This document is a free translation of the Polish original. Terminology current in Anglo-Saxon countries has been used where practicable for the purposes of this translation in order to aid understanding. The binding Polish original should be referred to in matters of interpretation.
Report on the activities of Bank Pekao S.A. Group for the year 2021 (prepared jointly with the Report on the activities of Bank Pekao S.A.)
W a r s a w , M a r c h 2 0 2 2
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Report on the activities of Bank Pekao S.A. Group for the year 2021 rok
Bank Pekao S.A.
1. Highlights of Bank Pekao S.A. Group ....................................................................................................................................................................... 3
2. Highlights of Bank Pekao S.A. ................................................................................................................................................................................... 4
3. Summary of Performance ........................................................................................................................................................................................... 5
4. External Activity Conditions ....................................................................................................................................................................................... 7
5. Important Events and Achievements ...................................................................................................................................................................... 13
5.1 Changes in the Group’s structure ........................................................................................................................................................................ 13
5.2 Changes in the Statutory Bodies of the Bank ...................................................................................................................................................... 13
5.3 Organizational changes ....................................................................................................................................................................................... 22
5.4 Awards and distinctions ....................................................................................................................................................................................... 23
6. Information for the Investors .................................................................................................................................................................................... 26
6.1 The Bank’s share capital and share ownership structure .................................................................................................................................... 26
6.2 Performance of market valuation of Bank Pekao S.A.’s stock ............................................................................................................................. 27
6.3 Dividend payment history .................................................................................................................................................................................... 29
6.4 Investor Relations ................................................................................................................................................................................................ 29
6.5 Financial credibility ratings ................................................................................................................................................................................... 30
7. Activity of Bank Pekao S.A. Group .......................................................................................................................................................................... 32
7.1 Important factors influencing the Group’s activities and results ........................................................................................................................... 32
7.2 Major sources of risk and threats ......................................................................................................................................................................... 35
7.3 Capital adequacy ................................................................................................................................................................................................. 38
7.4 Bank Pekao S.A. on the Polish banking market .................................................................................................................................................. 41
7.5 Major areas of activities of the Group’s subsidiaries ........................................................................................................................................... 57
7.5.1 Banking activity ........................................................................................................................................................................................ 57
7.5.2 Assets management ................................................................................................................................................................................ 57
7.5.3 Leasing activity ......................................................................................................................................................................................... 57
7.5.4 Factoring activity ...................................................................................................................................................................................... 57
7.5.5 Transactional advisory ............................................................................................................................................................................. 58
7.5.6 Other financial services ............................................................................................................................................................................ 58
7.6 Investing in human capital ................................................................................................................................................................................... 59
7.7 Sponsorship and charity policy ............................................................................................................................................................................ 64
8. Statement of Financial Position and Financial Results ......................................................................................................................................... 66
8.1 The consolidated income statement – presentation form .................................................................................................................................... 67
8.2 Structure of the consolidated statement of financial position – short form .......................................................................................................... 70
8.2.1 Assets ...................................................................................................................................................................................................... 71
8.2.2 Liabilities .................................................................................................................................................................................................. 72
8.3 Consolidated income statement – long form ....................................................................................................................................................... 75
8.4 Consolidated statement of comprehensive income ............................................................................................................................................. 77
8.5 Consolidated income statement – presentation form .......................................................................................................................................... 78
8.6 Reconciliation of income statement – presentation form and long form .............................................................................................................. 79
9. Separate Statement of Financial Position and Financial Results ......................................................................................................................... 81
9.1 The Separate income statement – presentation form .......................................................................................................................................... 82
9.2 Structure of the separate statement of financial position – short form ................................................................................................................. 85
9.2.1 Assets ...................................................................................................................................................................................................... 86
9.2.2 Liabilities .................................................................................................................................................................................................. 87
9.3 Separate income statement – long form .............................................................................................................................................................. 90
9.4 Separate statement of comprehensive income ................................................................................................................................................... 92
9.5 Separate income statement – presentation form ................................................................................................................................................. 93
9.6 Reconciliation of income statement – presentation form and long form .............................................................................................................. 94
9.7 The structure of the net profit ............................................................................................................................................................................... 96
9.8 Off–balance sheet items ...................................................................................................................................................................................... 98
10. Other Information ...................................................................................................................................................................................................... 99
11. Prospects for Development .................................................................................................................................................................................... 105
11.1 Factors which will affect the results of the Group .............................................................................................................................................. 105
11.2 Strategic directions and business priorities ....................................................................................................................................................... 106
12. Representations of the Bank’s Management Board ............................................................................................................................................. 109
13. Statement of Bank Polska Kasa Opieki Spółka Akcyjna on application of Corporate Governance Standards in 2021 ................................ 110
14. Statement of Bank Pekao S.A. Group on Non-financial Data for 2021 ............................................................................................................... 126
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Report on the activities of Bank Pekao S.A. Group for the year 2021 rok
Bank Pekao S.A.
1. Highlights of Bank Pekao S.A. Group
2021
2020
2019
2018
2017
2016
INCOME STATEMENT – SELECTED ITEMS
(in PLN million)
Operating income
8,522
7,796
8,282
7,830
7,350
7,347
Operating costs
(3,739)
(3,451)
(3,537)
(3,445)
(3,263)
(3,212)
Profit before income tax
3,002
1,725
3,002
3,047
3,153
2,897
Net profit for the period attributable to equity holders
of the Bank
2,175
1,102
2,165
2,287
2,475
2,279
PROFITABILITY RATIOS
Return on average equity (ROE) - nominally
8.7%
4.5%
9.5%
10.2%
11.0%
9.8%
Return on assets (ROA)
0.9%
0.5%
1.1%
1.3%
1.4%
1.4%
Net interest margin
2.4%
2.5%
2.9%
2.8%
2.8%
2.8%
Cost / income (including BFG cost)
47.3%
49.2%
48.2%
47.4%
48.1%
47.3%
Costs of risk
0.45%
0.99%
0.46%
0.36%
0.40%
0.45%
STATEMENT OF FINANCIAL POSITION – SELECTED ITEMS
(in PLN million)
Total assets
250,567
233,217
203,323
191,090
185,466
174,215
Customers’ financing (**)
169,073
151,684
151,384
140,032
132,300
122,663
Amounts due to customers (***)
194,804
177,745
157,203
149,143
145,398
136,380
Debt securities issued and subordinated liabilities
8,117
8,905
9,072
7,243
4,029
1,523
Equity
23,863
25,495
23,398
22,808
23,268
22,912
STATEMENT OF FINANCIAL POSITION STRUCTURE RATIOS
Customers’ financing (**) / total assets
67.5%
65.0%
74.5%
73.3%
71.3%
70.4%
Securities / total assets
22.9%
26.7%
17.8%
15.0%
20.8%
20.6%
Deposits (****) / total assets
81.0%
80.0%
81.8%
81.8%
80.6%
79.2%
Customers’ financing (*) / deposits (****)
83.3%
81.3%
91.0%
89.5%
88.5%
88.9%
Equity / total assets
9.5%
10.9%
11.5%
11.9%
12.5%
13.2%
Total capital ratio
16.9%
19.2%
17.1%
17.4%
17.1%
17.6%
EMPLOYEES AND NETWORK
Total number of employees (*****)
14,702
14,994
15,678
16,714
17,339
17,757
Number of outlets
650
713
805
818
843
952
Number of ATMs
1,475
1,592
1,648
1,708
1,745
1,761
(** ) Including net investments in financial leases to customers, non-treasury debt securities and excluding reverse repo transactions.
(***) Excluding repo transactions and lease liabilities.
(***) Deposits include amounts due to customers, debt securities issued and subordinated liabilities.
(****) Data for December 31, 2020 have been recalculated taking into account the retrospective recognition of part of the profit for 2020 (confirmation of the financial results by the General Shareholders Meeting) (after the approval of the KNF), in accordance with the EBA position expressed in Q&A 2018_3822 and Q&A 2018_4085.
(*****) Including 500 people who became employees of the Bank on the basis of art. 23 of the Labor Code in connection with the acquisition of Idea Bank on 3 January, 2021.
Note: Income statement data included in the table above and other notes to the Report on activities were presented according to income statement in a presentation form, which differs from the long form of the income statement presented in the Financial statements of the Group. Reconciliation of income statement in the presentation form and the long form is in the point 8.6 of the Report on activities.
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Report on the activities of Bank Pekao S.A. Group for the year 2021 rok
Bank Pekao S.A.
2. Highlights of Bank Pekao S.A.
2021
2020
2019
2018
2017
2016
INCOME STATEMENT – SELECTED ITEMS
(in PLN million)
Operating income
8,084
7,454
7,887
7 478
7 085
7 036
Operating costs
(3,438)
(3,169)
(3,204)
(3 119)
(3 025)
(2 991)
Profit before income tax
2,995
1,697
3,016
3 021
2 728
2 863
Net profit
2,237
1,126
2,247
2 311
2 088
2 278
PROFITABILITY RATIOS
Return on average equity (ROE) - nominally
9.2%
4.8%
10.2%
10.7%
9.6%
10.1%
Return on assets (ROA)
0.9%
0.5%
1.2%
1.3%
1.2%
1.4%
Net interest margin
2.4%
2.5%
2.9%
2.8%
2.8%
2.8%
Cost / income (including BFG cost)
46.1%
47.7%
46.4%
45.3%
46.4%
46.2%
Costs of risk
0.41%
1.03%
0.43%
0.36%
0.40%
0.46%
STATEMENT OF FINANCIAL POSITION – SELECTED ITEMS
(in PLN million)
Total assets
241,275
222,381
194,650
184,347
182,077
170,989
Customers’ financing (**)
157,783
139,926
142,146
133,085
128,873
119,034
Amounts due to customers (***)
195,064
178,276
157,750
149,784
146,110
136,630
Debt securities issued and subordinated liabilities
2,940
3,281
4,369
3,745
2,727
301
Equity
23,100
24,647
22,527
21,822
22,259
22,283
STATEMENT OF FINANCIAL POSITION STRUCTURE RATIOS
Customers’ financing (**) / total assets
65.4%
62.9%
73.0%
72.2%
70.8%
69.6%
Securities / total assets
24.2%
28.2%
18.6%
15.5%
21.1%
20.8%
Deposits (****) / total assets
82.1%
81.6%
83.3%
83.3%
81.7%
80.1%
Customers’ financing (*) / deposits (****)
79.7%
77.1%
87.7%
86.7%
86.6%
86.9%
Equity / total assets
9.6%
11.1%
11.6%
11.8%
12.2%
13.0%
Total capital ratio
18.8%
21.3%
18.7%
18.7%
18.4%
18.2%
EMPLOYEES AND NETWORK
Total number of employees (*****)
12,661
12,870
13,779
14,569
15,316
15,882
Number of outlets
650
713
805
818
843
952
Number of ATMs
1,475
1,592
1,648
1,708
1,745
1,761
(*) Including non-treasury debt securities and excluding reverse repo transactions.
(**) Excluding repo transactions and lease liabilities.
(***) Deposits include amounts due to customers, debt securities issued and subordinated liabilities.
(****) Data for December 31, 2020 have been recalculated taking into account the retrospective recognition of part of the profit for 2020 (confirmation of the financial results by the General Shareholders Meeting) and the first half of 2020 (after the approval of the KNF), in accordance with the EBA position expressed in Q&A 2018_3822 and Q&A 2018_4085.
(*****) Including 500 people who became employees of the Bank on the basis of art. 23 of the Labor Code in connection with the acquisition of Idea Bank on 3 January, 2021.
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Report on the activities of Bank Pekao S.A. Group for the year 2021 rok
Bank Pekao S.A.
3. Summary of Performance
In 2021, we generated the net profit of the Bank Pekao S.A. Group attributable to the Bank's holders at the level of PLN 2,174.9 million i.e. at the level of the net profit generated in 2019, before the pandemic. Net profit was higher by PLN 1,073.2 million, i.e. 97.4% y/y than the netprofit achieved in 2020, mainly due to higher operating income and lower net allowances for expected credit losses, which are gradually normalizing towards the levels observed before the pandemic.
ROE in 2021 amounted to 8.7%,y/y.
Despite the COVID-19 pandemic, we increased the scale of our commercial activities, actively supporting clients' financial liquidity and focusing on further digitizing and automating processes, and implementing advanced digital solutions. We focused our activities in the following key strategic areas (in accordance with the adopted Strategy for 2021-2024).
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Report on the activities of Bank Pekao S.A. Group for the year 2021 rok
Bank Pekao S.A.
Impact of the COVID-19 pandemic on the functioning of the Group
We continued our activities undertaken in 2020 in connection with the COVID-19 pandemic, actively supporting clients in maintaining financial liquidity, accelerating the digitization of processes and actively encouraging clients to use remote channels in everyday banking.
We monitor the economic situation in the country and in the world on an ongoing basis. The various scenarios for the development of the epidemic and its impact on the economy are analyzed, as well as the best solutions that the Bank can adopt.
Strategy and key financial indicators
„Responsible Bank. Modern banking ” is the new our strategy for the years 2021-2024, announced in March 2021.
According to the strategic plan, we:
• will be a universal bank of first choice for its customers,
• will develop remote distribution and customer service model,
• will focus on cost and process efficiency,
• will grow in most profitable market segments.
Our ambition is a strong position among the most profitable and effective banks in Poland, including increasing the return on equity (ROE), reducing the cost-to-income ratio and increasing the number of active mobile banking customers.
In the near future, we will update our financial targets announced in the Strategy 2021-2024 in connection with changes in the economic environment and an increase in interest rates.
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Report on the activities of Bank Pekao S.A. Group for the year 2021 rok
Bank Pekao S.A.
4. External Activity Conditions
Economic growth
In 2021 Polish economy expanded by 5.7%, following the decline of 2.5% one year earlier. According to the quarterly national accounts, GDP has exceeded the pre-pandemic level in the second quarter already. Domestic demand rose by 8.2% yoy in 2021, while net exports subtracted 1.9 p.p. from the headline figure. Economic growth was driven by gross capital formation (23.2% yoy) and total consumption (4.8% yoy, including household consumption rising by 6.2% yoy) in almost equal proportions. The former itself was driven by a rebound in fixed investment (8.0% yoy) and strong inventory buildup which added 2.7 p.p. The entire 2021 can best be summarized as the year in which consumer demand normalized after the initial period of the pandemic, inventories were refilled and investment partially recovered.
In 2022 Polish economy will slow down to 4.0%. According to the Bank’s forecasts this will result from several factors. First, the marked wieakness in consumer sentiment (current situation is considered to be as bad as at the turn of 2012 and 2013) suggests that households’ willingness to spend is limited and consumption will decelerate. Second, we expect the contribution from investment to decline due to problems in public investment (delays, lack of projects and EU RRF funds not flowing in in measurable amounts). Third, monetary tightening will have an increasingly negative impact on economic growth, with a trough at the turn of 2022 and 23.
Labour market
During 2021 domestic labour market was making up for pandemic losses very quickly, especially in its second half, after a significant relaxing of epidemic restrictions. The COVID -19 crisis, which was more like a natural disaster than a cyclical downturn, did not generate long-term negative consequences for the labour market. The government anti-crisis shields also played an important role. Concerns about employment cuts as part of the adaptation to ongoing economic situation by enterprises at the time of settling the Polish Development Fund Financial Shield that determined redemption of subsidies by maintaining employment for 12 consecutive months, did not materialize.
The unemployment rate at the end of 2021 was at 5.4% compared to 6.3% at the end of 2020. The pace of its declines in the second half of the year was faster than the pre-pandemic seasonal pattern. Polish labour market quickly turned into an "employees’ market" and labour demand remained strong, as evidenced by very high number of job offers published. In turn, average employment in the enterprise sector in December 2021 amounted to 6.362 mn, i.e. 33 thousend more than in December 2020. The fastest increase in employment took place in sectors most affected by the consequences of the pandemic, incl. accommodation, catering and trade. In turn, the biggest winner of the pandemic is the IT sector, where employment was much higher at the end of 2021 than in the period before the pandemic.
Wage growth in the enterprise sector recorded a strong rebound in 2021, to 8.6% from 4.8% in 2020. Despite the low statistical base effect, wage growth rate in the period of post-pandemic recovery exceeded market expectations. Rising wage pressure was supported by a very fast economic recovery with a gradually decreasing pool of available workers. Growing problems with the labour supply were reported by employers especially from the industry, construction and transport sectors, but also employers from the HoReCa sector, which was particularly hard hit by the coronavirus pandemic. At the same time, amid significantly elevated inflation, the risk of a breakdown in the wage-price spiral was increasing. Real wage growth in 2021 was at 3.4% yoy.
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Report on the activities of Bank Pekao S.A. Group for the year 2021 rok
Bank Pekao S.A.
Unemployment rate in 2022 will continue to decline, but at a slower pace than in 2021 – in line with projected ”cooling” of the economy. At the end of 2022, it will stand at 4.9% compared to 5.4% at the end of 2021. Problems related to the overheated labour market will be more and more dominant. The beginning of 2022 on the labour market will be particularly difficult due to more harsh pandemic situation related to the spread of the Omicron coronavirus variant and forecasted record number of new infections and people under quarantine. The shortages in the domestic labour supply should be further complemented by the wide influx of foreigners. The "drained" labour market and forecasted very high inflation will boost wage growth to very high, double-digit levels - we assume that wages in 2022 will increase by about 11%.
Inflation and monetary policy
Average CPI inflation in 2021 amounted to 5.1% compared to 3.4% in 2020. Inflation in 2021 turned out to be much higher than market expectations. The very quick, post-pandemic rebound in global demand encountered a barrier of much slower reconstruction of production capacities. Problems with broken supply chains, shortages of raw materials and semi-finished products pushed prices of many industrial goods to unprecedented levels in the second half of the year. This was evidenced by the high level of producer inflation (PPI) that in 2021 amounted to 7.9% on average, but at the end of the year, in December, it was already at 14.2%.
Prices increases in 2021 were also driven by higher core inflation (CPI excluding food and energy prices) that increased to 4.1% from 3.9% in 2020 due to, among other things, higher prices in the service sector strongly recovering from the pandemic. Rising energy and labour costs were passed on to the prices of final goods amid persistent high demand. Inflation was also boosted by fuels due to high market prices of crude oil. Fuel prices increased by 22.9% in 2021.
Forecasting inflation in 2022 is a difficult challenge due to the Anti-Inflation Shield introduced at the beginning of the year, the main purpose of which is to reduce retail prices through lower indirect taxes on non-core items. Its duration was set until the end of July, however, it could be extended if inflation persists at an elevated level. Therefore, in the baseline scenario, we assume that the Shield will be prolonged at least until the end of 2022. The Shield will have a strong impact directly on non- base components of inflation, such as food, fuels and energy. However, gigantic rises in energy market prices, on which business customers operate, will be readily passed on to the prices of base categories in goods and services in an environment of continued strong demand. Heavily “heated” labour market will also increase the wage-price pressure. Therefore, we expect a continuation of the strong upward trend in core inflation. Higher food prices will also make a significant contribution.
In our baseline scenario, average annual inflation in 2022 will amount to about 7% with the peak of inflation at the beginning of the year above 9% yoy. The Anti-Inflation Shield will probably save us from the scenario of double-digit inflation in the first half of 2022. The cost will be extended period of high inflation and thus delay in its return to the target for at least 2024.
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Report on the activities of Bank Pekao S.A. Group for the year 2021 rok
Bank Pekao S.A.
The year 2021 was marked by the correction of the NBP exchange rate the central bank’s rhetoric first began to change in Spring and during the summer months the bank began signaling that rate hikes were being seriously considered. Finally, in October the NBP surprised the markets and observers by hiking interest rates for the first time since 2012 (by 40 bps). Since then interest rates rose by a total of 215 bps, the asset purchase programme was phased out completely and the reserve requirement ratio was hiked from 0.5 to 2.0%. The current tightening cycle is this century’s fastest and, according to our forecasts, its pace and scale will not decline in the coming months. By mid-2022 the NBP’s main reference rate will reach 4% (the cycle will end in July at the latest) and markets will shift their focus on the length of high interest rate period. It can easily be longer than in 2012 and 2008 and we expect the NBP key rate to remain at 4% until end-2023.
Fiscal policy
2021 was a year of fiscal consolidation after a sharp spike in public deficit and debt a year earlier. Although COVID-19 continued to be a public health challenge it ceased to exert a significant impact on the economy. The government did not reintroduce lockdowns and scaled back the anti-crisis fiscal measure significantly. Budget expenditures grew only modestly as a result (approximately 5% yoy) in 2021. Tax revenues, on the other hands, increased significantly (17% yoy) thanks to a fast recovery of the economy and acceleration of inflation (which increased tax bases). Non-tax income grew even faster (26% yoy), mainly due to rising prices of CO 2 emission allowances. The 2021 revenues from the EUA auctions exceeded PLN 25 billion, compared to PLN 10.4 billion assumed in the budget bill. Moreover, the government benefited from NBP profit of PLN 9 billion. The central budget deficit was approximately PLN 35 billion, which was significantly less than expected at the beginning of 2021 (PLN 82 billion). This was accompanied by a significant reduction in off-budget financing of public expenditure. BGK and PFR issued bonds worth PLN 39.6 billion compared to PLN 165 billion in 2020. The deficit of general government decreased - in our opinion - from 6.9 to 2.3% of GDP. Consequently, the share of public debt in GDP was reduced from 57.4 to approximately 55% of GDP.
In 2022, we expect fiscal consolidation to halt but not reverse. Our forecast for general government deficit is 2.4% of GDP. Public debt should fall further to 52% of GDP. The state budget revenues will continue to grow at a quick pace due to high nominal economic growth, payment from the NBP profit (in the amount of up to PLN 13 billion) and the constantly growing prices of CO 2 emission allowances. However, public expenditure will also increase to a similar extent. We assume that the anti-inflationary shields which are set to expire in July 2022 will be extended at least until the end of year. Their total cost for the budget will reach around PLN 31billion. On the other hand, the tax reform of the Polish Deal will reduce public revenues by approximately PLN 16 billion.
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Report on the activities of Bank Pekao S.A. Group for the year 2021 rok
Bank Pekao S.A.
Capital markets
In 2021 equity investors could not complain – all major stock indices followed the steep, late 2020 trends and episodes of downward corrections were rare and very shallow. Eventually, the two key US indices, S&P500 and DJIA gained 20.2 and 18.7%, respectively, German DAX rose by 12.8%, British FTSE gained 15.5% and French CAC increased by 28.9%.
FI markets saw most of the action last year. While the world made several major steps towards monetary policy normalization in 2021, the road was a bumpy one. The first episode of rising market interest rates was rather benign (a reflationary one) – in January and February bond yields were buoyed by optimism owing to vaccination programmes, reopening of major economies and another round of fiscal stimulus in the United States following the elections. The second wave of market interest rate increases came in the third quarter and was associated with the global inflation spike seen in all possible indicators (from commodities to consumer prices). This episode continues until today, but investors were alternating between positive and pessimistic interpretations, only to settle on one that assumed front-loading of monetary tightening throughout the globe, with detrimental effects for economic growth in major economies. 2021, especially the second half, was marked by strengthening in the US dollar, driven by the perception that the US economy boasted cyclical advantages over its peers (GDP growth, progress in the post-pandemic recovery and monetary policy normalization).
In 2021 all equity indices on the Warsaw Stock Exchange rose by a double-digit pace. The rate of return on the broad WIG index amounted to 21.5%, WIG20 rose by 14.3% and midcap index mWIG40 gained 33%. Finally, the small cap benchmark sWIG80 rose by 24.6%. In 2020 the multi-year trend of net withdrawal from the stock market slowed down, but not ended – there were 19 withdrawals and 16 IPOs. The latter attracted attention of investors and WSE exhibited relatively high turnover of PLN 271.5 billion (as compared to PLN 288.6 billion in 2020).
WIG 20
WIG
Banking sector
According to the Financial Supervision Authority (KNF) data, in the period of January-November 2021 the sector generated an aggregated net profit of PLN 12.1 billion, an increase by 54% vs. the same period of 2020. The significant improvement was primarily due to lower cost of risk (the result of, among other, a better understanding of the actual economic impact of the crisis and greater optimism about future developments of the situation) coupled with rising fee and commission income, while interest income remained under pressure from low interest rates for the majority of the period (the first rate hike was enacted in October 2020).
The sector's total operating income has grown by 2% y/y. The decline in the main component, net interest income (-4.0% y/y), caused by the low level of interest rates, has been more than made up by a sharp increase in net fees and commissions income (+16% y/y), as well as a recovery of the other income category (+14% y/y). B anks' operating expenses were similar to the previous year’s results (+0,5% y/y), while the sector’s cost of risk fell sharply (-31% y/y) due to above mentioned reasons (in addition to base effects).
According to KNF data, at the end of November 2021 the banking sector assets amounted to PLN 2.613 billion, an increase by 11% y/y. Deposits from the non-financial sector grew by 9% y/y, while receivables increased by 4% y/y.
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Report on the activities of Bank Pekao S.A. Group for the year 2021 rok
Bank Pekao S.A.
Total loans and deposits
According to NBP data, at the end of 2021 the following developments were noted in terms of main deposit categories 1 :
− the volume of households’ deposits increased by 6.7% y/y. The growth rate was significantly lower than the one observed a year earlier – throughout the entire year 2020 dynamics exceeded 10% in this category, supported among others by public aid programs and increasing personal savings in an uncertain crisis environment,
− the volume of enterprises’ deposits rose by 10% y/y. The pace of growth in this category was also significantly lower than at the end of the year 2020 (+19% y/y), when in similarity with the retail segment, the effect of the so-called anti-crisis shields and public aid was the strongest. In 2021 the growth rate returned to “normal” levels, however it still remained relatively high,
− other deposits grew by 11% y/y, in comparison to 17% y/y growth after the year 2020.
At the end of 2021 household deposits accounted for 65%, corporate deposits for 25%, and other deposits for 10% of all deposits. Around 83% of them were covered by current deposits.
Household and corporate deposits
In terms of main receivables categories 2 , at the end of 2021 the following developments were noted:
− in yearly terms, volume of receivables from households increased by 4.8%. The pace was slightly higher compared with the one observed a year earlier (+3% y/y). A consistently high, two-digit, growth rate characterized the mortgage segment, driven by strong activity in the housing market (especially during the first three quarters of the year 2021) and a further increase of the prices of properties. Additionally a gradual recovery of the dynamics of consumer loans was also recorded, a category that was deeply affected by the pandemic,
− receivables from enterprises grew by 4.2% y/y, which is a strong rebound from the previous year’s decrease of 5,5% y/y. Credit activity in the enterprise sector increased due to a sharp revival in the economy during the entire year 2021. A steep rise at the end of the year was noted in current loans, however the dynamic of investment loans remained timid, an evidence of still strong uncertainty,
− other receivables increased by 8.2% y/y (in comparison to an exceptionally strong result of 38% y/y at the end of 2020).
As of the end of 2021 loans to households accounted for 58%, corporate loans for 26% and other loans for 16% of all loans.
1 Excluding central government institutions.
2 Excluding central government institutions. Receivables include debt securities.
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Bank Pekao S.A.
Loans to enterprises and households
Loan portfolio quality significantly increased in 2021, after a relatively moderate – taking into consideration the unprecedented character and impact of the COVID-19 crisis – deterioration through 2020. In particular:
− NPL ratio for corporate loans after November 2021 amounted to 7.7%, down from 8.8% a year before. An improvement in loan quality concerned both large companies (decrease from 5.3% to 4.4%) as well as small and medium enterprises (decrease from 11.9% to 11.1%),
− the share of non-performing loans in the portfolio of loans to households reached 5.3%, in comparison to 6.0% after November 2020. The overall improvement was mainly due to significant decrease of the ratio for consumer loans (from 11.3% to 10.1%), while in case of mortgages it remained nearly flat (2.4% compared to 2.5% after November 2020).
Non-performing loans, % of portfolio
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Bank Pekao S.A.
5. Important Events and Achievements
5.1 Changes in the Group’s structure
The composition of Bank Pekao S.A. Group is presented in the Note 2 to the Consolidated Financial Statements of Bank Pekao S.A. Group for the year ended on 31 December 2021.
Acquisition of the shares of Krajowy Integrator Płatności S.A.
On 31 March, 2021, the purchase transaction was completed, as a result of which Bank became the owner of 210,641 shares constituting 38.33% of the capital and entitling to 38.33% of votes at the General Meeting of Krajowy Integrator Płatności S.A. with its seat in Poznań, the operator of the Tpay.com system.
Acquisition of shares in the company PeUF Sp. z o.o.
