6. Information on the segments of activites and about geographical areas

6.1 Information on the segments of activities

The PKO Bank Polski SA Group conducts business activities as part of 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 the 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. The segment note below is recognised in an internal reporting system, i.e. information presented to the Management Board of PKO Bank Polski SA, used to assess achieved results and to allocate resources. The segment report below presents an internal organisational structure of the PKO Bank Polski SA Group.

In 2014, changes were made to the functioning of the existing segments: the corporate segment and the investment segment, which were combined into one corporate and investment segment. These changes were aimed at further improving the quality of service for corporate customers and financial institutions, including extending the range of services and products offered and, consequently, ensuring the provision of comprehensive services. At present, the PKO Bank Polski SA Group comprises three basic segments: retail, corporate and investment, and transfer centre:

  1. The retail segment offers a full range of services for individuals as part of retail and private banking as well as mortgage banking. Moreover, it comprises transactions conducted with legal persons, i.e. small and medium enterprises. The products and services offered to customers in this segment include, amongst others: current accounts, savings accounts, term deposits, private banking services, investment and insurance products, credit and debit cards, electronic banking services, consumer and mortgage loans, as well as corporate loans to small and medium enterprises, developers, cooperatives, and property managers.
  2. The corporate and investment segment includes transactions concluded with large corporate clients and financial institutions. This segment comprises, i.a., the following products and services: current accounts, term deposits, depositary services, currency and derivative products, corporate loans, leases and factoring. Within this segment, PKO Bank Polski SA also enters, individually or in a consortium with other banks, into loan agreements financing large investment projects and issuance of non-Treasury securities. This segment also comprises the Bank’s portfolio activity on its own account i.e. investing and brokerage activities, interbank transactions, derivative instruments and debt securities. The results of corporate and investment segment comprise results of activities of PKO Bank Polski SA’s subsidiaries.
  3. The transfer 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. Internal funds transfer is based on transfer pricing dependant on market rates. The transactions between business segments are conducted at arms’ length. Long-term external financing includes the issuance of securities, subordinated liabilities and amounts due to financial institutions.

The PKO Bank Polski SA Group typically settles inter-segment transactions as if they were concluded between unrelated parties, using internal settlement rates. The transactions between business segments are conducted at arms’ length.

Accounting policies applied in the segment report are consistent with accounting policies described in Note 2 of these financial statements.

Disclosed values of assets and liabilities are operating assets and liabilities applied by segment in operating activities. 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 asset, current income tax receivables, current income tax liabilities and deferred income tax liability in respect of the statement of financial position presentation were recognised at the Group level.

The tables below present data relating to income and results of individual business segments of the PKO Bank Polski SA Group for the twelve-month periods ended 31 December 2015 and 31 December 2014 and assets and liabilities as at 31 December 2015 and 31 December 2014.

For the period ended 31 December 2015   Continuing operations
Retail segment Corporate and investment segment Transfer centre Total activity of the PKO Bank Polski SA Group
Net interest income 6 171 873 1 167 382 (310 660) 7 028 595
Net fee and commission income 2 141 862 708 784 (18) 2 850 628
Other net income 252 840 531 293 1 467 785 600
Net result from financial operations 5 738 131 756 (9 170) 128 324
Net foreign exchange gains (losses) 182 911 175 546 10 637 369 094
Dividend income - 10 658 - 10 658
Net other operating income and expense 38 073 239 451 - 277 524
Income/expenses relating to internal customers 26 118 (26 118) - -
Net impairment allowance and write-downs (1 095 665) (380 253) - (1 475 918)
Administrative expenses, of which: (4 898 244) (1 138 026) - (6 036 270)
amortisation and depreciation (692 287) (126 301) - (818 588)
Share of profit (loss) of associates and joint ventures - - - 38 115
Segment gross profit 2 572 666 889 180 (309 211) 3 190 750
Income tax expense (tax burden) - - - (589 497)
Profit (loss) attributable to non-controlling shareholders - - - (8 311)
Net profit attributable to equity holders of the parent company 2 572 666 889 180 (309 211) 2 609 564

As at 31 December 2015  Continuing operations
Retail segment Corporate and investment segment Transfer centre Total activity of the PKO Bank Polski SA Group
Assets 140 811 660 111 565 843 13 614 239 265 991 742
Unallocated assets - - - 948 177
Total assets 140 811 660 111 565 843 13 614 239 266 939 919
Liabilities 150 189 893 63 454 513 22 972 731 236 617 137
Unallocated liabilities - - - 57 869
Total liabilities 150 189 893 63 454 513 22 972 731 236 675 006

