Programme of the University of Warsaw. In the years 1994-2006, economist with the Centre for Social and Economic Research CASE Science Foundation. Author of many publications on economics and market research. Member of the supervisory boards of: Centralny Port Komunikacyjny sp. z o.o. (from December 2018), PKO Faktoring S.A. (from 2018), PKO Życie Towarzystwo Ubezpieczeń S.A. (from April 2021) and PKO Towarzystwo Ubezpieczeń S.A. (from April 2021). |
Year of birth: 1970 |
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Functions performed in Committees as at 31 December 2020 |
The Bank’s Credit Committee (Member); Strategy Committee (Member). |
Rafał Kozłowski – Vice-President of the Management Board of the Bank in charge of the Finance and Accounting Area |
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Member of the Management Board since 1 January 2018
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Associated with PKO Bank Polski S.A. since 2012, where he was responsible, among other things, for launching a mortgage bank. Since the establishment of PKO Bank Hipoteczny S.A., as President of its Management Board he was responsible for the development of the institution and quickly guided it to the top of the list of the largest mortgage banks in Poland. Under his management the bank quickly became the largest issuer of mortgage-covered bonds on the Polish market, and conducted the largest issues of Polish mortgage-covered bonds abroad. Since 2018, he has served as Vice President of the Bank’s Management Board responsible for the Finance and Accounting Area. He comes from Łomża. He graduated from the Warsaw School of Economics (faculty: Quantitative Methods and Information Systems) and the University of Warsaw and the University of Illinois, where in 2008 he completed his Executive MBA studies. He has been in the banking business since 1995. He worked in managerial positions in Powszechny Bank Kredytowy S.A., Bank BPHPBK S.A., Bank Pekao S.A. and PKO Bank Polski S.A. He was also Finance Director and Member of the Management Board in the Corporation of European Pharmaceutical Distributors N.V. in Amsterdam, where he managed an international holding of 160 companies in Poland, Lithuania and the United Kingdom. In the course of his professional career he engaged in the construction of banking strategies and budgets and their monitoring, preparing financial analyses and stock exchange reports, and preparing public offerings and acquisitions of foreign entities. He is a top class specialist in controlling, accounting and reporting, finance risk and mortgage banking. He is a member of the Supervisory Board of Bank Pocztowy S.A. and Operator Chmury Krajowej sp. z o.o. |
Year of birth: 1974 |
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Functions performed in Committees as at 31 December 2020 |
Data Quality Committee (Deputy Chair); Risk Committee (Member); Operational Risk Committee (Member); Strategy Committee (Member); Transformation Committee (Member); Assets and Liabilities Management Committee (Member). |
Maks Kraczkowski – Vice-President of the Management Board of the Bank in charge of the International and Transaction Banking and Cooperation with Local Government Authorities and Government Agencies Areas |
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Member of the Management Board since 4 July 2016
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He graduated from the University of Warsaw’s Faculty of Law and Administration. He obtained an Executive MBA diploma in the Management University (Wyższa Szkoła Menadżerska) in Warsaw and completed the Advanced Management Program 194 at the Harvard Business School. He was Member of the Sejm of the 5th, 6th, 7th and 8th term. As an MP he mainly engaged in economic and financial market topics. He was Chair and Deputy Chair of the Economic Committee of the Sejm (2005-2006, 2007-2015) and member of the Parliamentary Legislation Committee (2005-2011, 2015-2016). In the years 2015-2016 he was Deputy Chair of the Parliamentary Committee for Economy and Development. He has many years of experience in establishing laws and knowledge of Polish and international business matters. Currently he is Chairman of the Supervisory Board of KREDOBANK S.A. Due to the changes in organizational structures, since 2 September 2019 he has also been responsible for supervising the operations of KREDOBANK S.A. |
Year of birth: 1979 |
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Functions performed in Committees as at 31 December 2020 |
The Bank’s Credit Committee (Member); Strategy Committee (Member). |
Mieczysław Król – Vice-President of the Management Board of the Bank in charge of the Operations Area |
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Member of the Management Board since 6 June 2016
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A graduate of the Faculty of Finance and Statistics of the Warsaw School of Economics and the International School of Management. He completed his post-graduate studies at the Warsaw School of Economics (Collegium of Management and Finance). He has been working in banking and finance for over thirty years. He has worked, among other things, at the National Bank of Poland. Associated with PKO Bank Polski S.A. for many years; from 2006 to 2010 he was Director of the Audit Department and, at the same time, Chairman of the Audit Committee of KREDOBANK S.A. Then, from 2011 to 2015, he was Director of the Audit Department at Bank Ochrony Środowiska S.A. in Warsaw. In 2006-2007, he combined his work at PKO Bank Polski S.A. with his function on the Supervisory Board of Centrum Finansowo-Bankowe in Warsaw. In 2007, he was Chairman of the Supervisory Board of Zakłady Chemiczne Organika Sarzyna in Nowa Sarzyna and of Zakłady Konserwacji Zabytków. He has lectured at the Academy of Business Activity in Warsaw. He has authored many articles about banking and economics. In 1998-2002, he was a councillor for the District [powiat] of Warsaw. He was Deputy Chairman of the Budget Committee and a member of the Audit Committee. In 2002-2014, he was a councillor at the City Council of the Capital City of Warsaw, where he was, among other things, Chairman and then Deputy Chairman of the Budget and Finance Commission and a member of the Health Commission. As part of his social activities, he managed the Social Board at the Father Jerzy Popiełuszko Hospital in Warsaw – Bielany. He is a member of the Supervisory Boards of PKO Życie Towarzystwo Ubezpieczeń S.A. PKO Towarzystwo Ubezpieczeń S.A. |
Year of birth: 1958 |
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Functions performed in Committees as at 31 December 2020 |
Operational Risk Committee (Member); Strategy Committee (Member). |
Adam Marciniak – Vice-President of the Management Board of the Bank in charge of the IT Area |
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Member of the Management Board since 1 October 2017
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He graduated from the Military Technical Academy in Warsaw, Warsaw University of Technology and the Warsaw Management University. He has worked for the PKO Bank Polski S.A. Group since 2011. In 2011-2017 Director of the Application Development and Maintenance Division of PKO Bank Polski S.A.; from 2011 to 2014, Vice-President of Inteligo Financial Services S.A.; until 2017, member of the Supervisory Board of PKO Bank Hipoteczny S.A., and currently he is Chairman of the Supervisory Boards of: PKO BP Finat sp. z o.o. and Operator Chmury Krajowej sp. z o.o. He also gained experience in the financial sector as the Operating Director of the Electronic Channels Development and Management Office in Bank Pekao S.A. and the Director of the IT Department in Centralny Dom Maklerski Pekao S.A. He is Chair of the Executive Committee of the Electronic Banking Council of the Polish Bank Association. At the turn of 2015/2016 he co-created the Bankowe Centrum Cyberbezpieczenstwa (Banking Cyber Security Centre). He has won numerous industry awards and honours, including the title of Ambassador for the Electronic Economy at the 10th Congress of Electronic Economy, and the CIO Diamond awarded by the jury of the 2015 CIO of the Year competition of IDG Poland S.A.. He won the special title of “Banking Market Innovator 2015” of Miesięcznik Finansowy BANK and the Nicholas Copernicus Medal awarded by the Polish Bank Association in 2016. He also won the title of “Banking Sector Digitization Leader 2018” awarded by the Members of the Banking Technology Forum 2018. In 2020, he received the Golden Herold Award – the Program Council of the 26th ICT Forum appreciated his long-standing activity and commitment in the area of implementation and development of ICT technologies supporting the construction of e-state. |
Year of birth: 1979 |
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Functions performed in Committees as at 31 December 2020 |
IT Architecture Committee (Chair); Data Quality Committee (Chair); IT Security Committee (Deputy Chair); Operational Risk Committee (Deputy Chair); Risk Committee (Member); Strategy Committee (Member); Transformation Committee (Member). |
Piotr Mazur – Vice-President of the Management Board of the Bank in charge of the Risk Management Area |
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Member of the Management Board since 8 January 2013
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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 Polish Financial Supervision Authority granted on 8 January 2013. He graduated from the Faculty of Organization and Management at the Academy of Economics in Wrocław. He has over 20 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. He is 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, the optimization of debt collection and restructuring processes, and cooperated with regulators in Poland and abroad. He started his professional career in 1991 in 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., he joined 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 Director of the 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 Chairman of the Credit Committee at BZ WBK S.A., Deputy Chairman of the Credit Risk Forum, and Deputy Chairman of the Risk Model Forum. |
Year of birth: 1966 |
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Functions performed in Committees as at 31 December 2020 |
The Bank’s Credit Committee (Chair); Operational Risk Committee (Chair); Risk Committee (Deputy Chair); IT Security Committee (Member); Data Quality Committee (Member); Strategy Committee (Member); Assets and Liabilities Management Committee (Member). |
Jakub Papierski – Vice-President of the Management Board of the Bank in charge of the Corporate and Investment Banking Area |
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Member of the Management Board since 22 March 2010
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He graduated from the Warsaw School of Economics. He has as a Chartered Financial Analyst (CFA) licence. His professional experience in the 1990s includes working for investment banks and consulting firms Creditanstalt Investment Bank and Deutsche Morgan Grenfell/Deutsche Bank Research, where he covered the banking sector in Central and Eastern Europe. From November 2001 to September 2003, he worked for Bank Pekao S.A. as Executive Director of the Financial Division, directly supervising the financial and fiscal policy of the bank, management information systems, as well as the treasury and management of investment portfolios; moreover, he was a member of the Assets and Liabilities Management Committee in the Bank. In October 2003, he was appointed President of the Management Board of Centralny Dom Maklerski Pekao S.A. In September 2006, he also took up the position of Deputy Chairman of the Supervisory Board of Pioneer Pekao TFI S.A. From May 2009, he was acting President of the Management Board of Allianz Bank Polska S.A. and in October 2009 he became President of the Management Board. From 2005 to 2009, he was Chairman of the Programme Council of the Capital Market Leader Academy established at the Lesław Paga Foundation and is now a member of the Programme Council. Member of the Council of the Industrial History Museum in Opatówek. He is a member of the supervisory boards of PKO Leasing S.A., PKO BP BANKOWY PTE S.A., PKO TFI S.A. and KREDOBANK S.A. |
Year of birth: 1972 |
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Functions performed in Committees as at 31 December 2020 |
The Bank’s Credit Committee (Member); Risk Committee (Member); Strategy Committee (Member). Assets and Liabilities Management Committee (Member). |
Jan Emeryk Rościszewski – Vice-President of the Management Board of the Bank in charge of the Retail Market Area |
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Member of the Management Board since 18 July 2016
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A graduate of the Faculty of Humanities of the Catholic University of Lublin and the Institut d’Etudes Politiques de Paris. He also holds an Executive MBA diploma and an insurance broker licence. He completed various training courses in finance, insurance and management in France, Great Britain and Poland. In 1990-1991 he worked in France for AXA Banque and AXA International, and in 1991-1993 for Groupe Azur. From 1993 to 1996, he was a Member of the Management Board of TU Azur Ostoja S.A. and TUnŻ Azur Życie S.A. Since 1996 he has worked for BNP Paribas. In 1998-2016, he managed – as President of the Management Board – TUnŻ Cardif Polska S.A. Simultaneously, in 2001-2016 he held the position of Director General of Cardif Assurance Risques Divers in Poland. He also performed the function of Deputy Chair of the Audit Committee of the Polish Chamber of Insurance. He was the Chairman of the Supervisory Board (SB) of Pocztylion-Arka PTE S.A. (1998-2016), Deputy Chairman of the SB of Pocztowa Agencja Usług Finansowych S.A. (2000-2014), member of the Audit Committee of the Polish Insurance Association (2012-2016), member of the SB of BBI Development NFI S.A. (2011-2018), member of the SB of: PKO Leasing S.A. (2016-2018), PKO Faktoring S.A. (2017-2018) and PKO Bank Hipoteczny S.A. (2017-2019) and Deputy Chairman of the SB of Bank Pocztowy S.A. (2017- July 2020). Until April 2021, he was a Chair of the SB in: PKO TFI S.A., PKO Towarzystwo Ubezpieczeń S.A. and PKO Życie Towarzystwo Ubezpieczeń S.A. Currently, he is a member of the Supervisory Board of PKO Bank Hipoteczny S.A. and Grupa Żywiec S.A. From 1981 to 1983, he was active in the charity organization of the Primate’s Committee for Help to People Deprived of Liberty. He is a Knight of Honour and Devotion of the Sovereign Military Order of Malta, and has held the position of hospitaller of the Polish Association of the Sovereign Military Order of Malta. He is a member of the Polish Historical Society and the Warsaw Mountaineering Club. He was awarded the Officer’s Cross of the Order of Polonia Restituta and Bene Merito of the Ministry of International Affairs for strengthening Poland’s position on the international arena. He is author and co-author of historical books and articles on finance and management. |
Year of birth: 1965 |
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Functions performed in Committees as at 31 December 2020 |
The Bank’s Credit Committee (Member); Risk Committee (Member); Strategy Committee (Member). |
Principles of operation of the Management Board
The Management Board makes decisions in the form of resolutions during a meeting or outside a meeting by circulation (in writing). The Management Board may make decisions using means of direct remote communication, in particular, by e-mail.
In 2020, the Bank’s Management Board held 58 meetings and passed 609 resolutions.
Declarations on behalf of the Bank are 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 2020, there were 5 proxies in the Bank. No proxy was cancelled or granted in 2020.
Competences of the Management Board
In accordance with § 20 clause 1 of the Articles of Association of PKO Bank Polski S.A., the competences of the Management Board include all matters related to managing the affairs of PKO Bank Polski S.A., including purchase and disposal of real estate, share in real estate or perpetual usufruct, 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 provisions of the Articles of Association of PKO Bank Polski S.A.
Making decisions on incurring liabilities or disposal of assets, the total value of which in respect of one entity exceeds 5% of equity, remains within the competences of the Management Board, unless it is reserved for the General Shareholders’ Meeting or the Supervisory Board.
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 made by the General Shareholders’ Meeting.
Resolutions of the Management Board are required with respect to all matters exceeding the scope of the Bank’s ordinary business. 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. Members of the Management Board participate in managing the activities of the Bank in line with the principles set out in the Rules of the Management Board and the Organizational Rules of the Bank. Members of the Management Board supervise the areas of activities allocated to them, and take decisions on matters of ordinary management within the areas supervised by them.
Committees of the Management Board
As at the end of 2020, the following standing committees functioned in the Bank with the participation of Members of the Management Board:
Assets and Liabilities Management Committee of PKO Bank Polski S.A. |
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Purpose |
Managing assets and liabilities by influencing the structure of the balance sheet of PKO Bank Polski S.A. 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 |
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Purpose |
Setting strategic directions and tasks with respect to banking risk taking into account the Bank’s strategy, macroeconomic situation and regulatory environment, analysing 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 Strategy of the Bank; • 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 of the Bank |
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Purpose |
Management of credit risk occurring when making 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 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 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 |
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Purpose |
Effective management of operational risk, improving the safety of the Bank’s operating activities. |
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; • Coordinating 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. |
Transformation Committee |
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Purpose |
Ensure effective transformation of the Bank in line with the development direction, including ensuring 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, including creating autonomous project teams; • Making decisions on the implementation of and changes to strategic programmes and projects, as well as decisions pertaining to material costs and other operating costs; • 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; • Solving disputes within the area of competences of the Committee, on lower decision-making levels. |
Strategy Committee |
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Purpose |
Oversight of the strategic planning process and management of the Bank’s strategy. |
Tasks |
• Managing the activities related to strategy development and implementation; • Approving the strategy development schedule and the strategy implementation schedule; • Making key decisions necessary to the implementation of the strategy, including the implementation of strategic initiatives; • Solving potential disputes arising when working on individual strategic initiatives. |
IT Architecture Committee |
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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 in the Bank; • Developing target architecture model; • Initiating activities aimed at implementing the target architecture model. |
IT Security Committee |
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Purpose |
Increasing the effectiveness of supervision and control over the IT system safety in PKO Bank Polski S.A. (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 |
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Purpose |
Setting strategic directions of the activities relating to data quality management and data architecture in the Bank in the context of the Data Management System (DMS), oversight of DMS 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; • recommendations to organizational units of the Bank regarding data management activities; • detailed data management solutions; • assessing the effectiveness of the operations of the DMS, determining priority measures as part of the DMS, and drawing up periodical action plans; • allocation of the ownership of data groups; • solving disputes pertaining to the DMS at the request of the Committee members; • approving – especially in cases justified by the need to ensure the continuity of the Bank’s operations – deviations from data quality criteria and rules as well as data quality solutions standards. |
In addition to the aforementioned functions, Members of the Bank’s Management Board were also members of non-standing committees, including steering committees established within the framework of projects. PKO Bank Polski S.A. also has an Investment Committee and a Sponsorship Committee. Members of the Management Board are not members of these committees.
The table below presents the shares in the Bank held by Members of the Management Board as at 31 December 2020. The nominal value of each share is PLN 1.
Table 23. Shares held in PKO Bank Polski S.A.
Name and surname |
Number of shares |
Purchase |
Disposal |
Number of shares |
Management Board of the Bank |
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|
|
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Zbigniew Jagiełło, President of the Management Board |
14 000 |
3 000 |
0 |
11 000 |
Rafał Antczak, Vice-President of the Management Board |
2 000 |
2 000 |
0 |
0 |
Rafał Kozłowski, Vice-President of the Management Board |
2 200 |
2 200 |
0 |
0 |
Maks Kraczkowski, Vice-President of the Management Board |
0 |
0 |
0 |
0 |
Mieczysław Król, Vice-President of the Management Board |
6 000 |
1 000 |
0 |
5 000 |
Adam Marciniak, Vice-President of the Management Board |
2 000 |
2 000 |
0 |
0 |
Piotr Mazur, Vice-President of the Management Board |
8 000 |
3 500 |
0 |
4 500 |
Jakub Papierski, Vice-President of the Management Board |
5 000 |
2 000 |
0 |
3 000 |
Jan Emeryk Rościszewski, Vice-President of the Management Board |
0 |
0 |
0 |
0 |
The Supervisory Board members did not hold any shares of PKO Bank Polski S.A. as at 31 December 2020 and as at 31 December 2019.
Due to potential or actual access to confidential information, 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 for 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 2020 and 31 December 2019, the Members of the Management Board and Supervisory Board did not hold shares in companies related to PKO Bank Polski S.A., i.e. its subsidiaries, joint ventures and associates.
11.4 Diversity policy
Principles of equal treatment, anti-discrimination and respect for human rights.
Diversity initiatives
Diversity in the composition of the Management and Supervisory Boards
Promoting diversity is present in many aspects of the Bank’s and the Group’s activities. It assumes, among other things, respect for others, equal treatment and using the potential of employees. Diversity means that people are important irrespective of any differences between them, such as their gender, age, health, sexual orientation, religion, marital status or country of origin. As we build teams, we understand that diversity is an asset to both innovation and smooth operations.
We aim to ensure, promote and disseminate diversity in the Bank and the entire Bank’s Group. We take care that diversity as a value, but also as a practice, is present in our organizational culture, initiatives and actions taken, as well as in the Bank’s relevant policies, regulations and processes.
Objectives and commitments
The obligation of equal treatment in employment is a fundamental principle at the level of policies, regulations and processes developed in the Bank. Therefore, in the Bank’s internal acts adopted at the level of the Management Board there are crucial commitments pertaining to:
• counteracting discrimination in employment and non-discrimination of employees, in particular due to gender, age, disability, race, religion, nationality, political views, trade union membership, ethnic origin, denomination or sexual orientation or due to employment for a fixed or indefinite period or on a full-time or part-time basis.
• basing the principles applied in the Bank on objective criteria, ensuring transparent rules for employees, e.g. in recruitment processes, employee development, access to training and access to employee benefits;
• guaranteeing equal treatment of employees performing the same kind of work or work of equal value,
• applying objective and fair criteria of performance appraisal.
The above commitments are based i.a. on Conventions of the International Labour Organization (Conventions No. 100 and 111).
Methods of implementing the objectives and commitments
The Bank introduced internal regulations, including the Bank’s Code of Ethics, in which it indicates and promotes the desirable values. In particular, the Bank:
• identified the important values, as well as the behavioural attitudes promoted in relations with employees, with Customers, in business activities and in relations with the Bank’s environment;
• clearly and precisely defined powers and ways of proceeding in the area of counteracting discrimination and bullying at work, including ways of reporting violations;
• created mechanisms for reporting, including anonymous reporting and explaining any irregularities noticed by employees in the workplace
• monitored and regularly reports (also to the relevant Member of the Bank’s Management Board) instances of violating the adopted values and principles.
Additionally, the Bank:
• supports employees in integration in the company and facilitates the creation of interest groups;
• ensures freedom of speech by organizing publicly available forums, provided that ethical principles and culture of speech are properly respected, and by organizing chats with key managers of the Bank;
• takes educational initiatives to promote the Bank’s values (also among companies of the Bank’s Group and cooperating entities), as well as to counteract discrimination and bullying, among other things, by organizing training sessions, workshops and information campaigns, and by establishing the institution of Ethics Ambassadors;
• periodically initiates training courses for managers on effective communication and feedback, including the diversity aspect.
In order to guarantee equal treatment of employees performing the same kind of work or work of equal value, the Bank applies:
• objective principles of jobs evaluation based on an international methodology, with the participation of independent consulting companies and related guarantees of remuneration levels included in the Company Collective Labour Agreement;
• monitoring remuneration in specific professional groups, including a breakdown by gender, the results of which are reported to the Bank’s management;
• cyclical remuneration reviews aimed at diagnosing and counteracting differences in remuneration resulting from other than objective criteria.
Policy on bullying and discrimination
The Bank is strongly opposing any forms of discrimination and intolerance that contrast with the organization’s values, and promotes attitudes based on mutual trust among the employees. Any conduct that can suggest the presence of bullying is unacceptable.
The Bank’s policy regarding bullying and discrimination is regulated in the internal rules:
• the Bank’s Work Rules;
• the Principles for counteracting bullying and discrimination and the procedure for handling complaints concerning violation of employee rights.
The Bank’s Code of Ethics also contains significant provisions concerning the attitudes and values promoted among the employees.