In 2021, Pekao Leasing Sp. z o.o., a subsidiary of the Bank, acquired 100% shares in Metsi Sp. z o.o. for the price of PLN 5 thousand. After changing the agreement of Metsi Sp. z o.o., it operates under PeUF Sp. z o.o. and deals with the distribution of insurance.
Sale of shares in the company Dom Inwestycyjny Xelion Sp. z o.o.
With reference to the information provided in the Consolidated Financial Statements of Bank's Capital Group as of 2020, about the preliminary agreement for the sale of 100% shares in Dom Inwestycyjny Xelion Sp. z o.o., signed by the Bank in December 2020, the Bank informed that the Polish Financial Supervision Authority stated in a communication published on September 7, 2021 that there are no grounds to object to the planned intention to directly acquire 120,100 shares of Dom Inwestycyjny Xelion Sp. z o.o. with its seat in Warsaw by Quercus Agent Transferowy Sp. z o.o. with its seat in Warsaw. On 29 October 2021, a promised agreement was signed for the sale of 100% of shares in Dom Inwestycyjny Xelion Sp. z o.o.
Increase of the share capital of Pekao Bank Hipoteczny S.A.
On 26 October, 2021, the District Court for the Capital City of Warszawy w Warszawie, XIII Commercial Division of the National Court Register entered an increase in the share capital of Pekao Bank Hipoteczny S.A. by PLN 35,000,000 through the issue of 350 Series I Shares, with a par value of PLN 100,000 per share and an issue price equal to the par value, ie PLN 100,000 per share. All shares were acquired by Bank Pekao S.A. (the shares were offered only to Bank Pekao S.A. by private subscription pursuant to Article 431 § 2 point 1 of the Commercial Companies Code). After the increase, the share capital of Pekao Bank Hipoteczny S.A. amounts to PLN 258,000,000.
5.2 Changes in the Statutory Bodies of the Bank
Changes in the Bank's Supervisory Board
On 7 June 2021 Mr. Marcin Eckert resigned from the position of the Vice Chairman of the Supervisory Board of the Bank and from the composition of the Supervisory Board of the Bank, effective at the time of its submission. The resignation did not contain information about its reasons.
On 11 June 2021, the Ordinary General Meeting of the Bank, taking into account the suitability assessment, appointed Mr. Marcin Izdebski to the composition of the Supervisory Board of the Bank as of 11 June 2021 for the period until the end of the current joint term of office of the Supervisory Board of the Bank.
According to the submitted statement Mr. Marcin Izdebski does not conduct any business competitive to that of the Bank and is not involved in a competitive business as a shareholder or partner in a civil law company, a partnership or a corporation or a member of a corporate body of a competitive legal person. According to the submitted statement Mr. Marcin Izdebski is not registered in the Register of Insolvent Debtors kept pursuant to the provisions of the KRS (National Court Register) Act of 20 August 1997.
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Bank Pekao S.A.
The composition of the Supervisory Board of Bank Pekao S.A. has as follows:
AS AT THE DATE OF SUBMITTING
THE REPORT FOR 2021
31 DECEMBER 2021
AS AT THE DATE OF SUBMITTING
THE REPORT FOR THE THIRD QUARTER OF 2021
Beata Kozłowska-Chyła
Chairman of the Supervisory Board
Beata Kozłowska-Chyła
Chairman of the Supervisory Board
Beata Kozłowska-Chyła
Chairman of the Supervisory Board
Joanna Dynysiuk
Deputy Chairman of the Supervisory Board
Joanna Dynysiuk
Deputy Chairman of the Supervisory Board
Joanna Dynysiuk
Deputy Chairman of the Supervisory Board
Małgorzata Sadurska
Deputy Chairman of the Supervisory Board
Małgorzata Sadurska
Deputy Chairman of the Supervisory Board
Małgorzata Sadurska
Deputy Chairman of the Supervisory Board
Stanisław Ryszard Kaczoruk
Secretary of the Supervisory Board
Stanisław Ryszard Kaczoruk
Secretary of the Supervisory Board
Stanisław Ryszard Kaczoruk
Secretary of the Supervisory Board
Sabina Bigos-Jaworowska
Member of the Supervisory Board
Sabina Bigos-Jaworowska
Member of the Supervisory Board
Sabina Bigos-Jaworowska
Member of the Supervisory Board
Justyna Głębikowska-Michalak
Member of the Supervisory Board
Justyna Głębikowska-Michalak
Member of the Supervisory Board
Justyna Głębikowska-Michalak
Member of the Supervisory Board
Michał Kaszyński
Member of the Supervisory Board
Michał Kaszyński
Member of the Supervisory Board
Michał Kaszyński
Member of the Supervisory Board
Marian Majcher
Member of the Supervisory Board
Marian Majcher
Member of the Supervisory Board
Marian Majcher
Member of the Supervisory Board
Marcin Izdebski
Member of the Supervisory Board
Marcin Izdebski
Member of the Supervisory Board
Marcin Izdebski
Member of the Supervisory Board
Changes in the Bank's Management Board
On 14 January 2021 the Supervisory Board of the Bank, after assessing suitability, appointed Mr. Błażej Szczecki and Mr. Wojciech Werochowski to the Management Board of the Bank for the current joint term of office as the Vice President of the Management Board of the Bank with the effect from 15 January 2021, and Mr. Jerzy Kwieciński to the Management Board of the Bank for the current joint term of office as the Vice President of the Management Board of the Bank with the effect from 1 February 2021.
According to the submitted statement Mr. Błażej Szczecki does not conduct any business competitive to that of the Bank and he is not involved in a competitive business as a shareholder or partner in a civil law company, a partnership or a corporation or a member of a corporate body of a competitive corporation or legal person. Mr. Błażej Szczecki is not registered in the Register of Insolvent Debtors kept pursuant to the provisions of the KRS (National Court Register) Act of 20 August 1997.
According to the submitted statement Mr. Wojciech Werochowski does not conduct any business competitive to that of the Bank and he is not involved in a competitive business as a shareholder or partner in a civil law company, a partnership or a corporation or a member of a corporate body of a competitive corporation or legal person. Mr. Wojciech Werochowski is not registered in the Register of Insolvent Debtors kept pursuant to the provisions of the KRS (National Court Register) Act of 20 August 1997.
According to the submitted statement Mr. Jerzy Kwieciński does not conduct any business competitive to that of the Bank and he was not involved in a competitive business as a shareholder or partner in a civil law company, a partnership or a corporation or a member of a corporate body of a competitive corporation or legal person. Mr. Jerzy Kwieciński is not registered in the Register of Insolvent Debtors kept pursuant to the provisions of the KRS (National Court Register) Act of 20 August 1997.
O n 4 February 2021, the Polish Financial Supervision Authority unanimously expressed consent to the appointment of Mr. Leszek Skiba as the President of the Management Board of the Bank. Obtaining the said consent results in fulfillment of the condition of becoming the President of the Management Board of the Bank.
According to the submitted statement Mr. Leszek Skiba did not conduct any business competitive to that of the Bank and he was not involved in a competitive business as a shareholder or partner in a civil law company, a partnership or a corporation or a member of a corporate body of a legal person. Mr. Leszek Skiba was not registered in the Register of Insolvent Debtors kept pursuant to the provisions of the KRS Act of 20 August 1997.
O n 15 February 2021, the Polish Financial Supervision Authority unanimously expressed consent to entrust Mr. Marcin Gadomski with the position of the Member of the Management Board of the Bank supervising the management of material risk in the Bank's operations. Obtaining the said consent results in fulfillment of the condition of becoming the Vice President of the Management Board of the Bank supervising the management of material risk in the Bank's operations.
According to the submitted statement Mr. Marcin Gadomski does not conduct any business competitive to that of the Bank and he is not involved in a competitive business as a shareholder or partner in a civil law company or partnership or a member of a corporate body of a competitive corporation or legal person. Mr. Marcin Gadomski is not registered in the Register of Insolvent Debtors kept pursuant to the provisions of the KRS Act of 20 August 1997.
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Bank Pekao S.A.
On 20 July 2021 Mr. Krzysztof Kozłowski resigned from the position of the Vice-President of the Management Board of the Bank as well as from the composition of the Management Board of the Bank, with the effect at the end of 3 August 2021.
On 3 August 2021, the Supervisory Board of the Bank, after assessing suitability, appointed Mr. Paweł Strączyński to the Management Board of the Bank for the current joint term of office as the Vice President of the Management Board of the Bank with the effect from 5 August 2021.
According to the submitted statement Mr. Paweł Strączyński does not conduct any business competitive to that of the Bank and he is not involved in a competitive business as a shareholder or partner in a civil law company, a partnership or a corporation or a member of a corporate body of a competitive corporation or legal person. Mr. Paweł Strączyński is not registered in the Register of Insolvent Debtors kept pursuant to the provisions of the KRS (National Court Register) Act of 20 August 1997.
On 29 October, 2021 Mr. Tomasz Kubiak resigned from the position of Vice-President of the Management Board of the Bank, as well as from the Management Board of the Bank with effect at the end of 4 November, 2021.
On 29 October 2021 the Supervisory Board of the Bank, after assessing suitability, appointed Mr. Piotr Zborowski to the Management Board of the Bank for the current joint term of office as the Vice-President of the Management Board of the Bank with the effect from 5 November 2021.
According to the submitted statement Mr. Piotr Zborowski does not conduct any business competitive to that of the Bank and he is not involved in a competitive business as a shareholder or partner in a civil law company, a partnership or a corporation or a member of a corporate body of a competitive corporation or legal person. Mr. Piotr Zborowski is not registered in the Register of Insolvent Debtors kept pursuant to the provisions of the KRS (National Court Register) Act of 20 August 1997.
The composition of the Management Board of Bank Pekao S.A. has as follows:
AS AT THE DATE OF SUBMITTING
THE REPORT FOR 2021
31 DECEMBER 2021
AS AT THE DATE OF SUBMITTING
THE REPORT FOR THE THIRD QUARTER OF 2021
Leszek Skiba
President of the Management Board
Leszek Skiba
President of the Management Board
Leszek Skiba
President of the Management Board
Jarosław Fuchs
Vice President of the Management Board
Jarosław Fuchs
Vice President of the Management Board
Jarosław Fuchs
Vice President of the Management Board
Marcin Gadomski
Vice President of the Management Board
Marcin Gadomski
Vice President of the Management Board
Marcin Gadomski
Vice President of the Management Board
Jerzy Kwieciński
Vice President of the Management Board
Jerzy Kwieciński
Vice President of the Management Board
Tomasz Kubiak
Vice President of the Management Board
Paweł Strączyński
Vice President of the Management Board
Paweł Strączyński
Vice President of the Management Board
Jerzy Kwieciński
Vice President of the Management Board
Błażej Szczecki
Vice President of the Management Board
Błażej Szczecki
Vice President of the Management Board
Paweł Strączyński
Vice President of the Management Board
Wojciech Werochowski
Vice President of the Management Board
Wojciech Werochowski
Vice President of the Management Board
Błażej Szczecki
Vice President of the Management Board
Piotr Zborowski
Vice President Of The Management Board
Piotr Zborowski
Vice President Of The Management Board
Wojciech Werochowski
Vice President of the Management Board
Magdalena Zmitrowicz
Vice President of the Management Board
Magdalena Zmitrowicz
Vice President of the Management Board
Magdalena Zmitrowicz
Vice President of the Management Board
Management Board of Bank Pekao S.A. at the date of submitting the report for the 2021 consists of nine members. Members of the Management Board are appointed by the Supervisory Board for a joint three-year term of office.
As of 31 December, 2021 the split of competences between the Members of the Management Board of the Bank was as follows:
President of the Management Board Leszek Skiba coordinates the work of members of the Management Board, issue regulations, according to the provisions of the Bank's internal regulations.
President of the Management Board supervising the following areas: internal audit, compliance risk, corporate communication, Investor relations, safety, legal risk, strategic projects, human resources management as well as macroeconomic analysis and digital transformation.
President of the Management Board Leszek Skiba has been appointed as a member of the Management Board responsible for implementation of obligations specified in the Act on Counteracting Money Laundering and Terrorist Financing.
Vice President of the Management Board Marcin Gadomski supervising the Risk Management Division also he’s responsible for overseeing the risk management process of bancassurance.
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Bank Pekao S.A.
Vice President of the Management Board Paweł Strączyński supervising the Financial Division, has been appointed as a member of the Management Board responsible for the day-to-day functioning of the whistleblowing procedure.
Vice President of the Management Board Jerzy Kwieciński supervising the Corporate Banking and MIB Division.
Vice President of the Management Board Wojciech Werochowski supervising the Retail Banking Division.
Vice President of the Management Board Magdalena Zmitrowicz supervising the Banking Enterprise Division.
Vice President of the Management Board Jarosław Fuchs supervising the Private Banking and Investment Products Division.
Vice President of the Management Board Piotr Zborowski supervising the Strategy Divison.
Vice President of the Management Board Błażej Szczecki supervising the Banking Operations and IT Division and coordinates activities aimed at appropriate management of the risks related to the security of the ICT environment.
The Management Board ensures that the management system at the Bank is transparent and effective and runs the Bank's affairs in compliance with applicable laws and Best Practices. The core values underlying the management of the Bank are professionalism, reliability and confidentiality.
LESZEK SKIBA
President of the Management Board
Leszek Skiba is President of the Management Board.
In 2015, he was appointed Undersecretary of State in the Ministry of Finance, where he was responsible for the supervision over macroeconomic policy and tax legislation. He was also supporting legislative works connected with financial and capital markets, and prepared general outline of the budget system reform. Between March 2019 and April 2020 he served as the President of the Council of the Bank Guarantee Fund.
Between 2009 and 2015 Leszek Skiba worked at the National Bank of Poland, at the Economic Institute, where he worked on NBP’s report devoted to the consequences of Poland’s membership of the euro area and prepared analyses of the euro area economy. Since 2009, Leszek Skiba has been running public non- profit activities as the President of the Council and expert of the Sobieski Institute.
Leszek Skiba is a graduate of master’s degree studies at the Warsaw School of Economics, in the faculty of International Economic and Political Relations. He’s the author of numerous publications in the field of his professional work and public activities.
Leszek Skiba fulfills suitability requirements determined in art. 22aa of Banking Law Act.
JAROSŁAW FUCHS
Vice President of the Management Board supervising the Private Banking and Investment Products Division
Jarosław Fuchs Vice President of the Management Board supervising the Private Banking and Investment Products Division.
Jarosław Fuchs received his Master degree with honors in Marketing and Management, in the Faculty of Management of AGH University of Science and Technology in Cracow, as well as he graduated from Banking and Finance studies in Cracow University of Economics.
He started his career in 1994, initially in Big Bank S.A. and AGH University of Science and Technology in Cracow, where he acted as a teaching assistant in Management Faculty. From 1996 to 1997, he worked for Raiffeisen Centrobank S.A. Branch in Cracow, where he was responsible for building relationships with corporate customers. From September 1997, Jarosław Fuchs worked for Societe Generale Warsaw Branch as a Senior Marketing Specialist in the Trade Office in Cracow. In October 2000, he moved to Fortis Bank Polska S.A., as a Senior Customer Advisor in Medium and Large Enterprises Center.
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Report on the activities of Bank Pekao S.A. Group for the year 2021 rok
Bank Pekao S.A.
From March 2003, Jarosław Fuchs worked for Bank Millennium S.A. in the position of the Senior Expert and, subsequently – Director of Małopolskie Customer Cooperation Center (Medium and Large Enterprises). From August 2004, he was associated with Bank BPH S.A. in Cracow and next, from December 2007 with Bank Pekao S.A. in managerial positions responsible for corporate customer relations. From March 2011, Jarosław Fuchs was responsible for management of Private Banking Relationship Managers Team as a Regional Sales Office Director in Cracow. At the same time, from 2013, Jarosław Fuchs was working for Pekao Central Brokerage House as a Director in the Region in Strategic Customers Office, where he was responsible for investment product distribution for strategic customers.
Jarosław Fuchs fulfills suitability requirements determined in art. 22aa of Banking Law Act.
MARCIN GADOMSKI
Vice President of the Management Board supervising the Risk Management Division
Marcin Gadomski Vice President of the Management Board supervising the Risk Management Division.
Marcin Gadomski graduated from the Warsaw School of Economics, majoring in Finance and Banking. He was also a scholarship holder studying at the University of Kiel (Germany) and completed doctoral studies at the Warsaw School of Economics. He passed a number of professional certification exams, including: Financial Risk Manager (FRM), Association of Chartered Certified Accountants (ACCA), Project Management Professional (PMP). He participated in the Leadership Development Program run by The John Maxwell Team as well as the Deloitte Leadership Program.
Marcin Gadomski began his professional career at the consulting company Ernst & Young (now EY) in 2002, where he conducted projects in the area of risk, finance and internal audit in financial institutions and non-financial enterprises. During this period, for several years he supported the Pekao Group in implementing among others requirements of IAS 39, Basel II and solutions regarding capital management as well as assets and liabilities management.
Then he continued his career with Deloitte Advisory, first in 2008-2012 as a Senior Manager, and, after a break, in 2016-2018 as a Director. As part of Deloitte Advisory, Marcin Gadomski provided solutions for the largest financial institutions in Poland and abroad (banks, insurers, leasing companies, brokerage houses), among others in the field of credit policy, risk models, improving the credit process for retail and corporate clients, market and liquidity risk management, regulatory requirements (e.g. IFRS 9, the PFSA recommendations, regulations regarding capital requirements, liquidity, information or reporting obligations), due diligences for takeover purposes.
In the years 2012-2016 Marcin Gadomski was the Director of Retail Credit Risk Unit at Bank Millennium. He was responsible for credit risk strategy, risk appetite, credit policy, credit assessment models, credit decision engines, risk reporting, credit product profitability assessment and credit process support for such business lines as unsecured consumer loans, mortgage loans and small business.
From August 2018 to November 2019 Marcin Gadomski was a Member of the Management Board of Pekao Bank Hipoteczny S.A., where on 20 November 2018 he obtained the consent of the Polish Financial Supervision Authority to entrust him the function of the Member of the Management Board supervising the management of material risks in the bank's operations. Between 29 November 2019 and 21 April 2020 Marcin Gadomski held position of the Vice President of the Management Board of Bank Pekao S.A. responsible for Risks Management Division. Later he was Credit Risk Director there.
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Bank Pekao S.A.
Marcin Gadomski additionally sits on supervisory boards as the Chairman of Pekao Bank Hipoteczny S.A., Vice Chairman of the Supervisory Board in Pekao Leasing Sp. z o.o., Pekao Investment Banking S.A. and additionally is a member of the Supervisory Board of Biuro Informacji Kredytowej S.A.
Marcin Gadomski meets suitability requirements determined in art. 22aa of the Banking Law Act.
JERZY KWIECIŃSKI
Vice President of the Management Board supervising the Corporate Banking and MIB Division
Jerzy Kwieciński, Vice President of the Management Board supervising the Corporate Banking and MIB Division.
He is a graduate of Faculty of Materials Engineering of the Warsaw University of Technology and holds a degree of Doctor in the field of technical science. He also completed a postgraduate course for managers at the Warsaw School of Economics and an international Master of Business Administration (MBA) programme run by the University of Antwerp, the University of Staffordshire, the Free University of Brussels and the University of Warsaw. Jerzy Kwieciński also has experience in academic and research and development work, which he gained, among others at the Warsaw University of Technology and as a visiting professor at Brunel University of West London.
Jerzy Kwieciński has more than 30 years of international experience in strategic planning, management of large organizations, programs and projects in the public, private, non-governmental and scientific research sectors, including energy sector. From 1993 to 2004, he worked for the European Commission Representation in Poland, where his duties included management of programmes and projects financed by the European Union. He also participated in the works preparing Poland for membership in the European Union. Between 2004 and 2005 he was the President of Europejskie Centrum Przedsiębiorczości sp. z o.o, where in 2008- 2015 he acted as a Vice-President of the Management Board.
In 2005, Jerzy Kwieciński took a position of the Undersecretary of State at the Ministry of Regional Development, where he coordinated the national development policy and cohesion policy, including the work on the National Development Strategy for 2007-2015 and the National Cohesion Strategy for 2007-2013.
Between 2008 and 2015, he served as President of the Management Board of JP Capital Group sp. z o.o., specializing in preparation and implementation of projects and innovations, including establishing and running start-ups. In that period he was also head of Fundacja Europejskie Centrum Przedsiębiorczości (European Entrepreneurship Centre Foundation). In 2015, he was appointed the Secretary of State in the Ministry of Development. Since 2015, he has been a member of the National Development CouncilIn November 2015, he was appointed the First Deputy of the Deputy Prime Minister in the Ministry of Development. From January 2018, he held the office of the Minister of Investment and Development, and from September 2019 he served also as the Minister of Finance. He held both functions until November 15, 2019. He worked on, among others on preparation and implementation of the Strategy for Responsible Development and implementation of cohesion policy.
From January to December 2020 he acted as President of the Management Board of Polskie Górnictwo Naftowe i Gazownictwo S.A. (PGNiG), he has been a member of the Supervisory Board in TUW Polski Gaz, Europolgaz SA and President of the Board of Directors PGNiG Upstream Norway.
From March 2021, Chairman of the Supervisory Board of Pekao Investment Banking S.A. and since April 2021, Member of the Supervisory Board of Pekao Leasing Sp. z o.o.
Jerzy Kwieciński fulfills suitability requirements determined in art. 22aa of Banking Law Act.
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Report on the activities of Bank Pekao S.A. Group for the year 2021 rok
Bank Pekao S.A.
PAWEŁ STRĄCZYŃSKI
Vice President of the Management Board supervising the Financial Division
Paweł Strączyński, Vice President of the Management Board supervising the Financial Division.
Mr. Paweł Strączyński has a university degree from the Wrocław University of Economics, the Faculty of National Economy, field of study: finance and banking and Master of Business Administration – Executive MBA degree.
He has extensive managerial experience. Mr. Paweł Strączyński has held position of the President of the Management Board of TAURON S.A. He was also Member of the Management Board of PKEE – Polish Electricity Associotion.
Previously Mr. Paweł Strączyński had held position of the Vice President of the Management Board for Finance at PGE Polska Grupa Energetyczna S.A. He had been a Member of the Management Board of companies such as: Zespół Elektrociepłowni Wrocławskich KOGENERACJA S.A. , ZOWER Sp. z o.o. , PGNiG Termika Energetyka Przemysłowa S.A. , Przedsiębiorstwo Energetyki Cieplnej S.A. in Jastrzębie-Zdrój and Polska Grupa Biogazowa S.A.
Paweł Strączyński fulfills suitability requirements determined in art. 22aa of Banking Law Act.
BŁAŻEJ SZCZECKI
Vice President of the Management Board supervising Banking Operations and IT Division
Błażej Szczecki, Vice President of the Management Board supervising the Banking Operations and IT Division.
Professionally associated with the Pekao Group since 2004. From 2018 till 2021 he has served as the Chief Transformation Officer and subsequently as the Chief Strategy Officer of Bank Pekao, responsible a.o. for the digital and operational transformation, as well as for the coordination of the work on the strategy of the Bank. From 2017 till 2018 he was responsible for the Transformation and Services Division, where he managed a.o. IT and Operations of the Bank. In 2010- 2017 he was Member of the Management Board of Pekao Leasing Sp. z o.o., where he assumed responsibility for IT, operations, insurance business, and customer service.
Previously, from 2004 till 2010 he held various leadership roles in the Corporate Banking Division of Bank Pekao,including participation in the taskforce preparing the merger of Bank Pekao with the BPH Bank. Before joining Bank Pekao, he worked as consultant for McKinsey and Co. in Frankfurt (Main) in Germany. He also served as a research associate at the University in Frankfurt (Oder) and in Giessen (Germany), as well as professional experience at Dresdner Bank. Since 2017 he has served as the Chairman of the Supervisory Board of Centrum Kart. In addition, from 2017 till 2020 he was also the Vice-chairmen of the Supervisory Board of Pekao Financial Services.
From 2017, Chairman of the Supervisory Board of Centrum Kart S.A. From 2017 to August 2020, in the Supervisory Board of Pekao Financial Services Sp. z o.o. he was the Deputy Chairman and Secretary of the Supervisory Board. He was reappointed to the Supervisory Board of Pekao Financial Services Sp. z o.o. in March 2021 and serves as the Chairman of the company's Supervisory Board.
He has a Ph.D degree in economics from the European University Viadrina Frankfurt (Oder), he graduated from the Faculty of Economics at the European University Viadrina Frankfurt (Oder). He participated in numerous courses and trainings in Poland and abroad, a.o. Unifuture in cooperation with the Institute for Management Development (IMD) in Lausanne (Switzerland).
Błażej Szczecki fulfills suitability requirements determined in art. 22aa of Banking Law Act.
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Report on the activities of Bank Pekao S.A. Group for the year 2021 rok
Bank Pekao S.A.
WOJCIECH WEROCHOWSKI
Vice President of the Management Board supervising the Retail Banking Division
Wojciech Werochowski, Vice President of the Management Board supervising the Retail Banking Division.
Manager with 20 years of experience in banking, for 4 years associated with Bank Pekao S.A., with the Retail Banking Division. From December 2017 served as a director of the Retail Customer Credit Products Department, where he managed retails customer credit products and was responsible for the sales activity, portfolio quality as well as financial performance of the product and product development.
Before joining Bank Pekao S.A. he worked at PKO Bank Polski, Bank Citi Handlowy, and Bank BPH, where he was responsible for the development and management of credit products, including mortgage loans, and the CRM function. Between 2000 and 2008 he was associated with General Electric Capital in Poland, with GE Money Bank. He has worked in a number of positions in the areas of product management, development of new business models, strategic pricing and finance management, Lean Six Sigma programs.
He has a university degree and an MBA degree from the University of Gdańsk, Copenhagen Business School and Universiteit Antwerpen. He completed trainings under the GE Management Development Institute, including Six Sigma Black Belt and Advanced Manager Course.
From March 2021, Vice-Chairman of the Supervisory Board of Pekao Direct Sp. z o.o.
Wojciech Werochowski fulfills suitability requirements determined in art. 22aa of Banking Law Act.
PIOTR ZBOROWSKI
Vice President of the Management Board supervising the Strategy Division
Piotr Zborowski, Vice President of the Management Board supervising the Strategy Division
Piotr Zborowski is a graduate of the University of Warmia and Mazury in Olsztyn, Faculty of Law and Administration, major in law. He completed his legal adviser apprenticeship at the District Chamber of Legal Advisers in Warsaw. In Bank Pekao S.A. he was the director responsible for servicing corporate offices as well as corporate governance and supporting the work of the Management Board and Supervisory Board. He was involved in the process of building and implementing the Bank's strategy, as well as in the implementation of a number of strategic projects and cooperation on behalf of the Bank with the PZU S.A. group. Previously, he worked, among others in government administration bodies: the Chancellery of the Prime Minister and the Ministry of State Assets, as the Deputy Director of the Minister's Office. He performed advisory functions in the Military Property Agency and was responsible for organizational and legal supervision in the Military Trade Company.
Piotr Zborowski meets suitability requirements determined in art. 22aa of the Banking Law Act.
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Bank Pekao S.A.
MAGDALENA ZMITROWICZ
Vice President of the Management Board supervising the Banking Enterprise Division
Magdalena Zmitrowicz, Vice President of the Management Board supervising the Banking Enterprise Division
In 2018 she started working in Bank Pekao S.A. as Managing Director in Corporate Banking Department and from December 1st, 2018 she was appointed as the Vice President of the Management Board of the Bank.She started her professional career in 1999 in Bank Handlowy w Warszawie S.A. in Retail Banking Sector. She pursued her career in Corporate Banking Division, holding various leadership roles in regional structures of the Bank, including a position of Head of Sales for Northern Region and Head of Public Sector for Regions in the Public Sector Department. Having worked for almost twenty years in the banking industry, she has gained extensive experience both in general banking operations, including in particular the areas of sales, risk, operations and foreign-currency market, as well as in various customers segments, such as retail clients, small, medium and large companies, institutional clients, public sector and international corporations. In 2016-2017, she managed the Corporate Banking Department in the structures of the CEEMEA Commercial Banking Group - Citigroup. She managed the activities of the Strategy Champions Group at Bank Handlowy w Warszawie S.A.
From January 2019, a Member of the Supervisory Board of Pekao Leasing Sp. z o.o. From December 2018, Deputy Chairman of the Supervisory Board of Pekao Faktoring Sp. z o.o., and from March 2021, the Chairman of the Supervisory Board of the Company.
