Financial and
ESG report 2020

Credit risk

The credit risk is one of the most important risk types for the Group and therefore considerable attention is given to management of credit risk-bearing exposures.

Credit risk is connected with balance-sheet credit exposures as well as off-balance sheet financial instruments, such as granted and unutilized credit lines, guarantees and letters of credit, as well as limits for transactions in financial instruments.

The credit policy is subject to periodic reviews and verification process taking into account the prevailing market conditions and changes in the Group’s regulatory environment.

The Group uses several rating systems to manage credit risk depending on the type of exposure and the customer segment involved. A rating system is a set of methods (models), processes, controls, data collection procedures and IT systems that identify and measure credit risk, sort levels of exposure by grades or pools (granting of credit rating), and quantify probability of default and expected loss estimates for specific types of exposure.

Measurement of Credit Risk

Measurement of credit risk, for the purpose of the credit portfolio management, on the level of individual customers and transactions, on account of granted loans is done with the consideration of three base parameters:

  1. Probability of Default (PD) of a customer or counterparty as regards their liability;
  2. amount of Exposure At Default (EAD) and
  3. the ratio of Loss Given Default (LGD) regarding the customer’s liability.

 

  1. The Group assesses the probability of default (PD) of individual counterparties, using internal rating models adapted to various categories of customers and transactions. Models were developed in-house or at the level of the BCP Group, or with help of external providers, and combine statistical analysis with assessment by a credit professional. The Group’s customers are divided into 15 rating classes, which for the purposes of this Report have been grouped into 6 main brackets. The Group’s Master Ratings Scale, presented below, also contains the scale of probabilities of non-compliance with the liabilities specified for a given class/rating group. Rating models are subject to regular reviews and whenever necessary to relevant modification. Modifications of models are confirmed by Validation Committee.
    The Group regularly analyses and assesses rating results and their predictive power with respect to cases of default. The process of assigning client risk assessments (for Corporates performed by Rating Department independently from credit decision process and transactions) is supported by IT systems, obtaining and analysing information from internal and external databases. 
    The Group’s internal rating scale 

    Master scale Description of rating
    1-3 Highest quality
    4-6 Good quality
    7-9 Medium quality
    10-12 Low quality
    13-14 Watched/Procedural
    15 Default
  2. EAD – amount of exposure at default – concerns amounts which according to the Group’s predictions will be the Group’s receivables at the time of default against liabilities. Liabilities are understood by the Group to mean every amount disbursed plus further amounts, which may be disbursed until default, if such occurs.
  3. LGD – loss given default is what the Group expects will be its losses resulting from actual cases of default, with the consideration of internal and external costs of recovery and the discount effect.

Since the implementation of IFRS 9, the Group has adopted a uniform definition of default, both in the calculation of capital requirements and for the purposes of estimating impairment. Starting from 2020, for the retail portfolio, the Group uses the definition of default in line with the EBA Guidelines, the so-called New Definition of Default.

  • DPD>90 days considering materiality thresholds for due amount: absolute PLN 400 retail and PLN 2000 corporates and relative threshold of 1% in relation to total exposure,
  • Restructured loans (forborne),
  • Loans in vindication process,
  • Other triggers defined in EBA Guidelines,
  • Qualitative triggers identified in the individual analysis.

The Group is using cross-default approach for all segments.

In case of support measures related to the negative impact of the Covid-19 pandemic, the Group adopted a sectoral approach, being in line with the EBA guidelines, according to which exposures with credit holidays granted under private moratoria shouldn’t be treated as forborne exposures. However, if there is a delay of more than 60 days on the customer’s accounts after 3 month since expiration of credit holidays, it was conservatively assumed that the customer should be classified in Stage 3.

Customers with credit holidays granted under public moratoria (under the Shield 4.0 government program) were classified in Stage 3 (unless specific exclusion criteria specified by the Supervisor were met).

Debt securities from State Treasury and from the Central Bank are monitored on the basis of Polish rating. Whereas the economic and financial situation of issuers of municipal debt securities is monitored on a quarterly basis based on their finance reporting.

The Group doesn’t apply Low Credit Risk (LCR) exemption neither for State Treasury and Central Bank exposures nor for any other groups of exposures.

The Group maintains strict control over the limits of net open derivative positions both with respect to amounts and transaction maturities. Credit risk exposures resulting from derivatives are managed as part of total credit limits defined for individual customers calculated on the basis of verification of natural exposure and analysis of customer’s financial situation, and also as part of counterparties’ limits.

The Group offers Treasury products for FX risk or interest rate risk only for hedging purposes and under Treasury limits assigned to clients or secured by specific collateral (deposit).

Most of the Group’s agreements include the possibility of calling the client to replenish the margin deposit, (if the valuation of the client’s open position exceeds treasury limit, the so-called margin call); and if the client does not supplement the deposit, the Group has the right to close the position.

Credit risk-based off-balance sheet liabilities include guarantees, letters of credit as well as granted credit lines. The main purpose of these instruments is to enable the customer to use the funds granted by the Group in a specific way.

Guarantees and letters of credit of standby type (liability similar to guarantee) bears at least the same credit risk as loans (in the case of guarantees and stand-by letters of credit type when valid claim appears, the Group must make a payment).

Documentary and commercial letters of credit are a written, irrevocable and final obligation of the Group to accept payments based on compliant documents within the time limits specified in the letters of credit and are connected with a guarantee-like risk.

The available credit line balance is the non-utilised part of previously accepted amounts pertaining to credit liabilities, available for use in the form of loans, guarantees or letters of credit. Considering the credit risk of undertakings to grant credit, the Group is potentially exposed to a loss in an amount equal to the sum of non-utilised liabilities. However the probable loss amount is usually lower than the total value of non-utilised liabilities, because most of the undertakings to disburse credit depend on customers’ particular credit conditions.

The Group monitors the period remaining to maturity of off-balance liabilities because long-term liabilities usually involve a higher degree of credit risk than short-term liabilities.

Limits control and risk mitigation policy

The Group measures, monitors and controls large credit exposures and high credit risk concentrations, wherever they are identified. Concentration risk management process encompasses single-name exposures with respect to an individual borrower or group of connected borrowers (with material capital, organizational or significant economic relations) and sectoral concentration – to economic industries, geographical regions, countries, and the real estate financing portfolio (including FX loans), portfolio in foreign currencies and other. Above types of sectoral exposures are subject to internal limits system. Information about the utilization of limits is presented at the Supervisory Board, the Committee for Risk Matters and the Risk Committee.

The internal (mentioned above) limits are monitored quarterly. Limits are subject to annual or more frequent review, when deemed appropriate. The limits are approved by the Supervisory Board or the Risk Committee.

