Summary of the year

PKO Bank Polski S.A. among the most stable banks in the European Union

PKO Bank Polski S.A. participated in the subsequent edition of the European stress tests conducted in 2021 by the European Banking Authority (EBA) with the participation of the PFSA and the European Central Bank and the European Systemic Risk Board. Fifty banks from 15 countries of the European Union and the European Economic Area, accounting for 70% of assets of the EU banking sector, participated in the test. The results of stress tests confirmed that the Bank is highly resilient to theoretical negative macroeconomic scenarios. The Bank was ranked among the most stable banks in the European Union.

Annual Report

Development of remotely offered services

The Group consistently developed remotely offered services:

  • The number of active IKO applications provided to the Bank’s Customers reached a record high of 6.12 million on the Polish banking market.
  • The IKO mobile application makes is possible to check the balance of an account with another bank and use a new version of voice assistant. The IKO application can also be used by people who have no open account with PKO Bank Polski S.A.
  • PKO Bank Polski S.A. was one of the first banks to launch BLIK proximity payment technology. The technology allows transactions to be made using the BLIK system, without providing a BLIK code, without a card, at no cost for currency translation. The new BLIK proximity payment function is available in the IKO application for Android.
  • The Bank launched subsequent cloud applications and services. As part of this work, it launched the MLOps Analytical Platform which allows for advanced data analytics and supporting internal processes, as well as pilot implementation of the Infosite, the Bank’s Information Services, i.e. websites available to Customers in the domain. The Projects are being performed in cooperation with Operator Chmury Krajowej sp. z o.o. – a company co-owned by PKO Bank Polski S.A.
  • In April 2021, Google launched the Google Cloud Warsaw region. It is the first computation infrastructure of the global public cloud provider in Central and Eastern Europe. The investment stems from the strategic partnership of Google and Operator Chmury Krajowej sp. z o.o. Each Polish company and institution may use world cutting-edge cloud solutions available in the Google Cloud region located in Poland.

Currency mortgage loans – Settlements programme

KO Bank Polski S.A. was the first bank in Poland to launch, on 4 October 2021, the process of the systemic resolution of the problem of CHF housing loans by offering settlements to its retail Customers who had active loans in CHF, which were intended for satisfying their own housing needs. This solution is based on the proposal of the President of the Polish Financial Supervision Commission (PFSA) and involves converting CHF loans into PLN loans as if it had been a PLN loan from the start subject to interest rate at the WIBOR reference rate increased by the margin historically applied to such loans.

The settlements are offered in the process of mediation proceedings conducted by the Mediation Centre at the Arbitration Tribunal at the PFSA in the course of court proceedings and proceedings resulting from a request to call for an attempt at arbitration.

The settlements are not available to Customers who have already repaid their loans, paid out in full in CHF or who used the Borrowers Support Fund (Fundusz Wsparcia Kredytobiorców).

The amounts to be repaid after conversion may be subject to interest at a variable rate or a fixed rate (for loans maturing within 5 years).

The process – for Customers who have iPKO – is carried out remotely, and the borrowers have to be present in the branch only once – when signing the settlement.

As at the end of 2021, more than 19 thousand applications for mediation were registered. 7,182 mediations were concluded with a positive outcome, including 5,754 cases in which settlements were signed. As at the end of 2021, 1,399 mediations were concluded with a negative outcome. The total number of settlements concluded as at 31 December 2021 amounted to 5,887, of which 5,754 were concluded in mediation proceedings and 133 in court proceedings. Until 22 February 2022, the number of registered applications was 22.7 thousand, 9,343 settlements were concluded including 9,191 in mediation process and 152 in court proceedings.

Support for the community, customers, and employees in the fight against the COVID-19 pandemic

The PKO Bank Polski S.A. Group engaged in battling the pandemic from the very start. In 2021, it took steps to ensure uninterrupted operations and the safety of its Customers and staff. It supported local communities and countrywide actions. It continued the digitization and automation of processes and implementation of advanced digital solutions.

The Bank’s Group supported:

  • medical facilities and help organizations – in 2021 it made money and in-kind donations worth PLN 2.9 million;
  • anti-COVID-19 vaccinations – the Customers were able, through the iPKO electronic banking service, to log into the Internet Patient Account and register for vaccination; the Bank also supported the vaccination raffle – money prizes could be collected via ATMs and in the Bank’s branches
  • Customers, by making available funds from aid programmes, including those offered by Bank Gospodarstwa Krajowego (BGK) and Polski Fundusz Rozwoju S.A. (PFR); it offered moratoria to the entities from so-called sectors at risk for repayment of loans and made it possible to submit applications for subsidies from the Financial Shield PFR 2.0 in the iPKO and iPKO biznes services.

