4.1. 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 with large corporate clients and financial institutions. This segment comprises, among others, the following products and services: current accounts, deposits, depositary services, currency and derivative products, sell-buy-back and buy-sell-back transactions, corporate loans, leases and factoring. Within the 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. Moreover the segment includes the Bank’s portfolio activity on its own account i.e. investing and brokerage activities, interbank transactions, derivative instruments and debt securities transactions. Results of the corporate and investment segment include results from 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 interest rates. The transactions between operating business segments are conducted on arm’s 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 on arm’s length.
Accounting policies applied in the segment report are consistent with accounting policies described in the note 2 of these financial statements.
Disclosed values of assets and liabilities are operating assets and liabilities applied by operating activities segment. Values of assets, liabilities, income and expenses of a particular segment are based on internal management information. To particular segments there are assigned assets and liabilities as well as income and costs related to these assets and liabilities.
The current income tax expense in respect of the presentation of the 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 revenue and results of individual business segments of the PKO Bank Polski SA Group for the 12-month period ended 31 December 2014 and 31 December 2013 and assets and liabilities as at 31 December 2014 and as at 31 December 2013.
| Continuing operations | ||||
|---|---|---|---|---|
|
For the year ended 31 December 2014 |
Retail | 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: | (4,220,696) | (1,024,445) | - | (5,245,141) |
| amortisation and depreciation | (612,221) | (134,943) | - | (747,164) |
| Share in profit (loss) of associates and joint ventures | - | - | - | 31,810 |
| Segment gross profit | 3,293,875 | 609,046 | 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 | 3,293,875 | 609,046 | 99,832 | 3,254,122 |
| Continuing operations | ||||
|---|---|---|---|---|
| As at 31 December 2014 | Retail segment | Corporate and investment segment | Transfer centre | Total activity of the PKO Bank Polski SA Group |
| Assets | 134,683,185 | 101,519,006 | 11,515,913 | 247,718,104 |
| Unallocated assets | - | - | - | 982,485 |
| Total assets | 134,683,185 | 101,519,006 | 11,515,913 | 248,700,589 |
| Liabilities | 141,576,058 | 57,145,886 | 22,316,594 | 221,038,538 |
| Unallocated liabilities | - | - | - | 46,500 |
| Total liabilities | 141,576,058 | 57,145,886 | 22,316,594 | 221,085,038 |
| Continuing operations* | ||||
|---|---|---|---|---|
| For the year ended 31 December 2013 | Retail segment | Corporate and investment segment | Transfer centre | Total activity of the PKO Bank Polski SA Group |
| Net interest income | 5,446,477 | 885,339 | 390,146 | 6,721,962 |
| Net fee and commission income | 2,227,274 | 778,333 | 145 | 3,005,752 |
| Other net income | 180,762 | 817,761 | (19,371) | 979,152 |
| Net result from financial operations | 8,359 | 94,569 | 18,865 | 121,793 |
| Net foreign exchange gains (losses) | 141,195 | 138,889 | (38,236) | 241,848 |
| Dividend income | - | 5,766 | - | 5,766 |
| Net other operating income and expense | 5,170 | 604,575 | - | 609,745 |
| Income/expenses relating to internal customers | 26,038 | (26,038) | - | - |
| Net impairment allowance and write-downs | (1,180,140) | (857,741) | - | (2,037,881) |
| Administrative expenses*, of which: | (3,694,647) | (927,896) | - | (4,622,543) |
| amortisation and depreciation | (487,404) | (91,836) | - | (579,240) |
| Share in profit (loss) of associates and joint ventures | - | - | - | (1,978) |
| Segment gross profit | 2,979,726 | 695,796 | 370,920 | 4,044,464 |
| Income tax expense (tax burden) | - | - | - | (816,271) |
| Profit (loss) attributable to non-controlling shareholders | - | - | - | (1,600) |
| Net profit attributable to equity holders of the parent company | 2,979,726 | 695,796 | 370,920 | 3,229,793 |
* Data for 2013 have been brought to comparability. Changes relate to the organisational structure of combining the corporate and investment segments performance.
| As at 31 December 2013 | Continuing operations* | |||
|---|---|---|---|---|
| Retail segment | Corporate and investment segment | Transfer centre | Total activity of the PKO Bank Polski SA Group | |
| Assets | 111,712,993 | 80,339,618 | 6,409,677 | 198,462,288 |
| Unallocated assets | - | - | - | 768,822 |
| Total assets | 111,712,993 | 80,339,618 | 6,409,677 | 199,231,110 |
| Liabilities | 127,700,088 | 39,124,242 | 7,197,754 | 174,022,084 |
| Unallocated liabilities | - | - | - | 54,701 |
| Total liabilities | 127,700,088 | 39,124,242 | 7,197,754 | 174,076,785 |
* Data for 2013 have been brought to comparability. Changes relate to the organisational structure of combining the corporate and investment segments performance.
4.2. Information about geographical areas
As a complementary, the PKO Bank Polski SA Group applies geographical areas distribution. The PKO Bank Polski SA Group operations conducted in the Republic of Poland and in Ukraine through the KREDOBANK SA Group, ‘Inter-Risk Ukraina’ Additional Liability Company and Finansowa Kompania ‘Prywatne Inwestycje’ Sp. z o.o., as well as in Sweden through subsidiaries: PKO Finance AB and PKO Leasing Sverige AB. For presentation purposes, the results of companies operating in Sweden are included in the segment of Poland.
| For the year 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 and write-downs | (1,824,026) | (74,644) | (1,898,670) |
| Share in 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: | 247,272,350 | 1,428,239 | 248,700,589 |
| non-financial non-current assets | 5,948,657 | 84,399 | 6,033,056 |
| deferred income tax assets and current income tax receivable | 959,109 | 23,378 | 982,487 |
| Liabilities | 219,733,534 | 1,351,504 | 221,085,038 |
| For the year ended 31 December 2013 | Poland | Ukraine | Total |
|---|---|---|---|
| Net interest income | 6,666,210 | 55,752 | 6,721,962 |
| Net fee and commission income | 2,941,936 | 63,816 | 3,005,752 |
| Other net income | 978,426 | 726 | 979,152 |
| Administrative expenses | (4,494,360) | (128,183) | (4,622,543) |
| Net impairment allowance and write-downs | (1,879,991) | (157,890) | (2,037,881) |
| Share in profit (loss) of associates and joint ventures | - | - | (1,978) |
| Profit (loss) before income tax | 4,212,221 | (165,779) | 4,044,464 |
| Income tax expense (tax burden) | - | - | (816,271) |
| Profit (loss) attributable to non-controlling shareholders | - | - | (1,600) |
| Net profit (loss) attributable to equity holders of the parent company | 4,212,221 | (165,779) | 3,229,793 |
| As at 31 December 2013 | Poland | Ukraine | Total |
|---|---|---|---|
| Assets, of which: | 197,625,058 | 1,606,052 | 199,231,110 |
| non-financial non-current assets | 4,695,955 | 145,500 | 4,841,455 |
| deferred income tax assets and current income tax receivable | 751,802 | 17,020 | 768,822 |
| Liabilities | 172,517,523 | 1,559,262 | 174,076,785 |