Management of credit risk exposure is also performed through regular monitoring of customers’ economic and financial situation and/or track record of their relationship with the Group from the point of view of punctual repayment of their principal and interest liabilities.

The Group accepts collateral to mitigate its credit risk exposure; the main role of collateral is to minimize loss in the event of customers' default in repayment of credit transactions in contractual amounts and on contractual dates by ensuring an alternative source of repayment of due and payable amounts.

Collateral is accepted in accordance with the credit policy principles defined for each customer segment. The key principle is that collateral for credit transaction should correspond to the credit risk incurred by the Group, taking into account the specific nature of the transaction (i.e. its type, amount, repayment period and the customer’s rating).

The credit policy defines the types, kinds and legal forms of collateral accepted in the Group as well as more detailed requirements that are to ensure the probability of selling collateral of respective types in the context of the Group’s recovery experiences.

The Group pays special attention to the correct determination of collateral value. It defined the rules for preparing and verifying collateral valuation and does its utmost to ensure that such valuations are objective, conservative and reflect the true value of the collateral. In order to ensure effective establishment of collateral, the Group has developed appropriate forms of collateral agreements, applications, powers-of-attorney and representations.

In the retail segment, accepted collateral consists mainly of residential real property (mortgage loans) and financial assets. In the corporate segment, are taken primarily all types of property (residential, commercial, land) as well as the assignment of receivables from contracts.

Temporary collateral is also accepted in the period before the final collateral is established. Additionally, the Group uses various forms of instruments supplementing the collateral, which facilitate enforcement or increase probability of effective repayment of debt from a specific collateral. Those instruments include: statement of submitting to enforcement in the form of a notarial deed, blank promissory note, power-of-attorney to a bank account, assignment of rights under an insurance agreement.

The Group monitors the collateral to ensure that it satisfies the terms of the agreement, i.e. that the final collateral of the transaction has been established in a legally effective manner or that the assigned insurance policies are renewed. The value of the collateral is also monitored during the term of the credit transaction.

In accordance with credit policy adopted in the Group it is also allowed to grant a transaction without collateral, but this takes place according to principles, which are different depending on the client’s segment. But in the case of the deterioration of the debtor’s economic and financial situation, in documents signed with the client the Group stipulates the possibility of taking additional collateral for the transaction.

Policy with respect to impairment and creation of impairment charges

The process of impairment identification and measurement with respect to loan exposures is regulated in the internal instruction introduced with IFRS9 application. The documentary defines in detail the mode and principles of individual and collective analysis, including algorithms for calculating particular parameters.

The methodology and assumptions adopted for determining credit impairments are regularly reviewed in order to reduce discrepancies between the estimated and actual losses. In order to assess the adequacy of the impairment determined both in individual analysis and collective analysis a historical verification (backtesting) is conducted from time to time (at least once
a year), which results will be taken into account in order to improve the quality of the process.

Supervision over the process of estimating impairment charges and provisions is exercised at the Group by the Risk Department (DMR), which also has direct responsibility for individual analysis in the business portfolio at the Bank, as well as collective analysis. In addition to DMR, the process also involves recovery and restructuring units. These are the Corporate Recovery Department – DNG (individual analysis for the recovery-restructuring portfolio for corporate customers) and the Retail Liabilities Restructuring and Recovery Department – DRW (individual analysis of individually significant retail impairments, mainly mortgages). DMR is a unit not connected with the process of lending; it is supervised by the Management Board Member responsible for risk management. Similarly organized is the impairment process at Millennium Leasing.

The Management Board of the Bank plays an active role in the process of determining impairment charges and provisions. The results of credit portfolio valuation are submitted to the Management Board for acceptance in a monthly cycle with a detailed explanation of the most important changes with an impact on the overall level of impairment charges and provisions, in the period covered by the analysis. Methodological changes resulting from the validation process and methodological improvements are presented at the Validation Committee, and subsequently at the Risk Committee which includes all the Management Board Members.

In monthly periods detailed reports are prepared presenting information about the Group’s retail portfolio in various cross-sections, including the level of impairment charges and provisions, their dynamics and structure. The recipients of these reports are Members of the Management Board, supervising the activity of the Group in the area of finance, risk and management information.

Since implementation of IFRS9 in 2018, impairment estimation model within the Group has been based on the concept of “expected credit loss”, (hereinafter: ECL). As a direct result of using this approach, impairment charges now have to be calculated based on expected credit losses and forecasts of expected future economic conditions have to be taken into account when conducting evaluation of credit risk of an exposure.

The implemented impairment model applies to financial assets classified in accordance with IFRS 9 as financial assets measured at amortized cost or at fair value through other comprehensive income, except for equity instruments.

According to IFRS 9, credit exposures are classified in the following categories:

  • Stage 1 – non-impaired exposures, for which expected credit loss is estimated for the 12-month period,
  • Stage 2 – non-impaired exposures, for which a significant increase in risk has been identified (SICR) and for which expected credit loss is estimated for the remaining life time of the financial asset,
  • Stage 3 – credit impaired exposures, for which expected credit loss is estimated for the remaining life time of the financial asset.
  • POCI (purchased or originated credit impaired) – exposures which, upon their initial recognition in the balance sheet, are recognized as impaired, expected losses are estimated for the remaining life of the financial asset.

Assets, for which there has been identified a significant increase in credit risk compared to the initial recognition in the balance sheet, are classified in Stage 2. The significant increase in credit risk is recognized based on qualitative and quantitative criteria. The qualitative criteria include:

  • repayment delays of more than 30 days,
  • forborne exposures in non-default status,
  • procedural rating, which is reflecting early delays in payments,
  • taking a risk-mitigating decision for corporate clients, triggered by the early warning system,
  • events related to an increase in credit risk, the so called “soft signs” of impairment, identified as part of an individual analysis involving individually significant customers.

The quantitative criterion involves a comparison of the lifetime PD value determined on initial recognition of an exposure in the balance sheet, with the lifetime PD value determined at the current reporting date. If an empirically determined threshold of the relative change in the lifetime PD value is exceeded then an exposure is automatically transferred to Stage 2. The quantitative assessment does not cover exposures analysed individually.

Individual analysis contains customers identified as significantly important both for business portfolio and recovery portfolio. Credit exposures are selected for individual analysis on the basis of materiality criteria which ensure that case-by case analysis covers at least 50% of the Group’s business corporate portfolio and 80% of the portfolio managed by entities responsible for the recovery and restructuring of corporate receivables.

