On 31 March 2015 The Management Board of the Bank adopted the new version of "Principles of management of capital adequacy and equity in PKO Bank Polski SA and PKO Bank Polski SA Group", which encompass i.e., the dividend policy.
The general principle of the Bank’s dividend policy is the stable execution of dividend payments over a long period in keeping with the principle of prudent management of bank and in line with the Bank’s and the Group’s financial capabilities. The objective of the dividend policy is to optimally shape the Bank’s and the Group’s capital structure, taking into account the return on capital employed and its cost, capital requirements related to development, accompanied by the necessity to ensure an appropriate level of the capital adequacy ratios.
Dividend policy implies the possibility of carrying out payments from the Bank's profit for shareholders in the long term in the amount of the excess capital above the minimum capital adequacy ratios with an additional capital cushion. Dividend policy takes into account factors related to the operations of the Bank and other entities from the Group, and in particular the supervisory requirements and recommendations in terms of capital adequacy
Capital adequacy ratios determining the dividend criteria are:
- the capital adequacy ratio of the Bank and the Group will be above 12,5% and
- the common equity Tier 1 ratio of the Bank and the Group will be above 12%.
These principles were approved by the Supervisory Board on 6 May 2015.
On 31 March 2015, the Bank received recommendation from the PFSA to stop the entire profit of PKO Bank Polski SA generated in the period from 1 January 2014 to 31 December 2014 - until the establishment of the supervisory authority the amount of additional capital requirement for the Bank. PFSA expected submission of the opinion in this regard by the Management Board and the Supervisory Board.
On 7 April 2015 Management Board and on 8 April 2015 the Supervisory Board adopted resolutions on the application of PFSA’s recommendation within the scope of their competencies. The Bank informed that in accordance with Article 395 § 2 point 2 of the Commercial Companies Code (KSH), the decision regarding the distribution of profit belongs to the Ordinary General Shareholders’ Meeting.
On 23 October 2015, the Management Board received from the PFSA recommendation concerning the amount of the additional requirement of own funds. PFSA recommended the maintenance of the Bank's own funds to cover the additional capital requirement at the level of 0.76 p.p. in order to hedge risk arising from foreign currency mortgage loans, which should consist of at least 75% of Tier1 capital (equivalent to 0.57 pp.). This means that:
- minimum capital ratios of the Bank taking into account the additional capital requirement recommended by the PFSA are: T1=9+0.57=9.57%, TCR=12+0.76=12.76%,
- capital ratios of the Bank taking into account the additional capital requirement in the context of dividend policy recommended by PFSA are:
- The criteria for payment up to 50% profit for 2014 r.: CET1=12+0.57=12.57%, TCR=12.5+0.76=13.26%,
- The criteria for payment up to 100% profit for 2014 r. : CET1=12+0.57=12.57%, TCR=15.5+0.76=16.26%.
This recommendation should be respected by the Bank from the date of receipt of the appeal until cancellation- i.e. until the PFSA considers - based on the analysis and evaluation of the supervisory board - that risk associated with FX mortgage loans, being the reason of the imposition on the Bank additional capital requirement, has significantly changed. PFSA recommended also the retention by the Bank of at least 50% of the profit generated in the period from 1 January 2014 to 31 December 2014.
On 25 June 2015, the Ordinary General Shareholders’ Meeting of PKO Bank Polski SA decided about the distribution of net profit of PKO Bank Polski SA for the year 2014 and retained earnings from previous years, allocating the profit in accordance with the recommendation of the Bank’s Management Board for the supplementary and reserve capital and leaving the undivided amount of PLN 1 250 000 thousand for dividends to shareholders. Resolution of the Ordinary General Shareholders’ Meeting of the Bank on the distribution of profit for 2014 was consistent with the recommendation of the PFSA dated 31 March 2015.