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Annual Report
2021

Share capital and shareholders

As at 31 December 2021, the share capital of PKO Bank Polski S.A. amounted to PLN 1,250,000,000 and was divided into 1,250,000, 000 shares with a nominal value of PLN 1 each. All the Shares have been fully paid. The amount of the Bank’s share capital did not change in 2021.

Series Type of shares Number of shares Nominal value
of 1 share		 Nominal value
of a series
A Series ordinary registered shares 312,500,000 PLN 1 PLN 312,500,000
A Series ordinary bearer shares 197,500,000 PLN 1 PLN 197,500,000
B Series ordinary bearer shares 105,000,000 PLN 1 PLN 105,000,000
C Series ordinary bearer shares 385,000,000 PLN 1 PLN 385,000,000
D Series ordinary bearer shares 250,000,000 PLN 1 PLN 250,000,000
    1,250,000,000   PLN 1,250,000,000

According to the best knowledge of PKO Bank Polski S.A., as at 31 December 2021 the following three shareholders held, directly or indirectly, significant blocks of shares (at least 5%): the State Treasury, Nationale-Nederlanden Open Pension Fund and Aviva Open Pension Fund.

As at 31.12.2021 As at 31.12.2020
Shareholder Number of shares Share in the number of votes at the GSM and in the share capital Number of shares Share in the number of votes at the GSM and in the share capital Zmiana udziału w liczbie głosów na WZ
State Treasury 367,918,980 29.43% 367,918,980 29.43% –
Nationale-Nederlanden Open Pension Fund1) 103,500,000 8.28% 107,198,023 8.58% – 0.30 p.p.
Aviva Open Pension Fund1) 90,810,319 7.27% 93,610,319 7.49% – 0.22 p.p.
Other shareholders2) 687,770,701 55.02% 681,272,678 54.50%    0.52 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 (PTE) 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 December 2021 and 31 December 2020 held 24,487,297 shares carrying 1.96% of the votes at the GSM.

The shares of PKO Bank Polski S.A. and other securities issued by the Bank do not carry any specific control rights.

The Bank is not aware of any agreements concluded in 2021, based on which any changes could occur in the future in the proportions of the shares held by the current shareholders or bond holders.

Shareholder Number of shares Share in the number of votes at the GSM
and in the share capital		 Number of shares Share in the number of votes at the GSM
and in the share capital
As at 31.12.2021 As at 31.12.2020
Nationale-Nederlanden OFE 103,500,000 8.28% 107,198,023 8.58%
Aviva OFE 90,810,319 7.26% 93,610,319 7.49%
PZU OFE 52,915,942 4.23% 54,780,422 4.38%
Aegon OFE 32,878,074 2.63% 33,078,074 2.65%
Metlife OFE 30,298,318 2.42% 30,993,318 2.48%
UNIQA OFE 23,513,483 1.88% 23,513,483 1.88%
Generali OFE 19,928,593 1.59% 19,913,271 1.59%
Allianz OFE 15,844,332 1.27% 15,844,332 1.27%
Pocztylion OFE 6,293,630 0.50% 6,293,630 0.50%

Restrictions imposed on shares of PKO Bank Polski S.A.

All 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 (one share carries one vote) or dividend.

The Articles of Association of PKO Bank Polski S.A. limit the voting right 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 at 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. The conversion into bearer shares or transfer of A-series registered shares, after obtaining such approval, results in the expiry of restrictions in respect of the 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.

The Bank has not identified any other restrictions relating to transfer of the ownership rights arising from the Bank’s securities.

Share price and capitalization

In 2021, the PKO Bank Polski S.A.’s share price increased by 56% to PLN 44.93 as at the end of the year. During the year the share price reached PLN 50.38, the highest level in more than a decade. Such a strong increase in the share price was primarily due to an improvement in the net profit, which reached its historical maximum with the support of the post-Covid economy rebound and the commencement of interest rate increases in the fourth quarter of 2021.

As at the end of 2021, PKO Bank Polski S.A. was the biggest polish company listed on the Warsaw Stock Exchange. At the end of the last trading session in 2021, it was valued by the investors at PLN 56 billion.

Due to their high liquidity and capitalization, the Bank’s shares are a part of a number of stock exchange indices, such as the Polish large companies’ indices WIG20 and WIG30, the WIG-Banki banking sector index, the index of companies representing the highest social responsibility standards WIG-ESG, the MSCI Emerging Markets index and the large companies index FTSE Russell and STOXX Europe 600.