A graduate of the Faculty of Social Sciences at the University of Gdańsk, postgraduate studies at the Faculty of Management at the University of Gdańsk and postgraduate Executive MBA studies (EMBA) organized at the Faculty of Management at the University of Warsaw. She completed many local and foreign trainings, including those in credit risk management, financial analysis and sales. In 2013, she graduated from Commercial Credit College in the USA New York as part of Citigroup.
Magdalena Zmitrowicz meets suitability requirements determined in art. 22aa of the Banking Law Act.
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Report on the activities of Bank Pekao S.A. Group for the year 2021 rok
Bank Pekao S.A.
5.3 Organizational changes
In 2021, organizational changes took place in the Bank's Head Office.
From Corporate Banking and MIB Division to SME Banking Division were transferred: Corporate Clients Department together with the subordinate Corporate Banking Macroregions and Corporate Centers as well as Credit Analytics and Administration Department. As a consequence, the name of SME Banking Division was changed to Commercial Banking Division.
Under direct supervision of the President of the Management Board (CEO), Analytics and Digital Transformation Center was established, which includes: Macroeconomic Research Department, Projects and Transformation Programs Office, Agile Transformation Office and Analytics and Processes Optimization Office (offices from former Digital Transformation Department).
From so far existing Corporate Governance and Services Division, which was a part of Technology, Corporate Governance and Services Area, the following units were transferred: Legal Department under direct supervision of CEO, Procurement Department to Financial Division, Real Estate Department to Operations Center and, as a consequence the Corporate Governance and Services Division was liquidated. In addition, Insurance Banking Department was transferred from Technology, Corporate Governance and Services Area to Retail Banking Division. As a result of these changes, Technology, Corporate Governance and Services Area was transformed into Technology and Operations Division, which included IT Center, Operations Center and then New Technology and Development Department was created. This Department acts as a support and competence center for the entire Bank in the area of using solutions based on new technologies such as artificial intelligence, robotics and other solutions automating data flow and processes in business and operations.
In Risk Management Division, the SME Risk Management Department and Corporate Client Risk Management Department have been merged into one unit - Commercial Risk Management Department. While, in Private Banking and Investment Products Division was created Private Banking Strategy and Development Department.
Marketing, Communication and Research Department has been transferred from the area of units supervised directly by CEO to Strategy Division, excluding tasks related to corporate communication, which were located in new Communication Office, supervised by CEO. The name of Marketing, Communication and Research Department was also changed to Marketing Department.
In addition, Quality Department and Data Protection Inspector Office were transferred to Strategy Division, while Strategic Projects Office was incorporated from the Strategy Division into the area of units supervised directly by CEO.
In Commercial Banking Division was created Clients Service Department, and the activities performed by EU Funds and Public Programs Office were moved to SME Banking Strategy and Development Department, whose name was changed to Commercial Banking Strategy and Development Department.
In Retail Banking Division, CRM and Customer Knowledge Department and Installment Sales and E-commerce Office were created, whose main task is to build a business line of installment sales financing by the Bank as well as to implement the installment loan sales process.
In the structure of organizational units supervised directly by CEO was created Group Development and Capital Transactions Department and Investor Relations and ESG Strategy Department.
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Report on the activities of Bank Pekao S.A. Group for the year 2021 rok
Bank Pekao S.A.
5.4 Awards and distinctions
The activities of Bank Pekao S.A. gained wide recognition by clients, industry specialists, the market and the media, as evidenced by numerous awards and distinctions granted by Polish and foreign institutions. Measures aimed at providing customers with the highest quality products and services, innovation of the proposed solutions have been appreciated. Bank Pekao S.A. received a number of awards and distinctions in 2021.The most relevant honors are presented below.
Top Employer 2022 Polska
For the twelfth time in a row, we have obtained the Top Employer certificate, which confirms our excellent HR strategy. In addition, for the first time we found ourselves in the top ten of the best-rated employers in Poland.
The Top Employer certificate confirms the Bank's commitment to creating a better work environment by implementing high standards in human resource management and HR practices.
Student Parliament Prize "Pro Juvenes
For the fifth time, we were recognized by the Students' Parliament, which awarded me with an award for supporting student initiatives.
For years, we have been committed to the benefit of the academic community, taking, among others, participation in many initiatives organized by student councils and universities, and carries out annually about 500 different projects addressed to students. Every year, we also invite them to participate in the Żubr Academy - a summer internship program, thus enabling them to gain their first professional experience.
AWARDS AND DISTINCTIONS FOR CORPORATE BANKING
The Best Investment Bank in Poland
For the fifth time in a row, the bank received the title of "The Best Investment Bank in Poland", awarded in the prestigious competition of the international magazine Global Finance.
The best custodian bank in Poland
For the ninth time, we have been awarded the title of "Best Sub-custodian Bank in Poland" by Global Finance magazine.
Treasury and Cash Management Provider Awards and Best Corporate FX Award
We were again appreciated by Global Finance magazine in the Treasury and Cash Management Provider category and received the title of the Best Corporate FX Award.
"Best Trade Finance Provider"
For the fourth time, we have received the "Best Trade Finance Provider in Poland" award by the international Global Finance magazine.
"Financial Leader for Industry"
In the "Top Industry Diamonds" competition in 2021, we received the "Industry Financing Leader" statuette. The award proves that we offer a wide range of financial solutions for industry, we meet the expectations of companies from this sector, thanks to which they can develop and implement new investments.
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Report on the activities of Bank Pekao S.A. Group for the year 2021 rok
Bank Pekao S.A.
AWARDS AND DISTINCTIONS FOR RETAIL AND PRIVATE BANKING
Forbes 5-star rating for Private Banking
In the prestigious Private Banking ranking of the Forbes magazine, for the fifth time in a row, we received the highest five-star rating. The award confirms the high quality of the services provided and the availability of solutions that meet the needs of an exceptionally demanding group of customers. The justification indicated a unique, wide investment offer and credit cards with a package of value-added services.
Private Banking account awarded with the Golden Quality International Emblem
The Private Banking account was awarded with the Golden Quality International 2021 Emblem in the Top Quality Product category. The Program Committee, under the patronage of: the Polish Agency for Enterprise Development, the Department of Process Management at the University of Economics in Krakow and the Polish Committee for Standardization, highly appreciated the activities related to the implementation and promotion of the idea of quality in all aspects of the Bank's operations, especially in the field of a new product for Private Banking clients.
AWARDS FOR THE PEOPAY KIDS APP
„Innovation of the month"
An award granted by the European Financial Management Association for the innovative PeoPay KIDS package.
2nd place in the "TechnoBiznes 2021" competition of Gazeta Bankowa
Award in the "Leader 2020" category. The application is recognized as the best implementation in the area of new technologies.
Nomination for the Efma-Accenture Banking Innovation Awards 2021
The PeoPay KIDS application was recognized as one of the 9 best innovations in the world in the Efma-Accenture Banking Innovation Awards 2021 in the Offering Innovation category.
Nominacja do Efma-Accenture Banking Innovation Awards 2021
Aplikacja PeoPay KIDS została uznana za jedną z 9 najlepszych innowacji na świecie w konkursie Efma-Accenture Banking Innovation Awards 2021 w kategorii Offering Innovation.
Award from the University of Warsaw
A special prize awarded by the jury of the Entrepreneur of the Year competition. Distinction for an innovative and entrepreneurial project.
The e-Commerce Polska award
The PeoPay KIDS application has also been appreciated by e-commerce experts. The jurors of the e-Commerce Polska awards competition organized by the Chamber of Electronic Economy recognized it as the best implementation in the digital banking services sector.
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Report on the activities of Bank Pekao S.A. Group for the year 2021 rok
Bank Pekao S.A.
1 st place in the personal account category in the Złoty Bankier ranking
In 2021, Konto Przekorzystne took the first place in the prestigious Złoty Bankier ranking in the category of the best personal account. According to experts, Konto Przekorzystne responds best to the needs of various customer groups, both those using only traditional services and innovative mobile solutions.
1st place in the Best Remote Account Opening Process for the Bank - Institution of the Year 2021 ranking
Customers and experts appreciated the complexity of the solution, the possibility of personalizing the offer, simple and understandable messages and the ease of taking photos.
A distinction for the Pekao24 website in the category "Best Internet banking" - Institution of the Year 2021
The Pekao24 website was among the winners in the "Best Internet Banking" category. The assessment took into account the functionality and ease of access to the account via internet banking.
AWARDS FOR COMPANIES
Pekao Direct with the Stevie Award
Bronze medal in the international Stevie Award for Sales & Customer Service competition for the hotline. The award was granted in the "Best use of technology in sales" category for handling and supporting the process of opening a selfie account for small businesses.
Pekao Direct wins the bronze medal
Debuting in the International Customer Experience Awards 2021 competition, Pekao Direct won a bronze medal in the "Employee Experience in Crisis" category. The jurors appreciated the way the company responded to the declining level of a pandemic.
IKZE Pekao TFI rated "five" in the ranking "Best IKZE with investment funds 2021 - IKZE 2021 Ranking"
The ranking assessed IKZE in three categories: efficiency, costs and costs. IKZE Pekao TFI appreciated the very wide offer of the fund within the framework and the available strategy model. Refund also improves the improvement in the rating of "efficiency", thanks to the improvement in ratings by some funds.
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Report on the activities of Bank Pekao S.A. Group for the year 2021 rok
Bank Pekao S.A.
6. Information for the Investors
6.1 The Bank’s share capital and share ownership structure
As at 31 December, 2021, the share capital of Bank Pekao S.A. amounted to PLN 262,470,034 and remained unchanged until the date of submitting the report. The Bank's share capital was divided into 262,470,034 shares in the following series:
− 137,650,000 Series A bearer shares with a par value of PLN 1.00 per share,
− 7,690,000 Series B bearer shares with a par value of PLN 1.00 per share,
− 10,630,632 Series C bearer shares with a par value of PLN 1.00 per share,
− 9,777,571 Series D bearer shares with a par value of PLN 1.00 per share,
− 373,644 Series E bearer shares with a par value of PLN 1.00 per share,
− 621,411 Series F bearer shares with a par value of PLN 1.00 per share,
− 603,377 Series G bearer shares with a par value of PLN 1.00 per share,
− 359,840 Series H bearer shares with a par value of PLN 1.00 per share,
− 94,763,559 Series I bearer shares with a par value of PLN 1.00 per share.
All the existing shares are ordinary bearer shares. There are no special preferences or limitations connected with the shares, or differences in the rights attached to them. The rights and obligations related to the shares are defined by the provisions of the Polish Commercial Companies Code and other applicable law.
Shareholders of Bank Pekao S.A., holding directly or indirectly, through subsidiaries, at least 5% of the total number of votes at the General Meeting of the Bank, are as follows:
NUMBER OF SHARES AND VOTES AT THE GENERAL MEETING
SHARE IN SHARE CAPITAL AND TOTAL NUMBER OF VOTES AT THE GENERAL MEETING
NUMBER OF SHARES AND VOTES AT THE GENERAL MEETING
SHARE IN SHARE CAPITAL AND TOTAL NUMBER OF VOTES AT THE GENERAL MEETING
SHAREHOLDER’S NAME
AS AT THE DATE OF SUBMITTING
THE REPORT FOR 2021
AS AT THE DATE OF SUBMITTING
THE REPORT FOR THE
THIRD QUARTER OF 2021
Powszechny Zakład Ubezpieczeń S.A.
52,494,007
20.00%
52,494,007
20.00%
Polski Fundusz Rozwoju S.A.
33,596,166
12.80%
33,596,166
12.80%
Aviva Otwarty Fundusz Emerytalny Aviva Santander
13,281,544
5.06%
13,281,544
5.06%
Funds managed by Nationale-Nederlanden Powszechne
Towarzystwo Emerytalne S.A.
13,201,655
5.03%
13,201,655
5.03%
Other shareholders (below 5%)
149,896,662
57.11%
149,896,662
57.11%
Total
262,470,034
100.00%
262,470,034
100.00%
Until the date of submitting the report the Bank has not received any other notifications regarding changes in the ownership structure in accordance with par. 69 of the Act of July 29, 2005 on Public Offerings and Conditions Governing the Introduction of Financial Instruments to an Organized System of Trading, and on Public Companies.
Polish open-end pension funds (OFE) constitute the group of financial investors holding a significant equity interest in the Bank. Based on their publicly available financial reports, as of December 31, 2021 OFE’s held in aggregate 19.35% of the Bank’s shares.
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Bank Pekao S.A.
The Polish open-end pension funds’ holdings in Bank Pekao S.A.:
NUMBER OF SHARES
AND VOTES AT GENERAL MEETING
% OF SHARE CAPITAL
AND TOTAL VOTE AT GENERAL MEETING
NUMBER OF SHARES
AND VOTES AT GENERAL MEETING
% OF SHARE CAPITAL
AND TOTAL VOTE AT GENERAL MEETING
SHAREHOLDER
31 DECEMBER 2021
31 DECEMBER 2020
Nationale-Nederlanden OFE
17,103,100
6.52%
15,742,052
6.00%
Aviva OFE
13,164,591
5.02%
13,164,591
5.02%
Aegon OFE
4,482,495
1.71%
4,518,634
1.72%
MetLife OFE
3,831,781
1.46%
3,871,781
1.48%
PKO BP Bankowy OFE
3,153,684
1.20%
3,264,272
1.24%
AXA OFE
3,079,825
1.17%
3,153,684
1.20%
Generali OFE
3,072,614
1.17%
3,048,933
1.16%
Allianz Polska OFE
2,115,460
0.81%
2,115,460
0.81%
OFE Pocztylion
796,568
0.30%
796,568
0.30%
Total
50,800,118
19.35%
49,675,975
18.93%
Source: OFE Reports, annual structure of open-end pension funds assets.
6.2 Performance of market valuation of Bank Pekao S.A.’s stock
The shares of Bank Pekao S.A. have been listed on the Warsaw Stock Exchange since June 1998 and they are one of the most liquid equities in Poland and Central and Eastern Europe. Since 2000, the Bank maintains Global Depositary Receipts (GDR) program. The Bank’s GDRs are traded on London Stock Exchange and on the over the counter market in the USA (the program will end on March 31, 2022).
The Bank’s market capitalization as of December 31, 2021 amounted to PLN 32.0 billion making the Bank one of the largest listed companies in Central and Eastern Europe. Given the high capitalization and liquidity the Bank’s shares are a part of many important stock indices maintained by domestic and foreign institutions including Polish blue chips index – WIG20 and WIG30, banking sector index WIG-Banks as well as MSCI Emerging markets. The Bank's shares are also included in the WIG-ESG index, i.e. the index of socially responsible companies run by the Warsaw Stock Exchange.
In 2018 the shares of Bank Pekao S.A. were included in the STOXX Europe 600 Index, the index of the largest and most liquid securities in Europe and the FTSE Developed Equity Index, due to reclassification of Poland into developed market.
In 2020, the Bank as one of the few in the entire region of Central and Eastern Europe, was included in the global Bloomberg Gender Equality Index, bringing together a listed company actively working for gender equality at work.
With the average daily turnover volume at the level of 737 thousands of shares and the worth of trading at PLN 17.3 billion in 2021, the share of the Bank’s stock in trading on the WSE amounted to 5.5%.
The share price of Bank Pekao S.A. increased by 99.7% y/y and reached PLN 122.00 as at the end of December 2021 compared to PLN 61.10 a year earlier. The return for the Bank's shareholders was higher than the return for the WIG Banks index, which rose by 81.3% in 2021.
Polish banks share price performance in 2021 was primarily affected by the strong economic recovery after the first waves of the COVID-19 pandemic. Strong GDP growth translated into significant increase in lending, decrease in the cost of risk and marked increase in the sector's profitability. Very positive factor for banks was the commencement of the interest rate hike cycle by the MPC in the fourth quarter of 2021. Additionally, some banks returned to paying dividends after a year of break, which undoubtedly influenced the perception of the sector by investors.
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Report on the activities of Bank Pekao S.A. Group for the year 2021 rok
Bank Pekao S.A.
Basic information about Bank Pekao S.A. shares
2021
2020
Share price at the end of the year (PLN)
122.00
61.10
Maximum share price (PLN)
131.75
107.60
Minimum share price (PLN)
61.10
40.80
Number of shares
262,470,034
262,470,034
Capitalization at the end of the year (PLN billion)
32.0
16.0
Average trading volume
737,242
1,108,242
Earnings per share (PLN) 1
6.35
6.11
Book value per share (PLN) 2
95.20
95.78
Dividend per share paid in a given year (PLN)
3.21
0.00
P/E (x) 3
19.2
10.0
P/BV (x) 3
1.28
0.64
Data based on GPW statistics.
1 Earnings per share calculated as the sum of quarterly earnings per share for four consecutive quarters, where the last quarter is the third quarter of a given year.
2 Book value per share calculated on the basis of financial data for the third quarter of a given year.
3 Indicators calculated in relation to the financial data after the third quarter of a given year.
Performance of Bank Pekao S.A. shares in year 2021:
0
500
1,000
1,500
2,000
2,500
0%
20%
40%
60%
80%
100%
120%
140%
2020-12-31
2021-02-28
2021-04-30
2021-06-30
2021-08-31
2021-10-31
2021-12-31
Trading volume
Pekao
WIG-Banki
Price performance
Trading volume (ths shares)
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Bank Pekao S.A.
6.3 Dividend payment history
In 2021, the Bank paid a dividend for 2020 in the amount of PLN 3.21 per share. Dividend yield was 2.9%. In the years 2009- 2020, the Bank regularly paid dividends, except for the distribution of profit for 2019, when due to the COVID-19 pandemic, the Polish Financial Supervision Authority recommended the Bank not to pay dividends. The total value of dividends paid for the years 2009-2020 amounted to almost PLN 21 billion, making the Bank one of the Polish companies with the highest level of dividends paid in recent years.
The dividend payments from 2009 to 2020 are presented below:
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Dividend for the year (in PLN million)
761
1 785
1 412
2 202
2 614
2 625
2 283
2 278
2 074
1 732
-
843
Dividend per 1 share (in PLN)
2,90
6,80
5,38
8,39
9,96
10,00
8,70
8,68
7,90
6,60
-
3,21
NOTE: Dividend presented in the year in which the profit intended for dividend payment was generated.
In line with the Bank's strategy for 2021-2024, Bank Pekao intends to allocate 50-75% of its net profit to dividend payments. The final decision on the distribution of the profit for 2021 and its allocation to the payment of dividends will be made by the General Meeting of Shareholders.
6.4 Investor Relations
The Bank’s activity, in the investor relations area, is focused on providing transparent and active communication with the market through active co-operation with investors, analysts and rating agencies, as well as fulfilling disclosure requirements within the frameworks of applicable law regulations.
The Bank’s representatives regularly hold many meetings with investors from Poland and abroad, and take part in most of the regional and sector dedicated investors conferences. In total, in 202, the bank participated in 30 Investor conferences and roadshows meetings with institutional investors from key financial centers around the world. As part of the conference, the Bank held 337 meetings with investors last year. Financial results of Bank Pekao S.A. Group are presented quarterly at conferences that are simultaneously transmitted via Internet.
The Bank’s financial results and its activity are regularly monitored by analysts representing Polish and foreign brokerage entities. In 2021, 19 analysts published reports and recommendations on the Bank.
Recommendation structure for Bank Pekao S.A. shares for 31 December 2021
Buy/Accumulate
13
Hold/Neutral
5
Reduce/Sell
1
The activity of the Bank’s investor relations is to enable to make a reliable evaluation of the Bank’s financial situation, its market position and business model effectiveness in the context of banking sector conditions and macroeconomic situation in the domestic economy as well as on international markets.
Relevant information for the investors about the Bank is available on the Bank’s website:
https://www.pekao.com.pl/en/investors-relations.html
The Bank publishes also on-line annual report available on the Bank’s website, where is also posted “Information Policy of Bank Polska Kasa Opieki Spółka Akcyjna regarding communication with investors, media and customers”.
Contact details for the Investor Relations Office e-mail: bri@pekao.com.pl tel.: +48 22 524 55 27
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Bank Pekao S.A.
6.5 Financial credibility ratings
Bank Pekao S.A. financial credibility ratings
Bank Pekao S.A. co-operates with three leading credit rating agencies: Fitch Ratings (the Fitch), S&P Global Ratings (S&P), and Moody’s Investors Service. In the case of the first two agencies, the ratings are provided on a solicited basis under relevant agreements and with respect to Moody’s Investors Service the ratings are unsolicited and they are based on publicly available information and review meetings.
As of 31 December 2021, Bank Pekao S.A. had assigned following financial credibility ratings:
FITCH RATINGS
BANK PEKAO S.A.
POLAND
Long-term rating (IDR)
BBB+
A-
Short-term rating
F2
F1
Viability rating
bbb+
-
Support rating
5
-
Support rating factor
No floor
-
Outlook
Stable
Stable
National Long-Term Rating
AA(pol)
(stable outlook)
-
National Short-Term Rating
F1+(pol)
-
S&P GLOBAL RATINGS
BANK PEKAO S.A.
POLAND
Long-term rating in foreign currencies
BBB+
A-
Long-term rating in domestic currency
BBB+
A
Short-term rating in foreign currencies
A-2
A-2
Short-term rating in domestic currency
A-2
A-1
Stand-alone credit profile
bbb+
-
Outlook
Stable
Stable
S&P GLOBAL RATINGS (RESOLUTION COUNTERPARTY RATING)
BANK PEKAO S.A.
POLAND
Long - term RCR in foreign currencies
A-
-
Short - term RCR in foreign currencies
A-2
-
Long - term RCR in domestic currency
A-
-
Short - term RCR in domestic currency
A-2
-
MOODY’S INVESTORS SERVICE (UNSOLICITED RATING)
BANK PEKAO S.A.
POLAND
Long-term foreign-currency deposit rating
A2
A2
Short-term deposit rating
Prime-1
Prime-1
Baseline Credit Assessment
baa2
-
Long-term counterparty risk assessment
A2(cr)
-
Short-term counterparty risk assessment
Prime-1(cr)
-
Outlook
Stabilna
Stable
Long-term Counterparty Risk Rating (CRR)
A2
-
Short-term Counterparty Risk Rating (CRR)
Prime-1
-
On 7 January, 2021, rating agency Moody’s Investors Service informed the Bank about maintaining the „A2” long term and „P-1” short term deposit ratings as well as stable outlook on the long term deposit ratings. Concurrently Moody’s downgraded the Bank’s Baseline Credit Assessment („BCA”) and Adjusted Baseline Credit Assessment („Adjusted BCA”) to „baa2” from „baa1”and its long term Counterparty Risk Ratings („CRR”) to „A2” from „A1”. Banks’s long term Counterparty Risk Assessment („CRA”) was also downgraded to „A2(cr)” from „A1(cr)”. The short term CRR and CRA were affirmed at „P-1” and „P-1(cr)” respectively.
According to Moody's, the rating update is a consequence of the Bank's announcement of the acquisition of the certain assets and liabilities of Idea Bank S.A. as part of Idea’s resolution under the legal framework of the Act of 10 June 2016 on the Bank Guarantee Fund, Deposit Guarantee Scheme and Resolution. Moody's stated that the transaction has a very limited impact on the Bank's credit profile and Moody's expectations on the Bank's financial fundamentals and performance are now more appropriately reflected in the BCA's of „baa2", which is a one-notch lower than before the assessment. At the same time, long- term deposit ratings were affirmed owing to rating uplift from the application of Moody’s Advanced Loss Given Failure analysis and a moderate likelihood of support from the government of Poland in case of need. The stable outlook for the ratings reflects the rating agency's expectation that the Bank will successfully execute the transaction within the set timelines, while maintaining its financial metrics broadly at current levels.
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Bank Pekao S.A.
On 24 June 2021 rating agency S&P Global Ratings (the "S&P") informed the Bank about maintaining the ratings of the Bank at the current level with the stable outlook.
According to S&P, the ratings of the Bank reflects its strong franchise as one of the top 3 universal banks in Poland and its strong capital buffer. The Bank's exposure to legacy CHF loans is not material, according to S&P, and in case of any unlikely adverse scenarios, the Bank could benefit from the support of its state-controlled strategic investor, PZU Group.
The stable outlook reflects that on Pekao's largest investor, PZU.
On 23 September 2021 rating agency Fitch Ratings informed the Bank that it has revised the outlook for the Bank’s Long-term IDR and National Long-Term Rating from “Negative” to “Stable” and has affirmed the ratings of the Bank.
According to the rationale provided by Fitch, Pekao's IDRs are driven by the bank's intrinsic strength, as reflected in its VR. The Outlook revision to Stable from Negative on Pekao reflects the swift economic recovery, which supports Fitch’s mid-term expectations of stable asset quality metrics and a gradual recovery of operating profitability, which has been depressed in 2020 by deep interest rate cuts. It also reflects the outlook revision for the Polish operating environment which to large degree acts as a constraining factor for the bank's ratings.
Fitch highlights that Pekao's VR of 'bbb+' reflects its well-diversified business model, solid market share and franchise in both retail and corporate banking, conservative risk appetite, and strong capitalisation and liquidity. The new mid-term strategy announced in 2021 is to a large degree a continuation of the previous one, and according to Fitch business and financial targets for 2024 appear achievable.
Pekao Bank Hipoteczny S.A. financial credibility ratings
Pekao Bank Hipoteczny S.A. cooperates with the international rating agency Fitch Ratings.
Fitch emphasizes that the rating of Pekao Bank Hipoteczny S.A. is related to the rating of Bank Pekao S.A., which holds 100% of the Bank's shares. According to Fitch, the rating of Pekao Bank Hipoteczny S.A. it is influenced by the level of integration with the parent company, the scale of operations and the Bank's capital.
At the end of December 2021, the long-term rating of Pekao Bank Hipoteczny S.A., awarded by the Fitch rating agency, was BBB + with a "Stable" outlook. Covered bonds issued by Pekao Bank Hipoteczny S.A. were rated "A-" by the Fitch rating agency. The high rating of the letters means that Pekao Bank Hipoteczny S.A. has the ability to issue securities with a high level of security and to obtain long-term funds for lending activities.
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Bank Pekao S.A.
7. Activity of Bank Pekao S.A. Group
7.1 Important factors influencing the Group’s activities and results
In 2021, yhe Group’s activitiy was mainly determined by the macroeconomic situation in the country and abroad, which was decisively influenced by strong economic recovery after the collapse in 2020 related to the first waves of the COVID-19 pandemic.
In 2020, both global and Polish economy experienced an unprecedented collapse related to the pandemic. The year 2021 saw a strong rebound and recovery of economies. Massive vaccination programs were of key importance, as they allowed significantly reduce the scale of lockdowns, and thus resulted in a sharp increase in economic activity. The Polish economy once again stood out positively against the background of European economies, recording the GDP growth rate of +5.7% last year. Thanks to the boom and the unprecedented support programs introduced by the Polish government in response to the pandemic, unemployment rate remained low, reaching 5.4% at the end of the year, one of the lowest in the entire European Union. One problem, especially visible in the second half of 2021, was inflation, which at the end of 2021 reached high level of 8.6%. Such a dynamic increase in inflation was largely influenced by external factors, such as high costs of energy and raw materials in the global markets and broken supply chains.
Such an economic environment in 2021 was very favorable for the banking sector. A significant recovery in loan demand was visible. In the segment of loans to households, the demand for mortgage loans was particularly strong, while the volumes of consumer loans were characterized by lower growth dynamics. Corporate loans also grew, with particular emphasis on loans for small and medium-sized enterprises. Slightly weaker growth dynamics was displayed by large enterprises, which are more influenced by the inflow of EU funds - relatively lower in the previous year. 2021 also saw a further significant increase in both retail and corporate deposits.
For most of the year, the MPC interest rates were at a record low level (reference rate at 0.10%). Despite such low interest rates, the banking sector in the first three quarters of 2021 was able to improve its net interest income thanks to measures related to lowering interest rates on deposits and repricing loans. In response to the growing inflationary pressure, the Monetary Policy Council launched a series of interest rate increases in the fourth quarter of 2021. After three increases, the reference rate at the end of the year was 1.75%. This is a factor that has had a strong positive impact on the net interest income of the banking sector, visible in the banks' results in the fourth quarter of 2021.
Due to the strong growth in customer activity, banks were also able to significantly improve their fee income. Dynamic increases were visible in all categories of bank commissions.
Inflationary pressure, changing customer behavior and the growing digitization of banking services meant that banks tried to reduce operating costs, including reduction in number of branches and employees. Bank Pekao also continued the optimization of the branch network and carried out another employment restructuring program.