Principal elements of the process of individual analysis:

  • Identification of soft signs of impairment being one of qualitative triggers of Significant Increase of Credit Risk (SICR);

This process covers biggest business corporate customers, for which financial-economic situation is analysed on a quarterly basis based on: latest financial statement, events connected with company activities, information concerning related entities and economic environment, expectation about future changes, etc. There was defined catalogue of so called “soft signs of impairment”, identification of which means significant increase of credit risk (SICR) and causing classification of all exposures of such customer to Stage 2.

  • Identification of impairment triggers;

The Group defined impairment triggers for individual analysis and adjusted them to its operational profile. The catalogue of triggers contains among others following elements:

  • The economic and financial situation pointing to the Customer’s considerable financial problems,
  • Breach of the contract, e.g. significant delays in payments of principal or interest
  • Stating the customer’s unreliability in communicating information about his economic and financial situation,
  • Permanent lack of possibility of establishing contact with the customer in the case of violating the terms of the agreement,
  • High probability of bankruptcy or a different type of reorganizing the Customer’s enterprise/business,
  • Declaring bankruptcy or opening a recovery plan with respect to the Customer,
  • Granting the Customer who has financial difficulties, facilities concerning financing conditions (restructuring).

Internal regulations allow discovering above-mentioned triggers by indicating specific cases and situations corresponding to them, in particular with respect to triggers resulting from the Customer’s considerable financial problems, violating the critical terms of the agreement and high probability of a bankruptcy or different enterprise reorganization.

  • Scenario approach in calculation of impairment allowances for individually analysed customers;

If at least one of impairment triggers has been identified during the individual analysis, all exposures of given customer are classified in Stage 3 and then detailed analysis of forecasted cash-flows should be performed. Since introducing IFRS9 the Group is using scenario approach. It means that analyst should define at least two recovery scenarios which reflect described and approved recovery strategies: the main and alternative ones with assigned probabilities of realization. The Group has defined guidelines regarding the weights used for individual scenarios. Scenarios can be based on restructuring or vindication strategy, mixed solutions are also used. The whole process of individual analysis is supported by especially dedicated Case-By-Case IT Tool especially useful in terms of calculation impairment amount with usage of scenario approach.

Every scenario contains two general types of recoveries: direct cash-flows from customers and recovered amounts from collateral.

  • Estimating expected cash-flows;

One element of the impairment calculation process is the estimation of the probability of cash flows included in the timetable, pertaining to the following items: principal, interest and other cash flows. The probability of realizing cash flows included in the timetable results from the conducted assessment of the customer’s economic and financial situation (indication of the sources of potential repayments) must be justified and assessed on the basis of current documentation and knowledge (broadly understood) of his situation with the inclusion of financial projections. This information is gathered by an analyst prior to the actual analysis in accordance with the guidelines specified in appropriate Group regulations.

In the event of estimating the probability of cash flows for customers in the portfolio managed by restructuring-recovery departments analysts will take into account the individual nature of each transaction pointing among others to the following elements which may have an impact on the value of potential cash flows:

  • Operational strategy with respect to the Customer adopted by the Group,
  • Results of negotiations with the customer and his attitude, i.e. willingness to settle his arrears,
  • Improvement/deterioration of his economic and financial situation,

The Group also uses the formal terms of setting and justifying the amount of probability and amount of the payment by the Bank of funds under the extended off-balance sheet credit exposure such as guarantees and letters of credit.

  • Estimation of the fair value of collateral, specifying the expected date of sale and estimation of expected revenues from the sale after deduction of the costs of the recovery process;

The inclusion of cash flows from realization of collateral must be preceded by an analysis of how realistically it can be sold and estimation of its fair value after recovery costs.

In order to ensure the fairness of the principles of establishing collateral recoveries, the Group prepared guidelines for corporate segment with respect to the recommended parameters of the recovery rate and recovery period for selected collateral groups. Depending on the place of the exposure in the Bank’s structure (business portfolio, restructuring-recovery portfolio) and type of exposure (credit, leasing) separate principles have been specified for particular portfolio types: business, restructuring-recovery and leasing portfolio. The recommended recovery rates and period of collateral recovery are verified in annual periods.

Subject to collective analysis are the following receivables from the group of credit exposures:

  • Individually insignificant exposures;
  • Individually significant exposures for which there has not been recognized impairment triggers as a result of an individual analysis.

For the purposes of collective analysis the Group has defined homogenous portfolios consisting of exposures with a similar credit risk profile. These portfolios have been created on the basis of segmentation into business lines, types of credit products, number of days of default, type of collateral etc. The division into homogenous portfolios is verified from time to time for their uniformity.

The expected credit loss in a collective analysis is calculated using Probability of Default (PD), Exposure at Default (EAD), and Loss Given Default (LGD) parameters, which are the outcome of the following models:

  • The PD model is based on empirical data concerning 12-month default rates, which are then used to estimate lifetime PD values using appropriate statistical and econometric methods. The segmentation adopted for this purpose at the customer level is consistent with the segmentation used for capital requirement calculation purposes. Additionally, the Bank has been using rating information from internal rating models to calculate PDs.
  • The LGD models for the retail portfolio used by the Group in the capital calculation process were adjusted to IFRS 9 requirements in the area of estimating impairment. The main components of these models are the probability of cure and the recovery rate estimated on the basis of discounted cash flows. The necessary adaptations to IFRS 9 include, among other things, exclusion of the conservatism buffer, indirect costs, and adjustments for economic slowdown. For the corporate portfolio LGD model is based on a component determining parameterized recovery for the key types of collateral and a component determining the recovery rate for the unsecured part. All the parameters were calculated on the basis of historical data, including discounted cash flows achieved by the corporate debt recovery unit.
  • The EAD model used in the Group includes calculation of parameters such as: average limit utilization (LU), credit conversion factor (CCF), prepayment ratio and behavioural lifetime. Segmentation is based on the type of customer (retail, corporate, leasing) and product (products with/without a schedule).

The results of models employed in collective analysis are subject to periodical verification. The parameters and models are also covered by the process of models management governed by the document „Principles of Managing Credit Risk Models”, which specifies, among others, the principles of creating, approving, monitoring and validation, and historical verification of models.

In the process of calculation of expected credit losses, the Group uses forward-looking information (FLI) about future macroeconomic events. In particular FLI is used in PD, LGD, and EAD as well as in the process of determination of SICR and allocation of exposures to Stage 2 (Transfer Logic). The Macroeconomic Analysis Office prepares three macroeconomic scenarios (base, optimistic and pessimistic) and determines the probability of their occurrence. Forecasts translate directly or indirectly into the values of estimated parameters and exposures and their impact vary by model, product type, rating-class etc. The Group uses macroeconomic forecasts prepared only internally. Forecasts are provided on a quarterly basis for a 3-year time horizon.

As with any economic forecasts, the projections and likelihoods of occurrence are subject to a high degree of inherent uncertainty and therefore the actual outcomes may be significantly different to those projected.