Key data on the PKO Bank Polski S.A. shares

2021 2020
Share price at the end of the year (PLN) 44.93 28.72
Maximum share price (PLN) 50.36 37.09
Minimum share price (PLN) 27.51 18.21
Rate of return since the beginning of the year (%) 56.44 -16.66
Number of shares 1,250,000 1,250,000
Capitalization at the end of the year (PLN million) 56,162.50 35,900.00
Average trading volume per session 2,293,578 3,307,051
Share in trading volume (%) 6.91 6.92
Average number of transactions per session 6,030 7,160
Earnings per share (PLN) 3.9 -2.05
Book value per share (PLN) 30.16 31.93
P/E (x)1) 10 11.9
P/BV (x)1) 1.21 0.77
Source: Data based on the WSE Statistical Bulletin
1) Source: Bloomberg.

Ratings

Ratings of PKO Bank Polski S.A. as at 31 December 2021 (paid rating)

The creditworthiness of PKO Bank Polski S.A. is assessed by Moody’s Investors Service rating agency which awards a paid rating to the Bank.

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 rating (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)

ESG ratings of PKO Bank Polski S.A. as at 31 December 2021
FTSE Russell 3,7
MSCI BBB
Sustainalytics 20.8 (Medium)
V.E 47

Ratings of PKO Bank Hipoteczny S.A. as at 31 December 2021 (paid rating)

Moody’s Investors Service
Long-term issuer rating A3
Short-term issuer rating P-2
Counterparty risk assessment – long-term A2
Counterparty risk assessment – short-term P-1
Opinion on counterparty risk – long-term A2(cr)
Opinion on counterparty risk – short-term P-1(cr)
Rating for PLN mortgage covered bonds issued Aa1
Rating for EUR mortgage covered bonds issued Aa1

Outlook: stable

Ratings of Polish Lease Prime 1 DAC bonds as at 31 December 2021 (paid rating)

A-class bonds rating
Scope Agency AAA
ARC Agency AA-
B-class bonds rating
Scope Agency BB-
ARC Agency BB+

Obligacje wyemitowane przez spółkę celową Polish Lease Prime 1 DAC, powołaną w ramach Grupy Kapitałowej PKO Leasing S.A. dla celów programu sekurytyzacji aktywów, posiadają na 31 grudnia 2021 roku poniższe oceny.

Ratings of KREDOBANK S.A. as at 31 December 2021 (paid ratings)

”Expert-Rating” Rating Agency
Credit rating on country-wide scale uaAAA with stable outlook
Rating on country-wide scale for A- and B-series bonds issued uaAAA with stable outlook
“Standard-Rating” Rating Agency
Credit rating on country-wide scale – long-term uaAAA with stable outlook
Credit rating on national scale – short-term uaK1 with stable outlook
Deposit rating on country-wide scale ua1 with stable outlook
Rating on country-wide scale for A- and B-series bonds issued uaAAA with stable outlook

As at 31 December 2021, KREDOBANK S.A. had the following ratings granted by Ukrainian rating agencies.

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.

Investor relations

PKO Bank Polski S.A. maintains regular contact with investors and financial market analysts and aims at maintaining high communication standards. The Bank’s representatives ensure transparent, reliable and complete access to information on the functioning of the Bank, its financial performance and the situation in the banking sector. The Bank allows various forms of contact preferred by the investors and analysts.

Due to the COVID-19 pandemic, most investor and analyst communications were conducted remotely via teleconference and video conference. in 2021, 299 meetings with investors were held.

In 2021:

  • Bank’s Management Board at meetings with investors and capital market and debt securities market analysts held in the Bank’s office or remotely via teleconference and video conference;
  • members of the Bank’s Management Board answered the investors’ questions during remote investor conferences organized for investors from all parts of the world; in 2021, a total of 235 meetings were held during 21 conferences with investors from Poland (42%), the United Kingdom (19%), other European countries (19%), USA (18%) and Asia (2%).
  • 57 individual meetings took place, of which 53 were held online and four took place in the Bank’s office.

PKO Bank Polski S.A. is observed by a wide group of analysts (one of the biggest), who issue recommendations to entities listed on the Warsaw Stock Exchange on an ongoing basis. At the end of the year 2021, 19 Polish and foreign analysts published reports and recommendations concerning the Bank’s shares. The average target price of the Bank’s shares for 2022 was PLN 55.43.

All information of significance to the Bank’s investors and shareholders was immediately published on the Investor Relations website at. In 2021, the Bank once again launched its online annual report in the form of an internet service site in two language versions: Polish and English, which facilitates obtaining key financial and business information.