It developed organizational solutions and tools which enabled remote work, and facilitated communication with Customers and ensured their seamless servicing.

In 2021, Brokerage Office of PKO Bank Polski S.A. achieved a turnover on the secondary market of shares of PLN 81.6 billion, corresponding to 12.25% market turnover, which placed the Bank’s Brokerage Office as leader in the ranking of brokerage offices in Poland.

As at the end of 2021, PKO Towarzystwo Funduszy Inwestycyjnych S.A., remained the leader on the Employee Capital Plans (PPK) market in terms of managed assets. The total number of management agreements signed at the end of 2021 amounted to 48,912, and the total number of registered participants exceeded 913 thousand. On the PPK accounts managed by the company there were assets worth nearly PLN 2.5 billion, which comprised 38.2% of all assets serviced by investment fund management companies and 32.5% of all PPK market assets.

Financial results

The activities which the PKO Bank Polski SA Group conducted in 2021 allowed it to achieve very good financial results and to reinforce its leading position among the largest financial institutions in Poland.

Basic financial data of the Bank’s Capital Group (PLN million)

2021 2020 Change (y/y)
Net profit/loss 4,874 -2,557 +2.9x
Net interest income 9,882 10,346 -4.5%
Net fee and commission income 4,431 3,920 +13.0%
Result on business activities 15,202 14,625 +3.9%
Operating expenses -6,174 -5,983 +3.2%
Tax on certain financial institutions -1,079 -1,055 +2.3%
Net write-downs and impairment -1,466 -9,299 -84.2%
Total assets 418,086 376,966 +10.9%
Total equity 37,693 39,911 -5.6%
Net ROE 12.1% -6.0% +18.1 p.p.
Net ROTE 13.2% -6.5% +19.7 p.p.
Net ROA 1.2% -0.7% +1.9 p.p.
C/I (cost to income ratio) 40.6% 40.9% -0.3 p.p.
Interest margin 2.70% 3.03% -0.33 p.p.
Share of impaired loans 3.98% 4.43% -0.45 p.p.
Cost of credit risk 0.55% 0.78% -0.23 p.p.
Total capital ratio 18.23% 18.18% +0.05 p.p.
Common equity Tier 1 (CET 1) 17.03% 16.99% +0.04 p.p.

In 2021, the PKO Bank Polski S.A. Group generated net profit of PLN 4,874 million, which means an increase in the result of PLN 7,431 million y/y. The change in the net result was due to:

  • charging the 2020 result with the costs of legal risk related to mortgage loans in convertible currencies of PLN 6,552 million, which reflected the decision of the Extraordinary General Shareholders’ Meeting (EGSM) of 23 April 2021 related to settlements with Customers;
  • an improvement in net expected credit losses of PLN 910 million, mainly as a result of a change in macroeconomic projections given the fact that the credit risk did not materialize.
  • an improvement in the net impairment allowances on non-financial assets of PLN 370 million, among other things, as a result of recognizing, in 2020, an impairment allowance on the shares of Bank Pocztowy S.A. (PLN -93 million), goodwill which arose as a result of acquisition of Nordea Bank Polska S.A. (PLN -116 million) and PKO Leasing Pro S.A. (PLN -31 million), value of activated costs of acquisition of OFE Customers (PLN -49 million), and impairment of real estates (PLN -62 million).
  • increase in net fee and commission income of PLN 511 million resulting from an increase in the result in all core positions, both commissions related to loans, cards, and savings;
  • an increase in other profit/loss of PLN 530 million, mainly as a result of exchange positions (in effect of recognizing the net result on closing currency position following the EGSM decision on offering settlements to Customers), other net operating income and costs (among other things, as a result of creating lower provisions for return of commissions on overdue consumer loan repayments and development of other lease activities) and net income/cost on financial operations (mainly as a result of an increase in the net result on derivatives);
  • accompanied by a decrease in net interest income/cost of PLN 464 million, determined by a low-interest-rate environment in the first three quarters of 2021, which was partially offset by an increase in interest-bearing assets;

In 2021, there was an apparent increase in the scale of operations of the Bank’s Group:

  • total assets exceeded PLN 418 billion (PLN +41 billion y/y);
  • amounts due to Customers increased to approx. PLN 322 billion (PLN +40 billion y/y) – as a result of an increase in both retail and private banking deposits, as well as corporate deposits;
  • the financing provided to Customers increased to approx. PLN 248 billion (PLN +12 billion y/y), as a result of an increase in the financing granted to both retail and corporate Customers;
  • a significant increase in the bank securities portfolio of nearly PLN 12 billion y/y, to PLN 122 billion took place.