The most significant period-end assumptions used for the ECL estimate as at 31 December 2020 are set out below.

Macroeconomic variable Scenario 2021 2022 2023
Gross Domestic Product Base 107.5 104.8 103.5
Optimistic 108.4 105.0 104.2
Mild recession 106.3 104.3 103.7
Retail Sales Base 109.5 107.6 105.0
Optimistic 110.9 108.2 105.5
Mild recession 107.6 106.8 104.6
Unemployment rate Base 7.1 6.4 5.9
Optimistic 6.1 5.7 5.5
Mild recession 8.3 7.5 6.9

The weightings assigned to each economic scenario at 31 December 2020 were as follows:

Base Optimistic Mild recession
Applied weighting 60% 15% 25%

For the purpose of assessing the sensitivity of ECL for future macroeconomic conditions, the Group calculated unweighted ECL for each defined scenario separately. The impact for ECL of application of each of the scenario separately does not exceed 1.5%.

Impairment Instruction, being core document of Internal regulations, provides a detailed definition of the principle of reversing impairment losses. In principle, reversing a loss and elimination of a revaluation charge is possible in the case of cessation of the impairment triggers, including the repayment of arrears or in the case of selling receivables. Reclassification to the Non-Impaired category is possible only when the customer has successfully passed the „quarantine” period, during which he will not show delay in the repayment of principal or interest above 30 days. The quarantine period only starts counting after any eventual grace period that may be granted on the restructuring.

Detailed rules regarding the applicable quarantine periods (at least 3 or 12 months for forced restructuring) and reclassification from default are in line with the EBA guidelines regarding the definition of default.

In 2020, the Bank sold retail credit exposures classified as impaired, in the total balance sheet amount of PLN 95.1 million.

Maximum exposure to credit risk

  31.12.2020 31.12.2019
Exposures exposed to credit risk connected with balance sheet assets: 94 130 376 93 723 201
Deposits, loans and advances to banks and other monetary institutions 625 430 784 277
Loans and advances to customers: 74 088 342 69 615 390
Mandatorily at fair value through profit or loss: 1 615 753 1 498 195
Loans to private individuals: 1 602 751 1 479 645
Receivables on account of payment cards 830 971 839 023
Credit in current account 771 780 640 622
Loans to companies and public sector 13 002 18 550
Valued at amortized cost: 72 472 589 68 117 195
Loans to private individuals: 54 094 684 49 518 735
Receivables on account of payment cards 75 769 94 530
Cash loans and other loans to private individuals 13 617 103 13 490 573
Mortgage loans 40 401 812 35 933 632
Loans to companies 18 105 650 18 406 390
Loans to public entities 272 255 192 070

Financial derivatives and Adjustment from fair value hedge

175 983 155 644
Debt instruments held for trading 269 413 874 033

Debt instruments mandatorily at fair value through profit or loss

50 335 103 001

Debt instruments at fair value through other comprehensive income

18 613 077 21 840 521
Repurchase agreements 66 350 205 439
Other financial assets 241 446 144 896
Credit risk connected with off-balance sheet items 14 177 193 11 629 618
Financial guarantees 1 756 283 1 746 565
Credit commitments 12 420 910 9 883 053

The table above presents the structure of the Group’s exposures to credit risk as at 31st December 2020 and 31st December 2019, not taking into account risk-mitigating instruments. As regards balance-sheet assets, the exposures presented above are based on net amounts presented in the balance sheet.

31.12.2020 31.12.2019
Mandatorily at fair value through profit or loss * 1 615 753 1 498 195
Companies 12 889 18 633
Individuals 1 602 751 1 479 446
Public sector 112 116
* The above data includes the fair value adjustment, in the amount of: (116 761) (84 519)

PLN’000, as of the end of 2020

Stage 1 (12-month ECL) Stage 2 (lifetime ECL) Stage 3 (lifetime ECL) POCI Total
Balance exposures exposed to credit risk 87 023 925 3 957 170 3 336 484 399 429 94 717 008
Balance impairment 365 159 292 937 1 688 178 26 361 2 372 635
Loans and advances to banks (external rating Fitch: from BBB to AAA; Moody’s: from B3 to Aaa; S&P: from B+ to AAA ) 625 430 625 430
Loans and advances to private individuals (according to Master Scale): 50 736 844 2 395 682 2 304 706 399 370 55 836 602
  • 1-3 Highest quality
29 968 500 24 559 0 3 872 29 996 931
  • 4-6 Good quality
10 586 928 257 412 0 8 498 10 852 838
  • 7-9 Medium quality
8 030 642  809 947 0 13 772 8 854 361
  • 10-12 Low quality
2 130 299  827 538 0 7 998 2 965 835
  • 13-14 Watched
9 680  476 123 0 3 379 489 182
  • 15 Default
0 0 2 304 444 361 847 2 666 291
  • Without rating*
10 795 103 262 4 11 164
Impairment 245 403 251 526 1 218 373 26 616 1 741 918
Loans and advances to public entities (according to Master Scale): 8 160 794 720 570 707 714 59 9 589 137
  • 1-3 Highest quality
59 626 822 0 0 60 448
  • 4-6 Good quality
1 711 520 86 777 0 0 1 798 297
  • 7-9 Medium quality
3 818 823 243 449 0 0 4 062 272
  • 10-12 Low quality
1 166 969 364 993 0 0 1 531 962
  • 13-14 Watched
0 8 886 0 0 8 886
  • 15 Default
0 0 707 714 59 707 773
  • Without rating*
1 403 856 15 643 0 0 1 419 499
Impairment 75 776 19 185 313 000 (255) 407 706
Loans and advances to public entities (according to Master Scale): 89 005 1 33 0 89 039
  • 1-3 Highest quality
0 0 0 0 0
  • 4-6 Good quality
0 0 0 0 0
  • 7-9 Medium quality
0 0 0 0 0
  • 10-12 Low quality
0 0 0 0 0
  • 13-14 Watched
0 0 0 0 0
  • 15 Default
0 0 0 0 0
  • Without rating*
89 005 1 33 0 89 039
Impairment 225 0 27 0 252
Factoring (according to Master Scale): 2 607 598 216 464 34 553 0 2 858 615
  • 1-3 Highest quality
6 0 0 0 6
  • 4-6 Good quality
763 822 214 0 0 764 036
  • 7-9 Medium quality
1 074 958 21 465 0 0 1 096 423
  • 10-12 Low quality
738 390 194 677 0 0 933 067
  • 13-14 Watched
0 0 0 0 0
  • 15 Default
0 0 34 553 0 34 553
  • Without rating*
30 423 108 0 0 30 530
Impairment 22 781 6 675 25 012 0 54 468
Leasing (according to Master Scale): 5 557 900 624 453 289 478 0 6 471 831
  • 1-3 Highest quality
85 887 347 62 0 86 296
  • 4-6 Good quality
624 117 2 030 94 0 626 241
  • 7-9 Medium quality
1 278 044 18 986 413 0 1 297 443
  • 10-12 Low quality
462 950 146 846 843 0 610 639
  • 13-14 Watched
0 2 839 15 0 2 854
  • 15 Default
0 0 268 101 0 268 101
  • Without rating*
3 106 902 453 405 19 950 0 3 580 257
Impairment 20 974 15 551 131 766 0 168 291
Derivatives and adjustment from fair value hedge (according to Master Scale): 297 514 0 0 0 297 514
  • 1-3 Highest quality
52 505 52 505
  • 4-6 Good quality
135 150 135 150
  • 7-9 Medium quality
24 376 24 376
  • 10-12 Low quality
18 173 18 173
  • 13-14 Watched
3 625 3 625
  • 15 Default
5 454 5 454
  • Without rating*
35 633 35 633
  • fair value adjustment due to hedge accounting
803 803
  • Valuation of future FX payments
0 0
  • Hedging derivative
21 795 21 795
Trading debt securities (State Treasury** bonds)  269 413  269 413
Investment debt securities (State Treasury **, Central Bank**, Local Government , EIB) 18 613 077 18 613 077
Receivables from securities bought with sell-back clause  66 350  66 350
* the group of clients without an internal rating includes, among others, exposures related to loans to local government units as well as investment projects and some leasing clients;
** rating for Poland in 2020 A- (S&P), A2 (Moody’s), A- (Fitch);