The Bank has internal regulations in place for counteracting bullying and discrimination. These principles guarantee counteracting undesirable phenomena in the employee relations and specify how to react to situations of interpersonal conflicts. Based on these principles, the Bank’s employee may without worrying about the consequences report a complaint about any breach of employee rights defined in the legal acts or internal regulations. Moreover, an employee is entitled to additional support in the process of clarifying the complaint. He/she can indicate a representative of a trade union organization or an employee representative appointed by the internal regulations of the Bank – who will participate in meetings with the employee or submit opinions on the validity of the claim. Ongoing support to the employees is offered by the HR Contact Centre. Thanks to that the employees may obtain up to date information about the way to report complaints and anonymous notifications of breaches of employee rights.
Complaints concerning widely defined breaches of employee rights are reviewed individually, therefore, optimal review deadlines are set for them separately, which enables formulating appropriate conclusions and recommendations or taking appropriate additional action or HR-related decisions. In the course of verifying the complaints various methods are applied (for example, anonymous surveys, detailed interviews with employees, verification of fluctuation ratios and other HR data). Each time, when deciding what measures should be taken, the Bank takes into account care for ensuring the highest possible impartiality of the review. Therefore, many times representatives of different entities participate in the process of clarifying the matter, in line with the Bank’s organizational structure.
Other entities belonging to the Bank’s Group also have the necessary solutions in their internal regulations guaranteeing compliance with the law regarding the prevention of bullying and discrimination. These solutions operate in separate regulations or as appropriate provisions in the work rules, ethics codes and other regulations applicable to a given entity.
Training on the subject of diversity
Appropriate diversity management increases team work efficiency, improves the atmosphere at work, helps retain valuable and experienced employees, improves innovation and creativity. For these reasons, such training is organized at the Bank. Managers acquire knowledge and skills in the management of diverse teams, which makes it possible to eliminate undesirable behaviour and situations and support valuable and positive behaviour.
In 2020, due to the epidemic, diversity training was conducted in the first quarter of the year. From April 2020 webinars were mostly dedicated to the topics of remote work organization, team communication, or emotion and stress management. For managers, training sessions were prepared on managing a dispersed team, working with people in change, or effective communication of the boss in remote working mode.
The diversity policy is also composed of various initiatives undertaken at the Bank, including strategic projects aimed at creating a friendly work environment and cooperation with external entities to support diversity in the workforce.
Strategic projects
Friendly work environment The strategy of creating a friendly environment includes such aspects as a functional workplace, implementation of a remote work model, or the digitization and simplification of processes. Creating a standardized, modern workplace, equipped with tools, equipment and properly arranged space, facilitate both individual and team work. Remote work allows for a flexible approach to completion of tasks. All these facilities allow both managers and employees to select a set of tools or use such a range of information that will meet their needs related to professional goals – individual and team ones.
#CzasNaFeedback (#TimeForFeedback) A new process has been implemented in the Bank, where cyclical summaries are performed of work results, competences, achievements, feedback or development goals of employees. They are aimed at supporting the employee in individual professional development. Expected attitudes and behaviours towards employees are included in a competence model based on the Bank’s values. This model is universal, applies to all employees and promotes, among other things, communication and cooperation, which have an impact on building harmonious, diverse teams. As part of the solution introduced, employees also get feedback from their co-workers, thanks to which they can easily and quickly communicate mutual needs and expectations and opinions. This enables building a friendly work environment and understanding of the diversity aspect of employees.
Working in Agile methodology In the Bank, within the Digital Transformation structures, teams with very diverse skills and competences have been created. Participants focus on each other, on interactions and cooperation; they efficiently react to changes, flexibly approach changes in the project. These assumptions allow employees to openly express their opinions, efficiently deliver work results and ensure task team integration.
Collaboration with external entities
Collaboration with external entities that supports diversity in the workforce includes:
• internship and training programmes being an opportunity for pupils, students and graduates of secondary schools and universities with various profiles;
• professional development programmes for people with disabilities in cooperation with external institutions, including the provision of workstations adapted to the needs of such people (principles for the implementation of occupational health and safety tasks, as well as technology and technical solution standards require taking the steps necessary to adjust workstations to the needs of persons with disabilities);
• cooperation with universities and high schools, under which workshops are organized at selected universities in Poland and at the Bank, during which students have an opportunity to learn about selected areas of the Bank’s operations.
Due to the pandemic and related restrictions (including the organization of remote work), cooperation programmes with external entities have been temporarily limited in 2020.
Other initiatives supporting diversity at the Bank
The Bank organizes integration programs and supports employee initiatives to strengthen the integration of employees from different areas of operation and representing different social groups. These include sports initiatives and activities and charitable activities of employees as volunteers. These initiatives help create a friendly organizational culture and build relationships based on the diversity of employees’ interests.
Due to the pandemic and related restrictions (including the organization of remote work), the above programs were temporarily reduced in 2020.
Diversity policy implemented
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 policy on the suitability of Members of the Management Board and persons performing the most important functions in the Bank and the suitability assessment in the companies belonging to the Bank’s Group;
• The policy on assessing the suitability of candidates for members of the Bank’s Supervisory Board and Supervisory Board members.
The provisions introduced at the Bank set the directions for selecting, appointing and planning succession, including staff resources and assessing the appropriateness of the Management Board Members and persons holding the key functions at 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 Supervisory Board makes decisions on the selection and assessment of the Management Board Members and the Management Board Members make decisions on the selection and 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 Committee for the Supervisory Board Nominations and Remuneration.
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 authorities.
• The principle of diversity in selecting the Bank’s Supervisory Board members is based on objective substantive criteria in terms of education and professional experience.
• The policies contain the commitment to monitor the effectiveness of 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 - it is assumed that the regulations will be implemented in 2021.
Structure of the composition of the management and supervisory bodies and key managers
Table 24. Diversity by gender, age and experience – statistics as at 31 December 2020 [GRI 405-1]
Diversity objectives for the composition of the Management Board and Supervisory Board
• The purpose of applying the diversity principle is to ensure that Members of the Management Board or the Supervisory Board are appropriately selected to obtain a broad range of competences, knowledge and skills that are adequate for the position to ensure that the Members of the Management Board and Supervisory Board, individually and as a body, issue top quality independent opinions and decisions on the whole range of the Bank’s activities.
• In assessing suitability, the General Shareholders’ Meeting and the Bank’s Supervisory Board seek to achieve a balance in gender representation in the composition of the Bank’s Supervisory Board and Management Board, respectively.
• The objectives of diversity in the composition of the Bank’s Supervisory Board and Management Board shall be taken into account in the selection of the members of the bodies only to the extent that this will not adversely affect the functioning and suitability of these bodies.
Purchase and sale of treasury shares
Information required based on Article 111a of the Banking Law Act
Published forecasts of financial results for 2020
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 2020
Underwriting agreements and guarantees granted to subsidiaries
Information on proceedings at court, before a competent arbitration tribunal or a public administration body
Value of collateral set up on accounts or assets of the borrowers
Loans incurred and loan, guarantee and surety agreements
Financial and guarantee liabilities granted
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
Seasonality or cyclicality of activities in the reporting period
Significant post-balance sheet events
Purchase and sale of treasury shares
PKO Bank Polski S.A. did not purchase any treasury shares on its own account during the period covered by the report.
Information required based on Article 111a of the Banking Law Act
Table 25. 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 |
16 816 |
-1 692 |
-828 |
-2 520 |
23 691 |
- Czech Republic |
10 |
3 |
0 |
3 |
7 |
- Germany |
8 |
-3 |
0 |
-3 |
7 |
- Sweden |
196 |
1 |
23 |
23 |
0 |
- Ireland |
54 |
0 |
0 |
0 |
0 |
In third countries: |
|
|
|
|
|
- Ukraine |
461 |
85 |
-17 |
68 |
1 824 |
*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 services 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 and Germany, and has established a branch in Slovakia, which commenced its operations in March 2021.
In 2020, PKO Bank Polski S.A. did not sign any agreements mentioned in Article 141t clause 1 of the Banking Law, i.e. financial support agreements with entities which 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. 3 and table no. 5, respectively.
Published forecasts of financial results for 2020
In the current reports No. 13/2020 dated 20 March 2020, 19/2020 dated 20 April 2020 and 25/2020 dated 1 June 2020, the Bank informed about the impact of the spread of the coronavirus, the decision of the Monetary Policy Council and other institutions affecting the operations of the Bank’s Group.
On 17 February 2021, the Bank released preliminary unaudited financial results of the Bank’s Group for the fourth quarter of 2020 and for the year 2020.
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. The Bank did not sign any agreements meeting the definition of confidential information in 2020 and therefore did not publish any information on such agreements.
In 2020, the Bank did not conclude any material agreements with the central bank or with the supervisory authorities. The Bank is not aware of the fact of signing or of the content of any agreements between its shareholders that are in force in 2020.
In 2020, KREDOBANK S.A. signed annexes to the general loan agreement of 2018 on long-term financing secured by government bonds with the National Bank of Ukraine, according to which the amount of the agreement was increased from UAH 600 million to UAH 2 300 million. As at 31 December 2020, the indebtedness of KREDOBANK S.A. under the aforementioned agreement amounts to UAH 2 300 million (PLN 305 million at the average exchange rate of the National Bank of Poland as at 31 December 2020).
Other 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 2020
In 2020, PKO Bank Polski S.A. did not issue any securities.
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, Biuro Maklerskie PKO Banku Polskiego S.A. had the role of underwriter (until August 2017, mortgage covered bonds were offered as standard issue bonds). In 2020, PKO Bank Hipoteczny S.A. did not issue any mortgage covered bonds. The aggregate nominal value of all mortgage covered bonds issued as part of firm commitment underwriting was PLN 2 590 million. The Brokerage Office’s portfolio as at 31 December 2020 contained mortgage-covered bonds with a total nominal value of PLN 8 million.
As at 31 December 2020, 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 4 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 2 billion. At the same time, on the basis of separate agreements, PKO Bank Hipoteczny S.A. authorised the Bank’s Brokerage Office to act as Issue Agent and PKO Bank Polski S.A. to act as Dealer. In October 2020, the parties signed annexes to the above-mentioned agreements in order to enable PKO Bank Hipoteczny S.A. to issue bonds with maturity up to 36 months.
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 2020 (in nominal terms) amounted to PLN 3.8 billion The PKO Bank Polski S.A. portfolio as at the end of 2020 did not contain any bonds issued as part of this programme.
On 12 October 2020, PKO Bank Hipoteczny S.A. concluded a Program Agreement with PKO Bank Polski S.A. and the Bank’s Brokerage Office concerning the Public Bond Issue Programme. The agreement was signed in connection with the approval of a new prospectus by the PFSA. Under the Programme, PKO Bank Polski S.A. acts as the Organizer and Calculation Agent, whereas the Bank’s Brokerage Office acts as the Offering Agent, Technical Agent and the Issue Guarantor. In 2020, PKO Bank Hipoteczny S.A. issued bonds (at nominal value) with a total value of PLN 50 million as part of the Public Bond Issue Programme. PKO Bank Polski S.A. did not cover the issue under guarantee. The Bank’s Brokerage Office’s portfolio as at the end of 2020 contained bonds with a total nominal value of PLN 11.4 million issued in 2019.
In 2020, PKO Bank Polski S.A. issued seventeen guarantees for the repayment of liabilities arising from the lease by subsidiaries of office space and parking spaces, with a total value of PLN 1.4 million (up to February 2025).
Information on proceedings at court, before a competent arbitration tribunal or a public administration body
As at 31 December 2020, the total value of the subject matter of litigation in court proceedings (trials) pending in which the companies belonging to the PKO Bank Polski Group S.A. (including the Bank) were defendants amounted to PLN 2 064 million (as at 31 December 2019: PLN 1 194 million), and the total value of the subject matter of litigation in court proceedings (trials) pending in which the companies belonging to the PKO Bank Polski Group S.A. (including the Bank) were claimants as at 31 December 2020 was PLN 2 607 million (as at 31 December 2019: PLN 2 527 million.
Taking into consideration the value of and an increase in the number of court proceedings, the Bank considered as material the court proceedings relating to mortgage loans in convertible currencies. As at 31 December 2020, 5 372 legal proceedings were pending against the Bank (as at 31 December 2019: 1 645) relating to mortgage loans granted in previous years in foreign currency with a total value in dispute of PLN 1 404 million (as at 31 December 2019: PLN 392 million), including one group proceeding. The Bank’s Customers’ claims concerned mainly demands to determine the invalidity of all or part of the agreements or to receive refunds of allegedly undue benefits in connection with the abusive nature of the foreign currency clauses. None of the clauses used by the Bank in the agreements was entered in the register of prohibited contractual provisions.
In 2020, the Bank and the other entities of the Bank’s Group were not parties to any material (from the perspective of the Bank’s Group) proceedings in court, before an arbitration tribunal or public administration body with respect to liabilities or receivables.
A description of the main disputes, including those relating to mortgage loans in convertible currencies, is presented in Note 48 of the Financial Statements of the Bank’s Group for the year 2020.
Value of collateral set up on accounts or assets of the borrowers
At the end of 2020, 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 410 billion. The aforementioned amount concerns loan agreements, leases and loans.
Loans incurred and loan, guarantee and surety agreements
In 2020, KREDOBANK S.A. received loans from the National Bank of Ukraine totalling UAH 2 300 million (PLN 305 million at the mid NBP exchange rate from 31 December 2020).
PKO Bank Polski S.A. and other entities of the Bank’s Group did not receive any loans from international financial organizations or other banks in 2020.
In 2020, 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 liabilities granted
As at 31 December 2020, financial and guarantee liabilities amounted to PLN 71.3 billion, of which 86.4% were financial liabilities. The overall dynamics of financial and guarantee liabilities granted was 7.1% y/y, mainly as a result of an increase in business credit lines and limits.
Table 26. Off-balance sheet liabilities granted (in PLN millions)
|
31.12.2020 |
31.12.2019 |
Change |
Change (%) |
Financial liabilities granted: |
61 609 |
55 159 |
6 450 |
11,7% |
housing credit lines and limits |
4 416 |
5 530 |
-1 114 |
-20,1% |
business credit lines and limits |
41 791 |
34 077 |
7 714 |
22,6% |
consumer credit lines and limits |
10 266 |
9 719 |
547 |
5,6% |
factoring credit lines and limits |
2 015 |
1 551 |
464 |
29,9% |
finance lease credit lines and limits |
149 |
287 |
-138 |
-48,1% |
other |
2 972 |
3 995 |
-1 023 |
-25,6% |
Guarantee commitments granted: |
9 733 |
11 450 |
-1 717 |
-15,0% |
financial entities |
1 196 |
630 |
566 |
89,8% |
non-financial entities |
8 323 |
10 560 |
-2 237 |
-21,2% |
public sector |
214 |
260 |
-46 |
-17,7% |
Total |
71 342 |
66 609 |
4 733 |
7,1% |
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
In 2020, PKO Bank Polski S.A. provided services to its related (subordinated) entities, including maintaining bank accounts, accepting deposits, granting loans and advances, issue of debt securities, 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 Biuro Maklerskie PKO Banku Polskiego 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.
The above-mentioned services were rendered on terms which do not differ materially from arm’s length terms.
In 2020, the subsidiaries of PKO Bank Polski S.A. did not conclude any material transactions with related parties on conditions other than arm’s length.
Seasonality or 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 similar seasonal fluctuations 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.
Significant post-balance sheet events
On 23 April 2021, the Extraordinary General Meeting of PKO Bank Polski S.A. decided to enter into settlement agreements with consumers who have entered into mortgage loan agreements with the Bank indexed to foreign currencies or denominated in foreign currencies (hereinafter: settlement agreements with consumers). According to the adopted resolution:
• a special fund is being created in the amount of PLN 6.7 billion for the purpose of covering specific balance sheet losses that will arise as a result of recognizing the financial effects of the settlement agreements with consumers;
• the amount of PLN 6.7 billion shall be allocated from the Bank’s supplementary capital, in the part created from retained earnings available for distribution and transferred to the aforementioned special fund;
• the General Meeting shall oblige the Bank’s Management Board to present for approval to the Bank’s Supervisory Board the terms and conditions on which the settlement agreements shall be concluded, including the terms and conditions of releasing from debt;
• The Bank’s Management Board may enter into settlement agreements with consumers (including the terms and conditions of releasing from debt) after the Bank’s Supervisory Board has issued a positive opinion on the terms and conditions under which the agreements will be concluded, including in respect of releasing from debt. The content of individual settlement agreements should be within the terms and conditions approved by the Bank’s Supervisory Board.
[GRI 102-1] 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) present their third Statement on the non-financial information (the Statement), which forms a separate part of the Directors’ Report (in the first year of non-financial reporting, a separate report on the non-financial information was prepared). [GRI 102-50] The Statement presents the operations of the PKO Bank Polski S.A. Group in the period from 1 January 2020 to 31 December 2020. [GRI 102-51] The previous Statement was prepared for the year 2019 and published on 12 February 2020. [GRI 102-52] The Bank’s Group publishes such statements annually. At the end of 2020, the Bank’s Group comprised the parent entity, i.e. PKO Bank Polski S.A., 12 direct subsidiaries and indirect subsidiaries. [GRI 102-54] The Statement was prepared in accordance with the GRI Standards: Core option and in accordance with the non-financial reporting requirements defined in the Accounting Act. Both the Bank and the Bank’s Group satisfy the criteria of an entity that is required to draw up the Statement. The individual issues have been presented in the Statement with regard to the Group, with the Bank highlighted. [GRI 102-10, GRI 102-49] The Statement for 2020 does not contain any significant changes in reporting of the organization and its supply chains or other changes in the reporting methods.
[GRI 102-56] The Statement on non-financial information for 2020 is not subject to an external audit.
[GRI 102-48] The Statement does not contain any adjustments of information from the previous reports, other than the re-calculation of the greenhouse gases emissions estimation for the base year due to the availability of more accurate data for some locations.
[GRI 102-42, GRI 102-46] The preparation of the Statement by the Bank was preceded by an analysis of the materiality of the issues specified in the Accounting Act. In the first stage, the analysis of materiality conducted in the autumn of 2020 was based on a review of the stakeholder groups of the Bank's Group, including the Bank, defined to date, and the areas of the interactions between the Group entities and the environment. In the second stage, the Bank analysed the scope of management of the areas encompassed by the Statement and reviewed the policies in place (the results are available at: https://www.pkobp.pl/investor-relations/esg-at-pko-bank-polski-group/policies-and-principles/).
The following tools were used in the study of materiality:
• in-depth interviews with representatives of the Bank's Headquarters;
• analysis of contacts with ESG rating agencies and other stakeholders;
• stakeholders’ opinion surveys regarding the significance of various issues for the company's image;
• enquiries addressed by the Bank to the subsidiaries;
• a review of the internal regulations of the Bank and provisions of the law.
[GRI 102-43] The Bank studies the approach of its stakeholders to its charitable and sponsoring activities on a continuous basis. During the pandemic, the stakeholders paid more attention to the companies’ support for healthcare and pro-social activities. In addition to healthcare and sports, the stakeholders were interested in environmental protection. The growing support for pro-environmental activities manifests itself in improving the image of the companies performing such activities.
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. Descriptions of the risks identified in the Bank’s Group are presented in the Statement in the appropriate chapters regarding the individual social and environmental issues. Attention was drawn in the description to the principle of “comply or explain”: an explanation was added to information on the lack of full coordination of selected policies at the Group level.
The Bank's Group, including the Bank, identify the following significant groups of stakeholders and material non-financial issues:
Material non-financial issues [GRI 102-47] |
|
|
Environmental 1) Expanded environmental responsibility |
1) Customers 2) Employees 3) Social environment, including local communities 4) Shareholders |
Social and employment 2) Impact on the social environment 3) Human rights 4) Relationships with subcontractors and suppliers 5) Employees relations |
|
Management 6) Customer relations 7) Ethics 8) Prevention of corruption 9) Product safety and Customer security 10) Protection of privacy 11) Prevention of money laundering |
Investors’ interest is ESG issues
[GRI 102-44] The Bank noted increased (in relation to 2019) interest of the investors in environmental, social and corporate governance matters. Their questions usually concerned the Bank’s actions aimed at supporting the stakeholders in fighting the epidemic, in particular in the context of the continuity of the Bank's operations, the safety of the Customers and employees and participation in social initiatives. The investors were also interested in the Bank's approach to financing high emission industries and the mining sector, diversity policy regarding the management and sustainable development criteria. The Bank's participation in the international disclosures such as CDP Disclosure Insight Action or the Coal Policy Tool was appreciated by the investors.
In response to the growing importance of ESG matters in investor relations, the Bank launched a new ESG section on its Investor Relations website: https://www.pkobp.pl/investor-relations/esg-at-pko-bank-polski-group/.
In its operations, PKO Bank Polski S.A. follows the principle of social responsibility and takes into account the impact on the shareholders, suppliers, employees and the general public.
With regard to the environment: |
• it is aware of the challenges, which result from climate changes; • it gradually eliminates the activities that are harmful for the environment, it supports environmental education; |
With regard to society: |
• it follows the principle of social responsibility; • it takes into account the impact of its actions on the general public, customers, suppliers, employees and shareholders; |
With regard to corporate governance: |
• it improves corporate governance; • it ensures transparent principles of management. |
To date, sustainable development of the Bank has been supported by the following actions. Most of them are long-term.
PKO Bank Polski S.A. monitors a number of non-financial performance indicators.
KPI |
Definition |
Unit |
2020 |
2019 |
Innovation and digitization |
|
|
|
|
Share of remote Customers |
Share of remote (mobile/online) Customers in the database of active retail customers |
% |
69 |
61 |
Share of sales in remote channels |
• cash loans • current accounts |
% |
73 29 |
43 13 |
IKO mobile applications |
Number of IKO applications |
mn |
5.2 |
4.2 |
Mobile transactions |
Number of IKO transactions |
mn |
301.8 |
176.8 |
Number of Customers with access to iPKO biznes |
• corporate segment • retail segment |
ths. |
13.8 61.5 |
13.0 55.9 |
Digitization of orders made by corporate Customers |
Share of orders made through iPKO biznes in the electronic form |
% |
71 |
15 |
Employment |
|
|
|
|
Turnover index |
Percentage of workers who left the Bank during the year under review (all types of reasons for leaving) |
% |
11.7 |
14.0 |
Employee resignations |
Turnover index taking into account employee resignations, excluding retirement or disability |
% |
4.7 |
7.8 |
Environment |
|
|
|
|
Number of printouts |
Reduction in the use of paper (number of sheets) |
mn |
2.0 |
0.1 |
Scale of the direct impact on the environment
The nature of the business activity means that the Bank's and its Group’s direct impact on the natural environment is limited.
