5. Information on operating segments
The PKO Bank Polski SA Group conducts business activities within segments offering specific products and services addressed to specific groups of customers. The manner in which the business segments are divided ensures consistency with the sales management model and offers customers a comprehensive product mix comprising both traditional banking products and more complex investment products, as well as services provided by the PKO Bank Polski SA Group entities.
2019
The segment note presented below is included in the internal reporting system, i.e. information presented to the Management Board of PKO Bank Polski SA, used to assess the achieved results and allocate resources. The segment report presented below reflects the internal organizational structure of the PKO
Bank Polski SA Group.
The PKO Bank Polski SA Group distinguishes three core segments:
| RETAIL SEGMENT | The retail segment offers a full range of services to individuals as part of retail, private and mortgage banking. It also comprises transactions concluded with legal persons, i.e. firms and enterprises. The products and services offered to the customers in this segment comprise: current and savings accounts, term deposits, private banking services, combined investment and insurance products, credit and debit cards, electronic banking services. With regard to financing, this segment offers consumer loans, mortgage loans, including those offered by PKO Bank Hipoteczny SA, as well as business loans for firms and enterprises, developers, cooperatives and property managers, and leases and factoring offered by the PKO Leasing SA Group. In addition, the results of the retail segment comprise the results of the following companies: PKO TFI SA, PKO BP BANKOWY PTE SA, PKO Życie Towarzystwo Ubezpieczeń SA, PKO Towarzystwo Ubezpieczeń SA, PKO BP Finat sp. z o.o. and ZenCard sp. z o.o. |
| CORPORATE AND INVESTMENT SEGMENT |
The corporate and investment segment includes transactions concluded with large corporate clients and financial institutions. This segment offers the following products and services: maintaining current accounts and term deposits, safekeeping of securities, currency products and derivatives, business loans, leasing and factoring offered by the PKO Leasing SA Group. In this segment, PKO Bank Polski SA also concludes, on its own or as part of syndicates with other banks, agreements for the financing of large projects in the form of loans and issues of non-treasury securities. Moreover, the segment comprises own operations, i.e. investing activities, brokerage activities, interbank transactions, transactions in derivatives and debt securities. The results of the corporate and investment segments also comprise the results of the companies operating in Ukraine, mainly KREDOBANK SA, and companies conducting IT services, real estate development and real estate management activities as well as funds investing money collected from investment fund participants. |
| TRANSFER CENTRE AND OTHER |
The transfer & other activities centre comprises the result on internal settlements related to funds transfer pricing, the result on long-term sources of financing and the result on positions classified for hedge accounting, as well as the results not allocated to any other segment. Internal funds transfer is based on arm’s length transfer pricing. Longterm external financing includes issuing securities, including mortgage covered bonds, subordinated liabilities and loans received from financial institutions. As part of this segment, the results of PKO Finance AB are presented. |
The PKO BP SA Group accounts for transactions between the segments as if they were transactions between unrelated entities – using internal settlements rates. Transactions between the segments are conducted on an arm’s length basis.
The accounting principles used in segment reporting are in compliance with the accounting policies described in these financial statements.
Disclosed assets and liabilities are operating assets and liabilities used by the segment in its operating activities. The values of assets, liabilities, income and expenses of particular segments are based on internal management information. Assets and liabilities as well as income and costs related to these assets and liabilities are assigned to particular segments.
The income tax expense in respect of the presentation of the financial result, and deferred income tax assets, current income tax receivables, current income tax liabilities and deferred income tax provisions in respect of the presentation of the statement of financial position were recognized at Group level (unallocated assets and liabilities).