Key Non-financial Performance Indicators

In June 2021, the Management Board and the Supervisory Board of the Bank adopted ESG indicators to be achieved and incorporated them in the non-financial objectives of the Bank’s Group for the following years. The Bank will continue working on new indicators and non-financial objectives relating to the ESG area and will incorporate the challenges related to sustainable development more broadly in its next strategy.

Key non-financial performance indicators in the area of the environment

eduction in the Bank’s greenhouse gas emissions (Scopes 1 and 2) of 60% by 2025 (the base year 2019) -61.8% -40.7% Base year
Elimination of the exposure to the coal mining sector by 2030/ Indicator: the share of financing for the coal and lignite mining sectors in total assets 0.13% 0.27% 0.27%
Increase in the Bank’s green financing of 5% y/y 83% X X
Value of exposure to green financing at least 3 times higher than the value of exposure to high emission financing for the Bank’s Group (the data relates to the Bank only) 3.5 1.6 1.4

Key non-financial performance indicators in the area of employment (in per cent)

At least 35% of women employed in key managerial positions in the total number of managers in the Bank’s Group by 2025 38 42 X
At least 35% of women employed in other material managerial positions in the total number of managers in the Bank’s Group by 2025 37 42 X
Employee rotation rate of no more than 14% in the Bank’s Group by 2025 13.1 12.5 15.3
Voluntary employee resignation rate of no more than 7% in the Bank’s Group by 2025 8.1 5.3 X
Implementation of systemic projects to support the employment of people with disabilities in the Bank’s Group/ Indicator: the share of employment of people with disabilities in the total number of employees (in per cent) 1.4 1.0 X

Key non-financial performance indicators in the area of procurement

Updating the Procurement Policy in keeping with the ESG principles by the end of Q3 2021 The Procurement Policy was updated and agreed in Q3 2021 and subsequently implemented by decision of the Procurement Department Director on 11/10/2021.
Conducting an ESG survey among the Bank’s key suppliers by the end of 2021 The Bank conducted ESG surveys among its key suppliers in Q2 2021.

The purpose of conducting the ESG surveys was to determine the level of familiarity with ESG issues among the Bank’s suppliers, mainly with regard to the experience gained from participating in procurement proceedings organized by other entities, but also with regard to own practices and internal policies. The conclusions drawn from the surveys were used in updating the Procurement Policy, and in the future they will be used to prepare a Supplier Code of Ethics.

Preparation of a Supplier Code of Ethics by the end of Q1 2022 In progress

Prizes and award

In 2021 the PKO Bank Polski S.A. Group received many prizes and awards, the most important of which are listed below.

Dynamic development and excellent financial results
Largest Bank in the Region In the Inteliace Research report for 2020, covering 200 leading banks from the CEE region, PKO Bank Polski S.A. is the largest in terms of assets which amounted to EUR 75.7 billion.

In the ranking of the largest banks in the region, 23 are from Poland, 26 in Hungary and 30 in the Czech Republic. Concluding, in terms of asset value Polish banks are the largest in the region. The report covered 15 countries of Central and Eastern Europe.

Modern technology leader
Bain&Company Ranking PKO Bank Polski S.A. was one of the Top 10 most digitally advanced banks in Europe, according to the Bain&Company ranking. The Bank received high mentions for, among other things, the best digital strategy, innovative actions and strong position in internet banking and mobile applications, well digitized banking processes from the point of view of the Customer, and intuitive and well-designed internet banking for personal computers and mobile equipment.
Best in Cloud PKO Bank Polski S.A. ranked 1st in the ninth edition of the Best in Cloud competition. The jury appreciated the migration of the Bank’s resources to the cloud conducted under the Road to Cloud Technological Transformation Programme, the originality of the project, its innovative nature and operational effects. Special attention was paid to the scale of changes which – according to the justification provided – transform the Bank into a cloud giant, cloud avant-garde of the financial sector.

The Best in Cloud competition is organized by IDG Poland, publisher of the Computerworld magazine.

Best products and services
Best private banking PKO Bank Polski S.A.’s Private Banking received the highest score (5 stars) in the annual Forbes ranking. This score was awarded, among other things, thanks to the banking platform for purchasing cars – Automarket, the possibility of opening investment accounts remotely in the Brokerage Office using the mSzafir e-Podpis (e-signature), and the expansion of the spectrum of investment funds.
Mobile Trends Awards In the 10th edition of the Mobile Trends Awards, IKO – the mobile application of PKO Bank Polski S.A.– won in the category Special Internauts’ Award. Users appreciate IKO mainly because of quick and easy access to banking transactions, user-friendly and practical solutions such as the option to pay for parking, and innovation and dynamic development.

The Mobile Trends Awards competition is organized by ClickMaster Polska. A jury comprising experts in the mobile industry selects the winners. Internauts also award their favourites.