The Group entities have procedures and structures in place for monitoring the legal changes regarding the environment which are significant for their operations. In 2020, none of the Group entities conducted an activity that could significantly affect the environment. [GRI 307-1] No administrative proceedings relating to a breach of the environmental regulations were conducted with respect to the Group that would result in any financial penalties.
Direct impact on the environment depends on the manner of consumption of limited natural resources. The Group monitors the consumption of such resources and engages in activities aimed at reducing their consumption. In previous years, a number of entities of the Bank’s Group performed energy efficiency audits. On the basis of the results of such audits, the Group entities defined the areas with the highest energy saving potential and action plans, which are currently being successively implemented.
[GRI 303-1v16] For the purposes of this report, the Group tried to estimate its water consumption. The water consumption at the Bank in 2020 amounted to approx. 260 mega litres. Water consumption at the other entities of the Bank's Group amounted to 27.6 mega litres.
Consumption of energy and fuels and emissions of greenhouse gases
Table 27. Energy consumption within the organization (in MWh) [GRI 302-1], [GRI 302-4]
|
BANK |
OTHER ENTITIES |
GROUP |
GROUP |
BANK |
OTHER ENTITIES |
GROUP |
BANK |
OTHER ENTITIES |
GROUP |
|
2020 |
y/y (%) |
2019 (after recalculation) |
2019 |
||||||
Fuel used in buildings |
22,803 |
3,864 |
26,667 |
-2.0 |
24,122 |
3,095 |
27,216 |
25,493 |
2,476 |
27,969 |
natural gas |
20,866 |
3,732 |
24,598 |
5.1 |
20,465 |
2,940 |
23,405 |
21,836 |
2,321 |
24,157 |
heating oil |
1,672 |
94 |
1,767 |
-49.5 |
3,368 |
132 |
3,500 |
3,368 |
132 |
3,500 |
diesel oil |
94 |
4 |
98 |
-0.7 |
81 |
17 |
98 |
81 |
17 |
98 |
LPG |
0 |
34 |
34 |
501.1 |
0 |
6 |
6 |
0 |
6 |
6 |
coal |
171 |
0 |
171 |
-17.5 |
208 |
0 |
208 |
208 |
0 |
208 |
Fuel used in vehicles |
18,400 |
10,180 |
28,580 |
-26.0 |
28,697 |
9,903 |
38,600 |
28,697 |
9,903 |
38,600 |
diesel oil |
815 |
4,479 |
5,295 |
-0.2 |
1,211 |
4,093 |
5,304 |
1,211 |
4,093 |
5,304 |
gasoline |
17,585 |
5,701 |
23,285 |
-30.1 |
27,486 |
5,810 |
33,296 |
27,486 |
5,810 |
33,296 |
Energy purchased |
148,506 |
17,043 |
165,548 |
-4.3 |
152,853 |
20,051 |
172,904 |
154,672 |
17,771 |
172,443 |
electricity |
81,547 |
10,291 |
91,838 |
-3.5 |
84,079 |
11,112 |
95,191 |
84,094 |
11,112 |
95,206 |
heat |
66,959 |
6,752 |
73,711 |
-5.1 |
68,774 |
8,939 |
77,713 |
70,579 |
6,659 |
77,238 |
Total energy consumption |
189,709 |
31,087 |
220,796 |
-7.5 |
205,671 |
33,048 |
238,720 |
208,862 |
30,150 |
239,012 |
Table 28. Intensity of energy consumption by the Bank's Group [GRI 302-3]
INDICATOR |
UNIT |
2020 |
2019 |
y/y (%) |
Total energy consumption per employee |
MWh / person |
8.4 |
8.5 |
-1.0 |
Total energy consumption per PLN 1 mln assets |
MWh / PLN 1 mln assets |
585.7 |
686.2 |
-14.6 |
Table 29. Emissions by source in MgCO2e by market-based method [GRI 305-1], [GRI 305-2], [GRI 305-3], [GRI 305-5]
|
BANK |
OTHER ENTITIES |
GROUP |
GROUP |
BANK |
OTHER ENTITIES |
GROUP |
BANK |
OTHER ENTITIES |
GROUP |
|||
|
2020 |
y/y (%) |
2019 (after recalculation) |
2019 |
|||||||||
Scope 1 - direct emissions from: |
10,106 |
3,403 |
13,509 |
-12.8 |
11,816 |
3,671 |
15,487 |
12,093 |
3,049 |
15,143 |
|||
fules used in buildings |
4,761 |
790 |
5,551 |
-4.7 |
5,185 |
638 |
5,823 |
5,462 |
513 |
5,975 |
|||
fuels used in vehicles |
4,562 |
2,613 |
7,175 |
-25.8 |
6,631 |
3,033 |
9,664 |
6,631 |
2,536 |
9,168 |
|||
fugitive sources |
783 |
- |
783 |
|
- |
- |
- |
- |
- |
- |
|||
Scope 2 - indirect emissions from: |
55,595 |
8,782 |
64,377 |
-35.0 |
88,906 |
10,104 |
99,010 |
89,562 |
9,347 |
98,909 |
|||
purchase of electricity |
32,333 |
6,492 |
38,825 |
-45.6 |
64,320 |
7,008 |
71,329 |
64,332 |
7,008 |
71,340 |
|||
purchase of heat |
23,262 |
2,290 |
25,551 |
-7.7 |
24,585 |
3,096 |
27,681 |
25,230 |
2,338 |
27,569 |
|||
Total emissions (Scope 1 + 2) |
65,701 |
12,185 |
77,886 |
-32.0 |
100,721 |
13,775 |
114,497 |
101,656 |
12,396 |
114,052 |
|||
Scope 3 – indirect emisssions (domestic business trips) |
289 |
- |
289 |
|
- |
- |
- |
- |
- |
- |
|||
Total emissions (Scope 1 + 2 + 3) |
65,989 |
12,185 |
78,175 |
|
- |
- |
- |
- |
- |
- |
|||
Table 30. GHG emissions intensity indicators in the Bank's Group [GRI 305-4]
INDICATOR |
UNIT |
2020 |
2019 |
y/y (%) |
GHG emissions Scope 1+2 per employee |
Mg CO2e / person |
3.0 |
4.1 |
-27.2 |
GHG emissions Scope 1+2 per client |
kg CO2e / person |
7.4 |
11.0 |
-32.2 |
GHG emissions Scope 1+2 per PLN 1 mln assets |
kg CO2e / PLN 1 mln assets |
206.6 |
329.1 |
-37.2 |
Table 31. Emissions by method in MgCO2e [GRI 305-1], [GRI 305-2], [GRI 305-3]
Scope 1 |
Scope 2 |
Scope 3 |
[GRI 305-1] |
[GRI 305-2] |
[GRI 305-3] |
13,509.48 |
96,628.66 (location based) |
288.67 |
|
64,376.66 (market based) |
|
Direct emissions of the Bank's Capital Group as a result of fuel combustion in sources owned by it |
Indirect emissions of the Bank's Capital Group resulting from the use of purchased electricity and heat |
The Bank's indirect emissions from domestic business trips |
The boundaries of the reported emissions include: (1) in the case of data concerning the Bank, this entity only (100% of the emissions); (2) in the case of data concerning the Bank’s Group: the Bank and all the subsidiaries of the Bank in accordance with operational control (100% of the emissions of each entity). The reported emissions comprise Scope 1 and Scope 2. Scope 3 emissions comprise domestic business trips of the Bank, which have been monitored since 2020.
The Bank calculated the emissions in accordance with the Greenhouse Gas Protocol (GHG) Corporate Accounting and Reporting Standard (revised) by the market-based method. As a result of the calculations performed, the Bank achieved a data reliability index (the percentage of data obtained from data sources in all data used in the calculations, which comprise data obtained from data sources and estimations) on a good level according to the GHG Protocol methodology.
The Bank recalculated the base year (2019) for the following reasons:
• more accurate data was received for several locations;
• it was found out that some of the media were underestimated in the consumption of natural gas and heating by subsidiaries.
Detailed information on the method used to calculate emissions and the comparison with the base year are presented in the Inventory of emissions of greenhouse gases of PKO Bank Polski S.A. for 2020 (https://www.pkobp.pl/media_files/3000c438-a16d-400b-bd9d-1b448d3ae040.pdf).
The Bank calculated GHG emissions intensity ratios for the purpose of comparison with the market. Total 1+2 Scope emissions for the Bank's Group were used in the calculation. As a result, the Bank obtained a full picture of the carbon footprint generated as a result of the operating activities.
The biggest drop in the emissions was recorded by the Group in Scope 2 with respect to the emissions from purchased electricity. One of the reasons behind the big reduction in greenhouse gas emissions in this area is the fact that the Bank has obtained guarantees of origin for the electricity from a low-emission source (highly efficient cogeneration). The guarantees of origin cover 73.3 GWh of energy (the Bank consumed more than 81.5 GWh in 2020). The emission amounts by method and type of energy are presented in the above-mentioned inventory.
The Group purchased electricity and heat; no purchases of technological steam or cooling were recorded. Most of the energy purchased was from non-renewable sources.
[GRI 302-4] The total energy consumption in the Bank’s Group in 2020 was 7.5% lower than in 2019, and in the Bank it was 7.8% lower.
At the Bank, the consumption of heating oil decreased the most (by more than half). It was due to the closing of four oil-heated locations and the change of the heating systems in four other locations (replacement of oil furnaces with municipal district heating or gas furnaces). The Bank also reduced the consumption of petrol and diesel in company vehicles.
Programme for optimizing energy consumption at the Bank
[GRI 302-4] The Bank is continuing to work on the implementation of the Energy Management System in accordance with ISO50001 in order to optimize energy consumption, introduce a single energy consumption control system and intensify the actions aimed at reducing the consumption of energy carriers. The Bank reviewed and analysed the possible actions that may be taken in order to reduce the CO2 emissions as much as possible and selected the following major tasks to be performed in the coming years:
• purchase of electricity from low-emission and zero-emission sources;
• commencement of the shift to the purchase of electricity directly from renewable sources;
• development of the assumptions and plan for the implementation of the Energy Management System consistent with ISO50001 in the years 2021-2022;
• commencement of the installation of PV systems in the Bank's properties. The first installations are planned for the year 2021.
The main results of the activities relating to energy consumption in 2020 include:
• performing a gap analysis for the Energy Management System consistent with ISO50001;
• purchase of 73.3 GWh of energy generated in highly efficient cogeneration units with guarantees of origin;
• continuing the replacement of lighting with LED lighting;
• ongoing design optimization during modernizations and investments.
In 2020, the Bank obtained the first energy savings resulting from the modernization of one of the biggest cooling installations serving the computational centre and modernization of the heating node for the Headquarters building. These projects resulted in annual energy savings of 197.25 toe (2,294 MWh).
Waste
Table 32. Non-municipal waste produced by the Bank (in tonnes)
|
2020 |
y/y (%) |
2019 |
|||
Total |
736 |
-13 |
843 |
|||
hazardous* |
15 |
-6 |
16 |
|||
other |
721 |
-13 |
827 |
|||
including: |
|
|
|
|||
bulky waste |
261 |
-51 |
532 |
|||
electronic and electric |
243 |
79 |
136 |
|||
magnetic and optical data carriers |
1 |
-50 |
2 |
|||
paper and cardboard waste (binders) |
37 |
825 |
4 |
|||
iron and steel waste |
179 |
18 |
152 |
|||
* electric and electornic appliances, such as air conditioners, used monitors, refrigerators |
|
|
|
|||
In 2020, the Bank had an agreement for collection of non-municipal waste with the same service provider as previously. The service provider holds ISO 9001:2015 and 14001:2005 certificates. The waste collected from the Bank is handed over by the service provider to other waste management firms, in accordance with the applicable regulations.
[GRI 306-2] Hazardous electrical and electronic waste is handed over by the Bank to a specialized firm where it is processed and recycled (100%).
Paper bank documentation is collected by a specialist firm and destroyed.
Moreover, in 2020 the Group conducted the selective collection of municipal waste. The Bank has implemented municipal waste sorting in 726 locations (64% of all locations).
Programme for optimizing printouts and reducing paper consumption
One of the strategic goals of the Bank is to simplify and streamline its processes by limiting the amount of paper documents.
In 2020, the Bank continued the SMARTOP project regarding the digitization of sales and support processes. There were also changes in the processes associated with a partial shift to remote work, which contributed significantly to the reduction in paper consumption at the Bank.
In 2020, the Bank extended the catalogue of orders which the Customers may place online through iPKO (previously they could be placed in the Bank's outlets and through the Contact Center). The number of orders made by the Customers through remote channels was more than 2.5 times bigger than the total number of such orders made in the years 2018-2019. At the same time, the Bank worked on digitization of the processes performed at branches, including the remote forms of contact between the Bank's employees and Customers. This also led to a reduction in the consumption of paper.
Mitigating the adverse effect on the environment - actions taken in 2020
Transport |
Placing bicycle stands and arranging changing rooms for the employees in the Bank's locations EKO-driving training for the employees (safe and efficient use of cars - both company and private) |
Waste |
Gradual implementation of municipal waste sorting in the Bank's locations |
Plastics |
Elimination of the use of plastic items, e.g. replacement of disposable plastic cups for drinking water from water dispensers installed in the Bank’s facilities with BIO cups, discontinuation of purchase of plastic plates and cutlery, reducing the consumption of plastic mechanisms for rubber self-inking stamps (approx. 1 700 pieces) Replacement of bottled spring water dispensers with point of use dispensers with filters connected to the water supply. The Bank uses 119 POU (Point of Use) dispensers in 79 locations. Consequently, the number of gallon bottles ordered in 2020 was by more than 2,500 lower than in the previous year. |
Paper |
Reducing the paper correspondence sent (centralized correspondence by approx. 7% and non-centralized correspondence by 23%) Text messages in place of paper correspondence Printing on EKO paper (approx. 2.1 million envelopes and approx. 2.9 million A4 sheets) |
Data |
Extension of the Bank’s real estate management system by adding the function of environmental data aggregation. Development of the functions allowing collection of information on media consumption (for the purpose of calculating the carbon footprint) and other information about the building (e.g. about waste sorting). |
Training |
How to be green? – what to do to reduce the adverse effect of daily activities performed at work and at home on the environment. |
Space management
The Bank was implementing Flexidesk project. Its purpose is to create a new working environment and allow work rotation/remote office work by adjusting the office space available in the Bank's real estate portfolio. The planned work should result in optimization of the Bank's space.
The Book of Spatial Arrangement and Fitting Standards for the Bank’s units (other than the sales units)
The Spatial Arrangement and Fitting Standard was adopted by the Bank in 2018 for the sales positions and in mid 2020 for the other positions. The standard defines the solutions and technologies used in creating new and modernizing the existing workstations. Many of the solutions adopted have a positive effect on the environment, e.g.:
• reduced demand for space;
• the requirement to sort waste into fractions;
• reducing the number of documentation cabinets as a result of reducing the flow of paper documentation (partly due to the digitization processes executed at the Bank, such as e.g. the Electronic Office project);
• introduction of indoor plants;
• using ventilation and air-conditioning installations with energy recovery in the buildings;
• installation of water dispensers connected to the water supply and the resulting reduction of the consumption/purchases of plastics;
• using LED lighting;
• increased use of natural materials;
• installation of showers for persons using bikes to commute to work.
Environmental responsibility
The extended environmental responsibility of the Bank's Group, including the Bank, comprises the policy of financing the activities of business and public entities. The Bank has been taking initiatives with the objective of caring for the environment for years. This applies to several areas of activity:
1. The Bank, together with the other Group entities, supports the development of the economy by financing investments in new technologies, the modernization of technological lines and energy-saving projects.
2. The Bank influences the attitudes of Customers by participating in the financing of pro-ecological projects, including the construction of waste incineration plants, sewage treatment plants and power generation systems using modern, pro-ecological technologies.
3. For many years, the Bank has been actively involved in cooperation with local government units (LGUs), including through the financing of projects relating to environmental protection or the pro-environmental modernization of public service facilities.
4. In the assessment of creditworthiness, the Bank takes into account the impact of the particular business activities on the environment, compliance with the formal and legal requirements regarding environmental permits, geographical and environmental conditions etc. In the assessment of the business models of borrowers and identification of risks (including ESG risks), the Bank takes into account the sustainable business development concept and the possible benefits for the local community and the natural environment.
5. In the process of analysing property valuations, the Bank assesses the environmental risks that could arise in the event of using the property for the purposes of activities causing contamination/devastation of the environment, including in particular: emission of dust, pollution of water, disposal of sewage, storage or production of toxic, inflammable, or explosive materials.
6. The Bank finances the transformation of the Polish power sector. The transformation areas include not only zero emission or low emission energy sources, but also improvement of the energy efficiency of entities that consume big quantities of energy for the purposes of their production processes and modernization of the transmission network.
The value of the Bank’s involvement
The Bank improved the methodology of qualification of environmental criteria and performed in-depth analyses of the product portfolio, which improved the quality of estimations compared with the prior year report.
Table 33. The exposure (loans and debt securities and the balance sheet equivalent of treasury limits) to the corporate segment entities and SME as a percentage of the Bank’s total assets as at 31 December 2020
|
2020 |
2019 |
"Green" branches (e.g. energy production from renewable energy sources, sewage disposal, water treatment and supply, waste collection/ treatment, remediation etc.) |
0.79 |
0.96 |
Loans for cooperatives and housing communities for the thermomodernization of multi-family residential buildings |
0.66 |
0.72 |
High carbon emissions energy sectors |
0.50 |
0.70 |
Policies
In 2020, the Bank adopted the Renewable Energy Policy and updated the Policy for Financing the Carbon Intensive Energy Sector, the Public Healthcare Policy and the Income-Generating Real Estate Policy. The Bank also has the policies in place addressed to the following industries: Trade, Construction and construction materials, Chemistry-Oil-Gas, Car dealers and CFM companies, Financing of Local Government Units.
The policy for financing the renewable energy sector |
|
Adopted and implemented in 2020 for the Bank’s Group. Purpose: gradually increasing the share in the financing of renewable energy. Motivation: supporting the natural environment, preventing global climate change, transformation of Poland into a zero-emission economy. The policy defines the preferred directions of development of the loan portfolio in the renewable energy segment. It is focused in particular on the financing of photovoltaic farm and wind turbine projects (in particular, the projects that have won renewable energy auctions and guarantee stable cash flows from operating activities). However, other projects can also receive financing based on individual decisions. Project assessments performed by the Bank include the analysis of the following issues: formal documents, transaction parameters, sources of repayment (e.g. a successful renewable energy auction, PPA), as well as the investor’s capital resources and experience. |
The policy for financing the carbon intensive energy sector |
|
Adopted and implemented in 2019 for the Bank’s Group. Purpose: a gradual change in the loan portfolio structure towards reducing the exposure to coal-based Customers and transactions (in line with the European climate policy and the goal to reduce the level of emissions to zero by 2050). The policy covers e.g. the following industries: coal and lignite mining, coal-related sectors (e.g. production of mining machinery, trading in coal and similar products), generation of electricity/heat (with the exception of renewable energy) and supplementary activities in the power sector (transmission, distribution, cogeneration). The policy was updated in 2020 by introducing stricter criteria of application (as a result, the policy is now applicable to a wider range of enterprises, including those operating in coal-related sectors) and terms of financing. The policy assumptions include: • with respect to coal and lignite mining, production of boilers, fireplaces and burners (coal-fired) – reducing the exposure (with the exception of coke, which will remain on the EU list of critical raw materials for the following 3 years); • with respect to energy/heat production - not financing any new coal or lignite based sources and gradual reduction of the existing exposure; • reducing general purpose financing and transforming it into ESG financing, aimed at energy efficiency improvement, changing the energy mix or modernization of transmission networks (coal based projects can be financed on the condition that the funds are spent on modernization aimed at meeting the growing environmental requirements; in such cases, the purpose of financing must be precisely defined and the use of funds must be controlled); • with respect to coal-related industries (e.g. production of mining machines, trading in coal and coal-based products) - gradual reduction of exposure, precise definition of the purposes of financing and control of its use; financing of entities having diversified customer portfolios (i.e. generating significant revenues from other sources not related to mining) or those transforming their operations is acceptable. |
The policy for financing the chemistry, oil and gas sector |
|
The Policy for Financing the Chemistry, Oil and Gas Sector defines, among other things, the framework for financing entities operating in the sectors of oil and natural gas extraction, production and distribution of liquid and gaseous fuels, production and trading in chemicals / chemical products, and production and sales of rubber and plastic products. The Bank adopted a strategy of reducing exposure to operations covered by the EU Single-Use Plastic Directive and a prudent approach to the sectors of oil and gas extraction or production of chemicals, chemical products and rubber products. The prudent approach involves, among other things, an assessment of compliance with environmental standards and impact on the environment and an evaluation of the business model with regard to the concept of sustainable business development. |
ESG in the lending process
As part of the ESG project launched in 2020, the Bank commenced work on incorporating the ESG risks assessment in the lending process for corporate Customers.
The appropriate ESG regulations introduced the tools for the estimation, effective assessment and control of non-financial risk of corporate Customers. Identification of ESG risks makes it possible to identify projects which do not satisfy growing environmental and social requirements. The ESG risk assessment became a part of the assessment of the borrower's business model with respect to both new and existing Customers. It also affects the terms and conditions of a decision on granting a loan. As a result of the identification of such risks, the Bank is able to support the financing of sustainable and socially responsible projects.
The introduction of ESG risk identification to the lending process was preceded by workshops for 300 employees (advisors and analysts). The aim of the workshop was not only to demonstrate the process approach, but also to present the role of ESG factors in the contemporary world and the reasons behind their growing importance. At the request of the Customers, the Bank also organized some meetings to discuss ESG.