Dividend

Dividend policy

In March 2021 the Supervisory Board of the Bank adopted the “Dividend Policy of PKO Bank Polski S.A. and the PKO Bank Polski S.A. Group” (hereinafter: Dividend Policy).  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. According to the Dividend Policy adopted, the repurchase of own 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.

In December 2021 the PFSA took a stand on the dividend policy of the supervised institutions in 2022, which was subsequently confirmed with the communication of 25 January 2022. The criteria for dividend distribution indicated in the PFSA’s positions in respect of distribution of dividend by commercial banks are as follows:

1. up to 50% of net profit for 2021 can only be distributed by banks which meet the following criteria jointly:

  • do not pursue the recovery plan;
  • are positively assessed under the supervisory review and evaluation process (SREP) – final SREP grade no lower than 2.5;
  • with a leverage ratio (LR) higher than 5%;
  • with core equity Tier 1 ratio (CET1) no lower than the required minimum: 4.5%+56%*P2R requirement + combined buffer requirement (taking into account 3% of the systemic risk buffer);
  • with Tier 1 ratio (T1) no lower than the required minimum plus 1.5 p.p.: 6%+75%*P2R requirement + combined buffer requirement (taking into account 3% of the systemic risk buffer);
  • with total capital ratio (TCR) no lower than the required minimum plus 1.5 p.p.: 8%+ P2R requirement + combined buffer requirement (taking into account 3% of the systemic risk buffer);

2. up to 75% of net profit for 2021 can only be distributed by banks which at the same time meet the criteria for the 50% distribution, taking into account – among capital criteria – the bank’s sensitivity to an unfavourable macroeconomic scenario;

3. up to 100% of net profit for 2021 can only be distributed by banks which at the same time meet the criteria for the 75% distribution, taking into account – among capital criteria – the bank’s sensitivity to an unfavourable macroeconomic scenario related to an increase in interest rates and its impact on the credit risk.

The criteria defined in points 1-3 above should be met by banks at both the separate and consolidated level.

Additionally, the PFSA indicated that the banks which have considerable portfolios of foreign currency housing loans should adjust the rate of dividend distribution based on two additional criteria:

  • Criterion 1 – based on the share of foreign currency housing loans for households in the total portfolio of amounts due from the non-financial sector;
  • Criterion 2 – based on the share of foreign currency housing loans granted in 2007 and 2008 in the foreign currency housing loans for households’ portfolio.

The PFSA recommended that appropriate adjustments be made depending on the size of the portfolio held by the bank:

  • Criterion 1:
    • banks with a share exceeding 5% – adjustment of the dividend rate by 20 p.p.;
    • banks with a share exceeding 10% – adjustment of the dividend rate by 40 p.p.;
    • banks with a share exceeding 20% – adjustment of the dividend rate by 60 p.p.;
    •  banks with a share exceeding 30% – adjustment of the dividend rate by 100 p.p.;
  • Criterion 2:
    • banks with a share exceeding 20% – adjustment of the dividend rate by 30 p.p.;
    • banks with a share exceeding 50% – adjustment of the dividend rate by 50 p.p.;

whereas the total value of the adjustment (maximum 100%) is the sum of adjustments resulting from both criteria.

On 11 February 2022 the Bank received an individual recommendation from the PFSA regarding the level of capital add-on under pillar II (P2G) with an indication of a reduction of the risk imminent to the Bank’s activities by maintaining, both on the separate and consolidated level, own funds to cover additional capital add-on to absorb potential losses resulting from stress conditions at the level of 0.29% over the combined value of the capital ratio referred to in Art. 92.1.c of Regulation No. 575/2013, increased by an additional requirement in respect of own funds referred to in Art. 138.2.2 of the Banking Law, and the combined buffer requirement referred to in Art. 55.4 of the Act on macro-prudential supervision. The capital add-on should entirely consist of the core equity T1.

At the same time, according to the PFSA letter of 25 January 2022; in February the Bank will receive an individual recommendation related to the ability to pay dividends.

As at 31 December 2021 the ratios amounted to:

  • at the consolidated level:
    • T1 capital ratio and core equity ratio T1 = 17.03%;
    • total capital ratio TCR = 18.23%;
    • Criterion 1 = 8.3%;
    • Criterion 2 = 38.7%;
  • at the separate level:
    • T1 capital ratio and core equity ratio T1 = 18.47%;
    • total capital ratio TCR = 19.84%;
    • Criterion 1 = 8.3%;
    • Criterion 2 = 38.7%.

The Bank intends to pay dividends in 2022 out of the net profit of 2021.

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.

Group in 2021 Financial position of the Bank
Group in 2021 Capital adequacy

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