PLN’000, as of the end of 2019

Stage 1
(12 month ECL)
Stage 2 (lifetime ECL) Stage 3 (lifetime ECL) POCI Total
Balance exposures exposed to credit risk 87 657 141 3 165 964 2 731 074 524 096 94 078 275
Balance impairment 274 149 190 214 1 451 981 45 273 1 961 617
Loans and advances to banks (external rating Fitch: from BBB to AAA; Moody’s: from B3 to Aaa; S&P: from B+ to AAA )          784 277    784 277
Loans and advances to private individuals (according to Master Scale): 46 875 172 1 745 489 1 872 618 523 995 51 017 274
  • 1-3 Highest quality
21 510 529 23 537 0 19 21 534 085
  • 4-6 Good quality
7 487 520 174 680 0 13 7 662 213
  • 7-9 Medium quality
5 169 919 300 442 0 15 5 470 376
  • 10-12 Low quality
1 357 717 510 268 0 0 1 867 985
  • 13-14 Watched
37 165 718 784 0 8 812 764 761
  • 15 Default
0 0 1 872 366 471 455 2 343 821
  • Without rating*
11 312 322 17 778 252 43 681 11 374 033
Impairment 138 784 155 913 1 019 043 45 250 1 358 990
Loans and advances to companies (according to Master Scale): 8 426 328 595 386 533 560 101 9 555 375
  • 1-3 Highest quality
27 493 438 0 0 27 931
  • 4-6 Good quality
1 238 059 85 778 0 0 1 323 837
  • 7-9 Medium quality
4 497 605 141 706 0 0 4 639 311
  • 10-12 Low quality
1 553 721 298 173 0 0 1 851 894
  • 13-14 Watched
0 23 238 0 0 23 238
  • 15 Default
0 0 533 560 101 533 661
  • Without rating*
1 109 450 46 053 0 0 1 155 503
Impairment 92 416 16 686 273 326 23 382 451
Loans and advances to public entities (according to Master Scale): 134 816 0 0 0 134 816
  • 1-3 Highest quality
0 0 0 0 0
  • 4-6 Good quality
0 0 0 0 0
  • 7-9 Medium quality
0 0 0 0 0
  • 10-12 Low quality
0 0 0 0 0
  • 13-14 Watched
0 0 0 0 0
  • 15 Default
0 0 0 0 0
  • Without rating*
134 816 0 0 0 134 816
Impairment 132 0 0 0 132
Factoring (according to Master Scale): 2 494 084 146 227 43 979 0 2 684 290
  • 1-3 Highest quality
320 0 0 0 320
  • 4-6 Good quality
685 415 482 0 0 685 896
  • 7-9 Medium quality
870 636 82 935 0 0 953 571
  • 10-12 Low quality
885 919 62 350 0 0 948 270
  • 13-14 Watched
0 0 0 0 0
  • 15 Default
0 0 43 979 0 43 979
  • Without rating*
51 793 460 0 0 52 253
Impairment 26 965 2 950 23 241 0 53 156
Leasing (according to Master Scale): 5 866 826 678 862 280 917 0 6 826 605
  • 1-3 Highest quality
53 585 429 0 0 54 014
  • 4-6 Good quality
393 929 27 243 0 0 421 173
  • 7-9 Medium quality
1 424 800 100 252 0 0 1 525 052
  • 10-12 Low quality
468 957 129 859 0 0 598 816
  • 13-14 Watched
0 1 123 0 0 1 123
  • 15 Default
0 0 266 521 0 266 521
  • Without rating*
3 525 555 419 956 14 396 0 3 959 906
Impairment 15 852 14 665 136 371 0 166 888
Derivatives and adjustment from fair value hedge (according to Master Scale): 155 644 0 0 0 155 644
  • 1-3 Highest quality
5 767 5 767
  • 4-6 Good quality
20 407 20 407
  • 7-9 Medium quality
8 216 8 216
  • 10-12 Low quality
11 602 11 602
  • 13-14 Watched
0 0
  • 15 Default
10 10
  • Without rating *
65 680 65 680
  • Fair value adjustment due to hedge accounting
803 803
  • Valuation of future FX payments
0 0
  • Hedging derivative
43 159 43 159
Trading debt securities (State Treasury** bonds) 874 033 874 033
Investment debt securities (State Treasury **, Central Bank**, Local Government , EIB) 21 840 522 21 840 522
Receivables from securities bought with sell-back clause 205 439 205 439
* the group of clients without an internal rating includes, among others, exposures related to loans to local government units as well as investment projects and some leasing clients;
** rating for Poland in 2019 A- (S&P), A2 (Moody’s), A- (Fitch)

Loans

The gross amount of impaired loans and advances broken down into customer segments is as follows:

Gross exposure in ‘000 PLN

31.12.2020
  Loans and advances to customers Loans and advances to banks Total
Companies Mortgages Other retail
By type of analysis
Case by case analysis 765 463  246 375 3 527 0 1 015 365
Collective analysis 266 374  768 588 1 648  062 0 2 683 024
Total 1 031 837  1 014 963 1 651 589 0 3 698 389

Gross exposure in ‘000 PLN

31.12.2019
Loans and advances to customers  Loans and advances to banks Total
Companies Mortgages Pozostałe detaliczne
By type of analysis
Case by case analysis 611 286 218 359 2 986 0 832 631
Collective analysis 247 271 706 779 1 415 953 0 2 370 003
Total 858 557 925 138 1 418 939 0 3 202 634

The quantification of the value of the portfolio subjected to case-by-case analysis as well as of the value of created charges, split between impaired receivables (and respectively charges) is presented in financial notes.