In 2021, the costs of risk in the sector returned to the levels characteristic for the period before the pandemic. Banks created a cushion of significant prudential reserves in 2020. In 2021, thanks to the excellent economic situation, newly created reserves remained low.
In 2021, BFG fees decreased by 30% y/y, from PLN 3.2 billion to PLN 2.2 billion for the sector There was a slight change in the structure of allocation of fees between funds: 55% of the total amount was attributed to the bank restructuring fund, and 45% to the deposit guarantee fund.
The above factors caused the financial results and profitability of the banking sector to increase significantly in 2021. According to the PFSA data, net profit of the banking sector in Poland amounted to PLN 8.9 bn last year (compared to PLN 3.3 bn in 2020).
The banks' capital base remained stable and solid. Due to the recommendation of the Polish Financial Supervision Authority of January 14, 2021, banks could not pay dividends in the first half of 2021, while the KNF recommendation of June 24 allowed some banks to pay out dividends in the second half of the year. Bank Pekao, after a year of break caused by the COVID-19 pandemic and its impact on the economy, is one of the few Polish banks which returned to pay dividends.
In 2021, the number of lawsuits against banks regarding loans in CHF increased after the ruling of the CJEU in 2019, and the percentage of cases won by customers increased, which in turn led to an increase in banks' reserves for the CHF loan portfolio. The Bank's exposure to these loans is marginal, therefore both the risk and the scale of the related write-offs are small.
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The issue of CHF mortgage loans was not finalized last year. The meetings of the Supreme Court in this case did not bring a final solution to the problem. Banks were also unable to establish a common framework for action on this issue. It was a common practice to try to find individual solutions for clients in individual banks, consisting in concluding voluntary agreements that would avoid lawsuits.
The pandemic accelerated the processes of operational and digital transformation in banks. The importance of customer service in remote channels was growing, and many banking processes were digitized. Many technical innovations were introduced and the functionalities of banking applications were expanded. These phenomena were accompanied by the reduction of branches.
In terms of capital requirements, in accordance with the law, Bank Pekao Group should maintain minimum levels of capital ratios at regulatory level of Pillar I resulting from the CRR Regulation, the Pillar II requirement under the Banking Law and the combined buffer requirement resulting from the Act on Macroprudential Supervision.
Pursuant to the CRR Regulation, the minimum level of capital ratios maintained by the Group and the Bank should be as follows:
− Total capital ratio (TCR) - 8%,
− Tier I (T1) capital ratio - 6%,
− Common Equity Tier I (CET1) ratio - 4.5%.
Under Pillar II, the capital requirement for the Group results from the recommendation of the Polish Financial Supervision Authority regarding the Group's holding of own funds to cover the additional capital requirement in order to secure the risk arising from mortgage-secured foreign currency loans and advances to households, at the level of 0.008 pp. for TCR, which should consist of at least 75% of Tier 1 capital (which corresponds to 0.006 pp) and at least 56% of Common Equity Tier 1 capital (which corresponds to 0.004 pp). 3
The combined buffer requirement as of December 31, 2021 consists of the following buffers:
− conservation buffer at 2.5%, other systemically important institution buffer at 0.75%,
− countercyclical buffer at 0.01% 4 ,
− systemic risk buffer at 0.00% 5 .
For the Pekao Group, as at 31 December, 2021, the minimum total capital ratio was 11.26%, the Tier 1 capital ratio was 9.26% and the Common Equity Tier 1 capital ratio was 7.76%.
Banks also incurred high costs of adapting to numerous regulatory solutions (including MIFID II, GDPR, PSD2), as in previous years.
In 2021, the BFG informed banks about the minimum requirement for own funds and eligible liabilities (so-called MREL), which the sector must meet at the end of 2023. In the case of Bank Pekao, based on data as at 31st December 2020, BFG set target minimal level of MREL requirement at 15.37% of the total risk exposure amount, and 5.91% of the total exposure measure. Target minimal level of MREL which must be fulfilled with own funds and eligible liabilities meeting the subordination requirement at the abovementioned date is 14.04% in relation to TREA, and 5.91% in relation to TEM. Abovementioned requirement is to be met from 31st December 2023 onwards. The BGF has also set a path to meet the above-mentioned requirements, both at the consolidated and individual level. Meeting these requirements will require banks to increase MREL capitals, including primarily the issue of debt securities that meet the criteria for inclusion in MREL capitals.
On January 14, 2021, Bank Pekao received a recommendation from the Polish Financial Supervision Authority to suspend the payment of dividends in the first half of 2021 (including retained earnings from previous years). Additionally, the Polish Financial Supervision Authority recommended that the Bank should not to undertake, in the first half of 2021, without prior consultation with the supervisory authority, other actions beyond the scope of current business and operational activities that may result in a reduction of the capital position, including buyback of own shares.
3 On February 18, 2022, the Bank received a decision from the Polish Financial Supervision Authority stating that the recommendation to comply with this requirement had expired
4 The countercyclical buffer calculated as at December 31, 2021 was 0.0093% for the Bank and 0.0086% for the Group.
5 Due to the published Regulation of the Minister of Finance, the systemic risk buffer was repealed on March 19, 2020. The buffer value effective until that date was 3% of the total risk exposure amount for all exposures located only in the territory of the Republic of Poland.
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On July 16, 2021, Bank Pekao received an individual recommendation of the Polish Financial Supervision Authority regarding the Bank's dividend policy in the second half of 2021. Pursuant to the Recommendation of the Polish Financial Supervision Authority, the Bank met the requirements for the payment of up to 100% of the dividend from the Bank's profit generated in the period from January 1 2020 to December 31, 2020. Additionally, the Polish Financial Supervision Authority recommended the Bank not taking, without prior consultation with the supervisory authority, other actions, in particular those outside the scope of its current business and operational activities, which could result in a reduction of its capital base, including possible dividend payments from undistributed profit from previous years (i.e. from 2019 and previous years) and share buybacks. Based on the above recommendation and the resolution of the Ordinary General Meeting of the Bank of June 11, 2021 on the distribution of the Bank's profit for 2020, the Bank paid a dividend in the amount of 75% of the Bank's net profit.
On December 9, 2021, the Polish Financial Supervision Authority adopted a position on the dividend policy of commercial banks, cooperative and associating banks, insurance companies, reinsurance companies, insurance and reinsurance companies, investment fund companies, universal pension companies and brokerage houses in 2022. The KNF adopted the following principles of the dividend policy of commercial banks in 2022:
1. The dividend up to 50% of the profit from 2021 may be paid out only by banks that meet the following criteria at the same time:
a) not in the middle of recovery program or recovery plan;
b) positively assessed as part of the Supervisory Audit and Assessment process (final BION grade not worse than 2.5);
c) having a leverage ratio (LR) at above 5%;
d) having Common Equity Tier I (CET1) ratio not lower than the required minimum: 4.5% + 56% * P2R 6 requirement + combined buffer requirement;
e) having Tier I (T1) capital ratio not lower than the required minimum: 6% + 75% * P2R requirement + combined buffer requirement;
f) having Total Capital Ratio (TCR) not lower than the required minimum: 8% + P2R requirement + combined buffer requirement;
2. The dividend up to 75% of the profit from 2021 can be paid out only by banks that meet the criteria for the 50% payout, taking into account, as part of the capital criteria, the bank's sensitivity to unfavorable macroeconomic scenario 7 .
3. The dividend up to the amount of 100% of the profit from 2021 can only be paid out by banks that meet the criteria for a 75% payout, taking into account, as part of the capital criteria, the bank's sensitivity to a specific adverse macroeconomic scenario regarding an increase in interest rates and its impact on credit risk 8 .
The criteria set out in items 1-3, the bank should meet both on an individual and consolidated level.
4. For banks with a significant portfolio of foreign currency mortgage loans, the dividend yield should be additionally adjusted in accordance with the following criteria:
a) Criterion 1 - based on the share of foreign currency mortgage loans for households in the entire portfolio of receivables from the non-financial sector:
• banks with a share exceeding 5% - dividend rate adjustment by 20 pp.
• banks with a share exceeding 10% - dividend rate adjustment by 40 pp.
• banks with a share exceeding 20% - dividend rate adjustment by 60 pp.
• banks with a share exceeding 30% - dividend rate adjustment by 100 pp.;
6 Pillar II Requirement (P2R), which is an additional regulatory capital requirement.
7 In accordance with the recommendation of the Polish Financial Supervision Authority regarding the capital charge (P2G) for Bank Polska Kasa Opieki S.A., the basic capital charge, which is based on supervisory stress tests carried out by the Polish Financial Supervision Authority in 2021 - amounts to 0.27 pp.
8 In line with the recommendation of the Polish Financial Supervision Authority regarding the capital charge (P2G) for Bank Polska Kasa Opieki SA, a supplementary capital charge based on the analysis of the impact of an increase in interest rates on credit risk, adjusted for the assessment of the internal capital model in terms of taking into account the credit risk associated with an increase in interest rates , carried out by the Polish Financial Supervision Authority in 2021 – amounts to 0.53 pp.
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b) Criterion 2 - based on the share of loans granted in 2007 and 2008 in the portfolio of foreign currency mortgage loans for households:
• banks with a share exceeding 20% - dividend rate adjustment by 30 pp.
• banks with a share exceeding 50% - dividend rate adjustment by 50 pp.,
wherein the total value of the correction (maximum 100%) is the sum of the corrections resulting from both criteria. The KNF also deems it necessary not to take other actions, in particular those outside the scope of current business and operational activities, which may result in a reduction of the capital base, without prior consultation with the supervisory authority. This also applies to possible dividends from retained earnings and share buybacks. The KNF expects that the possible implementation of such operations will always be preceded by and subject to the outcome of consultation with the supervisory authority.
7.2 Major sources of risk and threats
Risk management
Effective risk management is a prerequisite for maintaining a high level of security of the funds entrusted to the Group, and for achieving a sustainable and balanced profit growth within the risk appetite assumed by the Group.
The key risks material for the Group include credit risk, liquidity, market risks and operational risk. Moreover, the Group identifies the following risks as material in its business activity: business, macroeconomic, reputation, compliance, excessive leverage, bancassurance, real estate, financial investment, and model risks. The Group also identifies environmental, social and governance risk (ESG risk) currently considered insignificant in its operations. The Group will develop its own ESG risk methodology following the publication of regulatory quidelines.
The Group has adopted a comprehensive and consolidated approach to risk management. It extends to all units of the Bank and subsidiaries. Risks are monitored and managed taking into account business profitability and the capital required to cover the losses resulting from these risks.
The Management Board of the Bank is responsible for achieving the strategic risk management goals, while the Supervisory Board, supported by the Risk Committee, oversees whether the Group’s policy of taking various risks is compliant with the overall strategy and financial plan. The Credit Committee plays an important role in the credit risk management, the Asset, Liability and Risk Committee and Liquidity and Market Risk Committee in market and liquidity risk management, the Operational Risk Committee in the management of the operational risk and the Model Risk Committee in model risk management.
The rules of managing each of the risks are defined by internal procedures and the guidelines set up by the credit risk policy, investment and market risk policy and the operational risk strategy and policy accepted annually by the Management Board and approved by the Supervisory Board. Detailed reports on credit, liquidity, market, operational and model risks are presented to the Management Board and the Supervisory Board on a regular basis.
The rules and instruments of managing each of the risks and information on the risk exposure are included in Note 6 to the Consolidated Financial Statements of Bank Pekao S.A. for the period ended on December 31, 2021 and in the document “Information in respect to capital adequacy of Bank Pekao S.A Group as at 31 December 202”1” published on the Bank’s website.
Operational risk
The objective of proper operational risk management is to maintain the operational risk the Group takes, on the level consistent with a specific risk appetite. Operational risk management is based on internal procedures that are consistent with the law requirements, resolutions, recommendations and guidelines of the supervisor and includes: identification, assessment, monitoring, preventing and reporting of operational risk.
The operational risk profile is determined mainly by two operational event categories, in which the highest exposure to operational risk is identified i.e. Clients, products and business practices and Execution, delivery and process management.
This is reflected in the table below, which presents the distribution of losses resulting from operational events by categories as defined by the Article 324 of Regulation (EU) No 575/2013 of the European Parliament and of the Council. In connection with the acquisition of the part of Idea Bank, the operational risk profile has not changed. According to the Decision of the Bank Guarantee Fund (BFG) the part of the Idea Bank business with higher exposure to operational risk was not acquired by Bank Pekao.
The Group executes mitigation actions for all of the operational event categories, with particular emphasis on categories of the highest relevance.
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OPERATING EVENTS BY CATEGORIES
2021
2020
Internal frauds
0.00%
0.16%
External frauds
4.98%
1.97%
Employment practices and workplace safety
1.42%
0.47%
Clients, products and business practices
57.20%
82.52%
Damages to physical assets
5.68%
2.00%
Business disruption and system failures
0.44%
0.06%
Execution, delivery and process management
30.28%
12.82%
Total
100.00%
100.00%
Bank executes mitigation actions for all of the operational event categories, with particular emphasis on categories of the highest relevance.
OPERATIONAL EVENTS BY CATEGORIES
2021
2020
Internal frauds
0.00%
0.17%
External frauds
5.08%
1.46%
Employment practices and workplace safety
1.44%
0.51%
Clients, products and business practices
56.04%
82.21%
Damages to physical assets
5.81%
2.20%
Business disruption and system failures
0.45%
0.04%
Execution, delivery and process management
31.18%
13.41%
Total
100.00%
100.00%
Credit risk
Managing credit risk and maintaining it at a safe level is vital for the Bank’s financial performance. In order to minimize credit risk, special procedures have been established, pertaining in particular to the rules of assessing obligor and transaction risk, collateralization of loan and lease receivables, credit decision powers and concentration risk management .
Prudent credit risk management at Bank Pekao S.A. is based on the Credit Risk Policy, which takes into account, among the others, measures reducing the potential threats coming from macroeconomic factors related to the ongoing COVID-19 pandemic and their impact on the quality of the loan portfolio. The same approach is applied in the Bank’s subsidiaries .
Lending activities are subject to limits following both from the external regulations (CRR) and the Bank’s internal standards, including limits concerning exposure concentration ratios for individual sectors of the economy, limit on the share of large exposures in the Bank’s loan portfolio, portfolio limits and limits of exposures to countries, foreign banks and domestic financial institutions.
The credit decision powers, lending restrictions as well as internal and external prudential standards, pertain to loans and guarantees as well as derivative transactions and debt instruments. The quality of the loan portfolio is also protected by periodic reviews and ongoing monitoring of the timely servicing of loans and the financial standing of customers.
Internal limits, lending restrictions and the calculation of allowances take into account the risks arising from the COVID-19 pandemic.
The Bank has continued to work on further rationalization of the credit process with an aim to obtaining better efficiency and security, including in particular enhancement of the procedures and tools for risk measurement and monitoring.
Credit risk concentration limits
According to the applicable regulations the total exposure of the Bank to the risks associated with the single borrower or a group of borrowers in which entities are related by capital or management may not exceed 25% of a bank’s Tier 1 capital. In 2021, the maximum exposure limits set forth in the external regulations were not exceeded.
Sector concentration
In order to mitigate credit risk associated with excessive sector concentration the Bank sets up a system for shaping the sectoral structure of credit exposure. Every year within Credit Policy the Bank defines sector limits for particular sectors of economy. These limits are subject to ongoing monitoring. The system applies to credit exposure in particular types of business activity according to the classification based on the Polish Classification of Economic Activities (Polska Klasyfikacja Działalności – PKD).
Concentration limits are set based on the Bank’s current credit exposure and risk assessment of each sector. Periodic monitoring of the Bank’s exposure allows for ongoing identification of the sectors in which the concentration of exposure may be too excessive. In such cases, an analysis of the economic situation of the sector is performed including both the current
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Bank Pekao S.A.
and forecast trends and an assessment of quality of the current exposure to that sector. These measures enable the Bank to formulate the activities to reduce sector concentration risk and ongoing adaptation of the Bank’s Credit Policy to a changing environment.
The Group’s risk management process
The Bank supervises the risk related with subsidiaries. In particular an assessment on size and profile of risk related with their activities is performed. Risk management processes are consistent throughout the Group and adapted to the complexity of the risk profile of individual entities, in accordance with the principle of proportionality.
Compliance risk
Compliance risk is the risk resulting from breaching laws, internal regulations and market standards in the processes functioning within the Bank. Compliance risk can lead to criminal or administrative sanctions, material financial losses, diminished reputation, reduced brand value, reduced development potential and inability to perform contracts, as well as reduction or loss of business opportunities.
There is a separate unit for compliance matters functioning within the Bank , the Compliance Department, organisationally and operationally independent and subordinated directly to the President of the Management Board. Compliance Department is the key element of ensuring compliance within the Bank.
The Bank ensures compliance through application of suitable control mechanisms and compliance risk management process coordinated by the Compliance Department. Within the control function, the Compliance Department designsand supervises the implementation of control mechanisms with the aim to ensure compliance with law, internal regulations and market standards. The Compliance Department autonomously applies some of such control mechanism and performs independent monitoring of their compliance by other organizational units of the Bank, as well as reports the results of this monitoring. The compliance risk management process includes the following stages: identification, assessment, control, monitoring and reporting of the compliance risk level.
Within the control function, the Compliance Department ensures compliance, in particular through:
− current vertical verification on a continuous basis within risk-based approach on selected processes operating at the Bank (ex-ante activities),
− vertical testing, including monitoring of adherence to selected on risk-based approach control mechanisms, performed in the case of completed activities within selected processes functioning at the Bank (ex-post activities),
within the scope defined in the Regulations of functioning of the Compliance Department.
As part of compliance with laws, internal regulations and market standards each employee of the Bank applies appropriate control mechanisms and performs independent monitoring of adherence to control mechanisms , within the scope of duties assigned to him/her.
Assumptions of compliance risk management process were defined in Bank Pekao S.A. Compliance Policy developed by the Management Board and approved by the Supervisory Board and the Compliance Department Regulation There are following key elements supporting compliance risk management process:
− supervision of the Supervisory Board and responsibility of the Management Board for the effective management of compliance risk and observance of the Compliance Policy,
− responsibility of the Bank’s employees for ensuring compliance within the scope of their duties,
− properly defined organizational structure including appropriate location of Compliance Department,
− internal regulations on compliance matters,
− training,
− regular cooperation of Compliance Department with Internal Audit Department and other internal control system units.
The reports on performance of tasks by Compliance Department together with the level of assessed compliance risk are presented to the Management Board and Supervisory Board. The oversight of compliance risk related to the activities of subsidiaries is performed in the Bank.
Implementation and application of the compliance risk management standards are key factors in creating the enterprise value, reinforcing and protecting the Bank’s reputation, and winning public trust in the Bank’s activities and its standing.
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7.3 Capital adequacy
Bank Pekao S.A. Group and Bank Pekao S.A.
Capital ratios are the basic measure applied for the measurement of capital adequacy according to Regulation of the European Parliament and of the Council (EU) No 575/2013 of June 26, 2013 on prudential requirements for credit institutions and amending Regulation (EU) No 648/2012, which entered into force since January 1, 2014 together with further amendments, in particular Regulation (EU) 2019/876 of the European Parliament and of the Council of 20 May 2019 amending Regulation (EU) No 575/2013 as regards the leverage ratio, the net stable funding ratio, requirements for own funds and eligible liabilities, counterparty credit risk, market risk, exposures to central counterparties, exposures to collective investment undertakings, large exposures, reporting and disclosure requirements, and Regulation (EU) No 648/2012, Regulation (EU) 2020/873 of the European Parliament and of the Council of 24 June 2020 amending Regulations (EU) No 575/2013 and (EU) 2019/876 as regards certain adjustments in response to the COVID-19 pandemic, as well as Commission Implementing Regulations or Delegated Regulations (EU) (CRR Regulation).
Capital ratios, capital requirements and own funds have been calculated in accordance with the above mentioned CRR Regulation using national options defined in article 171a of The Banking Act, Act of 5 August 2015 on macro-prudential supervision over financial system and crisis management in financial system (Act on macro-prudential supervision), as well as regulations of minister in charge of the finance institutions.
According to law, the Group and the Bank are required to maintain minimal values of capital ratios resulting from Pillar I level (CRR Regulation), capital requirement of Pillar II resulting from The Banking Act and combined buffer requirement resulting from Act on macro-prudential supervision.
Minimal value of capital ratios on Pillar I level are:
− Total capital ratio (TCR) in amount of 8%,
− Tier I capital ratio (T1) in amount of 6%,
− Common Equity Tier I capital ratio (CET 1) in amount of 4.5%.
Combined buffer requirement as at 31 December 2021 consists of:
− Capital conservation buffer in amount of 2.50%,
− Countercyclical capital buffer in amount of 0.00% 9 ,
− Other systemically important institution buffer in amount of 0.75%,
− Systemic risk buffer in amount of 0.00% 10 .
Capital requirement of Pillar II for Pekao Group, results from the recommendation of KNF regarding holding by the Group own funds to cover the additional capital requirement to secure the risk resulting from mortgage-secured foreign currency loans and credits to households, amounts to 0.008% for TCR, which should consist of at least 75% of Tier 1 (which corresponds to 0.006 pp) and at least 56% of the Common Equity Tier 1 (which corresponds to 0.004 pp) 11 .
On Pillar II, Bank has no additional capital requirement.
In total, Group is required to maintain:
− Total capital ratio (TCR) in amount of 11.26%,
− Capital ratio Tier I (T1) in amount of 9.26%,
− Common Equity Tier (CET 1) in amount of 7.76%.
In total, Bank is required to maintain:
− Total capital ratio (TCR) in amount of 11.25%,
− Capital ratio Tier I (T1) in amount of 9.25%,
− Common Equity Tier (CET 1) in amount of 7.75%.
The capital ratios of the Group and the Bank were significantly above the minimum required by the law.
9 Countercyclical capital buffer was calculated as of December 31, 2021 at the level 0.0067% for Bank and 0.006% for Group.
10 According to the Regulation of the Minister of Finance, the systemic risk buffer was abolished on March 19, 2020. The buffer value applicable until that date was 3% of the total risk exposure amount for all exposures located only in the territory of the Republic of Poland.
11 On February 18, 2022 Bank received the decision of KNF stating that the recommendation to comply with this additional requirement is no longer valid.
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Bank Pekao S.A. Group
As of December 31, 2021 Group total capital ratio amounted to 16.9% and common equity Tier I ratio amounted to 15.1%.
The table below presents the basic information concerning the Group capital adequacy as of December 31, 2021 and December 31, 2020.
(in PLN thousand)
CAPITAL REQUIREMENT
31.12.2021
31.12.2020
Credit Risk
10,817,277
10,103,020
Market Risk
112,121
99,400
Counterparty credit risk including CVA
253,317
173,859
Operational risk
848,430
699,703
Total capital requirement
12,031,145
11,075,982
OWN FUNDS
Common Equity Tier I Capital
22,693,271
23,769,613
Tier II Capital
2,750,000
2,750,000
Own funds for total capital ratio
25,443,271
26,519,613
Common Equity Tier I Capital ratio (%)
15.1%
17.2%
Total capital ratio TCR (%)
16.9%
19.2%
(*) Data for December 31, 2020 have been recalculated taking into account the retrospective recognition of part of the profit for 2020 (confirmation of the financial results by the General Shareholders Meeting), in accordance with the EBA position expressed in Q&A 2018_3822 and Q&A 2018_4085.
Total Capital Ratio of Pekao Group as at the end of December 2021 was lower by 2.3 p.p. compared to the end of December 2020, mainly due decrease of own funds by 4.1% and higher capital requirements by 8.6%. Common equity Tier I Capital Ratio of Pekao Group as at the end of December 2021 was lower by 2.1 p.p. compared to the end of December 2020.
Decrease of own funds for total capital ratio results mainly from decrease of HTC&S portfolio valuation.
Increase of total capital requirement results mainly from higher credit risk capital requirement resulting mainly from increase of loan volumes, operational risk capital requirement mainly due to increase of provisions for loans denominated in foreign currencies and higher capital requirement for counterparty credit risk resulting from implementation of new Standardized Approach.
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Bank Pekao S.A.
As of December 31, 2021 Bank total capital ratio amounted to 18.8% and common equity Tier I ratio amounted to 16.7%.
The table below presents the basic information concerning the Bank capital adequacy as of December 31, 2021 and December 31, 2020.
(in PLN thousand)
CAPITAL REQUIREMENT
31.12.2021
31.12.2020 (*)
Credit Risk
9,793,023
9,122,418
Market Risk
110,737
99,495
Counterparty credit risk including CVA
253,177
173,728
Operational risk
741,877
597,848
Total capital requirement
10,898,814
9,993,489
OWN FUNDS
Common Equity Tier I Capital
22,803,010
23,827,624
Tier II Capital
2,750,000
2,750,000
Own funds for total capital ratio
25,553,010
26,577,624
Common Equity Tier I Capital ratio (%)
16.7%
19.1%
Total capital ratio TCR (%)
18.8%
21.3%
(*) Data for December 31, 2020 have been recalculated taking into account the retrospective recognition of part of the profit for 2020 (confirmation of the financial results by the General Shareholders Meeting), in accordance with the EBA position expressed in Q&A 2018_3822 and Q&A 2018_4085.
Total Capital Ratio of the Bank as at the end of December 2021 was lower by 2.5 p.p. compared to the end of December 2020, mainly due decrease of own funds by 3.9% and higher capital requirements by 9.1%. Common equity Tier 1 Capital Ratio of Bank as at the end of December 2021 was lower by 2.4 p.p. compared to the end of December 2020.
Decrease of own funds for total capital ratio results mainly from decrease of HTC&S portfolio valuation.
Increase of total capital requirement results mainly from higher credit risk capital requirement resulting mainly from increase of loan volumes, operational risk capital requirement mainly due to increase of provisions for loans denominated in foreign currencies and higher capital requirement for counterparty credit risk resulting from implementation of new Standardized Approach.
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7.4 Bank Pekao S.A. on the Polish banking market
Bank Pekao S.A. is a universal commercial bank offering all financial services available in Poland for individual and institutional clients. A wide range of products, innovative solutions and individual approach ensure comprehensive financial support for clients and an integrated customer service model is a guarantee of the highest quality of services and optimal adjustment to changing customer needs. Since 2017, Bank Pekao S.A. is part of the PZU S.A. capital group, the largest financial institution in Central and Eastern Europe.
A wide product offer, innovative solutions and individual approach provide comprehensive financial service to clients and the integrated customer service model provides the highest quality of services and their optimal adaptation to changing needs. The Bank has measurable advantages that allow it to compete effectively on the market and strengthen its market position in the strategic areas of the Bank's operations. The Bank offers competitive products and services on the Polish market, and high level of customer service and a well-developed distribution network.
BUSINESS MODEL
The Bank’s business model is based on customer segmentation with the following groups of customers:
• RETAIL BANKING AND PRIVATE BANKING – serving individual clients, including affluent private banking clients and micro enterprises. Private banking clients are offered investment advisory through private banking centers and remote channels, while all individual clients and micro-enterprises are served through a wide network of branches and partner outlets supported by market-leading remote service channels, including digital channels,
• ENTERPRISE BANKING – providing financial services to clients from small and medium-sized enterprises sector that are served by relationship managers with the support of product specialists. The service is carried out in specialized Business Customer Centers, Corporate Centeres and universal retail branches. Customers are offered with products and services tailored to their individual needs based on solutions proven in corporate banking and adapted to the needs of the enterprise segment,
• CORPORATE AND INVESTMENT BANKING – providing financial services to large enterprises (segmentation by revenues of companies), public sector entities, financial institutions and entities from the commercial real estate financing sector. Corporate and investment banking clients are served by relationship managers with the support of product specialists.
Distribution channels
In line with the Strategy, we take actions aimed at improving efficiency and migrating processes to remote channels. In f 2021, the Bank reduced its branch network by 63 units. As part of the development of the franchise network, the number of agency outlets over the last year increased by 27 units. In the second half of 2021, 82 processes were made available to clients in remote channels, which so far could only be implemented in the branch.
The Bank offers to its clients a broad distribution network with ATMs and outlets conveniently located throughout Poland as well as a professional call center and a competitive online and mobile banking platform for individual, corporate and micro companies.
31.12.2021
31.12.2020
Total number of outlets
650
713
own outlets
563
653
partner branches
87
60
Total number of own ATMs
1,475
1,592
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Report on the activities of Bank Pekao S.A. Group for the year 2021 rok
Bank Pekao S.A.
The number of accounts
At the end of December 2021, the Bank maintained 6,923.9 thousand PLN-denominated current accounts, 405.0 thousand mortgage loan accounts and 626.8 thousand “Pożyczka Ekspresowa” ( Express Loan) accounts.