“Green” products of the Bank's Group
Green mortgage (offered jointly by the Bank with PKO Bank Hipoteczny S.A.) |
|
The Customers may obtain a lower margin on the “Własny Kąt” mortgage loan based on the energy performance certificate for the property. |
A loan for the thermal modernization of apartment buildings (for housing cooperatives and homeowner associations) offered by the Bank |
|
Those who receive this loan may obtain non-refundable aid from the state budget in the form of a thermal modernization bonus or an overhaul bonus for repaying 20% of the loan. Execution of projects financed with the “Nasz remont” loan with a bonus provided by BGK makes it possible to reduce demand for energy. |
The “PKO Ekologii i Odpowiedzialności Społecznej Globalny” investment fund offered by PKO TFI S.A. |
|
The fund’s assets are invested in entities whose operations are environment-friendly and generate a positive impact on the society. First valuation: 23 October 2019, rate of return till the end of 2020: 5.69%. |
A lease or a loan for the financing of photovoltaic devices (products included in the offer of PKO Leasing S.A. for enterprises) |
|
This product is offered under a simplified procedure (there is no need to provide financial documents) and the Customer may obtain financing for both the photovoltaic panels and their installation (the financing of up to PLN 250 thousand may be provided for the whole photovoltaic installation for a period of up to six years). The company finances modules installed on roofs as well as on the ground, |
Ekopożyczka, a loan for for the purchase and installation of photovoltaic panels up to the amount of PLN 50 thousand (in the Bank's offer for individuals) |
|
The repayment period is from 2 to 120 months, the interest rate is 4.99%, and the commission for granting a loan is 0.99%. The Customer should provide an invoice documenting the purchase of photovoltaic devices for a minimum of 85% of the loan amount within 3 months from the date of receipt of the loan. Otherwise the interest is increased to the current maximum interest rate level. As of 2020, Ekopożyczka is also available to individuals who do not have bank accounts with the Bank. |
Transactions on the CO2 emission rights market - commodity swaps and commodity forwards |
|
Transactions addressed to the Bank’s corporate Customers who are obliged to redeem such rights every year in accordance with the EU ETS regulations. The Customers may trade in such transactions and hedge against changes in the prices of emission rights. |
BIZNESMAX guarantees with BGK (in the Bank’s offer) |
|
A possibility to secure loans for pro-environmental projects, such as circular economy, electromobility, renewable energy sources. |
Green mortgage covered bonds of PKO Bank Hipoteczny S.A. |
|
In 2019, PKO Bank Hipoteczny SA issued the first green mortgage covered bonds in Poland. The total value of the two issues carried out in 2019 was PLN 500 million (there were no issues in 2020). PKO Bank Hipoteczny is gradually building a portfolio of loans, which qualify for financing with the funds obtained from issues of green mortgage covered bonds. The amount of this portfolio as at the end of 2020 was PLN 7,203 million, i.e. more than 14 times the value of the green mortgage covered bonds issued. The portfolio of loans financed with the issues of green mortgage covered bonds was verified by an external firm (Sustainalytics), which confirmed the correctness of the utilization of funds. The portfolio of mortgage loans qualifying for financing with the proceeds from green mortgage covered bonds offers annual energy savings of 351,597 MWh and allows avoiding annual greenhouse gas emissions of 135,218 tCO2 (which is more than the combined annual greenhouse gas emissions of the whole Bank's Group). |
The PKO Energii Odnawialnej Fund -– fizan (PKO TFI S.A. and the Bank) |
|
Launched at the beginning of 2021. In accordance with the investment policy, the fund acquires and sells companies whose core business activities comprise generation, sales, transmission or storage of energy from photovoltaic, wind or water installations located in Poland. The first fund participant will be PKO Bank Polski SA, which plans to invest up to PLN 500 million to increase its participation in the transformation of the power sector. |
A syndicated loan for the financing of a portfolio of renewable energy sources owned by a renewable energy producer Qair |
|
The loan agreement between Qair and the banks (PKO Bank Polski S.A., Santander Bank Polska and BNP Paribas Bank Polska) signed in February 2021 with a value of PLN 479 million (EUR 105 million). The share of PKO Bank Polski SA in this financing is 30%. The financing will be used to build a portfolio of 4 wind projects and 29 photovoltaic projects with the total capacity of 106 MW. From the market perspective, the transaction is one of the biggest financing projects in Poland. From the point of view of PKO Bank Polski, this is: (i) the first transaction of financing of the construction and operation of a portfolio of photovoltaic projects; (ii) the first transaction of financing of the construction and operation of wind farms as part of a new nationwide support system, in which the Bank actively participated already at the stage of establishment of the transaction structure (the primary debt market). All projects covered by the transaction won renewable energy auctions and will sign 15-year contracts for difference, which will guarantee a fixed level of electricity selling prices. |
A syndicated loan for PAK PCE Fotowoltaika |
|
A loan granted in March 2021 by PKO Bank Polski S.A. and mBank with a value of PLN 138 million for the financing of the construction of a photovoltaic farm with the installed capacity of 70MWp on the grounds of a former mine. The company PAK PCE Fotowoltaika belongs to Zespół Elektrowni Pątnów-Adamów-Konin S.A. It is building a photovoltaic farm on the reclaimed area of a former open-pit lignite mine, which should be completed in the fourth quarter of 2021. |
The Bank carefully monitors the information published on anthropogenic climate change and is aware of corporate responsibility for complying with the obligations recorded in the Paris Agreement. The Bank wants to achieve its business objectives maintaining its impact on the climate change resulting from its operating and product activities at the lowest possible level.
The analysis of the Bank’s impact on climate (in terms of operations and products) was supplemented with the first attempt of climate risks assessment. In 2020, the Bank took the following actions in this area:
• it tried to identify the main risk factors for the Bank associated with climate change. In the following step, it identified the transmission channels of climate risks into the traditional risks, which are already managed by the Bank. Subsequently, the Bank identified the economic sectors which may be associated with the biggest climate risks. The results of those analyses will be used to develop a climate risk management system at the Bank;
• for the first time, it made a climate disclosure in CDP Disclosure Insight Action and presented, among other things, a preliminary assessment of risks and opportunities, which result from climate change, using the TCFD (Task Force on Climate-related Financial Disclosures) classification. The following risks were distinguished:
- regulatory risk associated with the prices of emission rights and extension of the ETS system to other sectors;
- regulatory risk associated with extension of the scope of reported emissions and making the reporting of greenhouse gas emissions obligatory rather than voluntary across the supply and value chain;
- the risk associated with the financing of the investment projects on new environment-friendly technologies which may not succeed on the market;
- the risk of an increase in the frequency and severity of unusual weather phenomena.
The opportunities identified by the Bank include the new possibilities for financing low emission products and services and the financing of energy transition.
Impact on the social environment through the products offered and initiatives on the financial market
Financing of the |
|
In 2020, PKO Bank Polski SA and PKO Bank Hipoteczny SA granted private individuals housing loans of PLN 11.7 billion (20% share of new sales of mortgage loans in 2020). Since 2014, PKO Bank Polski S.A. has been involved in a nationwide initiative supporting large families: a reduced commission for granting a Własny Kąt Hipoteczny [My Own Place Mortgage] housing loan for the holders of a Large Family Card. |
||||||||||||||||||||||||||||||
Supporting development of local government units through the financing of public investments (e.g. schools, hospitals, roads, environmental protection) |
|
Table 34. The share of loans in the portfolio for corporate and public entities by selected Polish NACE codes (%)
|
||||||||||||||||||||||||||||||
Supporting education |
|
Preferential student loans for students and doctoral students (the Bank offers forgiveness of a part of the loan for the best graduates). At the end of 2020, the value of preferential student loans was PLN 568 million. |
||||||||||||||||||||||||||||||
Counteracting financial exclusion |
|
The Bank has the largest network of branches and agencies of all banks operating in Poland. The coverage of the Bank's network provides access to banking services also to people living in places where the Bank's main competitors do not have branches. Electronic banking is an important supplement to the network of branches. As of 2020, the selected locations of the Bank offer their Customers online self-service points (for persons who do not have a computer or the Internet access). The Simple Communication project involves, among other things, making the messages presented on the e-banking platforms and in the product documentation more clear for the Customers. Supporting the acquisition of digital competences At every branch of the Bank, the Customers were offered individual support from a bank’s employee in using ATMs/cash deposit machines and using their bank products through electronic channels - the iPKO computer application and IKO mobile application. Such education was performed with the help of modern tools, such as the demo version of the application, interactive videos and Customer screens. Such solutions will continue to be developed in the following years. |
||||||||||||||||||||||||||||||
Supporting long-term saving |
|
The possibility of investing in investment funds (PKO TFI S.A.) and in savings Treasury bonds, including long-term bonds. The offer of ROD, ROS bonds for the beneficiaries of the 500+ programme. Preferences for pupils who turned 18 and students up to the age of 25: free of charge investment account until their 25th birthday and reduced commission on purchase or sale orders in respect of financial instruments listed on the WSE, submitted through the Internet system (including the mobile application) until the end of the calendar year in which they turn 25. |
||||||||||||||||||||||||||||||
Education of the youngest children |
|
The offer of educational products for children aged under 13 and their parents. The PKO Junior offer includes: PKO Konto Dziecka [PKO Child's Account], ROR Rodzica [current account of the parent], Pierwsze Konto Oszczędnościowe [First Savings Account], the offer of insurance products for children and teenagers PKO Ubezpieczenie dziecka (implemented in 2020), as well as online services and telephone applications: junior.pkobp.pl and junior.inteligo.pl. The Bank has been conducting the Szkolne Kasy Oszczędności [School Savings Accounts] programme in cooperation with schools for more than 85 years. It is the oldest, largest and at the same time the most innovative financial education programme in Poland, with more than 4,500 primary schools (one in three such schools in Poland) participating in this programme. The SKO offer includes three types of accounts: for pupils (with online access through www.sko.pkobp.pl), schools and parents’ councils. The Bank also offers a social media platform SzkolneBlogi.pl, where 825 schools participating in the SKO programme have their blogs. Overall, more than 830 ths. children used the PKO Junior and SKO offers (accounts for children and accounts for pupils). |
||||||||||||||||||||||||||||||
Supporting the development of small enterprises (microfinancing) |
|
The loans with BGK guarantees: de minimis and COSME (https://www.pkobp.pl/firmy/kredyty/gwarancje-bgk/gwarancja-cosme/) Overdraft up to PLN 20 ths. without security (https://www.pkobp.pl/firmy/konta/debet-w-koncie/) Credit card PKO EURO BIZNES up to PLN 50 ths. (https://www.pkobp.pl/firmy/karty/karty-kredytowe/karta-kredytowa-pko-euro-biznes/) Financing of invoices (https://www.pkobp.pl/firmy/finansowanie-faktur/) SME working capital loan (https://www.pkobp.pl/firmy/kredyty/produkty-kredytowe/kredyt-obrotowy-msp/) SME all-purpose loans (https://www.pkobp.pl/firmy/kredyty/produkty-kredytowe/pozyczka-msp/) Low-value loans granted on the basis of the Customer's declaration on income (https://www.pkobp.pl/klienci-indywidualni/pozyczki/szybka-pozyczka-gotowkowa/) Leases (https://www.pkobp.pl/firmy/leasing/leasing-dla-firm/) |
||||||||||||||||||||||||||||||
Availability of the services to the Customers with disabilities |
|
Preventing financial exclusion of persons with disabilities through: • Appropriate selection of locations (along a main pedestrian route, with access to parking spaces, accessible for persons with disabilities) and appropriate arrangement of space in the branches. By the end of 2020, 811 branches (i.e. 84% of the total number) had been adapted to the needs of persons with disabilities (as at the end of 2019: 755 branches, i.e. 72%). • A possibility of individual service adapted to the type and degree of a Customer's disability - if required, in a dedicated, comfortable and safe room. • Adapting the portals and applications to the needs of the blind and visually impaired and persons with manual disabilities in compliance with the WCAG standard at the AA level. • The Talk2IKO voice assistant: increasing the accessibility of the application for persons with manual disabilities. • Increasing the scope of the services that are available online. • Development of alternative forms of transaction authorization (text message; testing the possibility of signing an order on an electronic pad and receiving copies of documents by e-mail - more than 550 locations are already equipped with electronic pads for the Customers). • Providing services to persons with hearing impairments and the deaf in Polish Sign Language in every branch and agency (through a smartphone) - all advisers have been trained to provide professional services to deaf Customers. • Accessibility of ATMs. At the end of 2020, 2345 ATMs (72% of the Bank’s network) were equipped with audio modules. Information on the location of such devices can be found on the Bank's website and in the Dostępny Bankomat [Available ATM] interbank service. |
Effect on the budget
Table 35. Central and local taxes constituting revenues of the state budget and local budgets (in PLN millions)
|
BANK |
GRUPA KAPITAŁOWA BANKU |
||
|
2020 |
2019 |
2020 |
2019 |
Central taxes, including: |
3,019 |
2,978 |
3,279 |
3,477 |
corporate income tax |
1,452 |
1,339 |
1,388 |
1,525 |
tax on certain financial institutions |
957 |
931 |
1,055 |
1,022 |
personal income tax |
258 |
281 |
293 |
316 |
flat-rate personal income tax |
310 |
366 |
311 |
371 |
flat-rate corporate income tax |
6 |
28 |
7 |
29 |
tax on goods and services (VAT) |
36 |
33 |
225 |
214 |
Local taxes, including: |
17 |
20 |
78 |
91 |
tax on vehicles |
0 |
0 |
44 |
55 |
real estate tax |
14 |
13 |
27 |
24 |
fee for perpetual usufruct |
2 |
6 |
5 |
9 |
other taxes and fees |
1 |
1 |
2 |
3 |
Total: |
3,036 |
2,998 |
3,357 |
3,568 |
Note: The table presents data of the subsidiaries which were a part of the Bank’s Group at the year end and had tax liabilities to the Polish state budget.
According to data provided by the Ministry of Finance, the Tax Group of the Bank was the biggest CIT payer among the tax groups in Poland in 2019.
The Bank did not pay dividend in 2020.
Table 36. Taxes paid by the Bank’s subsidiaries to the Ukrainian budget (in UAH millions)
|
2020 |
2019 |
Total |
441 |
419 |
including: |
|
|
central |
323 |
314 |
local |
118 |
105 |
Involvement in pro-social activities
[GRI 102-12] For many years, the Bank has been initiating and implementing social projects combining business objectives with initiatives for all stakeholder groups. In accordance with its mission, the Bank conducts activities whose aim is to have a positive impact on Poland, its people, companies, culture and the environment. The Bank builds its capital based on the national values and traditions. It conducts, initiates and supports activities aimed at commemorating important historic events, promoting pro-social attitudes and popularizing the Polish tradition and culture. The Bank participates in educational and sport projects.
Both the Bank, as a part of its sponsoring activities, and Fundacja PKO Banku Polskiego (the Foundation), as a part of its charity activities, verify every partner and beneficiary of the support provided. No negative impact on the Bank’s image was identified in 2020 in these areas. The Bank and the Foundation implement projects jointly or separately in the most important programme areas in terms of image, such as culture, tradition, education and sport. Furthermore, the Foundation is involved in activities, which are focused on social welfare, protection of life and health and ecology. On the one hand, the division of commitment to programme areas strengthens the Bank’s image-related benefits, while on the other, it broadens their range.
|
|
Sponsorship activity
The sponsorship activities of the Bank are aimed at promoting the Bank’s image as a reliable leader of the Polish banking sector, a trustworthy financial institution, socially involved, innovative and open to its Customers’ needs.
The Bank’s sponsorship policy is governed by specific principles and a several-stage process of reviewing and accepting of submitted applications. After an expert analysis performed in accordance with the criteria defined by the internal regulations, offers that are accepted are sent to the Sponsorship Committee, which guarantees that the proposals will be considered with due regard to the facts and comprehensively.
In 2020, the COVID-19 pandemic and the related restrictions imposed by the government forced many cultural institutions and entities cooperating with the Bank to remodel their activities. Most of the events sponsored by the Bank during the pandemic were organized in an online or hybrid format (partly stationary, partly online). In this way, projects could be carried out, and in some cases the access to interesting cultural events, which were previously organized in the traditional format, was actually improved. The presence of the Bank as a sponsor was efficiently communicated in the virtual space (social media and platforms dedicated to specific projects).
Due to COVID-19, the Bank had to verify its projects and discontinue some of them in order to redirect funds to the operations associated with fighting the pandemic (chapter 8.1).
In 2020, the Bank received 474 new sponsorship applications. 175 sponsorship projects obtained financial support (in addition to 134 new projects, 41 projects initiated in the previous years were continued).
Charitable activities
The Foundation substantively and financially supports projects of importance to the development of Poland, implemented for and in consultation with local communities, serving the purpose of building the civic society.
The scope of the Foundation’s activities is specified in the Foundation’s Statutes, while the principles of cooperation between the Bank and the Foundation are governed by the agreement. Grants awarded by the Bank based on the resolutions of the Management Board constituted the main source of financing of the Foundation’s statutory objectives in 2020. Additionally the Bank transfers to the Foundation a part of the profit generated on non-cash transactions with charity cards Inteligo Visa payWave “Dobro procentuje” (Goodness pays interest). The support is designated to one of the four charity initiatives, selected by the Customer.
In 2020, the charity work of the Foundation was focused on fighting the coronavirus pandemic, and therefore the projects protecting the society from the effects of the pandemic and preventing the spread of the virus had priority. As a result, involvement in the customary and regular charity activities was significantly limited. Despite the limitations, 143 projects out of 561 applications for financial donations for social activities submitted in 2020 were approved. Donations are transferred based on an agreement concluded between the Foundation and the project partner.
The Foundation also transfers donations in kind to non-governmental organizations in the form of computer hardware and furniture withdrawn from use from various units of the Bank. In 2020, furniture and computer hardware were donated to 54 organizations.
In addition to pro-environmental charity actions, in the second half of 2020 the Bank conducted a nationwide campaign encouraging the Poles to generate cheap electricity for their own needs by installing photovoltaic panels on the roofs of detached houses. The actress Małgorzata Kożuchowska was the ambassador of this campaign. It was a joint campaign of the Ministry of Climate, the National Fund for Environmental Protection and Water Management and PKO Bank Polski S.A. Its aim was to build awareness of the opportunities associated with the use of renewable energy in Polish single family houses and development of the Polish market of photovoltaic micro installations.
Despite the pandemic, the Foundation carried out the following own projects:
• the Banking Honorary Blood Donation Campaign, (700 litres of blood were collected);
• Charity running campaign "I am running for..." In the first quarter of 2020, 12 actions were organized with the participation of 5,848 runners and PLN 120 thousand was collected for 12 beneficiaries;
• Promotion of Polish contemporary art;
• Busola na start [Compass for a start] (1 intern).
A volunteering programme encompassed:
• Helping the healthcare professionals and people suffering due to the pandemic;
• A charity competition “Pokaż jak pomagasz” [Show me how you are helping] organized by the Foundation;
• Christmas/Easter charity campaigns.
[GRI 102-16] As one of the biggest employers in Poland, the Bank is obliged to follow the principles of ethics and promote ethical business, build ethical organizational culture and follow the principles of social responsibility.
The Code of Ethics was implemented by resolution of the Bank's Management Board in 2014. The Code of Ethics is a set of the most important values, principles, standards of conduct, ethical attitudes determining mutual relations in business and the Bank's relations with the outside world. In practical terms, the Code is a tool supporting the popularization and implementation of ethical values at the Bank. Its provisions are binding for the employees and all persons who perform business activities for or on behalf of the Bank or act as intermediaries in the Bank's operations. According to the Bank's Employment Regulations, every employee of the Bank is obliged to observe the Code of Ethics. Initiatives are organized to promote the Code of Ethics and the Bank's values. In addition, an ethics training was prepared for all employees for 2021.
ACTIONS TAKEN |
• defining and promoting standards concerning business decisions and employee attitudes; • increasing the awareness of business ethics among employees by organizing training, workshops and dedicated information campaigns; • defining and promoting key values, which are necessary for the implementation of the Bank's mission, such as: reliability, Customer satisfaction, continuous improvement and entrepreneurship – such values constitute the basis for the employee competence model; • appointment of the Ambassadors of Ethics: in 2019 the employees elected 12 representatives for a two-year term. Tasks: (i) promoting ethical models of behaviour; (ii) supporting the Bank in the development of solutions strengthening the values, norms of conduct and ethical attitudes referred to in the Bank’s Code of Ethics; (iii) supporting the persons reporting violations of standards of ethics, including bullying and discrimination. The Bank supports the Ambassadors by offering them training in conflict resolution and mediation in the workplace and workshops aimed at sharing experience and understanding the Bank's values and the supported employee attitudes; • ensuring that the whole Bank's Group follows uniform standards of ethics; • promoting firms, which follow the principles of ethics in their relations with the Customers, business partners and employees; • involvement in the initiatives addressed to local communities and global projects; • taking steps to ensure a high standard of solutions in the area of ethics (confirmed by certificates); • ensuring that the employees have the right to associate and freedom of speech. |
The Bank has analysed the ethical risks for each group of stakeholders and it takes actions to mitigate such risks:
Stakeholders |
Risks |
Actions |
Employees |
Corruption and bribery Violating the trade secret Bullying, harassment, other forms of discrimination Violating the terms and conditions of employment |
Chapter 13.5.3 (Counteracting corruption) The Bank mitigates the risks of violating the business secret, bullying, harassment and other forms of discrimination, as well as the risk of violating the terms and conditions of employment, by defining the appropriate responsibilities of the employees in this respect in the Bank's Employment Regulations. |
Customers |
Unethical sales
Unauthorized access to Customer information Unauthorized access to Customers’ funds Social exclusion
Non-transparent relations with political parties |
Chapter 13.5.4 (misselling) Chapter 13.5.6 (filing complaints and reporting violations) Chapter 13.5.5 (a risk of unauthorized access to Customer information), data protection, observing bank secrets Chapter 13.5.2 (a risk of unauthorized access to Customers’ funds)
Chapter 13.4.1 (special actions supporting the Customers with disabilities) The Bank’s Management Board has adopted internal regulations concerning relations with political parties and defining the principles for opening bank accounts and granting loans to political parties |
Contractors |
Corruption and bribery Extortion of trade credit |
Chapter 13.5.3 (counteracting corruption) Chapter 13.4.4 (payments on time) |
Social environment
|
Corruption and bribery Adverse effect on the environment Adverse effect on the communities |
Chapter 13.5.3 (counteracting corruption) Chapter 13.3 (monitoring impact) Chapter 13.4.1 (charitable and sponsorship activities) |
Counteracting violations of standards of ethics
In addition to the promotion of the Bank's values and ethical conduct, the Bank finds it equally important to counteract all forms of violation of ethics in all aspects of the operations referred to above (including counteracting bullying and discrimination). Therefore, the following procedures have been defined in a clear and transparent manner:
• reporting any violations - this opportunity is available to every employee in any form (also anonymously);
• proceedings to explain the reported (potential) violations;
• monitoring and reporting (incl. to a competent Management Board member) of the identified violations.