The tables below present the structure of the impaired portfolio subjected to case-by-case analysis.

Case by Case loans and advances to customers – by currency
31.12.2020 31.12.2019
Amount in ‘000 PLN Share % Coverage by impairment provisions Amount in ‘000 PLN Share % Coverage by impairment provisions
PLN 772 004 76.0% 38.9% 622 273 74.7% 47.7%
CHF  162 121 16.0% 19.1% 136 680 16.4% 21.9%
EUR 80 539 7.9% 38.5% 71 602 8.6% 29.8%
USD  645 0.1% 21.0% 2 076 0.3% 5.1%
SEK 56 0.0% 76.1% 0 0.0%
Total (Case by Case impaired)  1 015 365 100.0% 35.7% 832 631 100.0% 41.8%

Case by Case loans and advances to customers – by coverage ratio
31.12.2020 31.12.2019
Amount in ‘000 PLN Share % Amount in ‘000 PLN Share %
Up to 20%  443 124 43,7% 312 450 37,5%
20% – 40%  162 226 16,0% 126 822 15,3%
40% – 60%  135 207 13,3% 121 726 14,6%
60% – 80%  132 817 13,0% 96 698 11,6%
Above 80%  141 991 14,0% 174 935 21,0%
Total (Case by Case impaired)  1 015 365 100,0% 832 631 100,0%

At the end of 2020, the financial impact from the established collaterals securing the Group’s receivables with impairment recognized under individual analysis (Case by Case) amounted to PLN 424.7 million (at the end of 2019 respectively PLN 371.6 million). It is the amount, by which the level of required provisions assigned to relevant portfolio would be higher if flows from collaterals were not to be considered in individual analysis.

The restructuring of receivables is done by dedicated units (separately for corporate and retail receivables).

The restructuring of both corporate and retail receivables allows the Group to take effective action towards the customers, the purpose of which is to minimize losses and mitigate, as quickly as possible, any risks to which the Group is exposed in connection with client transactions giving rise to the Group’s off-balance sheet receivables or liabilities.

The restructuring process applies to the receivables which, based on the principles in place in the Group, are transferred to restructuring and recovery portfolios and includes setting new terms of transactions which are acceptable for the Group (including in particular the terms of their repayment and their collateral and possibly obtaining additional collateral).

Recovery of retail receivables is a fully centralized process implemented in two stages:

  • monitoring and amicable debt collection proceedings – conducted by Retail Liabilities Monitoring and Collection Department,
  • restructuring and execution proceedings – implemented by Retail Liabilities Restructuring and Recovery Department.

Process performed by Retail Liabilities Monitoring and Collection Department involves direct telephone contacts with Customers and obtaining repayment of receivables due to the Group. In case of failure to receive repayment or in case the Customer applies for debt restructuring, the case is taken over by the Retail Liabilities Restructuring and Recovery Department and involves any and all restructuring and execution activities.

Recovery process is supported by specialized IT system covering the entire Customer portfolio, fully automated at the stage of portfolio monitoring and supporting actions undertaken in later restructuring and recovery phases. The behavioural scoring model constitutes an integral component of the system, used at the warning stage. The system is used for retail liabilities collection process applicable to all retail Customer segments.

The scoring model is based on internal calculations including, inter alia, Customer’s business segment type of credit risk based product (applicable, primarily, to mortgage products) and history of cooperation with the Customer relative to previous restructuring and execution activities. Late receivables from retail customers are sent to the IT system automatically no later than 4 days after the date of the receivable becoming due and payable.

The restructuring and recovery process applicable to corporate receivables (i.e. balance and off-balance receivables due from corporate and SME customers) is centralized and performed by the Corporate Recovery Department. Recovery of corporate receivables aims to maximize the recovery amounts and to mitigate risk incurred by the Group in the shortest possible periods of time by carrying out the accepted restructuring and recovery strategies towards:

  • the customer,
  • corporate receivables,
  • collateral ensuring their repayment.

The actions performed as part of those strategies include, among others: setting the terms and conditions of Customer financing, terms and conditions of restructuring corporate receivables (also within court restructuring proceedings), including the terms on which they will be repaid and secured, obtaining valuable and liquid collateral, achieving amicable repayment, recovery of due and payable receivables (also by court executive officer), also from collateral, actions performed within debtors’ bankruptcy proceedings, conducting required legal actions.

Corporate Recovery Department manages the corporate receivable restructuring and recovery process by using IT applications supporting the decision-making process and monitoring. They provide instantaneous information on receivables, collateral, approach used and key actions and dates.

All restructured exposures are classified directly after signing sufficient annex/agreement to Stage 3. In terms of regular payments such exposure can be cured when fulfil internally defined quarantine rules in accordance with EBA Guidelines concerning New Definition of Default. Cured restructured cases are classified to Stage 2 for at least following 2 years after cure in accordance to EBA technical standards for forborne exposures.

The table below presents the loan portfolio with recognized impairment managed by the Group’s organizational units responsible for loan restructuring.

Gross exposure in ‘000 PLN 31.12.2020 31.12.2019
Loans and advances to private individuals  1 103 434 1 029 338
Loans and advances to companies 214 529 248 895
Total  1 317 963 1 278 233

Exposures subject to measures applied in response to the COVID-19 crisis (in ‘000 PLN)

The outbreak of coronavirus pandemic in 1Q20 resulted in rapid changes in the dynamics of the Group’s business and enforced changes of its strategic priorities.

In the face of the unprecedented health, economic and social crisis the most important issue for the Group was to ensure the safety of employees and customers maintaining the continuity and high quality of business and services. Clients remained the priority for the Group through this crisis and a range of comprehensive measures to support our retail and business customers were implemented.