(in thousand)
31.12.2021
31.12.2020
Total number of PLN current accounts (*)
6,923.9
6,384.5
of which packages
4,933.8
4,68 5.4
Number of mortgage loans accounts (**)
405.0
401.3
of which PLN mortgage loans accounts
378.4
371.6
Number of Pożyczka Ekspresowa loan accounts (***)
626.8
674.6
(*) Number of accounts including accounts of prepaid cards.
(**) Retail customers accounts.
(***) Pożyczka Ekspresowa, Pożyczka Ekspresowa Biznes.
The data presented according to the business model, based on the managerial model in which the main criterion for dividing the Group's reporting is the classification of the client depending on his profile and service model.
On January 3, 2021, the Bank took over the enterprise and liabilities of Idea Bank S.A. with exceptions, as a result of the BGF's application of the resolution instrument. As at the date of publication of the report, the acquired assets, liabilities and customers were not assigned to any of the above-mentioned areas of activity, which will start from 2022.
RETAIL BANKING AND PRIVATE BANKING
Strategy - The „Customer” pillar
We are intensively developing digital channels as well as quick and convenient service processes. We seek to enable retail clients to handle almost any matter online. The digitization rate of nearly 100% is one of the key strategic aspirations.
The PeoPay mobile application becomes the main channel of contact with the client. We plan to make even greater use of advanced data analytics and modern sales support tools in order to personalize the offer, improve service quality and increase the tendency to recommend our services. The key measure of success that we strive for is a leap advance in customer satisfaction rankings.
Customer service
In the Institution of the Year 2021 ranking, 15 branches of the Bank were awarded the title of " The Best Banking Branch in Poland" , the award was granted for the quality of service during a visit to the branch.
We can also pride ourselves on the high quality of our infoline service. Pekao Direct took first place in the ranking of customer service quality on bank helplines and in contact by e-mail, the survey was conducted by ARC Rynek i Opinia.
In 2021, we moved up from 10th to 4th place in the "Best Bank for Business" ranking.
In November 2021, we completed the migration process of over 270 thousand Idea Bank customers to our systems.
At the beginning of 2021, we were the first to implement the process of quick company registration in the Central Register and Information on Economic Activity (CEIDG). Thanks to this, a customer with access to Pekao24 can, through one application, register a company, obtain NIP, REGON, open Konto Przekorzystne Biznes or auxiliary accounts and receive a debit card. From the first half of 2021, we also launched this process in the PeoPay application.
In the fourth quarter of 2021, we introduced acquisitions among clients waiting to start a business. We have enabled logging in with one identifier (individual customer ID) to an individual and company account and a quick process of adding proxies for company customers.
We have expanded the offer of payment terminals with modern android portable terminals, which are very popular among customers from all corporate segments. In the business segment, the value of POS transactions increased by 14% in 2021 compared to 2020.
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Report on the activities of Bank Pekao S.A. Group for the year 2021 rok
Bank Pekao S.A.
Development of electronic and mobile banking
In 2021, the number of active mobile banking customers increased by 355 thousand (+17% y/y) to 2.4 million and was 43% higher than two years ago. The number of active mobile customers using the PeoPay application increased by 386 thousand. (+23% y/y) to 2.0 million and was 49% higher than two years ago.
(*) Unique user actively using electronic banking is a user who logged in to the system and the mobile service m.pekao24.pl, at least once during the last quarter. (in case of using different mobile channels, the client is counted only once).
(**) Unique user using mobile banking application (PeoPay application), who logged in to the system PeoPay at least once during the last quarter.
At the end of 2021, 79 thousand of customers actively used mobile banking for companies, and 222 thousand from electronic banking (an increase by 50 thousand compared to the 2020).
In the fourth quarter of 2021, the Bank's customers could already use the PeoPay application version.
The PeoPay 4.0 application and subsequent versions were prepared by specialists from the Bank. While we were developing the latest version of the application, we listened to the opinions of customers who tested the application. The developed interface allows very convenient access to accounts and products, but above all, it facilitates everyday mobile banking. In response to customer needs, new functionalities and services will be added to the application, not necessarily directly related to banking.
In the PeoPay application - the main mobile banking tool, we offer a number of innovative solutions, including:
− concluding a loan agreement as part of the “click” process, without leaving your home – within 30 seconds of accepting the contract,
− finger or face biometrics approval transfers and payments,
− wide selection of payment methods: Apple Pay, BLIK, PeoPay payments, Garmin Pay, Fitbit Pay,
− paying for online purchases on your phone without logging into online banking,
− executing transactions both in PLN and selected foreign currencies without currency conversion, due to the link to the relevant currency accounts,
− the ability to manage cards - from the application level the client can activate or block the card, as well as change card,
− the ability to deposit and withdraw cash to their accounts by holders of individual and company accounts,
− the Messages module for correspondence with the Bank and contacting a consultant via text messages (chat),
− sendind documents regarding insurance and life policies and concluding a contract for the transfer of rights under the real estate insurance contract,
− automation of recurring payments using Qlips (interbank service supported by the National Clearing House and the Polish Bank Association),
− making automatic payments for motorway tolls using the Autopay service,
− full access to brokerage services, including online quote and exchange orders,
− purchase of public transport tickets,
− a new notification module that allows you to quickly and conveniently enable selected notifications and choose a convenient delivery method via push or SMS.
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Report on the activities of Bank Pekao S.A. Group for the year 2021 rok
Bank Pekao S.A.
Our PeoPay KIDS application is dedicated to children aged 6-13 and offers access to the Konto Przekorzystne for young people, the My Skarb savings account and the PeoPay KIDS debit card. Thanks to the application, children can learn to save and manage their own funds in an easy and accessible way, and thanks to the payment card they can make cashless payments in stores and withdraw cash from ATMs. The application also includes the function of a trainer who introduces the child to the world of finance.
The PeoPay KIDS application is connected with PeoPay mobile banking and Pekao24 internet banking, which allows the caregivers to view and authorize the child's finances. In the panel, the parent can, among other things: check the child's expenses, view the account balance, set functions that will be visible in the child's application - phone top-ups or purchase of game codes. And also set a spending limit on the child's payment card, make a quick transfer or order a permanent pocket money transfer. In the fourth quarter of 2021, customers who opened the PeoPay KIDS Package could take advantage of many attractive promotions, such as: "5.00% to the savings account Moj Skarb z PeoPay KIDS" and "First pocket money to the PeoPay KIDS account", under which you could receive up to PLN 100. At the end of Decemebr 2021, young customers had 65 thousand PeoPay KIDS packages (+74% increase by 2020), 90 thousand virtual virtual moneyboxes for individual purposes, for which they have accumulated over PLN 34 million. The children using PeoPay KIDS cards made nearly 2.5 million transactions.
The PeoPay KIDS application is very popular among children and receives very high ratings in Google Play and the App Store.
At Pekao24 and PeoPay, we systematically develop self-service processes, thanks to which customers can submit an instruction for a housing loan, student loan, loan, bill or card without leaving home, including a certificate of the amount of debt, issuing a bank opinion or preparation of documents for establishing a mortgage.
We have also developed the PekaoID digital identity and trusted profile services, enabling remote confirmation of the identity of retail clients. Thanks to the integration with the eIDAS National Node, PekaoID activation increased significantly. By the end of 2021, the number of customers using PekaoID amounted to 1,5 million.
From November 2021, through Pekao24 electronic banking, we provide clients with the option of submitting an application for the redemption of the PFR 2.0 Financial Shield
In December 2021, we were preparing to implement the application for the Family Care Capital benefit and the 500+ application, which will be made available to clients from 4 January, 2022.
Strategy - The „Growth” pillar
We strive for business growth in the most profitable market segments, product groups and areas of untapped potential, which will result in improved profitability, i.e. consumer finance and in the micro-enterprises segment. Over the next four years, Pekao wants to acquire over 400 thousand individual customers every year and increase its market share in cash loans from 7% up to 10%. Moreover, we will seek to rejuvenate the demographic structure of the retail customer base. The goal is to acquire over 600 thousand customers under 26 years of age by 2024.
We also focus on digital growth in investment products. By 2024, over 80% of the sales volume of investment funds will be realized in remote channels. We are also strengthening business synergies with the PZU Group, which will result in an increase in sales of insurance products and a twofold increase in the gross written premium by 2024.
Number of clients and accounts.
In 2021, we opened 443 thousand. new accounts (Konto Przekorzystne and Konta Świat Premium), which is an increase of +8.3% compared to 2020. In the fourth quarter of 2021, we opened nearly 145 thousand new accounts.
The conducted promotional campaigns and an attractive product offer contributed to the good sales result. In December 2021, the Savings Account returned to our offer with an interest rate of 2.5% for 6 months up to PLN 20 thousand.
We have prepared attractive promotions for customers who can sign up for the Mastercard Bezcenne Chwile loyalty program and gain additional bonus points. Customers for recommending Konto Przekorzystne to their relatives and friends can receive a bonus of up to PLN 100.
We actively supported families by accepting applications for 500+ and Dobry Start (300+) benefits, which can be submitted by clients in electronic banking and the PeoPay application. In 2021, we handled 385 thousand applications for 500+ (+11%) and 276,000 o Dobry Start (+12%).
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Report on the activities of Bank Pekao S.A. Group for the year 2021 rok
Bank Pekao S.A.
In June 2021, in cooperation with PZU, we introduced the "Comfort Package" to the offer, which is one of the few combinations of banking and insurance products available on the market with such a wide scope of protection. The "Comfort Package" gives customers, among others the possibility of immediate payments and insurance of internet purchases, assistance in the event of a breakdown at home, insurance of personal belongings.
Payment cards
The key factor in the implementation of our new strategy is the growth of the payment card portfolio. At the end of 2021, we handled over 4.6 million cards for individual customers, i.e. by 140 thousand. more than a year earlier. In 2021, the value of non-cash transactions reached the highest level in history and was over 22% higher than the year before. We have carried out a number of initiatives that encouraged customers to use cashless payments, emphasizing their convenience and security. We prepared the EKO Lottery, which promoted non-cash payments and pro-ecological activities. By paying with the card one could win the AUDI Q4 e-tron electric car and 36 electric bikes. The number of EKO Lottery participants was twice as high as in 2020. Part of the profit from transactions made with cards registered in the lottery was allocated to the support and protection of the Rezerwat Wąwozu Homole.
In addition, for customers who pay by card, we have prepared attractive vouchers for popular stores, a 10% refund for online transactions and the possibility of repaying purchases made with the card in 0% installments.
In July, we enabled our clients to fully remotely and quickly increase the credit card limit as part of a ready-made loan offer. Customers can receive an additional card limit after logging in to the Pekao24 online banking or the PeoPay application.
We have extended our offer with Revolutionary Visa Debit FX card and now Revolutionary debit cards are available both in the Mastercard and VISA systems.
The Revolutionary Card is a modern multi-currency debit card with a guarantee of the lowest rates. The card is issued to a PLN account and foreign currency accounts can be linked to it. When making a transaction in a foreign currency, the system automatically recognizes the currency and takes funds from the currency account, without currency conversion. If the required amount is not available on the account or the transaction is in a currency that the client does not have, the entire amount will be converted from the PLN account. In such a situation, the holder of a multi-currency card does not incur any additional costs on the part of the Bank - and the currency conversion will be performed directly at the Visa or Mastercard rate.
Credit products
In 2021, our activities focused on increasing sales in the area of key retail loans, while maintaining a prudent credit risk policy in the field of credit risk assessment and adjusting the lending policy to the dynamically changing market situation.
In the fourth quarter of 2021, thanks to the attractive express loan offer and increased sales, including remote channels, the value of granted cash loans, measured by the net volume, amounted to PLN 4.4 billion in 2021 and increased by +40% compared to 2020. The growth rate in the fourth quarter reached an increase of +9% compared to the previous quarter and +62% compared to the fourth quarter of 2020, with net sales of cash loans at the level of PLN 1.2 billion.
Out of concern for the care and protection of the environment, the Bank developed its lending campaign by promoting electronic processes, transferring after-sales processes to electronic channels, and by introducing solutions that significantly reduce the scale of document printing consumption in branches.
Sales of a cash loan in electronic channels in 2021 achieved a record result of PLN 1.8 billion, an increase of +79% compared to 2020. In the fourth quarter of 2021, we already granted 67% of cash loans in electronic channels. It was possible thanks to the introduction of new solutions and increasing the availability of offers per click for customers. As part of the development of remote processes, we have launched a new, innovative on the market, consolidation loan process per click, which allows you to easily transfer loans from other banks completely online. We also introduced the option of granting a loan per click by a consultant and advisor during a telephone conversation with the client.
From June 2021, we use the open banking functionality in the processes of granting a cash loan, overdraft limits and credit cards, using the account history from another bank to assess the customer's creditworthiness. As a result, we accelerated the credit process and our clients gained the opportunity to receive a faster credit decision.
We are a leading Bank in the sale of housing loans, in 2021, sales of housing loans amounted to over PLN 10.4 billion (+29% y/y).
We were constantly adjusting the offer of housing loans and consistently improving the processes of granting them and after- sales service. We have implemented the application assessment process in the entire branch network and launched the Partner Platform, which we have made available to selected intermediaries cooperating with us as a pilot. The new Platform supports users in the field of pre-contractual assistance and the preparation of an appropriate Information Form for the client.
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Report on the activities of Bank Pekao S.A. Group for the year 2021 rok
Bank Pekao S.A.
We have introduced a mortgage loan with a periodically fixed interest rate, also indexed to a foreign currency, and we have enabled clients to change the interest rate formula from a variable rate to a periodically fixed interest rate (for a period of 60 months). Out of concern for the environment, the Bank also expanded its housing loan offer by promoting ecological solutions.
In the third quarter of 2021, the mortgage loan receivables were transferred to Pekao Bank Hipoteczny for the fourth time. The total number of loans transferred so far is over 7.8 thousand worth PLN 1.4 billion.
In the business client segment, in 2021 the number of loans granted increased by 46% compared to 2020. It was possible thanks to the implementation of the functionality of the new credit workflow, which is a decision-making machine, which allows the entire transaction, including the release of funds, to be completed in less than an hour. The credit decision is made fully automatically and the risk assessment is performed by a system of multi-threaded decision rules. The application can be submitted remotely or by phone without visiting a branch.
Thanks to the guarantee instruments used, over 90% of new financing granted to business clients is covered by a portfolio guarantee, which significantly reduces the risk. Automation of renewals and centralization of service allowed to increase the concentration of the sales network on acquiring new transactions.
From December 2021, business customers who issue deferred invoices for their goods or services can use a factoring product for micro-entrepreneurs ("Płynnościomat"). This product allows you to receive cash faster, after the invoice has been issued to the contractor, and not according to the payment date.
Development in the area of insurance products
In 2021, we expanded our bancassurance offer with new products - travel insurance and assistance insurance as part of the package of services for Konto Przekorzystne. In the area of related insurance, insurance for cash loans can be purchased on the same terms, regardless of the sales channel, and we have also launched the sale of insurance for cash loans via the Call Center. In addition, we made it possible for clients to purchase motor insurance with a special discount in electronic channels. 2021 was a record year in terms of sales - the share of cash loans sold with insurance amounted to 36.4% (+1.2 p.p. compared to 2020), while the share of mortgage loans sold with insurance increased to 95.9% (+7, 5 pp compared to 2020). The premium collected in protective insurance was 58.5% higher in 2021 than in the corresponding period of the previous year, and with investment products - 90% higher.
We are consistently expanding our cooperation with PZU S.A. in the field of assurbanking activities. Already in over 170 PZU branches (an increase by over 50% compared to 2020) customers can open the Konto Przekorzystne, and the number of the Bank's customers acquired through PZU branches increased by 47% compared to the corresponding period of 2020. Additionally, we launched a pilot new distribution channel - PZU Exclusive Agents and implemented a new product combining the insurance and banking offer, the so-called „karta apteczna z kontem”.
Deposit, brokering activity and sale of investment products
At the end of December 2021, the sum of deposits and investment products held by individual and business customers amounted to PLN 128 billion and was higher than at the end of 2020 by 10%. The largest increase in deposit balances was recorded in personal accounts and savings accounts (+ 18%).
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Report on the activities of Bank Pekao S.A. Group for the year 2021 rok
Bank Pekao S.A.
We actively encouraged clients purchasing investment products to use remote channels, offering preferential pricing conditions. In the Pekao 24 system, we have provided clients with a new product - Lokata z Funduszem with an attractive deposit interest rate of up to 1.5% for 6 months and the option to purchase participation units in one of the 5 Pekao TFI funds tailored to investment preferences.
In the fourth quarter of 2021, in the Pekao 24 and PeoPay systems, we provided individual clients with the option to purchase a new product called Lokata z Funduszem with an attractive interest rate on the deposit and the simultaneous purchase of participation units in one of the 5 Pekao TFI funds adjusted to investment preferences.
In December 2021, we launched a promotion for new customers on the Savings Account (2.5% for 6 months up to PLN 20 thousand). The promotion is aimed at customers who actively use remote channels to service banking products. Each new customer may set up a promotional Savings Account together with Konto Przekorzystne or Konto Świat Premium only remotely via Pekao 24 or PeoPay.
In 2021, the Bank introduced the following investment products to its offer for individual and private clients:
• four subscriptions of PZU FIZ Akord Investment Certificates for the AŁ, AM, AN and AO series,
• three subscriptions of PZU FIZ Legato Investment Certificates for series A, B, D,
• 5-year product of Societe Generale "Megatrends",
• 5-year Goldman Sachs Bank Europe product related to Newmont Corporation Rio Tinto Plc Shares,
• Structured product without Autocall capital protection linked to BNP Paribas shares issued by Goldman, Sachs & Co. Werpapier GmbH,
• Autocall structured product with full capital protection linked to Newmont Corporation and Rio Tinto shares issued by Goldman, Sachs & Co. Werpapier GmbH,
• Autocall structured product with full capital protection linked to Totalenergies SE and Exxon Mobil Corporation shares issued by Goldman, Sachs & Co. Werpapier GmbH,
• Structured product with full capital protection Autocall related to the shares of BNP PARIBAS S.A. and HSBC HOLDINGS PLC issued by Goldman, Sachs & Co. Werpapier GmbH,
• Autocall structured product with full capital protection linked to Totalenergies SE and Volkswagen AG shares issued by Goldman, Sachs & Co. Wertpapier GmbH,
• Structured Product "Trade and Technology" 5-year certificate with capital protection with the worst of autocall option related to the shares of Siemens AG and Walmart INC,
• • Structured Product "Green Perspective" 3-year certificate with capital protection with the Autocall option related to MSCI Global Diversified ESG 100 Decrement 5%,
• Bank Securities in the form of Certificates of Deposit "Accumulator USDPLN 2",
offer addressed only to Private Banking customers:
• one series of certificates issued by Raiffeisen Centrobank AG,
• eight series of certificates issued by UniCredit Bank AG,
• COZ Structured Product Related to FedEx Corp Shares issued by Goldman, Sachs & Co. Wertpapier GmbH,
• Structured product with conditional capital protection based on the shares of Bayerische Motoren Werke AG issued by UniCredit Bank AG,
• Structured product with conditional capital protection in PLN: HVB PLN Barrier Reverse Convertible Protect based on the shares of Compagnie Generale des Etablissements Michelin SCA,
• Structured product with conditional capital protection in PLN: Bonus certificate for the shares of PKO BP S.A.,
• 2-year bonus certificate in USD related to the Solactive Cyber Security Technology Decrement EUR Index,
• 2-year bonus certificate in EUR linked to the Solactive Cyber Security Technology Decrement EUR Index.
We actively encourage clients to use remote channels, in the third quarter of 2021 we made it possible to remotely sign an agreement for receiving orders (the so-called PPZ agreement) regarding investment fund participation units, updating the
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Report on the activities of Bank Pekao S.A. Group for the year 2021 rok
Bank Pekao S.A.
questionnaire and indicating consent for a durable medium, as well as the possibility of remote opening investment account for the PeoPay mobile application.
From July 2021, former CDM clients have the opportunity to handle mutual funds in the modern Omnichannel Platform application, which offers clients the possibility of placing orders for funds in a branch as well as in remote channels. From September 2021, customers can invest in the new Pekao Ekologiczny subfund from the Pekao TFI offer. The subfund invests in companies from developed markets carefully selected by Pekao TFI - a novelty is the selection of companies, which is made not only on the basis of an analysis of financial factors but also on the basis of environmental, social and corporate governance (ESG) aspects. From September 2021, clients of the Pekao Brokerage House have at their disposal 9 index sub-funds included in the umbrella fund inPZU SFIO. InPZU index funds are funds that follow a given benchmark, the so-called benchmark portfolio, the purpose of which is to provide a rate of return that is closest to a given benchmark. The sub-funds are based on the most popular asset classes, differentiated in terms of investment risk.
The Bank applies preferential pricing conditions to clients purchasing investment products via remote channels. The My PZU shares loyalty program was implemented for clients who have a brokerage account with BM PEKAO and PZU shares.
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Report on the activities of Bank Pekao S.A. Group for the year 2021 rok
Bank Pekao S.A.
ENTERPRISE BANKING
Enterprise Banking consists of two segments: Small and Medium Enterprises (SME) and Medium Enterprises (MID) segments.
Strategy - The „Customer” pillar
We put the customer and his needs at the center of our activities, intensively develop digital channels and fast and convenient service processes. To an even greater extent, we will use advanced data analytics and modern CRM tools to support sales, which will allow us to better adjust the offer, improve the quality of service and increase the tendency to recommend our services.
In 2021, we consistently implemented the assumptions of the strategy. We have introduced a number of improvements related to the automation and digitization of loan applications and their analysis. We extended electronic banking functionalities enabling customer self-service.
Strategy - The „Growth” pillar
By focusing on the most profitable segments and groups of product, we plan to increase the share in the revenues of SME segments by 2 p.p. and 4 p.p. for the MID segment compared to the 2020.
Lending activities and customer financing
We offer our clients a wide, comprehensive range of products and services, such as bank loans, leasing, factoring, arranging issues of debt securities and other specialized forms of financing.
For the second time, we have enabled clients to submit applications for a financial subsidy under the government program, the so-called "PFR 2.0 Financial Shield", which helps micro, small and medium-sized enterprises operating in industries most at risk of a pandemic to maintain financial liquidity. In the first quarter of 2021, entrepreneurs eligible for subsidies submitted their applications via internet banking, and in the fourth quarter of 2021 they could settle the received funds through internet banking.
In cooperation with the Polish Development Fund, we proposed a new program for financing investments in renewable energy sources. The program is dedicated to, among others local governments and entrepreneurs with lower capital commitment, whose revenues are based on market risk. Green investments for business worth PLN 1 billion are an opportunity to implement larger projects and a faster return on capital investment.
In the fourth quarter of 2021, we maintained a high dynamics of growth in the value of the loan portfolio. The value of the loan portfolio in the fourth quarter of 2021 reached the dynamics of +24.4% y/y - an increase in value by PLN 5.8 billion. The growth dynamics in the segments amounted to:
− small and medium-sized enterprises - +31% y/y, + PLN 1.6 billion,
− medium-sized corporations - +23% y/y, + PLN 4.2 billion.
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Report on the activities of Bank Pekao S.A. Group for the year 2021 rok
Bank Pekao S.A.
The fourth quarter of 2021 was the fifth quarter in a row in which the value of loans sold in SMEs exceeded PLN 1 billion (without renewals) - 1.4 billion new loans (in the fourth quarter of 2021). The value of loan sales in 2021 amounted to PLN 5.1 billion, an increase by +50% y/y. In the fourth quarter of 2021, the sales of loans in the medium-sized enterprise segment were also record-breaking - PLN 3.9 billion and over PLN 11 billion in 2021, which translated into almost 60% y/y growth.
Transactional banking
We consistently developed the self-service zone for enterprise clients in PekaoBiznes24 electronic banking. We have made available further processes enabling self-service, among others submitting applications in the field of account maintenance, payment cards service, cash maintenance service and PFR financial shield. As the first in Poland, we offered corporate clients a transfer by telephone number via BLIK in internet banking.
We have implemented a new biometric method of remote verification of the identity of potential customer representatives "on a selfie". This method, combined with a qualified signature (SelfieSign), enables companies to establish relationships completely remotely, regardless of their legal form.
In cooperation with Tpay, we offered our clients a new service supporting the dynamically developing e-commerce - a payment gateway for online payments.
The development of electronic access channels, acquisition and adjustment of the offer to the needs of our clients had a positive impact on the number and volume of transactions - the volume of outgoing transfers increased by +18% y/y in the MID segment and +20% y/y in the SME segment. In the area of treasury transactions, we recorded record results, increasing the turnover on current currency exchange transactions by 31% y/y, and on transactions hedging foreign exchange risk by 32% y/y.
Customer acquisition
In in the fourth quarter of 2021, we maintained high level of acquisition and acquired 1,015 clients, this result was better by 45% compared to fourth quarter of 2020. Since of the beginning of 2021, we have acquired 4.1 thousand customers, achieving a 54% increase in acquisition in the SME segment and a 47% increase in the MID segment.
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Report on the activities of Bank Pekao S.A. Group for the year 2021 rok
Bank Pekao S.A.
CORPORATE AND INVESTMENT BANKING
The Corporate Banking Division covers corporate segments, significant capital groups (the so-called Large Corporations), public sector clients, financial institutions as well as commercial real estate and specialized financing. Given the specialist knowledge, safe and effective processes and a strong liquidity position we arrange and co-finance the most complex and biggest investment projects on the Polish market. A wide range of products and services, innovative solutions, customised approach and the comprehensive financial services for enterprises, institutions and public sector units strengthen our position as a market leader in the area of corporate services.
We provide both the c omprehensive services of a universal bank and the services from such areas as leasing, factoring, investment advisory services, advisory in M&A as well as highly advanced treasury and capital market products . We also prepare comprehensive offers of short- and long-term financing of international activities, supporting the expansion of Polish enterprises both on the European and developing markets. As part of developed transactions, we have cooperated, inter alia, with KUKE and we have developed a set of unique products and services on the market in the area of export structured finance, offering our clients a financing structure that is optimal for the conducted business activity and implemented projects.
We continue our cooperation with the UniCredit Group which allows to support Polish customers in conducting business in the countries where the UniCredit Group operates. The agreement also strengthens the role of the Bank as an expert in cross- border solutions for international clients and positions Bank Pekao S.A. as a Polish bank with a European reach. This allows to expand the geographic area of the serviced markets and develop further the business with international companies.
We increase our cooperation with PZU S.A. extending it to new areas and jointly arranging, inter alia, refinancing of the company's debt in the course of preparation for its debut at the London Stock Exchange.
Strategy
We plan to maintain the leadership position in corporate banking and maintain a high market share in revenues at least at the level from 2020, potentially increasing it, through effective volume growth, using competitive advantages such as: in- depth sector expertise, specialist financing knowledge as well as the growing digitalization of processes .
We consistently develop digitalization, automate processes and optimize the work of our relationship managers, as a result of which clients receive a wide range of digital solutions enabling self-service, and relationship managers have more time and better tools to reach the most demanding enterprises with specialist knowledge.
In our strategy, we have defined the most important areas for the Corporate Banking Division:
• focus on supporting actively economic recovery and climate transformation programs,
• responsible capital management, inter alia, through a unique corporate and investment banking product offer, DCM competences, targeted product x-sell and an increased selection of clients and transactions based on sector expertise,
• strengthening the position in the area of investment banking, taking into account the specificity of customer segments and groups, based on strong competences and a unique product offer,
• development of international banking by actively supporting foreign expansion of corporate clients (M&A, trade finance, export structured finance, correspondent banking, custody),
• further development of Corporate Banking competence centres supporting the whole Bank.
The Bank, as a leading institution cooperating with the largest corporate clients, in addition to supporting the substantive, operational and financial development of clients, will remain a partner for public development programs, socially responsible ESG projects, and will consistently engage in the development and modernization of the Polish economy, supporting the service and use of state and EU programs.
Pursuing the adopted strategy of sustainable development (ESG) we are even more involved in the energy and ecological transformation of Poland as well as environmental protection, in accordance with the principles of the European Green Deal.
We actively participate in building the renewable energy sources (RES) sector in Poland, offering and arranging the issues of sustainable development bonds. We were the first bank to take part in the largest and most complex ESG projects in Poland and we participated in all the most important benchmark bond issues for State Treasury Companies.
We also co-arranged the first issues of green local government bonds in Poland. As part of the signed agreement, the City of Łódź obtained PLN 418 mln, of which PLN 50 mln will be the green bonds.