These procedures and principles of conduct have been adopted by the Management Board of the Bank.
The Bank's Code of Ethics and the Bank's Employment Regulations contain provisions, inter alia, counteracting discrimination due to gender, age, disability, religion, race, ethnic origin, nationality, political convictions, union membership, sexual orientation, employment for a definite or indefinite period or on a full-time or part-time basis.
Each employee is obliged to comply with the Bank's Code of Ethics and participate in the development and promotion of the organization's culture and the related values.
In order to counteract breaches of the principles of ethics, the Bank applies other internal regulations: “The principles for counteracting mobbing and discrimination” and “The procedure for handling complaints concerning violation of employee rights”. Moreover, the Bank analyses each case in terms of non-compliance and violations related to conflicts of interests. The employees report such cases to dedicated email addresses.
In addition to promoting values among employees, the Bank also monitors employee complaints for potential violations of standards of ethics. The competent members of the Management Board of the Bank are informed once a quarter about employee complaints concerning the areas supervised by them and the way the case has been resolved. The Management Board members are also entitled to review the documentation concerning the complaint. Moreover, the President of the Management Board of the Bank is informed once a quarter about all complaints filed by employees.
In accordance with the regulations concerning the assessment of appropriateness of the candidates for Management Board members and the members of the Management Board of PKO Bank Polski S.A. adopted by PKO Bank Polski S.A., the Supervisory Board takes into account the criteria of reputation, integrity and ethical conduct of the candidates for Management Board members (as part of preliminary assessment) and the members of the Bank's Management Board (as part of periodic appraisal). Unethical behaviour may be subject to sanctions.
Ethics in the Bank’s Group
In order to introduce uniform standards, in 2020 the Bank handed over the Code of Ethics of the PKO Bank Polski Group Entities to the Group entities, which implements the provisions of the Bank's Code of Ethics. The Group entities implemented the Code of Ethics of the PKO Bank Polski Group Entities in the period from October to December 2020.
In the process of developing regulations, procedures and policies referring to human rights, the entities belonging to the Bank's Group draw from the achievements of international organizations and respect the fundamental principles set out in the International Bill of Rights which is composed of the following documents:
• the Universal Declaration of Human Rights;
• the UN Convention: the International Covenant on Civil and Political Rights;
• the UN Convention: the International Covenant on Economic, Social and Cultural Rights.
Depending on the size and specificity of a given entity of the Bank's Group, observing human rights is manifested equally in the internal provisions, the initiatives undertaken and in everyday practice. This applies, in particular, to the rights to:
• recognize the identity of every employee;
• proclaiming one's views and opinions, freedom of thought, conscience and religion;
• the protection of personal rights;
• equal treatment;
• access to information;
• access to healthcare;
• respect for privacy.
Internal documents related to human rights
Some of the Bank's Group entities have included provisions relating to respect for human rights and the prohibition of discrimination in such documents as their employment regulations or the Code (Principles) of Ethics. The Bank's policy concerning respect for human rights is contained in the following documents:
• the PKO Bank Polski SA's Code of Ethics;
• the Principles of counteracting mobbing and discrimination and the procedure for handling complaints concerning violation of employee rights;
• the Principles of recruitment and the Standards of Recruitment;
• agreements concluded with service providers (applies to personal data protection agreements);
as well as in strategic programmes such as #LubięTuPracować (#ILikeToWorkHere).
Issues regarding forced labour and child labour are not directly reflected in the Bank's regulations, because:
• the prohibition of forced labour arises from Article 4 of the Convention for the Protection of Human Rights and Fundamental Freedoms;
• the prohibition to employ people under the age of 15 arises from Article 190, para. 2 of the Labour Code.
In its practice, the Bank follows the Children’s Rights and Business Principles.
The other entities of the Bank's Group incorporate the issue of respect for human rights in their processes, everyday practice and in the unwritten rules.
Respecting human rights
One of the most crucial elements/stages of the analysis is the identification of human rights in the context of the operations conducted. No cases of underage employment or forced labour were identified in the Group entities operating in various countries.
Another task is the issue of observing the human rights in the supply chain, which in the context of the Group entities boils down to relationships with suppliers and outsourcing of services (mainly banking services). The issues of compliance with human rights are reflected in the procedures and agreements signed with these entities.
Examples of activities conducted within the Group entities, in which respect for human rights is manifested, are presented below:
• counteracting mobbing and discrimination;
• basing the rules of the periodic appraisal/summary of performance on a dialogue with the employee, the employee's participation in the process, collecting feedback from a variety of sources;
• use of recruitment principles that ensure equal treatment of candidates during the selection process for filling vacancies, without any discrimination, prejudice and without obtaining information that could breach the candidate's rights and personal dignity;
• basing promotion decisions on an objective appraisal of qualifications, skills and performance;
• supporting diversity in management, in particular with respect to age, experience, style of work, thinking; promotion of diversity among managers as an asset and not a limitation;
• enabling employees to express their opinions and influence important issues regarding the organization and working conditions, management, organizational culture, as well as enabling the provision of information about perceived crimes and fraud - assuring their anonymity and confidentiality (whistleblower mechanism);
• protecting personal rights (personal data, sensitive data) of employees and Customers through carefully prepared procedures and systems and the inclusion of restrictive entries in contracts concluded with service providers who have access to such data;
• creation of conditions for satisfying needs related to leisure and culture, as well as respect for the work-life balance principle;
• assurance of freedom of association;
• creating a safe working environment - in view of the exceptional circumstances resulting from the pandemic, in 2020 the additional Intra websites were launched (“Coronavirus”, “Remote work”), as well as the dedicated newsletters, in which the Bank provided the necessary information and guidelines in the area of tools or the organization of work on an ongoing basis. Psychological support was also provided.
The Bank's Group applies the same human rights standards across the entire supply chain in its business activities.
The Bank takes actions to prevent violations of human rights, including employee rights, but it is not able to entirely eliminate all conflicts. In 2020 final verdicts were passed in 20 cases concerning employment relationships. The Bank won 15 of these cases (the claims were dismissed) and lost 5 (the claims were granted).
The Bank's Group entities monitor the risks accompanying the individual human rights and manage them at the firm's level.
Communicating human rights
The basic internal communication tool is the Intra portal which contains information on benefits, privileges, rights and obligations of the Bank's employees. On the intranet portal of the Bank the employees may find the following documents:
• PKO Bank Polski S.A.'s Code of Ethics;
• The Principles of Recruitment (regulations updated and communicated to the organization in 2020);
• The recruitment standards (regulations updated and communicated to the organization in 2020);
• The rules on the prevention of bullying and discrimination and the procedure for handling complaints concerning breaches of the employee rights (provisions updated and communicated to the organization in 2018; a clear presentation of the rules of the prevention of mobbing and discrimination and the procedure for handling complaints was attached to the text of the regulations to facilitate the use of the procedure by the employees);
• Good practices in serving the disabled, as well as a presentation of the Bank's Values.
Human rights are communicated externally through the Bank's publicly accessible website, which contains information about the PKO Bank Polski Foundation, about the idea of the charity it pursues as a measure of respect for the environment, in particular for other people.
Responsibility in the supply chain
The Bank’s Group entities apply the principles of social responsibility in the supply chain by managing their relationships with unrelated entities in the following manner:
• they follow the principles of fair competition;
• they settle their liabilities in a timely manner to ensure liquidity in the supply chain;
• as part of the procurement policy, at the stage of the letter of inquiry they oblige the suppliers to follow the principles of social and environmental responsibility;
• they support diversity in the policy of employment and cooperation with non-related entities.
Operational risk related to outsourcing banking activities to external entities
The Bank conducts banking activities with the support of external entities. As a result, it is exposed to operational risk arising from outsourcing services to other entities.
REGULATIONS |
|
Principles for operational risk management; Principles for outsourcing banking activities to external entities other than agents or intermediaries; Principles for cooperation with agents and Principles for cooperation with intermediaries and Internet intermediaries |
STAGES |
|
Risk management is performed at all stages of outsourcing a given activity: • selection of the entity: evaluation of its credibility, financial situation and the possibility of ensuring continuity of the entrusted operations; • concluding the outsourcing contract; • monitoring the cooperation: recording the contracts concluded, updating the information on the selected entities; preparing contingency plans and reviewing them regularly. Evaluating the risk in the case of every material change in the contract and during the annual assessment of operational risk related to the performance of the outsourcing contract. Supervising the performance of contracts, reporting irregularities in the contracts' execution, monitoring the KRI indicators providing information about the scale of breaches in the cooperation with external entities; • Completion: an annual assessment of the cooperation with external entities executing outsourcing contracts and reporting the results to the relevant bodies. |
RISK IN THE GROUP |
|
The operational risk management procedures implemented at PKO Bank Hipoteczny S.A. correspond to the standards applied at the Bank. KREDOBANK S.A. has adopted its internal regulations: the commencement of cooperation is preceded by an assessment of the risk associated with outsourcing a given activity. |
Cooperation with suppliers of goods and services related to the ongoing procurement of the Bank’s Group entities
REGULATIONS |
|
The task of the Bank’s Procurement Department is to oversee the procurement process in order to punctually supply materials and services needed of an appropriate quality. In addition to the Bank’s interest in the broad sense, the Procurement Department oversees the compliance of the procurement processes with the principles of ethics, including the principle of treating all participants equally. When selecting suppliers, the Bank also takes into account certain criteria other than price, including compliance with business ethics, aimed at transparent relationships with suppliers. The procurement policy is developed based on best market practice. The main regulatory provisions are the “Principles” and “Procedures of purchasing goods and services at the Bank”. |
|||||||||||||||
PRINCIPLES |
|
Relations with suppliers are built on the basis of honesty, transparency of action, mutual respect and professionalism, including, in particular, through: • honouring the accepted arrangements and obligations; • settling payments and other liabilities on time and in accordance with the agreed contractual terms; • resolving difficult and conflict situations through dialogue; • verifying suppliers only on the basis of substantive and business premises; • informing suppliers about standards of conduct. |
|||||||||||||||
CONFLICT OF INTEREST |
|
From September 2020, the Bank began analysing the situations which could cause potential conflict of interest more thoroughly. In addition to the existing practice, where the employees handling the procurement process declare the absence of a conflict of interest, information for the suppliers with a map of the conflict of interest is attached to each request for a proposal. The supplier is obliged to disclose all situations/relationships, which could cause a conflict of interest in the future, with the bid. If circumstances that could lead to a conflict of interest occur after the bid has been submitted, at the stage of signing the contract or afterwards, the affected bidder or supplier shall be obliged to make the declaration immediately. |
|||||||||||||||
TIMELY SETTLEMENT OF LIABILITIES |
|
The Bank and other entities from the Bank’s Group approach the issue of settling their liabilities to suppliers in a timely manner with due care and diligence. In 2020, the value of invoices paid late, on which interest was charged as a result, constituted a marginal percentage of all the invoices paid and it decreased significantly in the entire Bank's Group. The list does not include payments, a possible delay in which was agreed with the supplier, because the collection of this information would be excessively laborious. Table 37. Share of the value of invoices on which interest was paid in the total value of invoices paid
|
|||||||||||||||
ESG CRITERIA |
|
The suppliers who are interested in starting cooperation with the Bank may register at the 'PKO Zakupy' procurement platform on their own. Every such supplier must be approved by an employee of the Procurement Department. The suppliers who have been approved may take part in procurement proceedings. The entities of the Bank’s Group affect the suppliers with respect to socio-environmental issues at the stage of each request for proposal sent by the Bank or any of the other entities of the Bank's Group. In accordance with its wording, when joining the procurement procedure, the suppliers must declare that they are guided by the overriding principle of respecting the law across the supply chain, a sense of justice and social responsibility and they understand the influence exerted by their activities on the natural environment, their surroundings, the other party, their employees, co-workers, subcontractors and business partners, and they are guided by the principles of ethics. A further part of the statement contains detailed declarations regarding: • caring for safety at the workplace; • being guided by cooperation, trust and a responsible and partnership approach to the other party; • compliance with the rules on working time and remuneration for work; • respecting human rights; • counteracting corruption; • caring for the natural environment. |
|||||||||||||||
PROCESS CERTIFICATION |
|
In 2020 the Bank worked on renewing the Corporate Certification obtained in 2016. The Certificate is a quality mark awarded by the Chartered Institute of Procurement and Supply (CIPS), the biggest procurement organization in the world. The process was completed in 2021 with renewal of the certificate. At present, PKO Bank Polski S.A. is the only financial institution with this certificate in Poland and the entire Central and Eastern Europe. Corporate Certification is a globally recognized distinction awarded to organizations applying the highest standards of procurement processes. |
|||||||||||||||
GRI STANDARDS |
|
[GRI 414-1] In 2020, all new suppliers (417) were verified by the Bank in terms of social criteria. [GRI 414-2] The Bank did not note any negative social impact in the supply chain. |
Employment level
Table 38. Total number of employees (in FTEs)
|
2020 |
y/y (%) |
2019 |
Bank |
21,939 |
-7.2 |
23,639 |
Other entities |
3,920 |
-3.7 |
4,069 |
Bank's Capital Group |
25,859 |
-6.7 |
27,708 |
Table 39. Employees by position, age, working time and gender [GRI 405-1] [GRI 102-8]
|
BANK |
GROUP |
||||||||||
2020 |
2019 |
2020 |
2019 |
|||||||||
total |
women |
men |
total |
women |
men |
total |
women |
men |
total |
women |
men |
|
by position and gener |
|
|
|
|
|
|
|
|
|
|
|
|
regular employees |
88% |
76% |
24% |
88% |
77% |
23% |
87% |
75% |
25% |
87% |
76% |
24% |
middle management |
7% |
68% |
32% |
7% |
69% |
31% |
7% |
65% |
35% |
8% |
66% |
34% |
senior management |
5% |
57% |
43% |
5% |
56% |
44% |
6% |
54% |
46% |
5% |
52% |
48% |
total |
100% |
75% |
25% |
100% |
75% |
25% |
100% |
73% |
27% |
100% |
74% |
26% |
by age group and gender |
|
|
|
|
|
|
|
|
|
|
|
|
up to 30 years |
11% |
72% |
28% |
13% |
72% |
28% |
12% |
72% |
28% |
15% |
71% |
29% |
from 30 to 50 years |
61% |
71% |
29% |
61% |
72% |
28% |
63% |
70% |
30% |
63% |
71% |
29% |
above 50 years |
28% |
83% |
17% |
25% |
84% |
16% |
25% |
81% |
19% |
23% |
83% |
17% |
total |
100% |
75% |
25% |
100% |
75% |
25% |
100% |
73% |
27% |
100% |
74% |
26% |
by full-time and part-time employment and gender |
|
|
|
|
|
|
|
|
|
|
|
|
Full-time |
99% |
75% |
25% |
99% |
75% |
25% |
97% |
73% |
27% |
98% |
74% |
26% |
Part-time |
1% |
80% |
20% |
1% |
77% |
23% |
3% |
65% |
35% |
2% |
65% |
34% |
Total employment |
100% |
75% |
25% |
100% |
75% |
25% |
100% |
73% |
27% |
100% |
74% |
26% |
The share in the number of employees of a given gender or in the total number of employees
Table 40. Newly hired employees and turnover rate in the Bank and the Bank’s Group by age group and gender in 2020 [GRI 401-1]
|
BANK |
GROUP |
||||||
|
newly hired |
turnover rate |
newly hired |
turnover rate |
||||
|
2020 |
2019 |
2020 |
2019 |
2020 |
2019 |
2020 |
2019 |
<30 |
49% |
50% |
3.3% |
4.1% |
43% |
46% |
3.5% |
4.7% |
30-50 |
49% |
47% |
5.6% |
7.1% |
53% |
50% |
6.4% |
8.0% |
>50 |
3% |
3% |
2.8% |
2.8% |
4% |
4% |
2.7% |
2.6% |
|
|
|
|
|
|
|
|
|
women |
68% |
68% |
9.1% |
10.5% |
67% |
66% |
9.4% |
11.1% |
men |
32% |
32% |
2.6% |
3.5% |
33% |
34% |
3.1% |
4.2% |
Total |
5% |
12% |
11.7% |
14.0% |
6% |
15% |
12.5% |
15.3% |
Share in the total number of employees (%)
The turnover rate calculated as the ratio of the number of employees terminated in 2020 to the number of employees employed at the end of 2019. The ratio of voluntary resignations at the Bank was 4.7%, retirement - 1.8%, and planned group redundancies - 1.2% of the number of employees at the end of the year. For the Group, these values were 5.3%, 1.6% and 1.1% (2020).
Table 41. Returns to work after parental leave [GRI 401-3]
|
BANK |
|
|
women |
men |
Employees who used parental leave in 2020 and for whom the parental leave still lasts |
897 |
3 |
Employees who returned to work during the reporting period after ended parental leave in 2020 |
532 |
3 |
Employees who used parental leave only in 2020 and it ended in 2020 |
563 |
3 |
Employees who returned to work in reporting perod after completion of parental leave, who are still employed in the end of 2020 |
406 |
3 |
Share of return to work after parental leave |
94.5% |
100% |
Share of employees, who returned from parental leave and stay employed till the end of 2020 |
76.3% |
100% |
Table 42. Additional information on the employment at the Bank in 2020
Permanent contract employment (share in total employment) |
89.5% |
Fixed-term contract employment (share in total employment) |
10.5% |
in this contract for replacement |
1.5% |
Employees with duration of employment>10 lat (share in total employment) |
74.9% |
Average duration of employment for women (years) |
16 |
Average duration of employment for men (years) |
11 |
Number of women employed (ths.) |
16.4 |
Number of persons in senior managment (in ths.) |
1.2 |
Number of women in senior management (in ths.) |
0.7 |
Number of newly hired (in ths.) |
1.0 |
Number of women among newly hired (in ths.) |
0.7 |
Number of employed foreigners |
21 |
Share of employment with disabilities in total employment |
1.2% |
The employment policy at the Bank and the Bank's Group is based on the principle that every employee is important, regardless of their gender, age, health, sexual orientation, religious denomination, marital status or country of origin.
The number of employees in 2020 was affected by the pandemic. The Bank temporarily suspended the recruitment processes aimed at filling both the existing and new vacancies with candidates from outside the organization. Moreover, the process of extending fixed-term contracts was verified thoroughly.
The Bank and the Bank’s Group entities use their best efforts to ensure diversity among the employees at every level in accordance with the applicable internal policies (chapter 11.4).
Salaries
Table 43. The relationship between the average salary of women and men by specific employment categories at the Bank
|
2020 |
2019 |
Distribution network |
0.8 |
0.8 |
Other non-managerial positions |
0.7 |
0.7 |
Managerial positions |
0.8 |
0.8 |
Key managers |
0.9 |
0.9 |
The Bank’s remuneration policy does not discriminate employees based on their gender. The process of determining the salaries at the Bank is based on the valuation of positions in accordance with a generally applicable international methodology. The salary is related to the complexity of the tasks within a given organizational structure, the level of responsibility and the necessary skills associated with a given position.
The Bank performs regular salary reviews for different positions, which also analyse the relationship between the salaries of women and men, taking into account internal benchmarks and data provided in remuneration reports and studies.
The gender pay gap at the Bank and in the Bank’s Group was 35% (based on the average salary) and it did not change in relation to 2019. The gender pay gap at the Bank based on the median was 36%.
[GRI 405-2] The global ratio of women’s basic salaries to men’s basic salaries in the Bank’s Group and at the Bank is 65%. However, this ratio is not a precise reflection of the relationship between women's and men’s salaries, because the differences observed between the salaries of women and men on equivalent positions are smaller.
In addition, in order to ensure that the same positions are compared and to avoid the effect of other elements on the salary level, the Bank uses the so called “Comparatio” (CR), which compares the salary offered to an employee to an appropriate market benchmark. The internal analyses performed using this ratio show that there are no differences between the remuneration of women and men at the Bank and that both groups receive remuneration at the market level.
The “Policy for remunerating the employees of the Bank and the Bank’s Group”, which is applied in the Group, ensures a consistent salary system by:
• applying a salary system which is in line with market trends,
• acquiring optimal job candidates;
• adjusting mechanisms, tools and salary levels to the Bank's and Bank Group's strategy and goals;
• taking into account the Bank Group's ability to shape the desired mechanisms and salary levels;
• setting permanent salaries on the basis of job valuations;
• developing the remuneration structure on the basis of the results of work achieved and appraisal of the skills of the employees;
• building employee responsibility for the tasks being assessed on the basis of objectivized criteria;
• ensuring that the variable components of the salaries are parameterized so that they take into account the Bank's and Bank Group's long-term cost of risk, the capital cost and liquidity risk;
• establishing a system in which the forms of remuneration do not encourage the people involved to favour their own interests or the interests of the Bank and other entities from the Bank's Group to the detriment of Customers.
[GRI 102-41] A Collective Bargaining Agreement concluded with the company's trade union organizations is in force at the Bank, regulating, among other things, salary issues. According to the Collective Bargaining Agreement, the Bank's employees are entitled to the following salary components: (i) a basic salary, (ii) allowances for working overtime and in conditions which are particularly onerous and harmful to their health, (iii) bonuses and rewards for special achievements at work.
Basic salaries and additional benefits granted to employees are set on the basis of job valuations and an analysis of market salaries.
The Bank has the bonus system under which the amount of a bonus depends on the achievement of set targets. The targets set for the employees are related to the Bank's key management indicators.
Apart from the bonus system, there is a system for awarding the Bank's employees. Employees may receive awards:
• individually - for those employees who achieve outstanding professional results or attainments bringing important effects for the Bank;
• for recommending candidates for the Bank's employees;
• for actions related to employee retention.