Instytution of the year In the sixth edition of the Institution of the year ranking, PKO Bank Polski S.A. was awarded four statuettes: for internet banking, for opening accounts remotely, for the quality of services and for actions taken in the battle against the social and economic consequences of the pandemic. In addition, 14 of the Bank’s branches were awarded with the Best Banking Outlet in Poland certificate.

The “Institution of the Year” is an initiative of the portal. Independent experts evaluate customer friendly actions of banks and insurance companies, and award them for their comprehensive approach to Customer service.

Superbrands 2021 In the 15th edition of Superbrands, the PKO Bank Polski S.A. brand was awarded the title Superbrands 2021 in banking. The award was granted based on the results of a consumer survey performed by the Research Institute ARC Rynek i Opinia and recommendations of experts from the Rada Marek brand council.

The brand strength index is the key factor which is decisive for granting the Superbrands award. The index is the difference between the results of recommending and advising against a brand.

Actions awarded in the area of Corporate Social Responsibility (CSR)
CSR white leaf In the 10th run of the CSR Leaves of the Polityka weekly, PKO Bank Polski S.A. was awarded in the sustainable development area, including the initiative for counteracting the economic and social effects of the pandemic and limiting the negative impact on the natural environment. The Bank received the CSR White Leaf. In addition, it was awarded for involvement in the project.

The Polityka CSR Leaves ranking is prepared in collaboration with the Responsible Business Forum and the consulting firm Deloitte.

Exemplary communication with the market
The Best Annual Report For years now the Bank’s annual reports are highly ranked, among other things, for their useful value for shareholders and investors. In the 16th edition of The Best Annual Report competition organized by the Institute of Accountancy and Taxes, PKO Bank Polski S.A. won “The Best of the Best” award. The jury also awarded the Bank with two special prizes: for the best report according to the ESEF standard, i.e. the European Single Electronic Format, and the best remuneration report.
Top Marka 2021 In the 14th 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. It was also awarded the title of “Brand of Brands” coming first in the general ranking comprising 500 brands from 50 industries.

In this year’s edition more than 108 million press and internet publications as well as social media posts were analysed.

PKO Bank Polski SA – Leader among employers
PKO Bank Polski S.A. among TOP Employers 2021 PKO Bank Polski S.A. received the prestigious title of Top Employer Polska 2021. This once again confirms that the HR strategy pursued, creating an employee-friendly working environment and the solutions supporting continuous development and building of employee commitment are among the best on the market. The certificate granted confirms the high quality of working conditions in the Bank.

Top Employers Institute awards employers by assessing and certifying them with respect to strategy, employee policy, monitoring its effects and actions contributing to employee development.

The best specialists on the market
Best Stock Exchange analysts Piotr Łopaciuk from the Brokerage Office of PKO Bank Polski S.A. won in the 19th edition of the securities exchange analysts ranking of Parkiet Gazeta Giełdy i Inwestorów. He was second to none in the general classification without the category break-down.

Every year representatives of TFI and OFE asset managers (32 institutions in total) selected the best analysts in particular sector categories. Five out of thirteen were won by analysts of the Bank’s Brokerage Office. It is the best result from among all the offices participating in the ranking.

Analyst Forecast Awards 2021 FocusEconomics Analysts of PKO Bank Polski S.A. once again showed they are the best in Poland in economic forecasting – they won the Analyst Forecast Awards 2021 FocusEconomics. They came first in the general classification and received honourable mentions in four detailed categories: inflation, interest rates, foreign exchange rates and balance of payments.

The award is granted in more than 90 countries throughout the world based on an assessment of the accuracy of forecasts of major economic ratios.

Awards received by the brokerage office and the companies of the Bank’s Group
Bulls and Bears and Golden Wallet In the 27th edition of the Parkiet Gazeta Giełdy i Inwestorów, PKO TFI S.A. won a Bull and Bear statuette in the Employee Capital Plans (PPK) 2020 category for effective management and the highest value of assets accumulated in PPK. The Company also won the Golden Wallet award in the raw materials market for its subfund PKO Akcji Rynku Złota (shares in the gold market) which in 2020 generated a rate of return of 28.3%, which made it the most profitable investment fund in 2020.

The Bulls and Bears and the Golden Wallets are awarded to market leaders.

Broker of the year 2020 Summing up the results of 2020, the WSE granted the Broker of the Year 2020 prize to the Bank’s Brokerage Office (Biuro Maklerskie PKO Banku Polskiego S.A.), 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, in 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 in the previous year. The Bank’s Brokerage Office also won prizes for the biggest share in session trading in shares on the Main Market and the biggest share in bond trading on the Catalyst market. The PKO Bank Polski S.A. Group will be awarded for the highest value of the portfolio of orders for information products including WSE and BondSpot data.

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