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In order to maintain a leading role and consistently provide the highest quality services, we are constantly developing our level of digitalization. We continuously increase the efficiency of internal processes and for this purpose we are working on development and implementation of a sales support and customer relationship management system of the CRM class (CRM One). Our goal is to make it the best solution of that type on the Polish market of corporate and business banking. Therefore, the tool which is being developed is based on the latest technologies (including cloud solutions).
In the area of direct relationship with clients, thanks to the automation and digitalization of processes, we provide solutions which give more and more opportunities for the simple and safe use of corporate banking services in remote channels (e.g. we have implemented a new tool for cash service in companies - Pekao CashCard for corporate clients). We also make sure that a significant part of the Bank's specialist knowledge is available in remote channels. Therefore we are continuously expanding the range of generally available materials prepared by Pekao S.A. analysts.
The high quality of products and services we offer, innovative solutions, a customised approach as well as comprehensive and professional service of corporations, financial institutions and public sector entities are appreciated by our clients and decide about the strength of corporate banking of Bank Pekao S.A. At the end of 2021, the Corporate Banking Division serviced more than 6,2 ths. entities being large corporations, public sector clients, financial institutions as well as commercial real estate projects and projects involving specialised financing.
We cooperate with 11 out of 12 Polish metropolises (92% market share) and provide ongoing budget support for every third metropolis (33%). We cooperate with every fourth municipality in Poland (25% market share). We also maintain business relationships with 92% of towns with county rights and provide ongoing services to every fifth of them (21%). We also cooperate with every third county (37%) and with almost all provinces (94%). We are also a major partner for state universities.
As part of correspondent banking, as at 31.12.2021, the Bank maintained 73 nostro accounts with 45 banks in 26 countries; it ran 221 loro accounts for 201 foreign clients (banks and other financial institutions) from 48 countries and 47 current accounts for 41 foreign financial institutions.
The Bank also intermediated in the execution of transactions for clients of other domestic banks, running 35 loro accounts for 14 Polish banks and maintaining 5 nostro accounts with 1 Polish bank.
Transactional banking
In 2021 we processed:
− over 462 mln Elixir domestic transactions – which is an increase of the number of outgoing domestic transfers by 7.2% and incoming domestic transfers by 4.5%; over 130 thousand ExpressElixir outgoing transactions sent via PekaoBiznes24, which is an increase of 350% as compared to the data for 2020, and an increase of 293% in terms of volume of processed transactions (PLN 2 , 039,289,576),
− 880 thousand outgoing and incoming foreign transactions with the total volume of PLN 340 billion, which, as compared to 2020, marks an increase of 35% in terms of the number of outgoing transactions and 11% in terms of the volume of such transactions,
− over 167 million transactions as part of the Pekao Collect service with a total volume of over PLN 226 billion, which is an increase of 3.9% of the number of transactions and 19.5% of the volume of such transactions as compared to 2020,
− over 6.3 million Direct Debit transactions with a total volume of more than PLN 2 billion - an increase of 1.01% in terms of the number of processed transactions and 19.87% in terms of the volume of such transactions as compared to 2021.
We introduced new functionalities and products as part of development of transactional banking.
We have made the following products and functionalities available in the PekaoBiznes24 system:
− ordering and importing BLIK MP2P phone transfers – we were the first bank in Poland to introduce this functionality,
− on-line tracking of the current status of a foreign payment order sent by SWIFT with the use of SWIFT GPI statuses,
− downloading a duplicate of the source message about the performed operation: SWIFT , TARGET2, SEPA, SORBNET, ELIXIR,
− making new product applications available in the self-service zone, such as: application for account closure – enabling to close a single current account, auxiliary account, VAT account, and application for bank opinion,
− submitting instructions concerning cards with a credit limit, such as: application for a card duplicate, PIN duplicate, 3DS service (changing the phone number, disabling the service), changing the proximity function, changing the limits for transactions made without physical use of the card, issuing the card in place of the reserved card,
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− viewing the information about the debit card holders and processing electronic applications for: issuing a card duplicate, PIN duplicate, 3DS service (changing the phone number, disabling the service), changing the proximity function, changing the limits for transactions made without physical use of the card, issuing the card in place of the reserved card,
In addition, the Bank’s most important achievements in the area of transactional banking included :
− implementation of the SwiftNetFileAct service – a file exchange solution for clients with their own SWIFT address,
− providing the Google Pay mobile payments method to clients holding a Mastercard card and Visa Business debit card,
− making the Apple Pay mobile payments method for Visa corporate cards available to clients holding Visa business cards with a credit limit. The Apple Pay enables to implement proximity payments in POS terminals in Poland and in the world (iPhone, Apple Watch), payments in iOS mobile applications (iPhone, iPad), payments made via websites (on the Safari browser),
− introducing a CashCard without payment functions only for making deposits. The new card allows the company’s employees to deposit cash directly to the company’s account using the network of Pekao ATMs with deposit function all over Poland,
− providing clients with the possibility to indicate settlement accounts as investment accounts, taking into account the legal changes defined in the provisions of the Act of 28 November 2020 amending the Corporate Income Tax Act and certain other acts. As a result, we enabled our clients to accumulate funds set aside for investment purposes, referred to in Art. 15 sec. 1hb point 2 of the Corporate Income Tax Act.
− implementing the Cumulated Limit (CIL) - a new type of debt limit. As a result of this service, the participant of the Cash Pool system will not exceed the amount of permitted debt towards the Leader in the longer time perspective than one day. The service is addressed to the Bank's strategic clients which use the Cash Pool service, in the option without redistribution of balances. The online reports on CIL parameters and the functions that allow clients to change the CIL value – depending on their current needs – were made available in the PekaoBiznes24 internet banking system,
− offering services for Simple Joint Stock Companies (P.S.A.), i.e. a new type of capital company combining the features of a joint stock company, limited liability company and partnerships. The P.S.A. was introduced by the Act of 19 July 2019 amending the Code of Commercial Companies Act and certain other acts. The new form of running business activity is particularly attractive to small enterprises with high development potential, operating as start-ups or conducting an innovative activity. P.S.A. Agreement may be concluded in the form of a notary act or online within 24 hours on the S24 portal operated by the Ministry of Justice,
− implementing a new functionality of the threshold interest calculation as part of virtual consolidation of funds, i.e. a solution where the value of the surplus of deposits above each interest rate threshold is calculated separately for a given threshold of deposits volume according to the interest rate defined for the given threshold. Additionally, daily/monthly reports dedicated to clients have been adjusted.
Trade finance
The amounts of documentary transactions and guarantees serviced by the Bank increased considerably in 2021. The value of granted guarantees and sureties rose by 51%, whereas the exposure to granted guarantees increased by 20%. The Bank recorded a two-digit growth dynamics in the area of documentary products - the amount of new transactions was higher by 31% in comparison with 2020, and exposure resulting from active documentary transactions as at the end of 2021 was higher by 41%.
In 2021, as part of the Open Financing Platform (OFP), the Bank financed the invoices whose value was by over PLN 900 million higher than in 2020, whereas the number of invoices bought out increased by 121%.
We are continuously developing a supplier financing program for one of the key clients operating in the retail industry. The client has selected over 200 suppliers for the program - the vast majority of them are foreign suppliers from Southeast Europe and Asia. The program is extended with new functionalities - e.g. an integral service supporting the circulation of commercial documents, which will allow to include the suppliers from other countries in this program.
We continue to support clients' operations in the conditions of the pending COVID-19 pandemic. We are consistently developing trade finance products by increasing automation and remote processes as well as maintaining the solutions developed in cooperation with Bank Gospodarstwa Krajowego.
System and operational integration with ex Idea Bank made it possible to make the offer of trade financing products available to entities that became our clients as a result of the merger of both banks.
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The Bank’s achievements in the area of trade finance were recognized by the Global Finance Magazine which awarded Bank Pekao S.A. the title of the “The Best Trade Finance Provider in Poland for 2021”.
Cooperation with international clients
The Bank supports the export plans of Polish companies present on foreign markets or planning international expansion. The Bank's clients can benefit from a package of the most advantageous financial solutions tailored to the business model. An attractive product offer for financing foreign contracts is a key element of support and at the same time a condition for strengthening the presence of domestic entities on foreign markets.
We granted loans and prepared comprehensive offers for short and long-term financing of international transactions, supporting the expansion of Polish enterprises on both European markets and in developing countries. When carrying out transactions, the Bank cooperated, among others, with KUKE (Export Credit Insurance Corporation), taking advantage of the concluded framework agreement.
We expanded our cooperation with KUKE by signing an agreement aimed at implementing new insurance and guarantee products under the new export support system. This will translate into a wider range of possibilities for financing development of exports. The offer, supported by KUKE's hedging products, will include loans for financing domestic investments generating exports, credit products to be used for financing the supply chain or debt financing instruments for purchase of foreign assets.
We also continued the cooperation with the UniCredit Group which provides for servicing UniCredit clients on the Polish market and Polish clients on foreign markets. The agreement allows supporting Polish clients in conducting business in the countries where the UniCredit Group operates. The agreement also strengthens the role of the Bank as an expert in cross-border solutions for international clients and it positions Bank Pekao S.A. as a Polish European bank.
Investment finance, structured finance and commercial real estates
We support the development of enterprises and infrastructure through long-term financing of investments in various segments of the economy. We offer our clients the services in the field of investment banking, structured finance and financing of commercial real estate projects, including financing the construction of warehouses.
The key projects financed by the Bank in 2021 included:
− participation in a syndicated loan consisting of two term tranches for a total amount of EUR 190 million for a leading company processing wood for the furniture and construction industry (Pekao as the MLA),
− acting as the lead arranger and bookrunner for financing granted by the international consortium of banks to refinance the debt of a leading company operating in the retail industry and to finance its general corporate needs, including further development. Bank Pekao was in a small group of international financial institutions with the biggest share in new financing amounting to EUR 90 million,
− financing the construction of a logistics centre for a leading company from the clothing industry, implemented by a top developer of warehouses. The amount of financing amonted to EUR 35.6 million,
− global coordinator and bookrunner of the loan related to post-IPO financing for the leader in logistics industry in the amount of PLN 2.75 billion,
− financing that comprised the investment loan and working capital loan for a restaurant network operator (Pekao was the Arranger, Loan Agent and Collateral Agent) for a total amount of about PLN 2.4 billion,
− financing the acquisition of a leading producer of spirits in Central and Eastern Europe. The amount of financing exceeded PLN 2 billion,
− arranger of a syndicated loan for the champion of Polish economy, a leading company from the chemical industry for the amount of PLN 2 billion,
− participation as the ”original lender” in a syndicated loan in total amount of PLN 2.1 billion for the largest chemical company in Poland,
− granting a guarantee to IRGIT in a total amount of PLN 1.88 billion,
− financing that comprised the investment loan and working capital loan for a company operating in the automobile industry (Pekao was the Loan Agent) for the total amount of about PLN 1.65 billion,
− financing comprising the investment loan and working capital loan for a manufacturer of interior design elements (Pekao was the Loan Agent and Collateral Agent) for the amount of PLN 1.1 billion,
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− participation in syndicated financing consisting of a term loan and a working capital loan for the companies operating in the fuel industry for a total amount of PLN 600 million,
− granting factoring limits in the amount of PLN 500 million for the leading companies from chemical industry,
− granting factoring limits for one of the leading companies from the energy industry in the amount of PLN 410 million,
− financing a modern office building complex in Katowice. The amount of financing amounted to over PLN 400 million,
− financing another stage of development of a wind farm in the amount of PLN 370 million,
− the loan for construction of a wind farm for a leader in energy industry in Poland. The amount of financing amounted to PLN 180 million.
Issuance of debt securities
Taking into account the outstanding debt as at 30 Novemebr 2021, Bank Pekao S.A. had over 31% market share (1 st place) in the area of arrangement and service of non-treasury debt securities (above 365 days), including:
− nearly 39% market share in arrangement of corporate bond issues (1st place),
− nerly 25% market share in arrangement of banks’ debt securities (3rd place),
− nearly 22% market share in arrangement of municipal bond issues (2nd place).
In 2021, the Bank was active in carrying out bond issues guaranteed by the State Treasury to finance aid programs related to the prevention of the COVID-19 pandemic effects. The bonds were issued for a total amount of over PLN 42 billion with maturities ranging from 7 to 20 years.
In 2021, the Bank participated in issuance of non-treasury debt securities on the Polish market and on foreign markets (except for the above-mentioned bonds guaranteed by the State Treasury) for the total amount of nearly PLN 25.2 billion, EUR 2.8 billion and USD 0.4 billion, of which the following transactions deserve special attention:
Transactions concluded on the Polish market:
− the issue of three series of bonds for a company belonging to a global manufacturer of vehicles with investment rating, for a total amount of PLN 1.75 billion, with maturities of 1 year and 2 years, in which the Bank acted as the sole arranger and dealer,
− the issue of 6-year bonds for a company holding a leadership position on the market of courier services for the amount of PLN 500 million, in which the Bank acted as the arranger and dealer,
− the issue of 10-year green and sustainable development bonds bearing a fixed interest rate based on the ESG rating (a measure of sustainable development covering environmental responsibility, social responsibility and implemented corporate governance) for the amount of PLN 1 billion for a leading fuel and energy company in Poland, in which the Bank acted as the sole arranger and dealer, and the issue of 5-year green bonds for the amount of PLN 400 million for a technological holding providing solutions, among others, to energy industry,
− the bond issues for developers operating in construction industry, including three series of bonds for a company belonging to an international developer group for a total amount of PLN 365 million, the issue of 5-lyear bonds for a leading housing developer on the Polish market for the amount of PLN 150 million and the issue of 2.5-year bonds for a developer of warehouses for the amount of EUR 20 million,
− the bond issues for leasing companies in which the Bank acted as the dealer and/or coordinator, including three series of 2-year bonds for a company belonging to an international financial group for a total amount of PLN 400 million; the issue of 3-year bonds for a leasing company belonging to an international financial group for the amount of PLN 160 million and the issue of two series of bonds for a leasing company belonging to a global automobile group (with one of the highest credit ratings), for a total amount of PLN 300 million with maturity of 3 years,
− the issue of two series of bonds for a leading debt collection company on the Polish market for a total amount of PLN 400 million,
− the bond issues for companies from the Group, including the issue of 7 series of mortgage pledge letters for the total amount of PLN 1,235 billion for the Group mortgage bank, the issue of 19 series of bonds in EUR and PLN for the leasing company for the total amount being the equivalent of about PLN 7.4 billion and the issue of 26 series of bonds in PLN and EUR for the factoring company with maturity up to 1 year for the total amount being the equivalent of about PLN 10.1 billion.
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Bank Pekao S.A.
Transactions concluded on foreign markets:
− the issue of 7-year green Eurobonds for a leading company operating in the fuel-energy industry in Poland for the amount of PLN 500 million, in which the Bank was the global coordinator and bookrunner,
− the issue of 7-year Eurobonds for a company from the chemical industry for the amount of PLN 600 million, in which the Bank was the global coordinator and bookrunner,
− the issue of 6-year Eurobonds for a company from the logistics industry for the amount of PLN 490 million, in which the Bank was the global coordinator and bookrunner,
− the issue of 10-year Eurobonds for a Polish bank for the amount of EUR 500 million, in which the Bank acted as the co- coordinator and dealer and 4-year Eurobonds for the amount of USD 400 million, in which the Bank was the sole arranger,
− the issue of Eurobonds for a multilateral financial institution with the highest credit rating for the amount of PLN 750 million, in which the Bank was the sole arranger and dealer.
In addition, in 2021, the Bank arranged bond issues for municipal units for the total amount of over PLN 992 million.
Comprehensive service of public sector finances
One of the elements of the strategy we adopted for the years 2021-2024 is to support the sustainable development of the economy, society and environmental protection. Financing the public sector and municipal projects fits in with activities aimed at co-creating and developing Polish infrastructure. Our long experience ensures a comprehensive offer and effectiveness both in cooperation with metropolises, smaller municipalities and municipal companies.
In 2021, we provided municipal units with financing for development projects in total amount of PLN 3.8 billion.
Particularly noteworthy is the green bond issue program agreement for the amount of PLN 400 million concluded with Miejskie Przedsiębiorstwo Oczyszczania - Łódź Sp. z o.o. The subject of financing is the implementation of the Łódź Recycling Centre which will consist of installations for the processing of municipal waste. The Bank also co-arranged the issue of municipal bonds of the city of Łódź for the amount of PLN 418 million, of which PLN 50 million are also green bonds. It is the first green bond issue in Poland launched by a self-government unit. The funds will be used to finance projects related to low-emission urban transport and waste management.
In addition, we arranged and co-arranged other largest bond issue programs such as:
− issue of bonds for the amount of PLN 491 million for the implementation of the investment program improving the standard of public transport in Wrocław,
− finalized transaction with Tramwaje Śląskie S.A. concerning the issue of bonds for the amount of PLN 496 million to be used for modernization and construction of track infrastructure in the Silesian Agglomeration and for the purchase of tram rolling stock and specialized rail vehicles .
Additionally, we were involved in activities in the field of Public-Private Partnership, both in the institutional and regulatory sphere as well as in co-participation in arranging financing structures for these projects. In 2021, we signed agreements with the special purpose vehicles of the Mota Engil Group providing financing for the projects related to building parking lots that are implemented in the PPP formula in Warsaw and in Łódź for a total amount of PLN 146 million. We will act as a lender and collateral agent, and the second external source of finances for the investment will be funds from the issue of bonds taken up by the Polish Development Fund.
In 2021, the Bank extended the agreements for servicing budgets of the cities of Bydgoszcz, Gdańsk and Lublin. Acquiring the city of Łódź, together with its 368 units, for service was a great success.
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7.5 Major areas of activities of the Group’s subsidiaries
Bank Pekao S.A. is one of the leading providers of banking services and groups together a number of financial institutions active in the asset management, pension funds, brokerage services, transactional advisory, leasing and factoring markets.
Dom Maklerski, and Xelion render brokerage services within the Group providing retail customers with a wide range of products and services on the capital markets.
For detailed description of the brokerage activity refer to the point 7.4.
Below are described the areas of operations of the Group’s key companies from the financial sector.
7.5.1 Banking activity
Pekao Bank Hipoteczny S.A. – Pekao Bank Hipoteczny
Pekao Bank Hipoteczny, as a specialist mortgage bank, continued its activities on the market of financing the purchase, construction, renovation or modernization of residential real estate for private individuals, as well as commercial real estate, and in cooperation with Bank Pekao in the scope of purchasing receivables secured with real estate.
As at the end of December 2021, net value of loans portfolio of Pekao Bank Hipoteczny amounted to PLN 3,597.9 million, a increase by PLN 989.3 million, i.e. 37.6% in comparison to end of December 2020. Loans granted to corporates and local governments represents 17.6% and 8.0% respectively and loans granted to individual clients represents 74.4% of loan portfolio. Loans launched in 2021 were 100% earmarked for financing the housing needs of natural persons.
In 2021, Pekao Bank Hipoteczny completed nine issue of covered bonds in PLN. The total value of liabilities under mortgage bonds as at 31 December, 2021 was PLN 2,348.5 million (including EUR 49.9 million). As at 31 December, 2021, the total value of liabilities under these bonds was PLN 300.3 million.Pekao Bank Hipoteczny S.A. has the quality certificate The Covered Bond Label, which proves the safety and quality of the issued covered bonds and the highest standards of transparency for investors.
7.5.2 Assets management
Pekao Investment Management S.A.– Pekao IM
Pekao IM, in which Bank Pekao S.A. holds a 100% share, is an owner of Pekao Towarzystwo Funduszy Inwestycyjnych S.A.(Pekao TFI).
Pekao TFI is the oldest investment fund in Poland providing customers with modern financial products and opportunity to invest on the Polish and the largest global capital markets. For many years, it creates savings programs, including programs offering additional savings for retirement under the third pillar, voluntary pension pillar. The Pekao TFI offer includes also a portfolio management service and Employee Capital Plans (PPK). The company has been entered into the PPK register, and its offer is available on the portal mojeppk.pl.
As at 31 December, 2021, the value of net assets of Pekao TFI investment funds (including PPK) amounted to PLN 20.3 billion and was lower by PLN 20.9 billion, i.e. 4.8% compared to the end of December 2020. The decline in the value of assets was adversely affected by the pandemic situation, and funds from the redemption of funds were largely deposited in bank accounts.
7.5.3 Leasing activity
Pekao Leasing Sp. z o.o. – Pekao Leasing
Pekao Leasing provides financial services supporting purchases and sale of fixed assets, i.e. vehicles, plant and equipment, and office space, both in the form of operating and finance leases.
In 2021, the Company concluded 16.8 thousand new contracts. The value of leased assets was 23.9% lower than in 2020 and amounted to PLN 4.8 billion, including: 52.4% means of transport, 43.2% - plant and equipment, 3.3% - real estate, 1.2% - other. The company cooperates with the Bank in the sale of leasing to clients who are also the Bank's clients.
7.5.4 Factoring activity
Pekao Faktoring Sp. z o.o. - Pekao Faktoring
The Company, besides the full range of factoring services (recourse and non-recourse factoring), offers additional services, such as collecting information on debtors’ standing, payments collection, debt recovery, settlements accounting and monitoring of payments on an ongoing basis. Additionally, the Company offers settlement of mass transactions, financial advisory and consulting services regarding selection of business financing methods, as well as extending factoring-related loans. The Company co-operates with Bank Pekao S.A. in developing new sales channels and enhancing sales through the existing ones.
The Company is ranked the 1 st on the Polish factoring market, with 21% of market share.
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7.5.5 Transactional advisory
Pekao Investment Banking S.A. – Pekao IB
Pekao IB focuses on serving institutional and corporate clients. The scope of services provided by Pekao IB includes, in particular, the acceptance and transmission of orders to purchase or sell financial instruments, execution of these orders on behalf of the client, offering financial instruments, as well as consulting for enterprises in the field of capital structure, corporate strategy as well as other merger services, division and acquisition of enterprises.
In 2021, Pekao IB participated in servicing four public offerings of shares (IPO) and in raising capital by one public company on the WSE. Pekao IB advised on four closed M&A transactions related to acquisitions of companies in Poland and Hungary. Pekao IB supported three clients in obtaining debt financing and handled the issue of bonds for thirteen entities.
Pekao IB closed two advisory processes in the area of obtaining financing under the Shield for Large Companies of PFR.
7.5.6 Other financial services
Pekao Direct Sp. z o.o. (previously Centrum Bankowości Bezpośredniej Sp. z o.o.) – Pekao Direct
Pekao Direct provides financial intermediation services, as well as comprehensive services through alternative communication channels for clients of the non-banking sector.
The company supports Bank Pekao S.A. as the main customer in the field of service, internet banking, cards and product infolines. Pekao Direct serves clients through alternative communication channels, mainly in the form of telephone, e-mail and in the form of chats. The main communication channel is telephone connections - in 2021 Pekao Direct handled 12.5 million calls. Pekao Direct participates in the innovative process of opening selfie accounts and in 2021 Pekao Direct verified 45.3 thousand accounts opened for selfie In 2021, the Company recorded a 25.9% increase in the chat service and a 48.7% increase in the number of video calls as part of the PeoPay application, which is related to the search by customers for alternative forms of communication in a pandemic situation. The company, in cooperation with the Bank, conducts projects aimed at developing communication with customers, including the use of mobile banking.
Pekao Financial Services Sp. o.o. – PFS
PFS provides outsourcing services for financial institutions in the field of operational and technological solutions, in servicing fund participants, as well as in the independent distribution of fund units. The company offers its clients services of the highest quality and safety. PFS specializes in keeping accounts of participants in investment funds, pension funds and PPK.
Among the clients served by the PFS there are companies with established market position. The company is the only entity that supports OFE funds using the services of an external transfer agent.
Centrum Kart S.A. - CK S.A.
The company provides comprehensive services related to, among others with support for payment card management systems, transaction authorization and card personalization.
The company continued the implementation of IT projects aimed at extending the Bank's product offer. The most important projects implemented in 2021 include: migration and implementation of full service of payment cards for the former Idea Bank customers, implementation of the replacement authorization functionality for debit cards, as well as improvement and extension of mobile top-up service.
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7.6 Investing in human capital
Human Capital as a key asset
The principles of the Bank’s policy in the area of Human Resources (HR) development are set by its mission and values considered as the key for the Bank sustainable growth.
The Bank invests in training, professional development of employees (in line with their preferences and abilities), creation of a friendly work environment and it conducts questionnaire surveys on employees’ engagement and satisfaction. Significant area of the Bank’s HR policy is outstanding talents spotting within the organization and investing in development of their skills.
Training and professional development
The Bank creates learning opportunities and provides access to various forms of training for its employees. Educational activities focus on realization of in-class training programs, on-the-job learning, coaching and Virtual Class system allowing for distance learning in form of Webinars.
In 2021, the main training priorities of the Bank were as follows:
− professional knowledge development of the Bank’s employees,
− leadership development - education for managers,
− cybersecurity training.
Professional knowledge development of the Bank’s employees
The Bank continued realization of training projects related with implementation of adopted business strategies. Training programs for employees with high potential and training for new employees were conducted.
In 2021 , the Bank delivered in form of class room over 237 thousand of training hours (class room and virtual sessions), in which attended over 11 thousand of employees confirming the Bank’s determination in efficient implementation of products, methods, required regulations and customer care. E-learning courses and trainings were completed at a similar lever of over 304 thousand hours.
In 2021, the Learning Week "Week of Discoveries" was carried out - a wide range of opportunities for improving and acquiring knowledge depending on individual interests, competences or performed duties. The aim of the initiative was to educate about hard and soft skills and to increase the motivation for self-development. All trainings were designed in an interactive, workshop formula, which translated into the development of specific skills. In addition to training and workshops, employees could take part in one of five lectures with famous inspirational speakers. All presentations were profiled in terms of banking and professional challenges of the industry, including in the field of self-development, the role of optimism in business or innovation in sales.
In 2021, the Robotization Academy was established is a program that allows you to develop digital competences and use automation on a daily basis. He teaches himself to build robots for his own needs. An original training program developed by our practitioners in cooperation with a partner - the largest supplier of automation solutions in the world.
The Bank has established the Forge of Agility, a 3-year training program, thanks to which each employee has the opportunity to learn the necessary agile competences and process optimization under two paths: Agile and Lean. Each path contains a complete dose of knowledge as well as skills that will allow you to extract the potential and gain efficiency in performing a specific role related to improving and optimizing processes as well as within the developed Product. A comprehensive program of training, exchange of practical knowledge and coaching is addressed both to people working in Product Teams and to all employees, potential stakeholders of agile methods.
Leadership development - education for managers
In 2021, the Leadership Academy and the Retail Manager Academy were launched, training and development programs intended for the bank's management staff in the Network and at the Head Office. The program was implemented with the support of an external training company and was designed to prepare the managerial staff both to achieve the business goals set out in the New Strategy of Bank Pekao S.A. and to implement the bank's values and implement key changes. The Academy also aims to support managers in coping with the daily operational work in the VUCA environment.
The programs have been developed in such a way that managers systematically acquire knowledge and translate it into specific skills on an ongoing basis. Through participation in new tasks, projects and thanks to the work that is necessary in acquiring new competences. The substantive scope of the Academy is largely based on the model and experience in the area of leadership of John Maxwell, one of the world's leading leadership authorities in the world.
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Cybersecurity training
In 2021, the Bank continued its extensive Cybersecurity training program in cooperation with prominent market specialists.
The "Safe in the Web" program is based on evidence-based examples presented in an accessible video training format. The aim of the training is to provide knowledge on how to consciously and safely use the benefits of the Internet, both at work and during private shopping in online stores. Some of the trainings were carried out as mandatory and covered all employees of the Bank. The trainings were aimed at increasing the knowledge of the Bank's employees in this area. The program was implemented at the request of the Bank's Security Department and was approved by the Management Board and Supervisory Board.
In addition, in 2021, especially for employees in IT and security was organized a dedicated program "CyberStudnia", which was based on the formula of an interactive conference, allowing for the selection of the path of interests and participation in inspiring lectures and online workshops. The primary goal was to improve digital competences for employees in IT and security. Thanks to this initiative, we were able to propose a wide range of inspirational events, in which well-known speakers and experts from this area also got involved.
Development programs and initiatives
The priority of development programs at the Bank is to identify, review, verify and develop current and future leaders. We offer employees development initiatives aimed at supporting professional development, skills, knowledge and competences, as well as a number of initiatives to develop employee engagement.
In 2021, development programs and initiatives were provided for the Bank employees, aimed at providing support in the development of managerial and interpersonal skills:
− Succession Plans, which are of fundamental importance for ensuring the continuity of employment in strategic positions, the implementation of long-term projects and minimizing operational risk.