The key actions related to the Bank's employee remuneration system in 2020 included:
• adjusting variable remuneration to the conditions of the Bank's operations during the pandemic and the regulatory guidelines;
• sales support campaigns for employees of selected organizational units - in particular for employees of the retail network units. The competition winners were awarded financial prizes and additional training raising their professional qualifications;
• ongoing actions relating to the bonus system relating to the Covid-19 pandemic.
In the Bank's Group entities, depending on the level of employment, the principles of remunerating employees are defined in the salary regulations and in the employment contracts or just in the employment contracts. In the individual entities belonging to the Bank's Group there are separate bonus systems for the employees.
Additional benefits
[GRI 401-2] All non-salary benefits are available to employees irrespective of their type of contract or working time (full or part time).
Table 44. Major non-salary benefits for the employees [GRI 401-2]
|
Share in total employment (%) |
y/y (%) |
|
BANK |
2020 |
2019 |
|
Medical packages |
100 |
100 |
0 p.p. |
Employee pension programme |
81 |
78 |
+3 p.p. |
Subsidization of organized recreation |
11 |
18 |
-7 p.p. |
Welfare payments |
3 |
4 |
-1 p.p. |
Housing advances |
13 |
15 |
-2 p.p. |
Benefits available from MyBenefit platform or special social benefits, such as Christmas bonuses |
100 |
100 |
0 p.p. |
Sports cards |
8 |
19 |
-11 p.p. |
GROUP |
|
|
|
Medical packages |
99 |
98 |
+1 p.p. |
Employee pension programme |
73 |
70 |
+3 p.p. |
Subsidization of organized recreation |
11 |
16 |
-5 p.p. |
Welfare payments |
4 |
4 |
0 p.p. |
Housing advances |
11 |
13 |
-2 p.p. |
Benefits available from MyBenefit platform or special social benefits, such as Christmas bonuses |
90 |
90 |
0 p.p. |
Sports cards |
8 |
19 |
-11 p.p. |
MEDICAL CARE |
|
Additional medical care: differentiated packages of benefits assigned to specific groups of positions, “Zdrowie jak w Banku” [Guaranteed health] – the preventing programme focused on the early detection of diseases and the promotion of a healthy lifestyle, Support in the pandemic – additional medical check-ups aimed at detecting post-COVID complications, Other entities of the Bank's Group (operating in Poland) provide medical care to their employees on the terms negotiated with the healthcare provider by the Bank, based on separate agreements. |
EMPLOYEE PENSION PROGRAMME (EPP) |
|
The Bank's EPP has been operated since 2013 in the form of an agreement under which the Bank contributes a Basic Contribution (3.5% of an employee's salary) and the Additional Employee Contribution to the Investment Funds managed by PKO TFI S.A. Other major companies belonging to the Bank’s Group also have EPPs in place. |
OTHER |
|
Additional benefits from the Company Social Benefits Fund: the MyBenefit cafeteria system. The amount of funds received depends on the gross income per person in a given family. Some of the Group companies also offer the possibility of using the MyBenefit platform to their employees. Vouchers, offers and discounts, group insurance, supporting sports initiatives and activities and charitable activities of the employees. |
Recruitment policy
The recruitment policy of the Bank’s Group is transparent and focused on employing persons with different types of professional experience and skills. The recruitment policy is based on high standards of counteracting discrimination and personal data protection with the support of modern technologies and information systems. The employees are selected without taking into account discriminatory criteria (e.g. age, gender, disability, race, religion, nationality, political views, trade union membership, ethnic origin, faith, sexual orientation).
The chances and development opportunities available to persons participating in internal recruitment are promoted and communicated in the intranet. The Bank provides optimum amount of time for the transfer of an employee selected in internal recruitment to their new position, making the process faster and simpler.
The Bank carries out internal campaigns aimed at encouraging employees to take part in internal recruitment (in the whole of the Bank's Group) as part of the professional development in other business areas.
Due to the pandemic, the Bank suspended all external recruitment in the period from March to June 2020. Subsequently, the recruitment was gradually resumed, but most offers were addressed exclusively to the employees of the Bank's Group.
The Bank cares about the candidates' experience in the recruitment process by diversifying the channels of reaching different groups of candidates, shortening the recruitment time or applying modern selection methods. The Bank uses modern technologies in the recruitment process, such as the ATS system, recruitment chatbot and online quiz available on its website.
At the same time, the Bank regularly analyses the candidates’ experience and improves the recruitment process.
An internal recommendation programme is also carried out at the Bank. As part of this programme, the employees may recommend candidates for jobs. If a candidate recommended by an employee is hired and satisfies the conditions specified in the rules, the recommending employee will receive a cash reward. In 2020, the Programme was extended by adding more positions, for which the employees may recommend candidates with appropriate qualifications.
For years, the internship programmes, such as “Staż na dzień dobry” (Internship for a start) have been one of the Bank’s strengths. The programme is addressed to students and young graduates who may choose one of the following five paths: Sales, IT, Data Analytics, Cybersecurity and Business Support.
Cooperation with universities is an important aspect of building the image of an employer. In response to business needs, the Bank cooperates with the academic community. It participates in the events organized at the universities, cooperates with their careers departments and shares knowledge. The Bank has signed cooperation agreements with universities, including the Warsaw School of Economics (SGH), the Warsaw University of Technology (Department of Mathematics and Information Sciences - MiNi) the SWPS University. In addition to supporting the organization of practical training and internships, these agreements concern joint organization of lectures, training courses, seminars and workshops about finance.
Relations with the employees and freedom of association
Trade union organizations
Employees are represented at the Bank by the trade unions and the Employee Council.
The employer does not prevent the employees from joining the trade unions and the Bank Employee Council or acting as their members in any way. The employee organizations at the Bank have the right to determine their own internal rules, are free to elect their representatives and appoint authorities, operate and prepare the programme for their operation. It is consistent with the principles of freedom of association referred to in Convention No. 87 of the International Labour Organization on Freedom of Association and Protection of the Right to Organise.
Two trade union organization operate at the Bank:
• The National Trade Union of PKO BP SA Employees;
• “Solidarity” Independent Self-Governing Trade Union of PKO BP SA Employees,
whereby only the former is a representative union.
As at 31 December 2020, trade union members constituted approx. 9.9% of the total number of employees (11% as at the end of 2019).
Meetings with trade unions and the Bank's Employee Council are organized as necessary, at least a few times a year. The social partners are informed about the planned organizational changes without undue delay [GRI 402-1]. In 2020, the most frequently discussed issues concerned the functioning of the Bank during the pandemic. Due to the pandemic, most meetings held in 2020 were remote meetings.
The social partners actively seek information they need to conduct their activities. Both the trade unions and the Employee Council have the opportunity to obtain the information they need. In order to make it easier for them to act, special communication channels have been developed for the trade unions and the Bank's Employee Council to provide information about their activities. For this purpose, a special tab - “Employee Representation” - has been added to the INTRA portal. The Employee Council uses this tool for regular communication with the employees.
Trade union members are Social Labour Inspectors at the Bank. Social Labour Inspection is a function performed by employees on a voluntary basis. Its aim is to ensure that the workplace offers safe and healthy working conditions and respects the employee rights specified in the labour law. The Bank provides space for the performance of the tasks of the Social Labour Inspection.
The Bank cooperates with these social partners in accordance with the applicable regulations. In accordance with the generally applicable laws, the Bank informs the social partners about:
• the employment-related aspects of the employer's activity and economic situation and the changes anticipated in this respect;
• the employment level, structure and anticipated changes and the actions aimed at maintaining the level of employment;
• the actions that could cause significant changes in the organization of work or the basis of employment.
If the law so requires, the Bank carries out consultations or negotiations with the social partner. Consultations are carried out e.g. in the event of planned organizational changes resulting in significant changes in the organization of work, the level of employment and the type of employment contracts. Negotiations with the trade unions are conducted with respect to the salaries and social benefits.
The employees may report their complaints, opinions and suggestions through trade unions. Alternatively, they may do so without the intermediation of trade unions, using a dedicated e-mail address. It is regulated by a procedure for reporting complaints and irregularities. An employee is entitled to additional support in the process of clarifying the complaint; namely, he or she may indicate a representative of a trade union organization or an employee representative appointed in accordance with separate internal regulations, who will participate in meetings with the employee or submit opinions on the validity of the claim.
The Bank's Employee Council also operates at the Bank. The principles of cooperation with the Bank's Employee Council have been set in a separate agreement. Under this agreement, the Bank’s Employee Council has the right to receive information from the employer within 7 days of requesting it. The members of the Bank's Employee Council may use the equipment, devices and materials provided by the employer for the purposes of executing the tasks of the Employee Council.
In the Bank's Group, a trade union organization is present at KREDOBANK SA. Trade union organizations do not operate in other entities of the Bank’s Group.
In the entities of the Bank's Group, the dialogue with the employees takes place in accordance with the applicable regulations. Its form is adapted to the size of the company and its specificity: in the larger subsidiaries, the dialogue with employees is conducted, among others, through elected employee representatives and using the forms of communication with employees accepted at that company, either directly or via e-mail and/or through the intranet. The employees have the opportunity to report complaints about a breach of employee rights and other irregularities.
No collective disputes were recorded at the entities.
No operations or suppliers characterized by a high risk of restricting the freedom of association and collective agreements were identified in 2020 at the Bank [GRI 407-1].
Development and education
Table 45. Basic data on training at the Bank [GRI 404-3, GRI 404-1]
|
BANK |
GROUP |
||||
|
total |
women |
men |
total |
women |
men |
Number of training days in a year |
133,960 |
98,383 |
35,577 |
137,110 |
100,119 |
35,991 |
Participation of employees subject to regular performance appraisal and career development reviews (%) |
94 |
93 |
98 |
82 |
82 |
83 |
Average number of hour of trainings in a year per employee* |
24 |
24 |
25 |
21 |
21 |
20 |
* average number of hours was estimated by multiplying the registered training days by 4 (during pandemic majority of trainings was carried out remotely) |
[GRI 404-2] Development activities are adjusted to the nature of the Bank and the individual entities of the Bank’s Group and regulated by internal regulations, which guarantees a flexible approach to the development policy.
“The principles of employee development and succession planning in PKO Bank Polski SA” set the goals, directions and activities of the Bank in the area of management of development of the Bank's employees and co-workers. The main assumption of the training policies is supporting:
• the achievement of the strategic goals of the Bank's Group entities and the business goals;
• onboarding of new employees;
• the assurance of professional qualifications for the employees and the adaptation of their knowledge and skills to the changing requirements of the market on which a given entity operates;
• the preparation of the employees for the implementation of new solutions and products offered by the Bank's Group entity or for introducing changes into the existing solutions and products offered.
All employees, regardless of their age or gender, may benefit from training activities in the Bank's Group. Individual entities may apply the criterion of the position held when referring employees to specific training, such as participation in education at degree level (different levels of education at the individual companies of the Bank's Group) or foreign language courses. The employers finance training activities in whole or in part.
The year 2020 was exceptional because of the epidemic, and therefore development activities were mostly conducted online.
The Bank updates the List of Training Courses every quarter and communicates it on the intranet portal. It contains a number of development activities for employees and managers, with a description of these activities and an easy to use tool for signing in up for the individual training sessions. Newly implemented training courses are related to cloud technologies or cybersecurity.
The Bank conducts projects to develop both hard and soft skills. A team of several dozen internal trainers conducts group training, on-the-job training and internal workshops (also for interns). Group training is held by external companies in selected projects. The Digital Transformation employees have access to both internal and certified training courses in agile methods. The employees also participate in language courses.
The Bank’s employees actively use the internal e-learning platform, mainly for holding trainings on product knowledge, knowledge of processes and use of IT applications.
As part of their professional development, the employees may apply for partial financing of their post-graduate studies, such as Master of Business Administration (MBA) or solicitor’s training. The Bank also conducts adaptation trainings for new employees, which are adjusted to the needs of various business areas. Training courses organized at the Bank are available to all employees regardless of the form of their contract (an permanent contract or a fixed-term contract (interns)). A new programme addressed to the retail sales network workers “W nowej roli” (In a new role) was launched in 2020 at the Bank. Its aim is to prepare employees to take up new positions in Personal Banking and Corporate Banking.
Employee satisfaction survey
The Bank attaches a great deal of importance to the opinions of employees on matters related to their work, the opportunities for individual development and the company's organizational culture. The surveys of the organizational culture, employee satisfaction and involvement are conducted at the Bank every few years; most recently in 2019. The Bank presents the results of the satisfaction surveys to the employees, as well as to the Management Board and the Supervisory Board, to provide them with an additional tool for analysing and forming proper relations with the employees.
The last survey clearly demonstrated that, as far as “commitment” is concerned, the following aspects are valued the most: relations with the immediate superior, quality of cooperation or the perceived sense of the work performed. The general commitment indicator of 70.6% (out of 100%) indicates that positive opinions prevail in the evaluations of the individual aspects of commitment (direct superior, sense of work, cooperation, remuneration and benefits, development and working environment). It means that, in the employees’ opinion, the Bank creates good conditions of work and development.
No such survey was conducted in 2020 due to the pandemic; however, pulse check surveys (“How is your work?”) were conducted. The employees were asked about their opinions about remote and hybrid work. The conclusions drawn from such surveys made it possible to introduce, on an ongoing basis, improvements and solutions adapted to the current needs.
In addition, regular surveys of the perception of the hybrid model of work are executed among the employees of the Headquarters and the Specialist Organizational Units. The results indicate that the employees have a positive opinion on the significant aspects of such work, such as efficiency, organization of work, as well as the satisfaction with work and wellbeing.
Table 46. OHS indicators
Organizational profile
PKO Bank Polski S.A. was established in 1919. The Bank’s Group consists of 12 direct subsidiaries, in which the Bank holds 100% of the shares (or, in the case of investment funds, investment certificates, Chapter 3.1).
[GRI 102-2] The Bank is a universal bank providing deposit and lending services to individuals and legal entities. Through its subsidiaries, the Bank’s Group offers, among others, 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. [GRI 102-3] The Bank’s head office is located in Warsaw. [GRI 102-4, 102-6] 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 through branches in the Federal Republic of Germany, the Czech Republic and the Slovak Republic (where operating activities were commenced in March 2021). [GRI 102-5] The Bank is a joint-stock company entered into the National Court Register under number KRS 0000026438. The Bank has been listed on the Warsaw Stock Exchange (WSE) since 2004. The significant shareholders holding more than 5% of the share capital are: the State Treasury and the open pension funds Aviva and Nationale Nederlanden. [GRI 102-7] The Bank offers its services through a network of 1 004 own locations (branches, offices, centres) and 492 agencies in Poland to 11 million retail Customers and 16.5 thousand corporate Customers. [GRI 102-8] The Bank’s Group provides jobs to 25.8 thousand people.
[GRI 102-9] The Bank’s Group cooperates with business partners as a buyer of goods and services and a client for agency and outsourcing services. As part of its charitable and sponsorship activities, it cooperates with various public benefit organizations.
[GRI 102-13] The Bank is a member of many organizations, both industrial and regional (e.g. the Polish Bank Association (Związek Banków Polskich), NATO Industry Cyber Partnership, The Institute of International Finance) and many business organizations, such as chambers of commerce and business associations (e.g. the Polish Association of Listed Companies (Stowarzyszenie Emitentów Giełdowych), the Association of Entrepreneurs and Employers (Związek Przedsiębiorców i Pracodawców), the Federation of Polish Entrepreneurs (Federacja Przedsiębiorców Polskich)).
Market position of the Bank's Group
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 and deposits, the size of the distribution network, as well as the number of Customers served and the number of employees.
At the end of 2020, the Bank was the second largest company listed on the WSE and its value during the last session exceeded PLN 35.9 billion.
PLN 377 billion assets of the Bank’s Group as at the end of 2020 |
|
17.6% share of PKO Bank Polski S.A. and PKO Bank Hipoteczny S.A. in the Polish loan market as at the end of 2020 |
|
1 496
number of branches |
PLN 35.9 billion |
|
11 million Retail segment customers of PKO Bank Polski S.A. at the end of 2020 |
|
25.8 thousand
employees of the Bank’s Group |
Development strategy
The COVID-19 pandemic accelerated the technological development and digitization processes and affected the Customer service model. The implementation of the 2020-2022 Strategy of PKO Bank Polski S.A. is focused in particular on digitization and development of remote channels. As a result, the Customers find it easier to use the Bank’s services from home. The Bank has prepared a sales model addressed to elderly people and those who have not used e-banking before. The Bank educates its Customers and the advisors assist them with signing agreements through the Internet or a smartphone application. In the 51+ age group, the share of persons using remote channels only increased by 6 p.p. y/y in 2020. At present, only 13% of the Customers in this age group use banking services only at branches.
The management structure of PKO Bank Polski S.A. and the PKO Bank Polski S.A. Group entities is based on standard, market principles of management. The Bank’s organizational structure is divided into 9 areas, which reflect the Bank’s areas of operations.
Management structure of PKO Bank Polski SA (31.12.2020) [GRI 102-18]
A new organizational unit was set up in the Finance and Accounting Area in 2019 - the Group Integrated Reporting Office, whose tasks include collecting, analysing and disclosing information on social and environmental topics. This means that the environmental and social issues gained recognition in the management structure of the Bank. At the beginning of 2020, the Bank launched the ESG project. Its aim is to improve the quality of non-financial reporting and the Bank’s reputation as an institution whose objectives are not limited to financial matters but also address the social, environmental and corporate governance areas. The project work is coordinated by the steering committee consisting of three Management Board members. The roles of the other committees are discussed in chapter 11.2.
[GRI 102-11] In accordance with the Risk Management Strategy at the Bank and the Bank's Group, the Bank oversees the risk management systems at the other entities of the Bank's Group and supports development of these systems, as well as takes into account the risk profile of the operations of the individual entities in the monitoring and reporting of risk at the Bank's Group level. The principles and method of assessment of the individual types of risk in other entities of the Banks' Group are specified in the internal regulations developed taking into account the opinions and recommendations formulated by the Bank, as well as the provisions of the Risk Management Strategy at the Bank and in the Bank's Group.
The risk management system is adapted to the nature, scale and complexity of the Bank's Group's operations, as well as the regulatory, social and natural environment. The Bank's Management Board is responsible for the functioning of an effective risk management system. The Management Board regularly monitors whether the methods of identifying, measuring or estimating risk, controlling, monitoring and reporting risk are adjusted to the size and risk profile of the Bank and the Bank's Group as well as the external environment. The Management Board guarantees the operation of the risk management system, monitors and evaluates its operation and informs the Supervisory Board thereof.
By appropriately managing risk, the Bank ensures the stability of its financial result and strengthening of the Bank's market position.
The Group identified risks which are to be managed, and considered some of these risks to be material. The Bank assesses materiality of the risks at least once a year. The following risks are considered material at the Bank: credit risk, risk of mortgage loans in foreign currencies for households, Forex risk, interest rate risk, liquidity risk (including financing risk), operational risk, business (strategic) risk, risk of macroeconomic changes and model risk (the group of material risks does not include any social or environmental risks). The Bank's Group and the Bank manage the said risks taking into account the social aspects. Other entities in the Bank’s Group may consider other types of risk to be material. The Bank verifies the materiality of such risks at the Bank's Group level.
The Bank monitors the process of introducing new ESG risk regulations and takes actions to comply with the EBA (European Banking Authority) requirements, in particular with respect to taking climate factors into account in the processes of managing different risks.
In connection with the entry into force of the Regulation (EU) 2019/2088 of the European Parliament and of the Council, two Group entities: PKO TFI S.A. and the Brokerage Office published the strategies for considering the risks to sustainable development in the process of making investment decisions (https://www.pkotfi.pl/sfdr/, https://www.bm.pkobp.pl/media_files/9636be2e-3d5f-4b30-b4b6-a9936c8ee499.pdf).
[GRI 102-11] As the first step in preparing the Statement, the Bank reviewed the social and environmental risks in the Bank's Group, which were identified in 2019.
The list of key risks remains unchanged and comprises:
• the risk of non-compliance of products with the applicable norms, including the risk of misselling (Chapter 13.5.4);
• the risk of the incorrect marking of products (Chapter 13.5.4);
• the risk of unauthorized access to Customer funds through electronic banking (Chapter 13.5.2);
• the risk of unauthorized access to Customer information (Chapter 13.5.5);
• the risk related to outsourcing services (Chapter 13.4.4);
• the risk of financing operations of entities whose products or services present a threat to the natural environment or to the society (identified in two subsidiaries).
Cybersecurity
Management structure
The Bank has a security policy, which also includes the principles of cybersecurity. The policy was approved by the Management Board in 2015. The Bank has a Cybersecurity Department, which performs the tasks associated with:
• ensuring security of the Bank’s IT system;
• development of systems and monitoring of cybersecurity parameters and critical services;
• servicing cybersecurity events and incidents, including the events and incidents in the area of electronic banking.
The function of controlling the current level of infrastructure security is performed by the Department director, who also supervises the Security Operations Centre (SOC). The Cybersecurity Department director is responsible for implementing the policy and controlling cybersecurity. The vice-president of the Management Board responsible for the IT is responsible for supervising the performance of these functions. The President of the Management Board supervises the implementation of the policy. For the purposes of improving the methods of counteracting fraud at the Bank, the Cybersecurity Department prepares analyses and presents their results to the Management Board and the Supervisory Board of the Bank along with the recommendations for the implementation or modification of specific solutions.
The monitoring of and responding to incidents are performed by the specialist CERT unit of the Bank.
In order to ensure IT security of the services provided, incident response operates 24/7/365. CERT PKO Bank Polski S.A. is a member of an international forum of responders - FIRST, and belongs to the task force of European responding teams - TERENA TF-CSIRT and the related Trusted Introducer organization.
As part of the exchange of information on threats, in 2020 the Bank used information on malware, incidents or phishing attacks, including in particular data on trends and new threats, from CIRCL (the Computer Incident Response Center Luxembourg) and NICP (the institutions participating in the NATO Industry Cyber Partnership), of which PKO Bank Polski SA is a member (as the only bank from Poland).
The Bank regularly educates its employees in ICT environment security and security of information processed in this environment. The Bank’s employees are offered training in the threats associated with:
• using mobile devices;
• using personal computer hardware for professional purposes and using equipment provided by the Bank for private purposes;
• publication of information concerning the Bank by employees in the Internet (in particular in social media);
• social engineering attacks.