Key solutions implemented at the early stage of the COVID-19 epidemic included:

  • Credit holidays – temporary deferral of principal and interest instalments
  • Contactless card transactions up to PLN 100 without PIN confirmation
  • Most transactions can be done safely and remotely from home
  • Fully online current account opening with the use of selfie
  • Dedicated website and banner communication on the portal
  • Application for PFR financial support (subsidy with redemption possibility) in Millenet for micro business and SME
  • Temporary suspension of loan instalments, including factoring, leasing and charge cards for all companies (as above)
  • Quick and simplified mode of credit renewal for SME and large companies
  • BGK guarantees under new, more favourable conditions for micro business and SME (de minimis guarantee)
  • Launching loans supported by BGK Liquidity Guaranties Fund for medium and large companies
  • Remote signing of all agreements for SME and large companies

At the later stage, the Group continued to facilitate multichannel access to its services and products and to limit paper documents.

As a part of customer support, the Group introduced a programme of credit moratoria.

From the perspective of year 2020 overall, the impact of the pandemic on results of the  Group was significant despite lower than initially expected negative impact on economic growth and key economic parameters. More details on solutions taken by the Group to counteract the effects of the Covid-19 pandemic and its impact on the financial results are presented in the Management Board Report on the activity of Bank Millennium and Capital Group of Bank Millennium.

Breakdown of loans and advances subject to legislative and non-legislative moratoria by residual maturity of moratoria.

Gross carrying amount

Number of obligors TOTAL Of which:
legislative moratoria
Of which:
expired
Loans and advances for which moratorium was offered 68 269 9 118 246
Loans and advances subject to moratorium (granted) 68 248 8 963 301 15 707 8 457 871
of which: Households 7 364 964 15 707 6 904 195
of which: Collateralised by residential immovable property 5 289 620 13 675 5 085 866
of which: Non-financial corporations 1 598 337 0 1 553 677
of which: Small and Medium-sized Enterprises 828 385 0 820 321
of which: Collateralised by commercial immovable property 90 003 0 89 858

Breakdown of loans and advances subject to legislative and non-legislative moratoria by residual maturity of moratoria,

Gross carrying amount

Residual maturity of moratoria
<= 3 months >3 months
<= 6 months
> 6 months
<= 9 months
> 9 months
<= 12 months
> 1 year
Loans and advances subject to moratorium (granted) 442 386 63 043
of which: Households 436 532 24 237
of which: Collateralised by residential immovable property 191 234 12 520
of which: Non-financial corporations 5 854 38 806
of which: Small and Medium-sized Enterprises 5 272 2 791
of which: Collateralised by commercial immovable property 145 0

Loans and advances subject to legislative and non-legislative moratoria

Gross carrying amount

TOTAL Performing
Performing

Gross carrying amount

Of which: grace period of capital and interest Of which: Instruments with significant increase in credit risk since initial recognition but not credit-impaired (Stage 2)
Loans and advances subject to moratorium 505 430 497 313 455 489 31 500
of which: Households 460 769 454 679 454 679 30 063
of which: Collateralised by residential immovable property 203 754 200 440 200 440 10 077
of which: Non-financial corporations 44 660 42 634 810 1 437
of which: Small and Medium-sized Enterprises 8 063 7 882 201 0
of which: Collateralised by commercial immovable property 145 145 145 0

Loans and advances subject to legislative and non-legislative moratoria

Gross carrying amount

Non-performing

Inflows to
non-performing exposures 

 

Non-performing
Gross carrying amount
Of which: Unlikely to pay that are not past-due or past-due
<= 90 days
Loans and advances subject to moratorium 8 116 8 116 2 142
of which: Households 6 090 6 090 2 142
of which: Collateralised by residential immovable property 3 314 3 314 862
of which: Non-financial corporations 2 026 2 026 0
of which: Small and Medium-sized Enterprises 182 182 0
of which: Collateralised by commercial immovable property 0 0 0

Information on loans and advances subject to legislative and non-legislative moratoria,

Accumulated impairment

TOTAL Performing
Performing
Accumulated impairment
Of which: grace period of capital and interest Of which: Instruments with significant increase in credit risk since initial recognition but not credit-impaired (Stage 2)
Loans and advances subject to moratorium (15 909) (12 562) (12 356) (3 152)
of which: Households (15 441) (12 334) (12 334) (3 060)
of which: Collateralised by residential immovable property (4 161) (2 346) (2 346) (836)
of which: Non-financial corporations (468) (227) (22) (92)
of which: Small and Medium-sized Enterprises (105) (57) (13) 0
of which: Collateralised by commercial immovable property (0.3) (0.3) (0.3) 0

Information on loans and advances subject to legislative and non-legislative moratoria,

Accumulated impairment

Non-performing
Non-performing
Accumulated impairment
Of which: grace period of capital and interest Of which: Unlikely to pay that are not past-due or past-due
<= 90 days
Loans and advances subject to moratorium (3 347) (3 107) (3 347)
of which: Households (3 107) (3 107) (3 107)
of which: Collateralised by residential immovable property (1 815) (1 815) (1 815)
of which: Non-financial corporations (240) 0 (240)
of which: Small and Medium-sized Enterprises (48) 0 (48)
of which: Collateralised by commercial immovable property 0 0 0

Information on newly originated loans and advances provided under newly applicable public guarantee schemes introduced in response to COVID-19 crisis Gross carrying amount Gross carrying amount
TOTAL Of which: forborne Inflows to
non-performing exposures
Newly originated loans and advances subject to public guarantee schemes 520 974 0 138
of which: Households 0 0
of which: Collateralised by residential immovable property 0   0
of which: Non-financial corporations 520 974 0 138
of which: Small and Medium-sized Enterprises 205 476 138
of which: Collateralised by commercial immovable property 0   0

Collateral transferred to the Group

In 2020 there were no major seizures by the Bank or sale of fixed assets constituting loan collateral. The above situation was caused by the implementation of other more cost-effective paths of satisfying oneself from lien or transfers of title (more effective in terms of time and money with the limitation of costs), i.e. leading to the sale of the object of collateral under the Bank’s supervision and with the allocation of obtained sources for repayment. A variety of such action is concluding agreements with official receivers on the basis of which the receiver for an agreed fee secures and stores objects of collateral and in agreement with the Bank puts them up for sale and actually sells them (also as part of selling organized parts or the debtor’s whole enterprise). Funds obtained in such a way are allocated directly for repayment of the Bank’s receivables (such debt-collection procedure is implemented without recording transferred collateral on the so-called “Fixed Assets for Sale”).

At the same time, a subsidiary of Bank – Millennium Leasing, takes control over some of assets leased and leads active measures aimed at their disposal. Data about the value of these assets and their changes during the reporting period are shown in note (29) „Non-current assets held for sale” of the consolidated balance sheet.

Policy for writing off receivables

Credit exposures, with respect to which the Group no longer expects any cash flows to be recovered and for which impairment provisions (or fair value adjustments in case of overdue receivables originated from derivatives) have been created fully covering the outstanding debt are written-off the balance sheet against said provisions and transferred to off-balance. This operation does not cause the debt to be cancelled and the legal and recovery actions, reasonable from the economic point of view, are not interrupted in order to enforce repayment.