| FOR THE YEAR ENDED 31 DECEMBER 2018 |
Continuing operations | |||
| Retail segment | Corporate and investment segment |
Transfer centre and other |
Total activity of the PKO Bank Polski SA Group |
|
| Net interest income/(expense) | 8 285 | 1 538 | 456 | 10 279 |
| Net fee and commission income | 2 469 | 599 | (21) | 3 047 |
| Other net income | 650 | 595 | 99 | 1 344 |
| Net gain/(loss) in financial instruments measured at fair value through profit or loss |
75 | 149 | (49) | 175 |
| Net foreign exchange gains / (losses) | 221 | 187 | 65 | 473 |
| Gains/(losses) on derecognition of financial assets and financial liabilities not measures at fair value through profit or loss | (9) | 154 | – | 145 |
| Dividend income | – | 14 | – | 14 |
| Net other operating income and expense | 337 | 117 | 83 | 537 |
| Income/(expenses) relating to internal customers | 26 | (26) | – | – |
| Net credit losses | (799) | (348) | – | (1 147) |
| Impairment of non-financial assets | (76) | (38) | – | (114) |
| Cost of the legal risk of mortgage loans in convertible currencies other |
(451) | – | – | (451) |
| Administrative expenses, of which: | (4 628) | (982) | (1) | (5 611) |
| depreciation and amortisation | (866) | (183) | – | (1 049) |
| Net regulatory charges | (504) | (114) | 81 | (537) |
| Tax on certain financial institutions | (703) | (316) | (3) | (1 022) |
| Share in profits and losses of associates and joint ventures | – | – | – | 31 |
| Segment profit/(loss) | 4 243 | 934 | 611 | 5 819 |
| Income tax expense (tax burden) | – | – | – | (1 787) |
| Profit (loss) attributable to non-controlling shareholders | – | – | – | 1 |
| Net profit attributable to equity holders of the parent company |
4 243 | 934 | 611 | 4 031 |
| AS AT 31 DECEMBER 2019 | Retail segment | Corporate and investment segment |
Transfer centre and other |
Total activity of the PKO Bank Polski SA Group |
| Assets | 183 962 | 154 769 | 7 065 | 345 796 |
| Unallocated assets | – | – | – | 2 248 |
| Total assets | 183 962 | 154 769 | 7 065 | 348044 |
| Liabilities | 208 771 | 59 030 | 37 971 | 305 772 |
| Unallocated liabilities | – | – | – | 694 |
| Total liabilities | 208 771 | 59 030 | 37 971 | 306 466 |
| FOR THE YEAR ENDED 31 DECEMBER 2018 |
Continuing operations | |||
| Retail segment | Corporate and investment segment |
Transfer centre and other |
Total activity of the PKO Bank Polski SA Group |
|
| Net interest income/(expense) | 7 427 | 1 536 | 382 | 9 345 |
| Net fee and commission income | 2 523 | 508 | (18) | 3 013 |
| Other net income | 366 | 507 | 108 | 981 |
| Net gain/(loss) in financial instruments measured at fair value through profit or loss |
11 | 22 | (5) | 28 |
| Net foreign exchange gains / (losses) | 161 | 212 | 116 | 489 |
| Gains/(losses) on derecognition of financial assets and financial liabilities not measures at fair value through profit or loss | 6 | 129 | – | 135 |
| Dividend income | – | 12 | – | 12 |
| Net other operating income and expense | 161 | 159 | 3 | 317 |
| Income/(expenses) relating to internal customers | 27 | (27) | – | – |
| Net credit losses | (1 050) | (323) | – | (1 373) |
| Impairment of non-financial assets | (23) | (55) | – | (78) |
| Administrative expenses, of which: | (4 492) | (835) | 5 | (5 322) |
| depreciation and amortisation | (703) | (118) | – | (821) |
| Net regulatory charges | (389) | (105) | (81) | (575) |
| Tax on certain financial institutions | (764) | (298) | 112 | (950) |
| Share in profits and losses of associates and joint ventures | – | – | – | 37 |
| Segment profit/(loss) | 3 598 | 935 | 508 | 5 078 |
| Income tax expense (tax burden) | – | – | – | (1 336) |
| Profit (loss) attributable to non-controlling shareholders | – | – | – | 1 |
| Net profit attributable to equity holders of the parent company | 3 598 | 935 | 508 | 3 741 |
| AS AT 31 DECEMBER 2018 | Retail segment | Corporate and investment segment |
Transfer centre and other |
Total activity of the PKO Bank Polski SA Group |
| Assets | 170 234 | 145 898 | 5 984 | 322 116 |
| Unallocated assets | – | – | – | 2 139 |
| Total assets | 170 234 | 145 898 | 5 984 | 324 255 |
| Liabilities | 184 729 | 64 542 | 35 460 | 284 731 |
| Unallocated liabilities | – | – | – | 423 |
| Total liabilities | 184 729 | 64 542 | 35 460 | 285 154 |