Such a training package is obligatory for every newly hired employee. The Bank carries out the training in accordance with an agreed schedule and all employees must participate. The participation training is monitored by the Bank on an ongoing and periodic basis as part of independent monitoring of controls.
In accordance with the Bank's policy, the cybersecurity principles must be complied with not only by employees, but also by third parties (contractors). The security requirements for the providers of IT services, understood as the standard requirements of the Bank with respect to the protection of the Bank’s information, access to the Bank's buildings and facilities, SIB safety, constitute an integral part of the contract and the terms and conditions of its execution.
Audit
The Bank identifies threats to cybersecurity on an ongoing basis, monitors the sources of information, implements protection against potential threats and develops incident response plans. The Bank has a formalized process in place for verifying the security and sensitivity of new or modified systems and applications before the launch of their production. The said process is performed in two dimensions: in connection with the process of software implementation and modification at the Bank and in connection with the project process. Every new project which changes a key system from the perspective of the of business processes is subject to an IT security audit.
An internal audit of the IT processes is performed at least once every 3 years. The selection of IT processes to be audited in a given year depends, among other things, on the following factors: the results of the internal audits preformed, changes in the ICT environment, risks associated with identified internal and external fraud and changes in internal and external regulations affecting the Bank’s functioning and operating activities. Internal audits of IT processes are performed by the Audit IT and Security Team of the Bank in accordance with a predefined schedule. External cybersecurity audits are outsourced to the audit firms with which the Bank has signed framework agreements.
Managing the risk of unauthorized access to Customer funds through electronic banking
The most important threat to the security of Customers identified by the Bank and PKO Towarzystwo Funduszy Inwestycyjnych S.A. is associated with potential criminal activities of third parties targeted at Customers using electronic channels of access to banking and investment services.
First, the Bank uses the latest ICT security solutions guaranteeing secure access to funds held by Customers. The Bank is constantly improving the quality of IT systems security, in particular regarding the applications used by the Bank's Customers. This applies, among others, to actively combating phishing websites pretending to be Bank's websites, tracking the development of malware attacking the Bank's Customers, developing mechanisms of detecting infected Customer computers, improving the rules and extending the scope of monitoring of electronic transactions.
Second, the Bank attaches a great deal of importance to informing and raising Customer awareness of the safe use of electronic banking services, as well as payment cards, as security in this respect depends to a large extent on the user's actions. These activities include in particular:
• mass educational campaigns, e.g. initiating texts on the safe use of electronic banking (the educational portal www.bankomania.pkobp.pl);
• ongoing provision of responses to Customer enquiries (e-mail, social media);
• ongoing communication of the Bank's views on various issues and provision of educational materials on cyber crime and the principles of security to the media;
• ongoing response to other signals regarding threats;
• communication of information on cybersecurity to the Customers through the Bank’s websites, the transactional service and e-mail.
In 2020, the Bank was improving systems for incident, anomaly and advanced malware detection and a large number of actions relating to incident handling was automated. The technology stack of solutions used for computer forensics purposes was replaced.
Representatives of the Bank also engage in the works of the Banking Cybersecurity Centre (BCC) operating by the Polish Bank Association. The purpose of BCC is to take comprehensive and long-term actions, which are aimed at improving the safety of mobile and electronic banking and preparing crisis management tools (structures, procedures, information exchange mechanisms) in case of e.g. a massive attack.
The Bank does not have an ISO 27001 certificate; however, its cybersecurity processes and regulations are based on this standard. The high organizational maturity in the area of handling cybersecurity incidents is particularly important in the light of the PFSA decision issued in 2018 on recognizing PKO Bank Polski S.A. as a key service operator as defined in the Act on the national cybersecurity system.
Anti-corruption system at the Bank
PKO Bank Polski S.A. does not tolerate corruption and counteracts all corrupt practices. Such phenomena as nepotism and accepting or offering any physical goods in order to influence decisions or actions taken are in conflict with the Bank's values of credibility and trust.
The Bank has a number of internal regulations regarding the prevention of corruption, including accepting benefits, presents or gifts. They are primarily:
• PKO Bank Polski SA's Code of Ethics;
• the Code of Banking Ethics (Principles of Good Banking Practice) by the Polish Bank Association;
• the Principles of compliance risk management and procedural risk management at the Bank.
These documents jointly define the Bank's policy and the last one defines the procedure to be followed in the event of identification of a risk of corruption.
The Bank applies internal anti-corruption rules intended to prevent the creation of an environment which is conducive to the offences referred to in Articles 229, 230a, 296a and 305 of the Criminal Code (acts of corruption) by entities related to the Bank, including, in particular, solutions ensuring:
• counteracting the emergence of mechanisms for granting property and personal benefits;
• familiarizing entities related to the Bank with the principles of criminal liability for the crimes referred to above;
• observance by the people related to the Bank of the PKO Bank Polski S.A.'s Code of Ethics and the Bank’s internal regulations for reporting the acceptance of benefits, presents or gifts by the Bank's employees;
• counteracting decision-making under the influence of corrupt activities and conflicts of interest;
• immediate notification of the relevant organizational units of the Headquarters and the Bank's authorities by the entities related to the Bank about possible corrupt proposals received by those persons regarding the operation of the Bank, as well as reporting them to the competent public administration authorities.
[GRI 205-1] Within the Bank's Group, including the Bank, the risks related to corruption are identified in particular:
• in the Customer service areas (individual and business);
• in the area of the supply of goods and services to the Bank's Group entities, including the Bank, by external entities;
• in connection with donations and sponsorship agreements;
• in the area of relations of the Bank's Group employees with state administration authorities.
These areas are subject to particular attention, the processes are regulated in detail, while decisions which have significant financial consequences are accepted, in principle, through the so-called “second hand” (they require dual acceptance).
The internal regulations of the Bank on the prevention of corruption with regard to the Bank’s employees and people acting on behalf of the Bank they include:
• the prohibition to accept benefits, presents or gifts intended for personal use from Customers and potential Customers, as well as representatives of entities cooperating with the Bank or seeking to start cooperation with the Bank, which could:
- result in an informal obligation to a given Customer or person cooperating with the Bank;
- cause a conflict of interest;
- otherwise negatively affect the manner in which the Bank's employee performs his corporate duties.
• this prohibition applies, in particular, to cash or cash equivalents, physical donations (presents and gifts) and other material benefits (in particular financing of travel, leisure or training expenses, participation in an event, or lending an asset, e.g. a car, for free use or use on terms that deviate from market terms), as well as the acceptance by any person involved in the procurement proceedings organized by the Bank of any gifts and benefits from entities which are bidders or potential bidders in these proceedings;
• exclusion of the possibility of circumventing the above prohibition, in particular by persuading other people (e.g. people living in the same household, family members or relatives) to accept the gift on their behalf;
• under exceptional circumstances, it is acceptable to accept a benefit or gift in business relations, on the terms and conditions set out in the Bank's internal regulations regarding the acceptance of benefits, presents or gifts;
• the prohibition to offer (on behalf of the Bank) to Customers, trading partners, representatives of public administration authorities and other entities any benefits, presents, gifts or incentives which are not a part of the Bank's offer of products and services in order to persuade those persons to behave in a particular way, especially to take steps which are inconsistent with the provisions of the law or good practices.
If a Bank's employee has doubts as to whether the acceptance of a benefit, present or gift is admissible in a given situation, he/she is required to consult his/her supervisor or the organizational unit at the Bank which manages compliance risk. Every new employee of the Bank receives information on the principles regarding this matter.
Corrupt behaviour is treated as non-compliance and reported to the Bank’s Management Board and Supervisory Board. The risk of corruption is an element of the compliance risk assessment process.
In the remaining entities of the Bank's Group, each of the subsidiaries whose business is associated with the risk of corruption has appropriate regulations in place to prevent corrupt practices. Every employee is required to read and apply these regulations. Each entity formulates appropriate regulations taking into account the nature of its activities and its own assessment of the areas of risk of corruption and bribery, and therefore the Bank's Group does not have a standard policy in this respect.
No critical events in this area were identified in 2020 and no corruption activities were identified in the Bank's Group entities which would result in disrupting the operations of the Bank or of the other entities belonging to the Bank's Group.
The Bank and the other Bank's Group entities also apply their anti-corruption activities to their potential trading partners. A bidder taking part in the procurement procedure declares that they “do not offer or provide any financial benefits to influence the decision on the selection of their proposal. They do not affect the choice of proposal in a manner which is in conflict with the law or good practice and do not take part in any agreements or arrangements with other third parties, which are aimed at influencing their selection.”
System of notifying breaches and reporting
The Bank has an anonymous system for reporting breaches introduced by resolution of the Management Board and Supervisory Board (the institution of whistle-blower is applicable to all unethical or illegal acts). Additionally, under the internal regulations, every employee of the Bank is obliged to report every suspected crime committed in connection with the Bank's activities. A report regarding a member of the Management Board is addressed to the Supervisory Board and all other reports are addressed to the President of the Bank's Management Board. The Bank has internal regulations, which define the procedures performed in such cases. There is a requirement at the Bank to report all identified cases of fraud to the Management Board on a regular basis, including those involving corrupt activities.
In the case of a breach by an employee of the Bank of the generally applicable provisions of the law or the Bank’s internal regulations, including those regarding corruption, the Bank applies the solutions specified in the provisions of the labour law. If a particular case is qualified as grounds for instituting disciplinary proceedings, the Bank conducts such proceedings and - depending on their outcome - applies the list of consequences provided for in the above regulations, including the right to terminate the employee's employment contract.
Reporting persons are protected. Nobody can be fired or punished otherwise for reporting a breach. Anonymous reports are verified by a limited number of persons appointed by the President of the Bank's Management Board.
The Bank provides preliminary and regular training for its employees on reporting breaches and cases of non-compliance (including those showing signs of corruption) and gives them access to the necessary information and internal regulations in this area (also in an electronic form in the intranet). Every employee of the Bank is required to undergo training in the principles for counteracting any corrupt practices.
Information on the reported breaches and the results of their verification is reported to the Management Board and Supervisory Board of the Bank.
Similar solutions are applied at the selected companies of the Bank’s Group adequately to the scale and scope of their activities.
[GRI 205-3] No cases of corruption were confirmed in 2020 and 2019.
Prevention of money laundering
On 1 October 2018 the Bank’s Management Board adopted a policy for preventing money laundering and financing of terrorism, which applies to all entities of the Bank’s Group. The purpose of this policy is to prevent the use of the Group's products in the activities relating to money laundering or financing of terrorism. The policy defines the standards that should be observed by the Bank, its subsidiaries and all persons working for them, including permanent and temporary associates, consultants, contractors, external agents and their employees (see https://www.pkobp.pl/relacje-inwestorskie/esg-w-grupie-pko-banku-polskiego/polityki-i-zasady/, questionnaires: https://www.pkobp.pl/media_files/bcb01b2f-4247-4e74-8d85-2f8262788264.pdf and
https://www.pkobp.pl/media_files/cec6bd5e-bed6-4693-9d1c-55bbcce47ddd.pdf).
The policy constitutes one of the internal procedures defining the scope of transfer of data, regulations, obligations, standards and measures applied to prevent money laundering and financing of terrorism. The Bank and the Group companies develop, implement and execute internal AML provisions, which comprise in particular:
• Customer identification and verification;
• monitoring of transactions in order to verify whether Customers’ transactions are consistent with the known Customer profile and the intended nature of business relationship;
• monitoring of sanctions to prevent prohibited contacts by checking whether the Customer is entered on a sanctions list;
• the method of exchange and protection of information;
• archiving;
• training.
The Group applies financial security measures before the commencement of a business relationship with a Customer and during the relationship at appropriate intervals adequate to the risk of a specific Customer.
The Bank applies special mitigating measures in the form of freezing funds and not providing assets to persons or entities entered in the following lists:
• the lists published by the General Inspector based on the resolution of the United Nations Security Council passed under Chapter VII of the United Nations Charter, concerning threats to international peace and security caused by terrorist attacks, in particular the lists referred to in section 3 of resolution 2253 (2015) of the United Nations Security Council or section 1 of resolution 1988 (2011) of the United Nations Security Council;
• the list of persons and entities subject to special mitigating measures, published by the General Inspector of Financial Information;
• the lists published on the basis of the regulations of the Council of the European Union;
• and the lists published by the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC).
The persons performing AML duties participate in training programmes concerning the execution of such duties.
Within their organizations, the Bank and its subsidiaries appoint AML officers responsible for the exchange of information among the Group entities. The Bank performs periodic reviews of the Group policy at least annually. It also prepares quarterly information on counteracting money laundering and the financing of terrorism, which is presented by the Security Department Director to the President of the Management Board of the Bank.
In terms of the products offered, PKO Bank Polski S.A. and the PKO Bank Polski S.A. Group pursue a policy which has the objective of ensuring:
• compliance of the products with the applicable regulations;
• their correct labelling;
• Customer security while using them.
The scope of this policy at the Bank and in the Bank's Group encompasses the stage of formulating the product offer, its presentation to the Customer, the purchase (i.e. signing the agreement) and the stage of using the product by the Customer. The principles and mechanisms of pursuing the compliance policy and appropriate labelling of products apply to the Bank and the whole Group.
Compliance of the products with the applicable standards
The Bank and the Bank's Group make every effort to ensure that the products offered meet the requirements set out in the provisions of the law and the accepted market standards. These efforts focus on ensuring that:
• the products offered are adequate to the needs of the Customers to whom they are addressed;
• the manner and proposed form of the purchase of products is adequate to their nature;
• before concluding the agreement, Customers were provided with reliable, transparent and comprehensive information about the product, in particular its nature, design, conditions, benefits and risks, as well as fees, commissions and other costs related to the conclusion, performance and potential early termination of the agreement (in a form understandable for an average person).
These rules apply to all entities from the Bank's Group, but also to companies to which the Bank has entrusted the performance of specific operations related to product sales or handling.
Managing the risk of improper sales of products to Customers (misselling)
As part of ensuring compliance of the products with the regulations, the Bank manages the misselling risk at the stage of product development and launch, and then at the stage of offering the product to Customers. Each product undergoes a pre-implementation analysis with regard to the risks it generates and the identification of target Customer groups. The Bank also identifies the groups of Customers to which the Bank should not propose the purchase of a given product because of its inadequacy to the Customer's needs or for other reasons (the so-called anti-groups). If there are any anti-groups, control mechanisms are implemented to mitigate the risk of misselling. The risk of misselling is also mitigated at the stage of commencing the sales activity -– before proposing the purchase of a product to a Customer it is assessed whether a given product is adequate to the needs of this type of Customer (in order to eliminate the cases, for example, of selling unemployment insurance to pensioners or long-term investment products to elderly persons). Additionally, the Bank always provides reliable and exhaustive information to Customers about the products offered so that they can make an informed choice. The Bank informs Customers about both benefits and risks arising from the purchase of the individual products.
The Bank considers any irregularities reported by the Bank's Customers (including in particular complaints) within the deadlines arising from the provisions of the law. Depending on the findings, the Bank takes steps to eliminate such irregularities, prevent their future occurrence and improve the quality of service (for more information, see chapter 13.5.6).
Similar solutions concerning the misselling risk management, in keeping with the principle of proportionality, are also in place in the remaining entities of the Bank's Group which develop or sell financial products.
Administrative and court proceedings
[GRI 417-2] In 2020 the Bank was a party to three administrative proceedings conducted before the Office of Competition and Consumer Protection (UOKiK) in previous years, one of which resulted in a fine being imposed on the Bank and creating of a provision. The proceedings are discussed in Note 48 Disputes: Proceedings conducted before the UOKiK President to the Consolidated Financial Statements for 2020.
The Bank is a party to the proceedings initiated by the UOKiK President regarding anti-competitive practices on the market of card payments in Poland and a party to court proceedings concerning mortgage loans in convertible currencies and reimbursement of commission in the event of early loan repayment. No administrative proceedings were pending in the other entities of the Bank's Group. Two entities participated in explanatory proceedings and exchanged correspondence concerning the action taken by the UOKiK President (for details, see Note 48).
Correct product labelling
[GRI 417-1] The Bank’s Group, including the Bank, fulfils the requirements concerning correct labelling of the bank and investment products by providing the Customers with all the necessary information about them, especially at the pre-contract stage.
The scope of information provided about the products is specified in the applicable provisions of the law and the recommendations of the PFSA. The general rule is that the highest level of protection is available to retail Customers - consumers. This information is formulated in such a way that it is understandable to the so-called “average consumer” within the meaning of the Act on counteracting unfair market practices - a consumer who is sufficiently well-informed, attentive and cautious. However, the scope of information provided to financial institutions and other professional recipients of financial products and services is narrower.
The proper product labelling also applies to the Bank's advertising messages, which support its sales activities and shape its brand image. All marketing materials published by the Bank take into account the specific obligations arising from the provisions of the law (e.g. the Consumer Credit Act - within the scope of advertising this type of loans) as well as market standards and the PFSA guidance formulated in the "Rules of advertising banking services".
Customer security while using the products
One of the Bank's priorities is to set the highest security standards. Customer security in the process of using the Bank's and the Bank Group's products primarily includes security of the Customers’ funds and physical security of Customers in the Bank's facilities. The matter of security is regulated by the internal regulations of the Bank, including the Security Policy at PKO Bank Polski SA and - in detail - the provisions regarding specific areas of security, i.e.: (i) protection of people and property; (ii) IT System security; (iii) managing security incidents.
Security of Customer funds
The activities of the Bank and other entities of the Bank's Group related to ensuring the security of Customer funds apply to the assurance of security of both the funds entrusted and the funds invested with the use of the products offered. The initiatives implemented regarding the assurance of a stable and secure infrastructure made it possible to achieve very high reliability indicators for the operation of the IT infrastructure.
Security of funds invested: The Bank makes every effort to ensure that its products do not generate the risk of a loss of funds by the Customers. This is particularly important in case of investment products. Therefore, within the framework of the obligations imposed by the MiFID, the Bank informs Customers before conducting a transaction on whether the given product is suitable for them.
Security of entrusted deposits: The main mechanism guaranteeing security of funds entrusted by Customers is the stability of the Bank's financial result and the results of the other entities belonging to the Bank's Group. An additional mechanism is the Bank's involvement in the obligatory deposit guarantee system, operating under the Act on the Bank Guarantee Fund, the deposit guarantees system and special resolution.
The security of Customer funds is also guaranteed by the cybersecurity procedures (chapter 13.5.2).
Physical security of Customers
The Bank and the other entities of the Bank's Group ensure the highest quality of direct Customer service in their locations, among other things, by ensuring proper standards of comfort and safety. They use state-of-the-art technical solutions in the area of physical security of Customers, employees, funds and protected information, including bank secret and personal data.
Security is provided in the form of:
• physical protection (construction, mechanical and electronic, including burglary and attack signalling systems, surveillance TV and access control);
• continuous direct physical protection of selected sites of the Bank;
• monitoring of alarm signals by certified security firms and arrival of intervention groups after receiving alarm signals.
Moreover, in the interest of Customers’ and employees’ security, the Bank provides training courses, including "Counteracting robberies and dealing with security threats." All employees of branches and agencies participate in such courses.
PKO Bank Polski S.A. follows the generally applicable regulations, including:
• Regulation (EU) 2016/679 of the the Parliament and of the Council of 27 April 2016 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data, and repealing Directive 95/46/EC (General Data Protection Regulation, GDPR);
• the Personal Data Protection Act of 10 May 2018;
and its own internal personal data protection regulations.
These regulations apply to the principles of personal data processing at the Bank, in particular the method of processing and the technical and organizational measures ensuring security of the process.
Additionally, the Bank applies internal regulations regarding in particular:
• security of protected information;
• IT system security;
• protection of people and property;
• management of security incidents where the method of management of personal data protection violations has been defined;
• conducting explanatory proceedings;
• preparation and implementation of security mechanisms.
Data privacy and security
The Security Standards for the Bank’s Group address the following issues: personal data protection, business continuity management, ICT security, counteracting money laundering, security incident management, outsourcing principles and security reporting principles. Furthermore, the Bank’s Group has a policy in place for contracting money laundering and financing of terrorism.
The Bank processes personal data in compliance with the generally applicable laws and data transparency requirements, the principle of purpose limitation, the principle of data minimisation, and the principle of maintaining the accuracy and integrity of data. In order to achieve these objectives, the Bank applies mechanisms comprising both procedural regulations and technological solutions, which are designed to observe the personal data processing principles defined in General Data Protection Regulation (GDPR).
The Bank has appointed a Data Protection Officer (DPO) whose tasks comprise supervision over the correctness of personal data processing. Customers may contact the DPO by writing to the Bank's address or by e-mail: iod@pkobp.pl.
As required by the GDPR, the Bank has prepared and provides the Information on personal data processing. The Customers are informed about the principles of personal data processing, the purpose of its processing and their rights, including the right to access, rectify and delete data.
If data is processed on the basis of the consent of the data subject, the data subject is informed about the right to withdraw consent.
The Bank has also defined the principles for informing Customers about a breach of their data security based on generally applicable laws.
Moreover, a dedicated website of the Bank https://www.pkobp.pl/rodo/ presents information on personal data processing, including the information on the appointed DPO, on the manner of personal data processing, the legal basis for the processing, and the rights of the data subjects.
The Bank’s Customers also have access to complaint paths for expressing doubts concerning data security. Internal regulations concerning the management of personal data breaches have also been developed. These regulations comprise the principles for informing Customers about a breach of security of their data.
Ongoing exchange of information and improvement of security on the basis of the best practices are the permanent features of the cooperation and the Agreements in place in the Bank's Group. Any irregularities are addressed in compliance with the law, which includes informing the competent authorities, as required by the internal regulations and the generally applicable laws.
Management of the risk of unauthorized access to Customer information
The risk of unauthorized access to Customer information is managed in accordance with the “Security Policy of PKO Bank Polski S.A.”. At the same time, “the Principles of protected information security at PKO Bank Polski S.A.” regulate the issues of confidentiality of information and the maintenance of bank secrecy, as well as personal data security, including the liability of the Bank's employees regarding personal data protection. Every employee is obliged to complete appropriate training in personal data protection in accordance with formal procedures. Such trainings are also organized in cycles. Actions aimed at ensuring data security are taken with the participation of the Management Board. For this purpose, the best policies and system security solutions are implemented. Such solutions (in terms of both systems and policies) are constantly evaluated, audited and improved in accordance with the best market practices. The Security Department supervises the performance of duties associated with the protection of information at the Bank and prepares information on the state of security for the Bank’s Management Board and Supervisory Board in the form of semi-annual reports. The activities of the Security Department also include carrying out internal security inspections in the Bank's organizational units, which also cover information security, and giving opinions on new solutions and projects implemented at the Bank in the area of the protection of information.