In most of cases the Group writes off receivables against impairment provisions when said receivables are found to be unrecoverable i.e. among other things:

  • obtaining a decision on ineffectiveness of execution proceedings;
  • death of a debtor;
  • confirmation that there are no chances to satisfy claims from the estate in bankruptcy;
  • exhaustion of all opportunities to carry out execution due to the lack of assets of the main debtor and other obligors (e.g. collateral providers)

Gross exposure write-offs
in ‘000 PLN

In 2020
Loans and advances to customers Loans and advances to banks Total

 

Companies Mortgages Other retail
Receivables written-off excluded from enforcement activity 1 211 3 249 5 979 0 10 439
Receivables written-off being subject to enforcement activity 135 780 7 401 76 602 0 219 783
Total written-off 136 991 10 650 82 581 0 230 222
Gross exposure write-offs
in ‘000 PLN

In 2019
Loans and advances to customers Loans and advances to banks Total

 

Companies Mortgages Other retail
Receivables written-off excluded from enforcement activity 1 627 333 4 045 0 6 005
Receivables written-off being subject to enforcement activity 169 960 15 476 125 975 0 311 411
Total written-off 171 587 15 809 130 020 0 317 416

Concentration of risks of financial assets with exposure to credit risk

The table below presents the Group’s main categories of credit exposure broken down into components, according to category of customers.

31.12.2020 Financial intermediation Industry and constructions Wholesale and retail business Transport and communication Public sector Mortgage loans Consumer loans* Other sectors Total
Loans and advances to banks 625 430 0 0 0 0 0 0 0 625 430
Loans and advances to customers (Amortized cost) 269 259 5 702 979 5 405 144 2 343 051 76 415 41 000 677 14 835 925 5 211 774 74 845 224
Loans and advances to customers
(FAIR VALUE)
222 2 681 4 324 1 700 4 0 1 602 751 4 069 1 615 753
Trading securities 97 46 0 0 269 413 0 0 102 269 658
Instruments valued at amort. cost 0 0 0 0 38 821 0 0 0 38 821
Instruments mandatorily at fair value through P&L 251 107 0 0 0 0 0 0 0 251 107
Derivatives and adjustment due to fair value hedge 102 704 39 387 23 959 2 359 0 0 0 7 574 175 983
Investment securities 29 184 5 004 0 308 18 613 089 0 0 35 18 647 619
Repurchase agreements 66 350 0 0 0 0 0 0 0 66 350
Total 1 344 354 5 750 096 5 433 428 2 347 418 18 997 742 41 000 677 16 438 676 5 223 554 96 535 945
* including: credit cards, cash loans, current accounts overdrafts

31.12.2019 Financial intermediation Industry and constructions Wholesale and retail business Transport and communication Public sector Mortgage loans Consumer loans* Other sectors Total
Loans and advances to banks 784 277 0 0 0 0 0 0 0 784 277
Loans and advances to customers (Amortized cost) 383 869 6 407 050 4 961 080 2 556 469 125 864 36 432 136 14 445 592 4 766 753 70 078 813
Loans and advances to customers
(FAIR VALUE)
322 3 873 4 886 2 153 5 0 1 479 645 7 311 1 498 195
Trading securities 28 29 0 0 874 033 0 0 153 874 243
Instruments valued at amort. cost 0 0 0 0 48 187 0 0 0 48 187
Instruments mandatorily at fair value through P&L 169 610 0 0 0 0 0 0 0 169 610
Derivatives and adjustment due to fair value hedge 133 160 10 515 5 075 944 0 0 0 5 950 155 644
Investment securities 29 315 5 004 0 284 21 840 533 0 0 32 21 875 168
Repurchase agreements 205 439 0 0 0 0 0 0 0 205 439
Total 1 706 020 6 426 471 4 971 041 2 559 850 22 888 622 36 432 136 15 925 237 4 780 199 95 689 576
* including: credit cards, cash loans, current accounts overdrafts

Taking into consideration segments and activity sectors concentration risk, the Group defines internal concentration limits in accordance with the risk tolerance allowing it to keep well diversified loan portfolio.

The main items of loan book are mortgage loans (53.5%) and cash loans (18.8%). The portfolio of loans to companies (including leasing) from different sectors like industry, construction, transport and communication, retail and wholesale business, financial intermediation and public sector represents almost 25% of the total portfolio.

Sector name 2020
Balance Exposure
(PLN million)
Share (%) 2019
Balance Exposure
(PLN million)
Share (%)
Credits for individual persons  57 554.6 75.2% 52 580.0 73.2%
Mortgage  41 000.7  53.5% 36 571.7 50.9%
Cash loan 14 412.7 18.8% 13 969.8 19.5%
Credit cards and other 2 141.2 2.8% 2 038.5 2.8%
Credit for companies* 19 023.1 24.8% 19 221.1 26.8%
Wholesale and retail trade; repair 5 410.0 7.1% 4 966.5 6.9%
Manufacturing 4 596.0 6.0% 5 232.3 7.3%
Construction 1 109.8 1.4% 1 178.9 1.6%
Transportation and storage 2 344.9 3.1% 2 558.8 3.6%
Public administration and defence 76.5 0.1% 126.0 0.2%
Information and communication 1 305.5 1.7% 842.2 1.2%
Other Services 1 325.9 1.7% 1 047.9 1.5%
Financial and insurance activities 269.5 0.3% 384.2 0.5%
Real estate activities 1 058.6 1.4% 1 007.0 1.4%
Professional, scientific and technical services 242.0 0.4% 696.8 1.0%
Mining and quarrying 78.2 0.1% 74.1 0.1%
Water supply, sewage and waste 160.1 0.2% 144.6 0.2%
Electricity, gas, water 510.1 0.7% 421.5 0.6%
Accommodation and food service activities 197.3 0.3% 175.3 0.2%
Education 79.3 0.1% 57.1 0.1%
Agriculture, forestry and fishing 102.0 0.1% 89.1 0.1%
Human health and social work activities 122.8 0.2% 180.9 0.3%
Culture, recreation and entertainment 34.6 0.0% 37.9 0.0%
Total (gross) 76  577.7 100.0% 71 801.1 100.0%
* incl. Microbusiness, annual turnover below PLN 5 million

Concentration ratio of the 20 largest customers in the Group’s loan portfolio (considering groups of connected entities) at the end of 2020 equals 6.9% comparing with 5.9% at the end of 2019. Concentration ratio in 2020 also increased for the 10 largest customers: to 5.0% from 4.1% at the end of the previous year. This was the result of, among others, the granting financing to several large entities.

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