− Annual appraisal system - the process of appraising the Bank's employees, which includes the assessment of competencies, potential, planning of individual development and business goals.
− Assessment Center / Development Center sessions - research on professional potential, the results of which are used in decision-making processes related to employment, promotion and employee development.
In 2021 we implemented a program for Talents - Talents Up, the program was attended by nearly 60 participants, as part of the project path participants developed solutions that respond to the most important business challenges of the bank. The aim of the program is creating innovation culture in the organization and development of program participants’ competences.
Moreover a development program Change Ambassadors was launched for branch organizational support employees from Operations Centre – 19 high potential employees were invited to the program.
Pro-Wellness activities
In 2021, we continued the website “Take your health by the horns!” Up to three available thematic areas related to:
− healthy eating,
− physical activity,
− overcoming stress.
We have added the fourth area related to the broadly understood prevention, in which we pay attention to the issues related to the need for regular tests, especially during a pandemic, as well as those related to COVID-19 and its prevention. As every year, we conducted training in First Aid (Premedical Aid) - including action in the event of suspicion of COVID-19.
In 2021, we implemented the Stress Reduction Program in 12 steps. During 24 on-line meetings (each step in theoretical and practical dimensions) with an expert in the field of mindfulness and emotional regulation, stress was tamed by understanding it thoroughly and acquiring the skills to deal with it. We also conducted a webinar and shared a series of articles on the prevention of burnout.
Throughout the year, we carried out regular on-line meetings on healthy eating, during which knowledge in this area and the impact of the diet of our body was disseminated, taking into account selected diseases of civilization. During the classes, interesting recipes, seasonal menus and culinary curiosities were made available.
The website also includes a few instructional videos with short exercises that were to stimulate the body instead of morning coffee.
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Bank Pekao S.A.
The biggest event was the implementation of the MiLOVE run with Żubr - helping by running, during which we encouraged people to walk or run and collect miles together virtually by motivating our employees to do good for the charitable goal of the action. In 2021, 56 dedicated articles were made available, over 450 people registered for the MiLOVE Runs campaign, and over 6.5 thousand participants took part in the webinars.
Apprenticeship programs
One of the annual objectives of the Bank is to obtain a certain number of graduates of the best universities in Poland and abroad, offering them career development within the organization: the network of branches and units of the Head Office of the Bank.
The following programs were implemented in order to realize the above mentioned objective:
− A year-long internship program addressed to university students and graduates. The internships last from 2 to 5 months and give the opportunity to gather experience in selected banking areas, in all organizational units of the Bank,
− Summer Internship Program “Akademia Żubra” addressed to university students and graduates. The program lasts for 2 months and is a good start for students who want to learn about functioning of the Bank's business areas. Participants actively support units and implement individual projects. In the range of the Program Apprentices are invited to participate in workshops on soft and technical competences,
− “Banking Champions” Internship Program is a unique internship offer on the market. The program is addressed to students of the best universities in Poland and abroad and who want to create modern solutions in the Polish banking sector. The program offers development in the areas such as Investment and Corporate Banking, Risk Management and Big Data. The role of the Mentor is key, as he shares his knowledge and experience with the Apprentices.
Compensation policy
The compensation strategy was developed in line with the business standards and values underlying the Bank’s mission and reflected in the internal regulations as well as it constitutes the basis for enhancing and protecting the Bank's reputation and creating long term value for all the stakeholders. The key regulation in this area is the Remuneration Policy of Bank Polska Kasa Opieki Spółka Akcyjna , the last update of which entered into force by the Order of the President of the Management Board of October 7, 2020. This policy reflects the mission and values in the Bank's approach to remuneration systems, including:
– defines the compensation pillars, management of its structure, corporate and organizational processes,
– confirms the compliance requirements of the compensation systems with the generally binding law,
– defines the principles of market practice monitoring, and the approach to the matter of compensation systems which guarantees the sustainability of the Bank's functioning.
The remuneration structure ensures a direct link between remuneration and performance by guaranteeing financial stability and variable remuneration levels appropriate to the Bank's financial capacity, setting performance-based remuneration levels and developing incentive systems foreseeable the minimum levels of the Bank's performance below which the bonus is not paid. Variable remuneration covers all remuneration components, the granting of which depends on the results, and its payment is directly dependent on individual achievements and the results achieved by the Bank and adjusted to the risk.
Sustainable results contributing to the creation of long-term value for stakeholders relate to the actual results achieved and how they are achieved, with a view to measuring results consistent with shareholders' interests and profitability principles based on safe risk levels, sustainable risk management practices and a multi-dimensional performance analysis and quality of operation.
In order to ensure the competitiveness of the remuneration structures, as well as their transparency and an effective and fair remuneration system, the Bank monitors market trends in terms of forms of remuneration and the level of remuneration offered on the market. Decisions on the remuneration system at the Bank are made taking into account the available data on market trends in the area of fixed remuneration as well as incentive systems. Such data is obtained from consulting companies offering financial sector analyzes. An additional comparative analysis is carried out at the level of the Bank's organizational units in order to ensure consistency of remuneration in individual areas. In 2021, attention was paid to the analysis of wage coherence between women and men in identical positions, in order to make efforts to compensate for the pay gap existing at the Bank.
As part of the remuneration system, employees are offered non-wage benefits ensuring fair treatment and consistency of the remuneration system.
Each year, a report on the functioning of the Remuneration Policy at the Bank is prepared, which is then presented at the General Meeting of Shareholders in order to assess whether the functioning of the Remuneration Policy in force at the Bank, supports the development and security of the Bank's operations.
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Information regarding remuneration value of each Member of the Management Board is presented in the point 10, the section of the Management Board and the Supervisory Board Remuneration.
The Subsidiaries of the Bank's Capital Group have remuneration policies adapted to the size and specificity of their activities and the remuneration principles.
Incentive systems
In the Bank, there are three main incentive systems: an Executive Variable Compensation System, a System based on Management by Objectives (MBO), and a system based on provisions of Corporate Collective Labour Agreement, which is based on quarterly bonuses and incentive reward.
The top management is covered by a variable remuneration system dedicated to people who have a significant impact on the Bank's risk profile. The aim of the System is to support the execution of the Bank’s operational strategy and to mitigate excessive risk conflicts of interest. Participant covered by the system may receive a variable compensation based on a bonus pool approach. The System provides a comprehensive performance measurement at individual level, level of his/her organizational unit and results of the entire Bank, as well as verification of the participant’s compliant behavior with respect to law provisions, and standards adopted by the Bank and risk assessment. For reinforcement of care for long-term welfare of the Bank, under the system at least 50% of variable remuneration is provided in phantom shares based on the value of the Bank shares and at least 40% of the bonus is deferrable and paid after the end of the evaluation period it is payable for.
The system of variable remuneration components is developed by Human Resources Division, with the involvement and participation of other organizational units of the Bank, including Legal Department, Compliance Department, Risk Management Division, Financial Division, and in consultation with Internal Audit Department. This is to ensure compliance with the regulations, the Bank's articles of association and the standards of ethical conduct or other standards of conduct applicable to the Bank, in such a way that legal, compliance and reputational risks mostly related to customer relations are properly controlled and managed.
Variable remuneration systems implemented in the Bank's subsidiaries have schemes similar to the Bank for the division of remuneration into cash and financial instruments, taking into account general provisions and guidelines of market regulators regarding the sectors in which the subsidiaries operate.
MBO system covers employees employed under the management contract and refers in particular to the sales positions and to the managerial positions, which play a significant role in achieving the Bank’s commercial goals. Under the MBO system, employees receive individual goals for realisation, which result from the financial plan adopted for a given year and the Bank's key goals. The amount of the annual bonus depends on the level of implementation of these goals, as well as the result achieved by the Bank. Sales functions employees, in each quarter, can receive an advance payment towards the annual bonus in achieving of the set goals.
The system based on the provisions of the Corporate Collective Labour Agreement (CCLA) applies to all employees who are covered by it. According to the provisions of CCLA the basis of the system is a quarterly bonus which is discretionary and depends on evaluation of employee’s performance, the level of commitment and the results achieved by the Bank in a given year, as well as the incentive bonus, which is granted for outstanding achievements in professional work. In 2021, guidelines for variable remuneration, i.e. the quarterly bonus for sales network employees covered by the CCLA, were applied and took into account both performance and quality goals .
Selections and Suitability Assessment Policy
The Bank has a Policy of selecting candidates for the position of a member of the Management Board and the key function as well as assessing the suitability of proposed and appointed members of the Management Board, Supervisory Board and persons holding key functions at Bank Polska Kasa Opieki Spółka Akcyjna (Selection and suitability assessment policy) approved by the Bank's Supervisory Board on 30 December 2020. The aim of the Policy is to guarantee an optimal and uniform process of selecting candidates for the position of a member of the Management Board and the Key Function at the Bank, so as to ensure that tasks related to the implementation of the Bank's plans and business strategy are performed by persons who have the necessary knowledge, experience and skills, and who enjoy get a good reputation.
The policy of selecting and assessing suitability also defines the criteria for assessing the individual and collective suitability of candidates and members of the Management Board, Supervisory Board and Key Functions at the Bank at the stage of appointment and during the performance of the function, as well as events resulting in the need to conduct a suitability assessment, the course of the suitability assessment process, including the roles and responsibilities in the process and the impact of the assessment including corrective measures to ensure compliance with the suitability requirements.
In 2021, the secondary individual and collective suitability of members of the Bank's Supervisory Board was assessed, and the secondary individual and collective suitability of members of the Bank's Management Board was assessed as well as suitability assessment due to changes in the composition of the Bank's Management Board.
The subsidiaries have implemented the Suitability Assessment Policies in accordance with applicable law.
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Bank Pekao S.A.
Gender equality and Diversity policy
The Bank has a Gender equality and diversity policy with regard to members of the Supervisory Board, members of the Management Board and persons holding Key Functions at Bank Polska Kasa Opieki Spółka Akcyjna (Gender equality and diversity policy) introduced on December 18, 2020 by the Order of the President of the Management Board, which defines the strategy in the scope of managing diversity of the Bank's employees, including diversity with regard to the appointment of members of the Supervisory Board, members of the Management Board and persons performing Key Functions at the Bank. The gender equality and diversity policy defines guidelines aimed at ensuring that the Bank's employees can manage their careers, achieve success and evaluate their work on the basis of individual achievements, regardless of gender.
The purpose of the Bank's diversity strategy referred to in the Gender Equality and Diversity Policy is to ensure high-quality performance of tasks by the Bank's employees, including the selection of competent persons to perform functions in the Supervisory Board, Management Board and Key Functions at the Bank, first of all applying objective substantive criteria and taking into account the benefits of diversity.
The gender equality and diversity policy, in accordance with the legislative process in force at the Bank, was adopted by the Bank's Management Board and approved by the Supervisory Board.
Gender equality enables the Bank's employees to manage their career, achieve success and evaluate their work on the basis of individual achievements, regardless of gender.
Corporate values
In April 2021, we introduced new values: SIMPLE, TOGETHER, BRAVE, RESPONSIBLE along with the new bank strategy. They were developed with employees’ engagement. They define a daily work etiquette, as well as behaviour towards colleagues and clients. The values are a foundation of the changing bank’s corporate culture, which is based on effective internal cooperation and mutual respect. Along with the new values, the Management Board have decide to adopt valuable rules of team management i.e. a set of ten universal rules which should be followed by every manager while working with their teams. The bank is focused on many actions to promote the corporate culture change among employees – among others initiatives which promote teamwork and modification of the business process in accordance with the new values.
Relations with Trade Union Organizations
In 2021 the cooperation between the Bank and Trade Unions in the range of consultation, negotiations and other agreements were led pursuant to the rules defined in the labour law, with respect for both sides’ interests and social dialog rules. In 2021, 32 meetings between the Bank and Trade Unions were taken place. The meetings were conducted both stationary (11 meetings) and by means of teleconferencing due to COVID-19 pandemic announcement. The meetings and arrangements were aimed mostly at discussing the employment restructuring process. As the result of the discussions, the Bank concluded an agreement with seven Trade Union organizations operating in the Bank defining the principles of collective redundancies. The parties, among other matters, agreed on the selection criteria for employees whose employment contracts will be terminated and whose terms and conditions of employment will be amended as part of collective redundancies, severance pay conditions and additional compensation and the scope of the assistance program for dismissed employees. It was also agreed that collective redundancies will cover not more than 1 110 employees in case of termination of employment contracts and not more than 1 250 employees in case of amendment of terms and conditions of employment until 30 June 2021.
During year 2021, there were three group disputes in the Bank, initiated in 2016, 2019 and 2021 by one of the Trade Union operating in the Bank and one group dispute initiated in 2021 by another Trade Union.
Trade Unions are entitled to place on the Bank’s intranet web sides their newsletters and information concerning the crucial employee’s matters, including dialogue conducted with the Employer.
Bank, in the mutual relations with Trade Union organizations guided the principles of good will to achieve the best solutions in the range of collective labour law both for employees and for the Bank.
Relations with the Works Council
On February 22, 2021 The Works Council Members Elections took place for 2021–2025. Works Council is employees’ representative that is entitled to gain information and lead consultation with employees according to article dated 7 April 2006 about informing and conducting the consultations with the employees. The framework of talks with Works Council is the matters defined in the labour law regulations and the cooperation between both sides takes place with the respect of mutual rights. Information after the meetings between Works Council and employer is placed on the intranet websites available for all employees.
In 2021, 9 meetings with Works Council took place. The meetings were conducted both stationary (3 meetings) and by means of teleconferencing due to COVID-19 pandemic announcement (6 meetings).
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Workforce in number
As at the end of December 2021, the Group employed 14,702 employees (in the Bank and the companies consolidated under full consolidation method) as compared to 14,994 employees as at the end of 2020.
As at the end of December 2021, the Bank employed 12,661 employees as compared to 12,870 employees as at the end of 2020.
The average age of the employees was 45.5 years, 74.3% of the employees are university graduates ( 72.2% in 2020), women represent 70.2% of the total workforce.
7.7 Sponsorship and charity policy
Our sponsorship and charity activities are aimed at strengthening the Bank's image as an open, modern institution, close to clients and the communities in which we operate.
We support initiatives based on long-term social commitment with selected organizations and institutions that implement projects in areas such as:
− responsible development of the economy,
− promotion of the national brand and Polish values,
− support for culture and sport,
− aid for children,
− environmental protection.
We support nationwide projects by sponsoring strategic events that have a significant impact on Polish culture and dedicated to local communities. We strive to ensure the quality of society's life as well as build and strengthen long-term relations with the society based on mutual understanding of needs.
Our charity activities are carried out mainly through the Bank Pekao S.A. Foundation. the name of dr. Marian Kanton, which was established in 1997. The scope of the Foundation's charitable and social activities is very wide. The statutory goals of the Foundation include: supporting activities in the field of education and upbringing of children and adolescents, scientific and research projects and didactic projects of scientific institutions and schools, popularizing banking knowledge, helping the sick and disabled, environmental protection, and disseminating culture.
In 2021, due to the global pandemic caused by the COVID-19, our plans in the area of sponsorship and charity activities were adjusted to the national restrictions defined by the Polish government and banking supervision. Nevertheless, we got involved in a number of projects organized throughout the country, which made it possible to maintain the continuity of long-term initiatives and provided great support to the community in this difficult period.
Last year, the Foundation was involved, inter alia, in in the purchase of equipment for the Territorial Defense Forces. She equipped the computer lab at the Primary School No. Orląt Lwowskich in Tomaszów Lubelski, funded scholarships for students of the John Paul II Catholic University of Lublin and co-financed the renovation of the campus for students of the UKSW. Remembering the Poles in the East, the cultural heritage and history of Kresy, the Foundation also donated funds for the preparation of 80 Christmas packages for Polish families in and around Krzemieniec. The Foundation donated funds for the renovation of the social library in Gdańsk. As part of promoting physical culture and sport, the Foundation and the Bank's employees supported the organization of the "Postcresima" youth camp and funded scholarships for talented youth from the Zdrowy Ruch Foundation.
After the break caused by COVID-19, we were once again the title sponsor of one of the largest tennis tournaments in Poland - Pekao Szczecin Open. We have established cooperation with the Polish Basketball Association and the Polish Basketball League S.A. and we became the official sponsor of Polish basketball.
In 2021, we also supported economic and economic initiatives, we were present at the Economic Forum in Karpacz, Congress 590, Corporate and Investment Banking Congress and the Polska Wielki Projekt Congress.
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Despite the difficulties related to the pandemic, we conducted the third edition of the "We are close" grant competition, under which the Bank's employees, as volunteers, implemented their own projects for local communities. The projects included initiatives in such categories as ecology, education, sport, culture and art, health promotion A wide range of categories made it possible for each employee to propose a project related to topics related to the needs of the local community. So far, 230 initiatives have been implemented in towns and villages in Poland. Over 1,150 volunteers from the Bank participated in them. every employee of Bank Pekao should participate by submitting a project to help local communities and the form of its implementation. The authors of the winning initiatives receive 4.5 thousand from the Dr. Marian Kanton Foundation of Bank Pekao SA for the implementation of their own project. The competition is becoming more and more popular among employees, participation in it allows for self-realism integration, integration with colleagues and assistance to local communities. The most important projects implemented this year were related to, inter alia, with: sports education for children from an orphanage, ecological workshops for seniors, cycling races and meetings with famous cyclists.
In addition to the activities carried out through the Foundation of dr. Marian Kanton, the Bank also cooperates with public benefit organizations for which it provides donations supporting their statutory activities.
For many years, we have been consistently involved in the protection of Polish bison, we care for the protection of the largest free-living herd of bison in the world, inhabiting the areas of the Białowieża Forest. We also co-finance scientific and educational projects in institutions such as the Białowieża National Park, the Warsaw Zoological Garden "Panda", the Pszczyna Region Development and Promotion Agency, or the European Bison Friends Association.
In November 2021, we made our art collection available to the public - the virtual Art Gallery of Bank Pekao S.A. The collection of almost 1,200 exhibits includes works by early art authors such as Jan Matejko, Stanisław Wyspiański, Wojciech Kossak, Julian Fałat, Józef Mehoffer and Zygmunt Waliszewski, as well as works by contemporary artists, incl. Tadeusz Dominik, Jerzy Nowosielski, Jerzy Duda-Gracz, Franciszek Starowieyski and Bożenna Biskupska. The collection also includes sculptures, furniture, lamps and clocks from the 19th and 20th centuries.
We donated two exhibits from our collection to the collections of the Museum at the Royal Castle and the National Museum in Warsaw. The museum at the Royal Castle received a 16th-century tapestry by Cornelis de Ronde, entitled "Kidnapping of Helena by Paris", while the National Museum in Warsaw a silver casket for jewelry from the beginning of the 18th century made by Daniel Friedrich von Mylius.
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Bank Pekao S.A.
8. Statement of Financial Position and Financial Results
Consolidated income statement containing cumulated items for the period from 1 January to 31 December, 2021 and 2020 respectively is presented in the Consolidated Financial Statements of Bank Pekao S.A. Group for the year ended on 31 December 2021
The Report on activities of Bank Pekao S.A. Group for the year 2021, includes statement of financial position in a short form and income statement in a presentation form as well as the key, selected items from these statements are discussed.
Main P&L items
Net profit of the Bank Pekao S.A. Group attributable to the Bank's holders for 2021 amounted to PLN 2,174.9 million Net profit was higher by PLN 1,073.2 million i.e. 97.4% y/y. ROE reached the level of 8.7%. We have reached the level of profitability seen before the pandemic.
In 2 021 , the Group’s operating income amounted to PLN 8,522.2 million and was higher by 9.3% in comparison to 2020 , thanks to both net interest income and net fee and commission income.
• Net interest income in 2021,amounted to PLN 5,660.8 million and was higher by PLN 458.8 million, i.e. 8.8% compared to 2020,
• The Group’s net fee and commission income in 2021, amounted to PLN 2,687.5 million and was higher by PLN 253.8 million i.e. 10.4% compared to 2020, mainly due to the adaptation of the offer to the changing market conditions, customer activity and positive sentiment on capital markets, which compensated for the negative impact of regulatory changes in the area of investment funds.
In 2021 , the Group’s operating costs including contributions and payments to the Bank Guarantee Fund amounted to PLN 4,028.4 million and were higher by PLN 196.5 million, i.e. 5.1% than in 2020, mainly due to integration costs resulting from the acquisition of the part of Idea Bank , the reconstruction of variable salary costs and the growing depreciation, which is related to investments in the transformation of the Bank. The dynamics of costs was consistent with the assumptions of the Strategy.
The Group’s Net allowances for expected credit losses amounted to PLN 778.2 million in 2021 , and was lower by half than in the corresponding period of 2020, mainly due to the gradual normalization of write-offs towards the levels observed before the pandemic.
I n 2021 the Bank Guarantee Fund fee amounted to PLN 289.3 million, and were lower of PLN 91.6 million as compared to 2020.
Tax on certain financial institutions in 2021 amounted to PLN 718.9 million and was higher by PLN 58.3 million, i.e. 8.8% as compared to 2020 , due to an increase in Group’s assets.
Volumes
As at the end of December 2021, loans and advances at nominal value amounted to PLN 175,748.7 million, an increase of PLN 17,864.9 million, i.e. 11.3% in comparison to the end of December 2020.
As at the end of December 2021 , the volume of retail loans amounted to PLN 82,777.8 million, an increase of PLN 3,445.5 million, i.e. 4.3% in comparison to the end of December 2020 , thanks to dynamic growth of PLN mortgage loans by 6.5% y/y.
As at the end of December 2021, corporate loans and non-treasury debt securities amounted to PLN 92,970.9 million, an increase of PLN 14,419.4 million, i.e. 18.4% in comparison to the end of December 2020, however with the growth in the segment of enterprises (24.4% y/y) and leasing receivables.
As at the end of December 2021 , amounts due to the Group’s customers and debt securities issued amounted to PLN 202,920.9 million, an increase of PLN 16,271.1 million, i.e. 8.7% in comparison to the end of December 2020 .
The value of net assets of investment funds managed by Pekao TFI S.A. amounted to PLN 20,285.3 million as at the end of December 2021, an increas of PLN 937.5 million, i.e. 4.8% in comparison to the end of Decemebr 2020.
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8.1 The consolidated income statement – presentation form
In 2021, we generated the net profit of the Bank Pekao S.A. Group attributable to the Bank's holders at the level of PLN 2,174.9 million. Net profit was higher by PLN 1,073.2 million, i.e. 97.4% y/y, mainly due to higher opereiting income and lower net allowances for expected credit losses, which are gradually normalizing towards the levels observed before the pandemic.
On 3 January, 2021, the Bank took over the enterprise and liabilities of Idea Bank S.A. with exclusions as a result of the BGF's application of the resolution instrument on 30 December, 2020.
(in PLN million)
2021
2020
CHANGE
Net interest income
5,660.8
5,202.0
8.8%
Net fee and commission income
2,687.5
2,433.7
10.4%
Dividend income
26.7
26.2
1.9%
Trading result
163.4
230.8
(29.2%)
Net other operating income and expenses (*)
(16.2)
(96.9)
(83.3%)
Net non-interest income (*)
2,861.4
2,593.9
10.3%
Operating income (*)
8,522.2
7,795.9
9.3%
Operating costs
(3,739.1)
(3,451.0)
8.3%
Gross operating profit (*)
4,783.1
4,344.9
10.1%
Net allowances for expected credit losses
(778.2)
(1,578.4)
(50.7%)
Net operating profit
4,004.9
2,766.5
44.8%
Bank Guarantee Fund fee
(289.3)
(380.9)
(24.0%)
Tax on certain financial institutions
(718.9)
(660.6)
8.8%
Gains (losses) on associates and disposal of subsidiaries
4.9
-
x
Profit before tax
3,001.6
1,725.0
74.0%
Income tax expense
(825.0)
(622.1)
32.6%
Net profit
2,176.6
1,102.9
97.4%
Attributable to equity holders of the Bank
2,174.9
1,101.7
97.4%
Attributable to non-controlling interest
1.7
1.2
41.7%
Operating income
In 2 021 , the Group’s operating income amounted to PLN 8,522.2 million and was higher by 9.3% in comparison to 2020 , thanks to both net interest income and net fee and commission income.
Total net interest income
(in PLN million)
2021
2020
CHANGE
Interest income
5,870.4
5,849.3
0.4%
Interest expense
(209.6)
(647.3)
(67.6%)
Net interest income
5,660.8
5,202.0
8.8%
Net interest income in 2021,amounted to PLN 5,660.8 million and was higher by PLN 458.8 million, i.e. 8.8% in compared to 2020.
Interest income
In 2021 , the interest income amounted to PLN 5,870.4 million and was higher by PLN 21.1 million y/y. The increase in interest rates in the fourth quarter of 2021 along with additional interest income on the assets acquired from Idea Bank S.A. compensated for the impact of the reductions on the results in the first half of the year.
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Bank Pekao S.A.
Interest expense
In 2021 , the interest expense amounted to PLN 209.6 million and was lower by PLN 437.7 million y/y, (despite a strong increase in the volume of deposits), mainly due to the adaptation of the Bank's product offer to the market conditions.
Interest margin
The interest margin achieved in 2021 was 2.39% and was lower by 0.06 p.p. than the margin achieved in 2020, under the pressure of the negative impact of interest rate cuts in the first half of 2021.
Net non-interest income
(in PLN million)
2021
2020
CHANGE
Fee and commission income
3,230.0
2,905.3
11.2%
Fee and commission expense
(542.5)
(471.6)
15.0%
Net fee and commission income
2,687.5
2,433.7
10.4%
Dividend income
26.7
26.2
1.9%
Trading result
163.4
230.8
(29.2%)
Net other operating income and expense
(16.2)
(96.9)
(83.3%)
Net non-interest income
2,861.4
2,593.8
10.3%
The Group’s net fee and commission income in 2021, amounted to PLN 2,687.5 million and was higher by PLN 253.8 million i.e. 10.4% compared to 2020, mainly due to the adaptation of the offer to the changing market conditions, customer activity and positive sentiment on capital markets, which compensated for the negative impact of regulatory changes in the area of investment funds.
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The table below presents the Group’s net fee and commission income divided according to the main areas of the activity.
(in PLN million)
2021
2020
CHANGE
Net fee and commission income
2,687.5
2,433.7
10.4%
on loans
552.5
486.3
13.6%
on cards
243.7
260.3
(6.4%)
on mutual funds
366.3
390.2
(6.1%)
on brokerage activate
132.3
107.3
23.3%
on margins on foreign exchange transactions with clients
596.4
527.9
13.0%
other
796.3
661.7
20.3%
Operating costs
In 2021 , the Group’s operating costs including contributions and payments to the Bank Guarantee Fund amounted to PLN 4,028.4 million and were higher by PLN 196.5 million, i.e. 5.1% than in 2020, (below inflation) mainly due to integration costs resulting from the acquisition of the part of Idea Bank , the reconstruction of variable salary costs and the growing depreciation, which is related to investments in the transformation of the Bank. The dynamics of costs was consistent with the assumptions of the Strategy.
(in PLN million)
2021
2020
CHANGE
Personnel expenses
(2,156.1)
(2,039.9)
5.7%
Other administrative expenses
(934.8)
(872.2)
7.2%
Depreciation and amortization
(648.2)
(538.9)
20.3%
Operating costs
(3,739.1)
(3,451.0)
8.3%
In 2021 , cost / income ratio amounted to 43.9% and was lower by 0.4 p.p. y/y.
As of 31 December 2021, the Group employed 14,702 employees (in the Bank and the companies consolidated under full consolidation method) as compared to 14,994 employees as at the end of December 2020 an was lower y/y despite of the acquisition of Idea Bank S.A. whose employees became employees of the Bank pursuant to Art. 23 of the Labor Code.
Bank Guarantee Fund fee
I n 2021 the Bank Guarantee Fund fee amounted to PLN 289.3 million, and were lower of PLN 91.6 million as compared to 2020.
Tax on certain financial institutions
Tax on certain financial institutions in 2021 amounted to PLN 718.9 million and was higher by PLN 58.3 million, i.e. 8.8% as compared to 2020 , due to an increase in Group’s assets.