In accordance with these principles:
• access to protected information at the Bank is only given to employees within the scope of their corporate tasks and duties;
• the employees undergo training on security of protected information before starting to process protected information;
• if materials containing protected information are provided to external entities, a non-disclosure agreement is concluded between the parties, whereas, in the case of entrusting the processing of personal data, an agreement is concluded on entrusting the processing of personal data, including among other things the obligations of the entities cooperating with the Bank to protect the entrusted data, use it exclusively for the purposes of performing the agreement and inform about any security breaches. The Bank defines the requirements concerning the security of the processed data in accordance with the generally applicable laws. The Bank may also control the security of the processed data at the cooperating entities.
The Bank is obliged to maintain banking secrecy as defined by the “Banking Law”.
Any information containing bank secret, including the personal data of the Bank's Customers, may only be made available in compliance with the generally applicable laws. Enquiries from entities authorized to demand access to the information constituting bank secret (e.g. government institutions) are considered by the Bank in accordance with the law. The information constituting bank secret is provided only in the situations specified in the above-mentioned act, after the conditions giving the Bank the right to make such information available have been satisfied.
The information on the legal basis for giving access to data is also presented on https://www.pkobp.pl/rodo/.
Each of the other Bank Group's entities processing personal data has such regulations in place and applies them in practice. The companies have signed and implemented the Security Standards, including the standards relating to personal data protection, forming a part of the “Security Standard Guidelines for the PKO Bank Polski Group”. They are in line with the generally applicable regulations and standards applied at the Bank and, to the extent necessary, contain specific regulations, which are adequate to the specific nature of the particular entity's business.
In the event of a violation of personal data protection, the Bank takes actions in accordance with the Principles for security incident management at PKO Bank Polski SA and GDPR. In the event of identifying a violation, immediate action is taken to analyse it and mitigate its adverse effect, if any. Any violations of personal data protection resulting in a risk to the personal rights and freedoms are reported to the President of the Personal Data Protection Office (UODO). Moreover, if a violation of personal data protection could result in a high level of risk to the personal rights or freedoms, the data subject is immediately notified about the violation.
Complaints process
The complaints process is an important part of building the positive experience of Customers and their satisfaction from cooperation with the Bank’s Group entities. Every complaint brought by a Customer is considered individually, and every problem reported is carefully analysed and explained.
Complaints process at the Bank
The submission of complaints or appeals by Customers may take various forms, depending on the Customer's decision: written, oral or electronic.
The complaint handling process is conducted along two lines:
• the first line consists of units dealing with the first complaints of Customers in accordance with the tasks performed, and reports concerning personal data protection addressed to the President of the Personal Data Protection Office;
• the second line is the Customer's Ombudsman and the Office of the Customer's Ombudsman. They consider:
appeals of Customers against the decision of the Bank's first line in the complaints process;
reports concerning the Customers filed by:
the PFSA;
external institutions dealing with the protection of Customer rights (such as the Banking Consumer Arbitration, the Arbitration Court at the Polish Bank Association, the Arbitration Court at the Polish Financial Supervision Authority, the Municipal or County Consumer Ombudsman and the Financial Ombudsman);
individual cases, in particular in connection with the significance of the reported issue.
The solution proposed by the Customer’s Ombudsman constitutes the final position of the Bank in a given matter.
Complaints or appeals are dealt with with due care and diligence, fairly, thoroughly and within the shortest time possible. The Bank's Code of Ethics, the Code of Good Banking Practice and the standards of Customer service quality are applied when considering complaints.
The consideration of a complaint / appeal involves in particular:
• an analysis and assessment of its validity;
• taking appropriate steps to eliminate the irregularities identified;
• giving a comprehensive response.
Pursuant to the Act on handling complaints by financial market entities and on the Financial Ombudsman, the Bank follows the principle that a response to a Customer’s complaint should be formulated in a clear and understandable manner and should include:
• a factual and legal justification, unless the complaint is resolved in line with the Customer's wishes;
• information about the position of the Bank with regard to the Customer's objections, including an indication of the respective parts of the agreement or the product regulations;
• specification of the date on which the Customer’s claim, which has been accepted by the Bank, will be fulfilled.
The deadlines for replying are in line with the provisions of the law, in particular with the above-mentioned Act and the agreements concluded with the Customers.
The Office of the Customer’s Ombudsman regularly monitors and reports, inter alia, to the Operational Risk Committee and the Bank's Management Board and Supervisory Board. The process of handling Customer complaints is supplemented by the initiation of positive changes at the Bank.
Every unit at the Bank that considers complaints and appeals of the Customers:
• analyses the reports received to identify possible irregularities, causes and places of their occurrence and to identify possible changes to products, services or processes whose implementation would contribute to an improvement in the quality of the services provided by the Bank;
• takes remedial or improvement actions.
The competent unit (in terms of responsibilities and the subject matter of the initiative):
• takes remedial action to eliminate irregularities;
• implements improvements in products, services or processes;
• provides information on the remedial or improvement action taken and the date and method of its implementation to the Office of the Customer's Ombudsman and to the unit handling the report.
This approach to the complaint handling process means that individual reports lead to the implementation of solutions that are beneficial not only for the person filing the report, but also for other Customers.
The implementation of remedial action is monitored by the Office of the Customer’s Ombudsman.
Complaints process at the other Bank's Group entities
The Bank's subsidiaries manage complaints on their own and implement and follow their own procedures for receiving and considering Customer complaints. These procedures:
• have been specified in the form of internal procedures/ regulations of the entities;
• are included in the regulations and contained in the agreements with Customers or
• arise from the provisions of the generally applicable law.
Complaints are handled reliably and objectively, taking into account all the information and documents related to the problem reported by the Customer and in accordance with the provisions of the law and concluded agreements.
Most subsidiaries of the Bank are subject to the Act on handling complaints by financial market entities and on the Financial Ombudsman, which regulates this process in detail.
Indicators describing the complaints process
In 2020, the Group entities received nearly 320.5 thousand complaints (271 thousand in 2019), of which approx. 80% were handled within 14 days (86% in 2019). Approximately 58% of all cases were fully or partly settled in the Customer’s favour (61% in 2019).
Marketing communications
The Bank’s policy is regulated by the “Principles for conducting marketing and public relations (PR) activities by PKO Bank Polski SA”, which were adopted by resolution of the Management Board in December 2019. The Principles comprise the “General requirements for creating advertising messages regarding trading in financial instruments” (appendix no. 3 to the Principles). The Bank's internal regulations concerning the principles for conducting marketing activity define the features of the appropriate advertising message, as well as the list of undesirable actions. According to these principles, an advertising message in particular:
• should be designed in a reliable manner, not be misleading, and should feature respect for the generally applicable laws, principles of fair trading and good practices;
• must not present benefits in such a way that would diminish the significance of costs and risks associated with the purchase of a product or service.
In addition to the Bank’s internal regulations, in its marketing communications the Bank follows:
• “The Code of Banking Ethics” prepared by the Polish Bank Association as part of the Principles of Good Banking Practice;
• “Good Practices in consumer credit advertising standards” developed jointly by the Polish Bank Association, the Conference of Financial Enterprises and the Association of Lending Companies;
• “The principles for advertising banking services” by the Polish Financial Supervision Authority;
• “The canon of good financial market practices” prepared by entities from the financial and insurance sector.
In its marketing activities, the Bank has mechanisms that prevent the creation of unethical and unreliable messages. Each time, the correctness of the communication is consulted with the units whose tasks include verifying the compliance of messages with the generally applicable laws. The principles of ethics in marketing communication and the mechanisms for preventing the risk of unethical communications also apply to materials prepared at the request of the Bank by external entities (advertising agencies, event agencies).
The same standards apply to all Customer groups. Each message should be formulated in a comprehensible, reliable, credible way, regardless of the Customer to whom it is addressed.
Within the Bank's Group, the subsidiaries have internal regulations which require them to design messages in compliance with ethical standards (this does not apply to entities that do not actively conduct marketing operations). These standards coincide with those adopted by the Bank. In addition, the Bank's subsidiaries which have signed agency agreements with the Bank for the provision of marketing services for the Bank's Group are required to apply the internal regulations on marketing communications in force at the Bank.
With regard to their marketing activities, all subsidiaries of the Bank have control mechanisms to prevent the risk of irresponsible or unethical communication from the company. The marketing communication is appropriately approved by the company's supervisory units respectively, or additionally - in the case of companies that have agreements with the Bank concerning commissioning of marketing services for the Bank's Group - by the Bank's relevant departments.
[GRI 417-3] In 2020, as part of the marketing activities conducted by the Bank’s Group and the Bank, no administrative proceedings concerning violation of the ethics regulations in marketing communication were pending and no inconsistencies were noted in marketing communication.
Customer satisfaction surveys
[GRI 102-43] The Bank evaluates the stakeholders’ commitment based on regular Customer satisfaction surveys.
Retail Customer satisfaction surveys
In 2020, the Customer satisfaction (CSI) and the NPS (Net Promoter Score) indices were taken into account for the first time in the objectives of most organizational units of the Bank, including the Management Board. In this way, the principle that Customer satisfaction is of key importance for the Bank's actions, particularly in the area of product and solution design and implementation and ongoing Customer service, was established.
With regard to retail Customers, the Bank continued two types of satisfaction surveys:
1. Relational research - conducted in all Customer segments, including firms and enterprises, measuring the strength of the relationship with the Bank and satisfaction with the cooperation, encompassing the whole of the Customer's experience;
2. Transactional research - performed at the key points of contact between the Customer and the Bank, immediately after the event, measuring satisfaction with a given interaction, which is defined in space and time, also including surveys for the needs of process design and implementation (treated as objectives for the Formation).
Both the Net Promoter Score (NPS) and Customer Satisfaction Index (CSI) indicators are used in both types of surveys.
At the same time, given the changing circumstances of the Bank’s operations, the Bank adjusted the methods of obtaining the Customers’ opinions to the new (more digital) reality. As a result, remote surveys (questionnaires on iPKO) were launched for the first time, the works on the launch of IKO surveys are advanced and the Customer satisfaction measurement with the use of a voicebot was implemented for testing. The surveys conducted by e-mail and text messages, which were first implemented in 2019, were also continued in 2020.
Overall, in 2020, the Bank held more than 230,000 interviews with retail Customers using various methods (more than 220,000 interviews in 2019). The plans include a further increase in the number of processes (products and sales channels) monitored for Customer satisfaction, as well as development of the techniques of obtaining information (e.g. new types of questionnaires in remote channels - IKO/iPKO).
Customer satisfaction measurement was continued in 2020 in the other entities of the Bank's Group as well.
Corporate Customer satisfaction surveys
The number of “contact points” (interactions of the Customers with the Bank) after which the Bank asked the Customers about their opinion tripled in 2020. The survey covered both the digitization of the existing processes (e.g. adding new electronic banking users) and new solutions which had to be implemented under the present circumstances (e.g. filing applications for PFR (Polish Development Fund) subsidies). Fast communication of the collected information to product owners and taking it into account in the subsequent activities were of key importance.
The Bank constantly monitors the response rate (in 2020 it was 65%).
In 2020 the Group implemented 13 new initiatives addressing the problems and needs reported by the Customers. Among these initiatives, the following ones had the biggest effect on Customer satisfaction: digitization of the processes which were previously executed by the Advisors on paper and changes in the Customer service system at PKO Faktoring S.A.
In total, 112 initiatives have been implemented as part of the Programme since 2016.
Information policy
In order to maintain correct relations with all its shareholders, the Bank has adopted the PKO Bank Polski S.A. Information Policy with respect to contacts with investors and Customers (the policy was approved by the Management Board on 9 December 2014). According to its provisions, the overriding aim of the Bank's 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. Within the context of its information policy, the Bank takes into account the interests of all investors, provided that they are not in conflict with the Bank’s interests, while the objective of the information policy is to define the mechanisms of communication with the participants of the capital market to ensure appropriate, fair and complete access to information about the Bank for all investors, without any preferences.
[GRI 102-55] GRI content index
GRI Indicator |
Description |
Chapter |
Page |
102-1 |
Name of the organization |
13.1 |
120 |
102-2 |
Activities, brands, products and services |
13.5.1 |
147 |
102-3 |
Location of headquarters |
13.5.1 |
148 |
102-4 |
Location of operationsj |
13.5.1 |
148 |
102-5 |
Ownership and legal form |
13.5.1 |
148 |
102-6 |
Markets served |
13.5.1 |
148 |
102-7 |
Scale of the organization |
13.5.1 |
148 |
102-8 |
Information on employees and other workers |
13.4.5, 13.5.1 |
148, 148 |
102-9 |
Supply chain |
13.5.1 |
148 |
102-10 |
Significant changes to the organization and its supply chain |
13.1 |
120 |
102-11 |
Precautionary principle or approach |
13.5.2 |
151 |
102-12 |
External initiatisves |
13.4.1 |
131, 131 |
102-13 |
Membership of associations |
13.5.1 |
148 |
102-14 |
Statement from senior decision maker |
Letter of the President of the Management Board is published on the Bank’s website along with the annual reports |
|
102-16 |
Values, principles, standards, and norms of behavior |
13.4.2 |
133 |
102-18 |
Governance structure |
13.5.2 |
150 |
102-40 |
List of stakeholder groups |
13.1 |
121 |
102-41 |
Collective bargaining agreements |
13.4.5 |
141 |
102-42 |
Identifying and selecting stakeholders |
13.1 |
120 |
102-43 |
Approach to stakeholder engagement |
13.1, 13.5.6 |
120, 120 |
102-44 |
Key topics and concerns raised |
13.1 |
121 |
102-45 |
Entities included in the consolidated financial statements |
3.1 |
23 |
102-46 |
Defining the report content and topic boundaries |
13.1 |
120 |
102-47 |
List of material topics |
13.1 |
121 |
102-48 |
Restatements of information |
13.1 |
120 |
102-49 |
Changes in reporting |
13.1 |
120 |
102-50 |
Reporting period |
13.1 |
120 |
102-51 |
Date of most recent report |
13.1 |
120 |
102-52 |
Reporting cycle |
13.1 |
120 |
102-53 |
Contact point for questions regarding the report |
13.6 |
164 |
102-54 |
Claims of reporting in accordance with the GRI Standards |
13.1 |
120 |
102-55 |
GRI content index |
13.6 |
163 |
102-56 |
External assurance |
13.1 |
120 |
205-1 |
Operations assessed for risks related to corruption |
13.5.3 |
153 |
205-3 |
Confirmed incidents of corruption and actions taken |
13.5.3 |
155 |
302-1 |
Energy consumption within the organization |
13.3.1 |
123, 124 |
302-3 |
Energy intensity |
13.3.1 |
123 |
302-4 |
Reduction of energy consumption |
13.3.1 |
124, 124 |
303-1v16 |
Water consumption |
13.3.1 |
123 |
305-1 |
Direct (Scope 1) GHG emissions |
13.3.1 |
123 |
305-2 |
Energy indirect (Scope 2) GHG emissions |
13.3.1 |
123 |
305-3 |
Other indirect (Scope 3) GHG emissions |
13.3.1 |
123 |
305-4 |
GHG emissions intensity |
13.3.1 |
123 |
305-5 |
Reduction of GHG emissions |
13.3.1 |
123 |
306-2 |
Management of significant waste-related impacts |
13.3.1 |
125 |
307-1 |
Non-compliance with environmental laws and regulations |
13.3.1 |
123 |
401-1 |
New employee hires and employee turnover |
13.4.5 |
139 |
401-2 |
Benefits provided to full-time employees that are not provided to temporary or part-time employees |
13.4.5 |
141 |
401-3 |
Parental leave |
13.4.5 |
139 |
402-1 |
Minimum notice periods regarding operational changes |
13.4.6 |
143 |
403-1 |
Occupational health and safety management system |
13.4.7 |
145 |
403-2 |
Hazard identification, risk assessment, and incident investigation |
13.4.7 |
146 |
403-3 |
Ocupational health services |
13.4.7 |
146 |
403-4 |
Worker participation, consulation, and communication on occupational health and safety |
13.4.7 |
146 |
403-5 |
Worker training on occupational health and safety |
13.4.7 |
146 |
403-6 |
Promotion of worker helath |
13.4.7 |
146 |
403-7 |
Prevention and mitigation of occupational health and safety impacts directly linked by business relationships |
13.4.7 |
147 |
403-8 |
Workers covered by an occupational health and safety management system |
13.4.7 |
147 |
403-9 |
Work-related injuries |
13.4.7 |
147 |
403-10 |
Work-related ill health |
13.4.7 |
147 |
404-1 |
Average hours of training per year per employee |
13.4.6 |
144 |
404-2 |
Programs for upgrading employee skills and transition assistance programs |
13.4.6 |
144 |
404-3 |
Percentage of employees receiving regular performance and career development reviews |
13.4.6 |
144 |
405-1 |
Diversity of governance bodies and employees |
13.4.5 |
139, 139 |
405-2 |
Ratio of basic salary and renumeration of women to men |
13.4.5 |
140 |
407-1 |
Operations and suppliers in which the right to freedom of association and collective bargaining may be at risk |
13.4.6 |
144 |
414-1 |
New suppliers that were screened using social criteria |
13.4.4 |
138 |
414-2 |
Negative social impacts in the supply chain and actions taken |
13.4.4 |
138 |
417-1 |
Requirements for product and service information and labeling |
13.5.4 |
157 |
417-2 |
Incidents of non-compliance concerning product and service information and labeling |
13.5.4 |
157 |
417-3 |
Incidents of non-compliance concerning marketing communications |
13.5.6 |
162, 162 |
[GRI 102-53] Contact: esg@pkobp.pl
Interest-bearing assets – amounts due from banks, securities and loans and advances to Customers;
CPI (Consumer Price Index) – consumer price index;
Customer deposits – amounts due to Customers;
Financing granted to Customers – loans and advances granted to Customers (including finance lease receivables) and municipal and corporate bonds (excluding the bonds of Polski Fundusz Rozwoju S.A., Bank Gospodarstwa Krajowego and the European Investment Bank) presented in securities, other than securities held for trading;
External financing – subordinated liabilities, liabilities in respect of issue of securities measured at amortized cost, and loans and advances received;
Other liabilities – hedging derivatives, other derivative instruments, liabilities in respect of insurance activities, other liabilities, current income tax liabilities, deferred income tax provisions, provisions, reverse repo transactions, amounts due to the Central Bank and amounts due to banks;
Operating expenses – operating expenses (including net regulatory charges);
Regulatory costs – net regulatory charges;
Total capital ratio – own funds to the total capital requirement multiplied by 12.5;
Securities (banking portfolio) – securities less municipal and corporate bonds (excluding bonds held for trading) and bonds of Polski Fundusz Rozwoju S.A., Bank Gospodarstwa Krajowego and the European Investment Bank;
Other assets – derivative hedging instruments, other derivative instruments, investments in associates and joint ventures, non-current assets held for sale, intangible assets, property, plant and equipment, insurance receivables, current income tax receivables, deferred income tax assets, other assets and repo transactions;
Risk-free rate – the average annual yield on 10-year Treasury bonds;
Average interest on loans – interest income on loans and advances to Customers on an annual basis to the average balance of loans and advances to Customers from the last 5 quarters;
Average interest on deposits – interest expense on amounts due to Customers on an annual basis to the average balance of amounts due to Customers from the last 5 quarters;
C/I ratio (costs to income ratio) – operating expenses (including net regulatory charges) to the result on business activities on an annual basis;
Tier 1 capital ratio – Tier 1 capital to the total capital requirement multiplied by 12.5;
Credit risk cost indicator – net impairment allowances on loans and advances to customers for the last 12 months to the average gross amounts due to Customers at the beginning and end of the reporting period and interim quarterly periods;
Interest margin ratio – net interest income on an annual basis to the average balance of interest-earning assets (including amounts due from banks, securities and loans and advances to Customers) from the last 5 quarters;
Net ROA – net profit for the year to the average balance of assets from the last 5 quarters;
Net ROE – net profit for the year to the average balance of equity from the last 5 quarters;
Net ROTE – net profit for the year to the average balance of equity less intangible assets from the last 5 quarters;
Share of exposures with recognized impairment – a portfolio with recognized impairment in the portfolio of loans and corporate and municipal bonds (not guaranteed by the State Treasury), including loans measured at fair value through profit or loss;
Net operating result – result on business activities, operating expenses and tax on certain financial institutions;
Net write-downs and impairment – result on allowances for expected credit losses, result on impairment of non-financial assets and cost of legal risk associated with mortgage loans in convertible currencies and result on loans measured at fair value through profit or loss;
Result on business activities – result on business activities less result on loans measured at fair value through profit or loss;
Net profit – net profit recognized in the consolidated income statement understood as the net profit attributable to equity holders of the parent company.
Statement of the Management Board
The Management Board of PKO Bank Polski S.A. declares that in accordance with its best knowledge the annual Directors’ Report of the PKO Bank Polski S.A. Group for 2020 prepared jointly with the Directors’ Report of PKO Bank Polski S.A. includes an accurate description of the development and achievements, as well as the situation of the PKO Bank Polski S.A. Group and PKO Bank Polski S.A., including a description of the main risks and threats.
Signatures of all the Members of the Bank’s Management Board
28.04.2021 |
Zbigniew Jagiełło |
President of the Management Board |
|
28.04.2021 |
Rafał Antczak |
Vice-President of the Management Board |
|
28.04.2021 |
Rafał Kozłowski |
Vice-President of the Management Board |
|
28.04.2021 |
Maks Kraczkowski |
Vice-President of the Management Board |
|
28.04.2021 |
Mieczysław Król |
Vice-President of the Management Board |
|
28.04.2021 |
Adam Marciniak |
Vice-President of the Management Board |
|
28.04.2021 |
Piotr Mazur |
Vice-President of the Management Board |
|
28.04.2021 |
Jakub Papierski |
Vice-President of the Management Board |
|
28.04.2021 |
Jan Emeryk Rościszewski |
Vice-President of the Management Board |
|
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