For the period ended 31 December 2014  Continuing operations
Retail segment Corporate and investment segment Transfer centre Total activity of the PKO Bank Polski SA Group
Net interest income 6 254 818 1 122 952 145 161 7 522 931
Net fee and commission income 2 215 021 720 564 (2 079) 2 933 506
Other net income 230 527 502 850 (43 250) 690 127
Net result from financial operations 8 438 233 733 (16 933) 225 238
Net foreign exchange gains (losses) 161 740 100 374 (26 317) 235 797
Dividend income - 6 511 - 6 511
Net other operating income and expense 34 285 188 296 - 222 581
Income/expenses relating to internal customers 26 064 (26 064) - -
Net impairment allowance and write-downs (1 185 795) (712 875) - (1 898 670)
Administrative expenses, of which: * (4 137 148) (1 107 993) - (5 245 141)
amortisation and depreciation (609 341) (137 823) - (747 164)
Share of profit (loss) of associates and joint ventures - - - 31 810
Segment gross profit 3 377 423 525 498 99 832 4 034 563
Income tax expense (tax burden) - - - (791 747)
Profit (loss) attributable to non-controlling shareholders - - - (11 306)
Net profit attributable to equity holders of the parent company 3 377 423 525 498 99 832 3 254 122

*Beginning from the data for 2015 the methodology of cost allocation was changed. The data for 2014 were transformed to be comparable i.e. recalculated in accordance to the new methodology.   

As at 31 December 2014  Continuing operations
Retail segment Corporate and investment segment Transfer centre Total activity of the PKO Bank Polski SA Group
Assets 134 683 184 101 519 005 11 515 913 247 718 102
Unallocated assets - - - 982 487
Total assets 134 683 184 101 519 005 11 515 913 248 700 589
Liabilities* 141 576 058 57 175 468 22 287 012 221 038 538
Unallocated liabilities - - - 46 500
Total liabilities 141 576 058 57 175 468 22 287 012 221 085 038
             

6.2 Information about geographical areas

Complementary, the PKO Bank Polski SA Group applies geographical areas distribution. The PKO Bank Polski SA Group conducts activities in the Republic of Poland and in Ukraine through the KREDOBANK SA Group, ‘Inter-Risk Ukraina’ Sp. z d.o. and Finansowa Kompania ‘Prywatne Inwestycje’ Sp. z o.o., as well as in Sweden through subsidiaries: PKO Finance AB and PKO Leasing Sverige AB and the Branch in Germany through corporate branch of PKO Bank Polski SA (PKO Bank Polski Niederlassung Deustchland). For presentation purposes, the results of companies operating in Sweden and results of the Branch operating in the Germany, which from the point of view of the scale of operations of the PKO Bank Polski SA Group are not significant, are included in the segment of Poland.

For the period ended 31 December 2015 Poland Ukraine Total
Net interest income 6 926 013 102 582 7 028 595
Net fee and commission income 2 807 961 42 667 2 850 628
Other net income 832 557 (46 957) 785 600
Administrative expenses (5 935 783) (100 487) (6 036 270)
Net impairment allowance (1 439 935) (35 983) (1 475 918)
Share of profit (loss) of associates and joint ventures - - 38 115
Profit (loss) before income tax 3 190 813 (38 178) 3 190 750
Income tax expense (tax burden) - - (589 497)
Profit (loss) attributable to non-controlling shareholders - - (8 311)
Net profit (loss) attributable to equity holders of the parent company 3 190 813 (38 178) 2 609 564

As at 31 Decemer 2015 Poland Ukraine Total
Assets of which: 265 572 205 1 367 714 266 939 919
non-financial fixed assets 6 388 189 65 928 6 454 117
deferred tax assets and current income tax receivable 936 113 12 064 948 177
Liabilities 235 382 254 1 292 752 236 675 006

For the period ended 31 December 2014 Poland Ukraine Total
Net interest income 7 457 960 64 971 7 522 931
Net fee and commission income 2 881 882 51 624 2 933 506
Other net income 765 991 (75 864) 690 127
Administrative expenses (5 128 226) (116 915) (5 245 141)
Net impairment allowance (1 824 026) (74 644) (1 898 670)
Share of profit (loss) of associates and joint ventures - - 31 810
Profit (loss) before income tax 4 153 581 (150 828) 4 034 563
Income tax expense (tax burden) - - (791 747)
Profit (loss) attributable to non-controlling shareholders - - (11 306)
Net profit (loss) attributable to equity holders of the parent company 4 153 581 (150 828) 3 254 122

As at 31 December 2014 Poland Ukraine Total
Assets of which: 247 272 349 1 428 240 248 700 589
non-financial fixed assets* 6 086 703 85 069 6 171 772
deferred tax assets and current income tax receivable 959 110 23 377 982 487
Liabilities 219 733 533 1 351 505 221 085 038

*Data for 2014 were made comparable. The change in presentation method consist in taking into account non-financial fixed assets.