1) As a result of the cessation of defence of minimum EUR/CHF rate by Swiss central bank, in January 2015 a significant appreciation of the Swiss franc against foreign currencies, including Polish zloty took place. The Group constantly analyses the impact of these events on financial results, of which on the risk of deterioration in the quality of the portfolio of housing loans denominated in CHF. This risk is partially neutralised by a decline in reference interest rates for CHF LIBOR (three-month LIBOR in February 2015 was at the level of approximately -0.9%). The Group took a number of actions aiming at support of customers and simultaneously reducing an increase in the credit risk related to an increase in CHF – among others decreasing the CHF/PLN spread used to calculate CHF repayment amount and applying the negative LIBOR rate for all customers. In the assessment of the Group these actions allow to maintain the borrowers capacity to service the debt arising from housing loans in CHF at the level not lower than in December 2014.
The table below presents a qualitative analysis of loans in CHF (the Bank’s data)
| Loans and advances to customers by method of calculatingimpairment allowances in CHF (in original currency) | 31.12.2014 | |||
|---|---|---|---|---|
| Financial institutions | Enterprises | Households | Total | |
| Assessed on an individual basis, of which: | 2,912 | 169,951 | 188,969 | 361,832 |
| impaired | 2,912 | 169,951 | 188,969 | 361,832 |
| Assessed on a portfolio basis, | ||||
| impaired | - | 29,737 | 1,042,503 | 1,072,240 |
| Assessed on a group basis (IBNR) | 3,837 | 309,293 | 29,252,287 | 29,565,417 |
| Loans and advances to customers, gross | 6,749 | 508,981 | 30,483,759 | 30,999,489 |
| Impairment allowances on exposures assessed on an individual basis, | ||||
| of which: | (15) | (43,789) | (75,402) | (119,206) |
| impaired | (15) | (43,789) | (75,402) | (119,206) |
| Impairment allowances on exposures assessed on a portfolio basis | - | (14,034) | (601,131) | (615,165) |
| Impairment allowances on exposures assessed on a group basis (IBNR) | (23) | (4,401) | (96,252) | (100,676) |
| Impairment allowances - total | (38) | (62,224) | (772,785) | (835,047) |
| Loans and advances to customers, net | 6,711 | 446,757 | 29,710,974 | 30,164,442 |
The PKO Bank Polski SA Group regularly monitors the volatility of CHF exchange rate, the value of housing loans portfolio denominated in CHF and the impact of changes in foreign exchange rate on the level of capital adequacy measures. The Group expects to maintain capital adequacy measures at a safe level in 2015, taking into account the volatility of CHF exchange rate.
Observed by the PKO Bank Polski SA Group a scale of PLN depreciation has impact on the volume of the Group’s portfolio of currency loans denominated in CHF, which contributes to an increase in the requirements as regards own funds in respect of credit risk and consequently causes a decrease of total capital adequacy ratio (TCR) and a ratio of Tier 1 basic funds - Common Equity Tier 1 (CET1).
The Group estimates, that with the CHF/PLN exchange rate at the level of 4.20:
- a consolidated total capital adequacy ratio would fall by 0.29 pp.,
- a consolidated ratio of Tier 1 basic funds would fall by 0.33 pp.
The above estimate was prepared on the basis of appropriate consolidated data as at 31 December 2014.
2) In February 2015, as a result of releasing of hryvnia exchange rate by the National Bank of Ukraine, a significant depreciation of Ukrainian hryvnia against foreign currencies, including Polish zloty took place. From the beginning of March 2015, after the decision on significant increasing in reference interest rates in Ukraine, decreasing of scale of hryvnia depreciation is observed. The Group regularly analyses the impact of these events on financial results, including the risk of deterioration of the Group assets’ quality in Ukraine.
3) On 30 January 2015, the Extraordinary General Shareholders’ Meeting of PKO Bankowy Leasing Sp. z o.o. adopted a resolution on increasing the Company’s share capital of PLN 20 000 thousand. All shares in the increased capital were covered by the current sole shareholder - PKO Leasing SA.
4) On 10 February 2015, PKO Bank Polski SA established PKO Towarzystwo Ubezpieczeń SA with a share capital of PLN 20 000 thousand. The main business of the Company shall be the provision of non-life insurance.
5) On 6 March 2015 the Polish Financial Supervision Authority issued a decision, in which granted its permit to starting operations by PKO Bank Hipoteczny S.A.
6) On 10 March 2015 the Polish Financial Supervision Authority granted its permit to the establishment an insurance company operating within branch II (non-life insurance) by PKO Bank Polski SA.
Signatures of all Members of the Management Board of the Bank
Zbigniew Jagiełło
President of the Management Board
Piotr Alicki
Vice-President of the Management Board
Bartosz Drabikowski
Vice-President of the Management Board
Piotr Mazur
Vice-President of the Management Board
Jarosław Myjak
Vice-President of the Management Board
Jacek Obłękowski
Vice-President of the Management Board
Jakub Papierski
Vice-President of the Management Board
Signature of person responsible for
maintaining the books of account
10.03.2015
Danuta Szymańska
Director of the Accounting Division