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2018 Financial and Social Report

Information about operating segments has been prepared based on the reporting structure which is used by the Management Board of the Bank for evaluating the results and managing resources of operating segments. Group does not apply additional breakdown of activity by geographical areas because of the insignificant scale of operations performed outside the Poland, in result such complementary division is not presented.

The Group’s activity is pursued on the basis of diverse business lines, which offer specific products and services targeted at the market segments listed below:

The Retail Customers Segment covers activity targeted at mass-market Customers, affluent Customers, small companies and individual entrepreneurs.

The activity of the above business lines is developed with use of the full offer of banking products and services as well as sales of specialised products offered by subsidiaries in the group. In the credit products area the key products are mortgage loans, retail credit products, credit card revolving credit as well leasing products for small companies. Meanwhile key Customers funds include: current and saving accounts, term deposits, mutual funds and structured products. Additionally the offer comprises insurance products, mainly linked with loans and credit cards, as well as specialised savings products. The product offer for affluent customers was enriched to include selected mutual funds of other financial intermediaries, foreign funds and structured bonds issued by the Bank.

The Corporate Customers Segment is based on activity targeted at Small and Medium sized Companies as well as Large Corporations. The offer is also addressed to Customers from the Public Sector.

Business in the Corporate Customers segment is pursued with use of a high quality offer of typical banking products (loans for day-to-day activity, investment loans, current accounts, term deposits) supplemented by a range of cash management products as well as treasury products (including derivatives) and leasing and factoring services.

This segment covers the Group’s activity as regards investments by the Treasury Department, brokerage, inter-bank market transactions and taking positions in debt securities, which are not assigned to other segments.

This segment includes other assets and other liabilities, assets and liabilities connected with hedging derivatives, liabilities connected with external funding of the Group and deferred income tax assets not assigned to any of the segments.

For each segment the pre-tax profit is determined, comprising:

  • Net interest income calculated on the basis of interest on external working assets and liabilities of the segment as well as allocated assets and liabilities generating internal interest income or cost. Internal income and costs are calculated based on market interest rates with internal valuation model applied;
  • Net commission income;
  • Other income from financial transactions and FX gains, such as: dividend income, result on investment and trading activity, FX gains/losses and result on other financial instruments;
  • Other operating income and expenses;
  • Costs on account of impairment of financial and non-financial assets;
  • Segment share in operating costs, including personnel and administration costs;
  • Segment share in depreciation costs;
  • Operating profit used as segment profit measure differs from pre-tax IFRS profit only by Banking tax and Share in net profit of associated companies. Share in net profit of associated companies and Income tax charge has been presented on Group level only.

The assets and liabilities of commercial segments are the operating assets and liabilities used by the segment in its operations, allocated on business grounds. The difference between operating assets and liabilities is covered by money market assets/liabilities and debt securities. The assets and liabilities of the Treasury, ALM & Other segment are money market assets/liabilities and debt securities not allocated to commercial segments.

Commencing from January 1, 2018, the Group has changed the way a fee for the bank restructuring fund charged by the Bank Guarantee Fund is allocated to particular operating segments. This contribution was previously presented in other operating expenses, while since 2018 this fee is recognized as a component of other administrative expenses and in the segment “Treasury, ALM and Other“ (previously the results of commercial segments were charged). Comparative data have been adjusted accordingly.

Income statement 1.01.2018 – 31.12.2018
In ‘000 PLN Retail Banking Corporate Banking Treasury. ALM & Other Total
Net interest income 1 242 434 291 239 283 802 1 817 475
Net fee and commission income, including: 500 680 163 741 (3 352) 661 069
Fee and commission income 638 217 174 451 11 577 824 245
Fee and commission expenses (137 537) (10 710) (14 929) (163 176)
Dividends, other income from financial operations and foreign exchange profit 76 449 71 124 87 283 234 856
Result on non-trading financial assets mandatorily at fair value through profit or loss (19 930) 0 13 555 (6 375)
Other operating income and cost (6 917) 4 219 3 380 682
Operating income 1 792 716 530 323 384 668 2 707 707
Staff costs (467 094) (140 766) (30 235) (638 095)
Administrative costs (447 281) (68 659) (59 730) (575 670)
Depreciation and amortization (43 443) (9 210) (1 574) (54 227)
Operating expenses (957 818) (218 635) (91 539) (1 267 992)
Impairment losses on assets (141 775) (60 225) (476) (202 476)
Results on modification (15 165) 1 008 0 (14 157)
Operating Profit 677 958 252 471 292 653 1 223 082
Share in net profit of associated companies 0 0 0 0
Banking tax (198 477)
Profit / (loss) before income tax 1 024 605
Income taxes (263 954)
Profit / (loss) after taxes 760 651
Balance sheet items as at 31.12.2018
In ‘000 PLN Retail Banking Corporate Banking Treasury. ALM & Other Total
Loans and advances to customers 37 270 388 15 441 292 0 52 711 680
Liabilities to customers 49 860 658 16 248 660 134 451 66 243 769
Income statement 1.01.2017 – 31.12.2017
In ‘000 PLN Retail Banking Corporate Banking Treasury. ALM & Other Total
Net interest income 1 131 098 265 680 299 690 1 696 468
Net fee and commission income 504 377 156 091 3 085 663 553
Dividends, other income from financial operations and foreign exchange profit 35 356 65 610 118 655 219 621
Other operating income and cost (7 945) 1 739 (1 835) (8 041)
Operating income 1 662 886 489 120 419 595 2 571 601
Staff costs (433 223) (134 703) (28 612) (596 538)
Administrative costs (415 592) (64 724) (72 869) (553 185)
Depreciation and amortization (43 587) (8 096) (1 288) (52 971)
Operating expenses (892 402) (207 523) (102 769) (1 202 694)
Impairment losses on assets (172 361) (81 829) (1 168) (255 358)
Operating Profit 598 123 199 768 315 658 1 113 549
Share in net profit of associated companies 0 0 0 0
Banking tax (188 326)
Profit / (loss) before income tax 925 223
Income taxes (243 996)
Profit / (loss) after taxes 681 227
Balance sheet items as at 31.12.2017
In ‘000 PLN Retail Banking Corporate Banking Treasury, ALM & Other Total
Loans and advances to customers 33 944 580 13 466 498 0 47 411 078
Liabilities to customers 42 132 753 14 971 419 169 083 57 273 255