Net allowances for expected credit losses
(in PLN million)
2021
2020
CHANGE
financial assets measured at amortized cost excluding provisions for legal risk regarding foreign currency mortgage loans in CHF
(689.0)
(1 145.6)
(39.9%)
financial assets measured at fair value through other comprehensive income
37.6
(34.3)
x
financial liabilities measured at amortized cost
25.4
(89.6)
x
Net allowances for expected credit losses excluding provisions for legal risk regarding foreign currency mortgage loans in CHF
(625.9)
(1 269.6)
(50.7%)
financial assets measured at amortized cost - provisions for legal risk regarding foreign currency mortgage loans in CHF
(152.3)
(308.9)
(50.7%)
Net allowances for expected credit losses
(778.2)
(1 578.5)
(50.7%)
The Group’s Net allowances for expected credit losses amounted to PLN 778.2 million in 2021 , and was lower by half than in the corresponding period of 2020, mainly due to the gradual normalization of write-offs towards the levels observed before the pandemic.
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Bank Pekao S.A.
Costs of risk
The costs of risk in 2021 amounted to 0.45% and was lower by 0.54 p.p. y/y. In four quarter of 2021, the Group made an additional PLN 105.0 million provisions for legal risk regarding foreign currency mortgage loans in CHF.
8.2 Structure of the consolidated statement of financial position – short form
The balance sheet of Bank Pekao S.A. determines the amount of total assets in balance sheet and the structure of the assets and liabilities of the Group. As at the end of December 2021, the total assets of Bank Pekao S.A. constitutes 96.3% of the total assets of the whole Group.
31.12.2021
31.12.2020
ASSETS
PLN MILLION
STRUCTURE
PLN MILLION
STRUCTURE
CHANGE
Cash and due from Central Bank
4,696.6
1.9%
4,456.3
1.9%
5.4%
Loans and advances to banks (*)
3,328.1
1.3%
2,578.3
1.1%
29.1%
Loans and advances to customers (**)
169,073.0
67.5%
151,684.3
65.0%
11.5%
Reverse repo transactions
969.6
0.4%
280.6
0.1%
> 100%
Securities (***)
57,352.8
22.9%
62,331.8
26.7%
(8.0%)
Investments in associates
44.0
0.0%
-
-
x
Property, plant and equipment and intangible assets
4,130.6
1.6%
3,927.5
1.7%
5.2%
Other assets
10,971.9
4.4%
7,958.4
3.4%
37.9%
Total assets
250,566.6
100.0%
233,217.2
100.0%
7.4%
(*) Including net investments in financial leases to banks.
(**) Including net investments in financial leases to customers and non-treasury debt securities .
(***) Including financial assets held for trading, other financial instruments at fair value through profit and loss and excluding non-treasury debt securities .
31.12.2021
31.12.2020
EQUITY AND LIABILITIES
PLN MILLION
STRUCTURE
PLN MILLION
STRUCTURE
CHANGE
Amounts due to Central Bank
0.0
0.0%
0.0
0.0%
x
Amounts due to other banks
8,575.5
3.4%
9,950.7
4.3%
(13.8%)
Amounts due to customers
194,804.0
77.7%
177,745.2
76.2%
9.6%
Debt securities issued
5,355.4
2.1%
6,146.7
2.6%
(12.9%)
Subordinated liabilities
2,761.5
1.1%
2,757.9
1.2%
0.1%
Repo transactions
0.0
0.0%
152.6
0.1%
x
Lease liabilities
358.0
0.1%
406.2
0.2%
(11.9%)
Other liabilities
14,848.9
5.9%
10,562.9
4.5%
40.6%
Total equity, including
23,863.3
9.5%
25,495.0
10.9%
(6.4%)
non-controlling interests
11.9
0.0%
11.3
0.0%
5.3%
Total equity and liabilities
250,566.6
100.0%
233,217.2
100.0%
7.4%
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Bank Pekao S.A.
8.2.1 Assets
Changes in the structure of assets
Loans and advances to customers and securities represent items of the largest value under assets. As at the end of 2021, they accounted for 67.5% and 22.9% of the total assets respectively in comparison with 65.0% and 26.7% respectively as at the end of 2021.
Cash and due from Central Bank
(in PLN million)
31.12.2021
31.12.2020
CHANGE
Cash and due from Central Bank, including:
4,696.6
4,456.3
5.4%
Cash
3,699.7
4,306.1
(14.1%)
Current account at Central Bank
996.9
150.2
>100%
Other
0.0
0.0
-
Customers’ Financing
Customer structure of loans and advances
(in PLN million)
31.12.2021
31.12.2020
CHANGE
Loans and advances at nominal value (*)
175,748.7
157,883.8
11.3%
Loans and investments in financial leases
164,860.8
148,373.5
11.1%
Retail
82,777.8
79,332.3
4.3%
Corporate
82,083.0
69,041.2
18.9%
Non-treasury debt securities
10,887.9
9,510.3
14.5%
Other (**)
1,257.3
1,104.1
13.9%
Impairment allowances
(7,933.0)
(7,303.6)
8.6%
Total net receivables
169,073.0
151,684.3
11.5%
Reverse repo transactions
969.2
280.5
>100%
Total Customers’ financing (***)
176,717.9
158,164.3
11.7%
(*) Excluding reverse repo transactions.
(**) Including interest and receivables in transit.
(***) Total customers’ financing includes loans and advances at nominal value, securities issued by non-monetary entities and reverse repo transactions.
As at the end of December 2021, loans and advances at nominal value amounted to PLN 175,748.7 million, an increase of PLN 17,864.9 million, i.e. 11.3% in comparison to the end of December 2020.
As at the end of December 2021 , the volume of retail loans amounted to PLN 82,777.8 million, an increase of PLN 3,445,5 million, i.e. 4.3% in comparison to the end of December 2020 , thanks to dynamic growth of PLN mortgage loans by 6.5% y/y.
As at the end of December 2021, corporate loans and non-treasury debt securities amounted to PLN 92,970.9 million, an increase of PLN 14,419.4 million, i.e. 18.4% in comparison to the end of December 2020, however with the growth in the segment of enterprises (24.4% y/y) and leasing receivables.
Receivables and impairment losses (*)
(in PLN million)
31.12.2021
31.12.2020
CHANGE
Gross receivables
177,006.1
158,987.9
11.3%
Stage 1
142,212.0
123,458.6
15.2%
Stage 2
25,606.8
26,926.5
(4.9%)
Stage 3
9,187.3
8,602.8
6.8%
Impairment allowances
(7,933.1)
(7,303.6)
8.6%
Stage 1
(634.5)
(423.5)
49.8%
Stage 2
(1,092.2)
(1,175.0)
(7.0%)
Stage 3
(6,206.4)
(5,705.1)
8.8%
Total net receivables
169,073.0
151,684.3
11.5%
(*) Including net investments in financial leases to customers, non-treasury debt securities , interest and receivables in transit and excluding reverse repo transactions.
As at the end of December 2021 the ratio of impaired receivables (stage 3) to the gross receivables amounted to 5.2 %.
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Loans and advances to customers by currency (*)
31.12.2021
31.12.2020
PLN MILLION
STRUCTURE
PLN MILLION
STRUCTURE
CHANGE
Denominated in PLN
146,451.2
82.7%
129,536.7
81.5%
13.1%
Denominated in foreign currencies (**)
30,554.8
17.3%
29,451.2
18.5%
3.7%
Total
177,006.0
100.0%
158,987.9
100.0%
11.3%
Impairment allowances
(7,933.0)
x
(7,303.6)
x
8.6%
Total net
169,073.0
x
151,684.3
x
11.5%
(*) Including net investments in financial leases to customers, non-treasury debt securities , interest and receivables in transit and excluding reverse repo transactions.
(**) Including indexed loans.
The currency structure of loans and advances to customers is dominated by amounts expressed in the Polish złoty, as at the end of December 2021 , their share was 82.7%. The largest portion of foreign currency loans and advances to customers were represented by those denominated in EUR (84.7%), CHF (9.0%) and USD (4.5%).
Loans and advances to customers by contractual maturities (*)
31.12.2021
31.12.2020
PLN MILLION
STRUCTURE
PLN MILLION
STRUCTURE
CHANGE
Current and up to 1 month
17,759.2
10.0%
14,316.0
9.0%
24.1%
1 to 3 months
6,066.4
3.4%
5,740.7
3.6%
5.7%
3 months to 1 year
20,421.2
11.5%
16,483.2
10.4%
23.9%
1 to 5 years
59,116.6
33.4%
54,919.4
34.5%
7.6%
Over 5 years
66,586.2
37.6%
62,477.1
39.3%
6.6%
Past due
5,799.1
3.3%
3,947.4
2.5%
46.9%
Other
1,257.3
0.7%
1,104.1
0.7%
13.9%
Total
177,006.0
100.0%
158,987.9
100.0%
11.3%
Impairment allowances
(7,933.0)
x
(7,303.6)
x
8.6%
Total net
169,073.0
x
151,684.3
x
11.5%
(*) Including net investments in financial leases to customers, non-treasury debt securities , interest and receivables in transit and excluding reverse repo transactions.
As at the end of December 2021, loans and advances with maturity over 5 years represents 37.6% of total loans and advances (mainly attributed to mortgage loans, investment loans, and non-treasury debt securities).
Information on loan concentration is included in the Note to the Consolidated Financial Statements of Bank Pekao S.A. Group for the year ended on 31 December 2021
8.2.2 Liabilities
Changes in the structure of liabilities
Amounts due to customers were the main item under the Group’s liabilities and equity. As at the end of 2021, amounts due to customers, debt securities issued and subordinated liabilities totaled PLN 211,496.4 million, and their share in the total assets was 81.0%, compared with 80.1% as at the end of 2020. The share of total shareholder’s equity in the total assets was 9.5% as at the end of 2021, compared with 10.9% as at the end of 2020.
External sources of financing
(in PLN million)
31.12.2021
31.12.2020
CHANGE
Amounts due to Central Bank
0.0
0.0
x
Amounts due to other banks
8,575.5
9,950.7
(13.8%)
Amounts due to customers
194,804.0
177,745.2
9.6%
Debt securities issued
5,355.4
6,146.7
(12.9%)
Subordinated liabilities
2,761.5
2,757.9
0.1%
Repo transactions
0.0
152.6
x
Total external sources of financing
211,496.4
196,753.1
7.5%
Amounts due to customers amounted to PLN 194,804.0 million, an increase by 9.6% due to significant increase in retail and corporate deposits.
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Bank Pekao S.A.
The deposit base is widely diversified and is sourced from retail and corporate customers. In addition, the Group uses also funds borrowed on the interbank market. The Group is not dependent on any single customer nor group of customers.
Amounts due to customers and debt securities issued
(in PLN million)
31.12.2021
31.12.2020
CHANGE
Corporate deposits
78.135.7
71.664.5
9.0%
Non-financial entities
57.433.7
54.784.0
4.8%
Non-banking financial entities
4.281.6
4.598.9
(6.9%)
Budget entities
16.420.4
12.281.6
33.7%
Retail deposits
116.342.1
105.734.3
10.0%
Other (*)
326.2
346.4
(5.8%)
Amounts due to customers (**)
194.804.0
177.745.2
9.6%
Debt securities issued. of which
8.116.9
8.904.6
(8.8%)
Structured Certificates of Deposit (SCD)
178.6
523.3
(65.9%)
Subordinated bonds
2.750.0
2.750.0
0.0%
Pekao Bank Hipoteczny S.A. covered bonds
1.086.8
1.315.5
(17.4%)
Pekao Bank Hipoteczny S.A. bonds
156.0
355.0
(56.1%)
Pekao Leasing Sp. z o.o. bonds
1.366.9
1.476.7
(7.4%)
Pekao Faktoring Sp. z o.o. bonds
2.559.9
2.472.5
3.5%
Interest
18.7
11.6
61.2%
Amounts due to customers and debt securities issued (**)
202.920.9
186.649.8
8.7%
Lease liabilities
358.0
406.2
(11.9%)
Repo transactions
0.0
152.5
x
Amounts due to customers and debt securities issued total (***)
203.278.9
187.208.6
8.6%
Investment funds of Pekao TFI S.A. (ex. Pioneer Pekao TFI)
20.285.3
19.347.8
4.8%
Bond and money market funds
14.004.7
15.388.7
(9.0%)
Balanced funds
3.450.8
2.171.1
58.9%
Equity funds
2.500.1
1.701.8
46.9%
PPK
329.7
86.2
>100%
including distributed through the Group’s network
19.328.5
18.852.7
2.5%
(*) Other item includes interest and funds in transit.
(**) Excluding repo transactions and lease liabilities.
(***) Including repo transactions and lease liabilities.
As at the end of December 2021 , amounts due to the Group’s customers and debt securities issued amounted to PLN 202,920.9 million, an increase of PLN 16,271.1 million, i.e. 8.7% in comparison to the end of December 2020 .
The total volume of retail deposits, Structured Certificates of Deposit and other amounted to PLN 116,774.2 million as at the end of December 2021 , an increase of PLN 10,196.3 million, i.e. 9.6% in comparison to the end of December 2020 and they increased their share in the structure of financing.
The total volume of corporate deposits, Subordinated bonds, Pekao Bank Hipoteczny S.A. covered bonds and bonds, Pekao Leasing Sp. z o.o. bonds, Pekao Faktoring Sp. z o.o. bonds interest and other amounted to PLN 86,146.6 million as at the end D ecember 2021, an increase of PLN 6,074.7 million, i.e. 7.6% as compared to the end of D ecember 2020 .
The value of net assets of investment funds managed by Pekao TFI S.A. amounted to PLN 20,285.3 million as at the end of D ecember 2021 , an increas of PLN 937.5 million, i.e. 4.8% in comparison to the end of D ecember 2020 .
Amounts due to customers by currency (*)
31.12.2021
31.12.2020
PLN MILLION
STRUCTURE
PLN MILLION
STRUCTURE
CHANGE
Denominated in PLN
163,671.0
84.0%
149,318.0
84.0%
9.6%
Denominated in foreign currencies
31,133.0
16.0%
28,427.2
16.0%
9.5%
Total
194,804.0
100.0%
177,745.2
100.0%
9.6%
(*) Including interest and amounts due in transit and excluding repo transactions and lease liabilities.
The bulk of the amounts due to customers are denominated in the Polish currency and its share as at the end of Decemeber 2021 amounted to 84.0%. The majority of amounts due to customers denominated in foreign currencies were in EUR (63.2%) and USD (30.0%).
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Amounts due to customers by contractual maturities (*)
31.12.2021
31.12.2020
PLN MILLION
STRUCTURE
PLN MILLION
STRUCTURE
CHANGE
Current accounts and overnight deposits
181,534.3
93.3%
156,956.2
88.5%
15.7%
Term deposits
12,943.6
6.7%
20,442.6
11.5%
(36.7%)
Total deposits
194,477.8
100.0%
177,398.8
100.0%
9.6%
Interest accrued
5.9
x
46.6
x
(87.3%)
Funds in transit
320.3
x
299.8
x
6.8%
Total
194,804.0
x
177,745.2
x
9.6%
(*) Excluding repo transactions and lease liabilities.
Provisions, deferred tax assets and liabilities
(in PLN million)
31.12.2021
31.12.2020
CHANGE
Total provisions
883.1
988.7
(10.7%)
of which:
provisions for off-balance sheet commitments
360.1
383.4
(6.1%)
provisions for liabilities to employees
310.1
426.6
(27.3%)
other provisions
212.9
178.7
19.1%
Deferred tax liabilities
24.9
27.8
(10.4%)
Deferred tax assets
1,648.8
1,248.7
32.0%
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8.3 Consolidated income statement – long form
Consolidated income statement for 2021 - Provided for comparability purposes.
(in PLN thousand)
Q4 2021
Q3 2021
Q2 2021
Q1 2021
Interest income
1,670,439
1,430,228
1,364,910
1,404,779
Interest income calculated using the effective interest method
1,574,704
1,354,688
1,296,270
1,336,590
Financial assets measured at amortised cost
1,476,990
1,259,802
1,180,899
1,191,489
Financial assets measured at fair value through other comprehensive income
97,714
94,886
115,371
145,101
Other interest income related to financial assets measured at fair value through profit or loss
95,735
75,540
68,640
68,189
Interest expense
(69,787)
(43,170)
(25,458)
(71,180)
Net interest income
1,600,652
1,387,058
1,339,452
1,333,599
Fee and commission income
849,692
842,719
800,788
736,798
Fee and commission expense
(154,451)
(139,062)
(128,034)
(120,935)
Net fee and commission income
695,241
703,657
672,754
615,863
Dividend income
3
1,062
25,597
-
Result on financial assets and liabilities measured at fair value through profit or loss and foreign exchange result
9,482
27,197
64,559
28,607
Result on fair value hedge accounting
723
335
847
1,799
Result on derecognition of financial assets and liabilities not measured at fair value through profit or loss
(7,061)
2,917
23,194
10,813
Net allowances for expected credit losses
(232,127)
(178,138)
(191,900)
(176,033)
Operating income
46,019
28,846
27,944
18,737
Operating expenses
(69,134)
(25,146)
(28,495)
(14,971)
Administrative expenses
(924,954)
(935,549)
(978,757)
(1,259,782)
Personnel expenses
(470,778)
(506,269)
(532,478)
(646,531)
Other administrative expenses
(454,176)
(429,280)
(446,279)
(613,251)
Depreciation and amortization
(166,889)
(163,726)
(160,520)
(157,083)
Gains (losses) on associates and disposal of subsidiaries
3,880
693
355
-
PROFIT BEFORE INCOME TAX
955,835
849,206
795,030
401,549
Income tax expense
(262,096)
(217,841)
(189,672)
(155,453)
NET PROFIT
693,739
631,365
605,358
246,096
Attributable to equity holders of the Bank
693,689
630,780
604,780
245,648
Attributable to non-controlling interests
50
585
578
448
(*) Other administrative expenses includes tax on certain financial institutions and Bank Guarantee Fund fee .
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Bank Pekao S.A.
Consolidated income statement for 2020 - Provided for comparability purposes.
(in PLN thousand)
Q4 2020
Q3 2020
Q2 2020
Q1 2020
Interest income
1,277,205
1,307,670
1,547,044
1,717,440
Interest income calculated using the effective interest method
1,225,600
1,248,391
1,478,805
1,658,059
Financial assets measured at amortised cost
1,076,910
1,091,978
1,314,397
1,499,810
Financial assets measured at fair value through other comprehensive income
148,690
156,413
164,408
158,249
Other interest income related to financial assets measured at fair value through profit or loss
51,605
59,279
68,239
59,381
Interest expense
(72,044)
(104,618)
(181,496)
(289,189)
Net interest income
1,205,161
1,203,052
1,365,548
1,428,251
Fee and commission income
794,163
714,908
676,929
719,266
Fee and commission expense
(137,863)
(119,799)
(109,082)
(104,872)
Net fee and commission income
656,300
595,109
567,847
614,394
Dividend income
7
268
25,748
255
Result on financial assets and liabilities measured at fair value through profit or loss and foreign exchange result
83,386
26,178
50,703
10,272
Result on fair value hedge accounting
22
(117)
992
(1,744)
Result on derecognition of financial assets and liabilities not measured at fair value through profit or loss
12,285
4,672
23,049
21,126
Net allowances for expected credit losses
(496,153)
(277,387)
(474,010)
(330,910)
Operating income
16,062
16,436
16,490
19,192
Operating expenses
(84,810)
(26,374)
(28,956)
(24,909)
Administrative expenses
(895,487)
(874,265)
(905,345)
(1,278,372)
Personnel expenses
(473,175)
(459,178)
(489,277)
(618,236)
Other administrative expenses
(422,312)
(415,087)
(416,068)
(660,136)
Depreciation and amortization
(141,329)
(139,383)
(134,704)
(123,535)
Gains (losses) on associates and disposal of subsidiaries
-
-
-
-
PROFIT BEFORE INCOME TAX
355,444
528,189
507,362
334,020
Income tax expense
(170,550)
(157,089)
(147,906)
(146,569)
NET PROFIT
184,894
371,100
359,456
187,451
Attributable to equity holders of the Bank
184,812
370,851
359,151
186,898
Attributable to non-controlling interests
82
249
305
553
(*) Other administrative expenses includes tax on certain financial institutions and Bank Guarantee Fund fee.
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Bank Pekao S.A.
8.4 Consolidated statement of comprehensive income
Consolidated statement of comprehensive income for 2021
(in PLN thousand)
Q4 2021
Q3 2021
Q2 2021
Q1 2021
Net profit
693,739
631,365
605,358
246,096
Other comprehensive income
Item that are or may be reclassified subsequently to profit or loss:
Impact of revaluation of debt financial instruments and loan measured at fair value through other comprehensive income (net):
(700,846)
(97,002)
(274,631)
(200,938)
Profit or loss on fair value measurement
(697,980)
(94,533)
(257,773)
(194,753)
Profit or loss reclassification to income statement after derecognition
(2,866)
(2,469)
(16,858)
(6,185)
Impact of revaluation of derivative instruments hedging cash flows (net)
(1,132,204)
(232,201)
(100,101)
(271,771)
Items that will never be reclassified to profit or loss:
Impact of revaluation of investments in equity instruments designated at fair value through other comprehensive income (net)
(23,774)
(36,638)
31,262
35,952
Remeasurements of the defined benefit liabilities (net)
38,710
-
-
-
Other comprehensive income (net of tax)
(1,818,114)
(365,841)
(343,470)
(436,757)
Total comprehensive income
(1,124,375)
265,524
261,888
(190,661)
Attributable to equity holders of the Bank
(1,124,462)
264,939
261,310
(191,109)
Attributable to non-controlling interests
87
585
578
448
Consolidated statement of comprehensive income for 2020
(in PLN thousand)
Q4 2020
Q3 2020
Q2 2020
Q1 2020
Net profit
184,894
371,100
359,456
187,451
Other comprehensive income
Item that are or may be reclassified subsequently to profit or loss:
Impact of revaluation of debt financial instruments and loan measured at fair value through other comprehensive income (net):
159,388
101,235
425,312
(130,495)
Profit or loss on fair value measurement
162,360
105,546
444,560
(119,609)
Profit or loss reclassification to income statement after derecognition
(2,972)
(4,311)
(19,248)
(10,886)
Impact of revaluation of derivative instruments hedging cash flows (net)
(57,919)
3,509
96,353
336,097
Items that will never be reclassified to profit or loss:
Impact of revaluation of investments in equity instruments designated at fair value through other comprehensive income (net)
68,044
(5,323)
17,723
(9,099)
Remeasurements of the defined benefit liabilities (net)
(8,881)
-
-
-
Other comprehensive income (net of tax)
160,632
99,421
539,388
196,503
Total comprehensive income
345,526
470,521
898,844
383,954
Attributable to equity holders of the Bank
345,453
470,272
898,539
383,401
Attributable to non-controlling interests
73
249
305
553
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Bank Pekao S.A.
8.5 Consolidated income statement – presentation form
Consolidated income statement for 2021
(in PLN thousand)
Q4 2021
Q3 2021
Q2 2021
Q1 2021
Net interest income
1,600,652
1,387,058
1,339,452
1,333,599
Net fee and commission income
695,241
703,657
672,754
615,863
Dividend income
3
1,062
25,597
-
Trading result
3,144
30,449
88,600
41,219
Net other operating income and expenses
(23,115)
10,232
6,039
9,553
Net non-interest income
675,273
745,400
792,990
666,635
Operating income
2,275,925
2,132,458
2,132,442
2,000,234
Operating costs
(875,464)
(899,330)
(939,310)
(1,043,835)
Gross operating profit
1,400,461
1,233,128
1,193,132
956,399
Net allowances for expected credit losses
(232,127)
(178,138)
(191,900)
(176,033)
Net operating profit
1,168,334
1,054,990
1,001,232
780,366
Bank Guarantee Fund fee
(29,969)
(27,120)
(28,861)
(203,357)
Tax on certain financial institutions
(186,410)
(179,357)
(177,696)
(175,460)
Gains (losses) on associates and disposal of subsidiaries
3,880
693
355
-
Profit before income tax
955,835
849,206
795,030
401,549
Income tax expense
(262,096)
(217,841)
(189,672)
(155,453)
Net profit
693,739
631,365
605,358
246,096
Attributable to equity holders of the Bank
693,689
630,780
604,780
245,648
Attributable to non-controlling interest
50
585
578
448
Consolidated income statement for 2020
(in PLN thousand)
Q4 2020
Q3 2020
Q2 2020
Q1 2020
Net interest income
1,205,161
1,203,052
1,365,548
1,428,251
Net fee and commission income
656,300
595,109
567,847
614,394
Dividend income
7
268
25,748
255
Trading result
95,693
30,733
74,744
29,654
Net other operating income and expenses
(68,748)
(9,938)
(12,466)
(5,717)
Net non-interest income
683,252
616,172
655,873
638,586
Operating income
1,888,413
1,819,224
2,021,421
2,066,837
Operating costs
(827,209)
(801,939)
(827,125)
(994,698)
Gross operating profit
1,061,204
1,017,285
1,194,296
1,072,139
Net allowances for expected credit losses
(496,153)
(277,387)
(474,010)
(330,910)
Net operating profit
565,051
739,898
720,286
741,229
Bank Guarantee Fund fee
(43,913)
(43,162)
(43,081)
(250,703)
Tax on certain financial institutions
(165,694)
(168,547)
(169,843)
(156,506)
Gains (losses) on associates and disposal of subsidiaries
-
-
-
-
Profit before income tax
355,444
528,189
507,362
334,020
Income tax expense
(170,550)
(157,089)
(147,906)
(146,569)
Net profit
184,894
371,100
359,456
187,451
Attributable to equity holders of the Bank
184,812
370,851
359,151
186,898
Attributable to non-controlling interest
82
249
305
553
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Bank Pekao S.A.
8.6 Reconciliation of income statement – presentation form and long form
Consolidated income statement for 2021
INCOME STATEMENT – PRESENTATION
FORM'S ITEMS
LONG FORM'S ITEMS RECLASSIFFIED
TO PRESENTATION FORM
2021
Net interest income
Net interest income
5,660,761
Net fee and commission income
Net fee and commission income
2,687,515
Dividend income
Dividend income
26,662
Trading result
-
163,412
Net result on other financial instruments at fair value through profit and loss
129,845
Result on fair value hedge accounting
3,704
(Gains) losses on derecognition of financial assets and liabilities not measured at fair value through profit or loss
29,863
Net other operating income and expenses
Net other operating income and expenses
(16,200)
Operating income
121,546
Operating expenses
(137,746)
Net non-interest income
-
2,861,389
Operating income
-
8,522,150
Operating costs
-
(3,739,030)
Personnel expenses
(2,156,056)
Other administrative expenses
(1,942,986)
less – Bank Guarantee Fund fee
289,307
less – Tax on certain financial institutions
718,923
Depreciation and amortization
(648,218)
Gross operating profit
-
4,783,120
Net allowances for expected credit losses
Net allowances for expected credit losses
(778,198)
Net operating profit
-
4,004,922
Bank Guarantee Fund fee
Bank Guarantee Fund fee
(289,307)
Tax on certain financial institutions
Tax on certain financial institutions
(718,923)
Gains (losses) on associates and disposal of subsidiaries
-
4,928
Profit before income tax
Profit before income tax
3,001,620
Income tax expense
Income tax expense
(825,062)
Net profit for the period
Net profit for the period
2,176,558
Attributable to equity holders of the Bank
Attributable to equity holders of the Bank
2,174,897
Attributable to non-controlling interest
Attributable to non-controlling interest
1,661
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Bank Pekao S.A.
Consolidated income statement for the 2020
INCOME STATEMENT – PRESENTATION
LONG FORM'S ITEMS RECLASSIFFIED
FORM'S ITEMS
TO PRESENTATION FORM
2020
Net interest income
Net interest income
5,202,012
Net fee and commission income
Net fee and commission income
2,433,650
Dividend income
Dividend income
26,278
Trading result
-
230,824
Net result on other financial instruments at fair value through profit and loss
170,539
Result on fair value hedge accounting
(847)
(Gains) losses on derecognition of financial assets and liabilities not measured at fair value through profit or loss
61,132
Net other operating income and expenses
Net other operating income and expenses
(96,869)
Operating income
68,180
Operating expenses
(165,049)
Net non-interest income
-
2,593,883
Operating income
-
7,795,895
Operating costs
-
(3,450,971)
Personnel expenses
(2,039,866)
Other administrative expenses
(1,913,603)
less – Bank Guarantee Fund fee
380,859
less – Tax on certain financial institutions
660,590
Depreciation and amortization
(538,951)
Gross operating profit
-
4,344,924
Net allowances for expected credit losses
Net allowances for expected credit losses
(1,578,460)
Net operating profit
-
2,766,464
Bank Guarantee Fund fee
Bank Guarantee Fund fee
(380,859)
Tax on certain financial institutions
Tax on certain financial institutions
(660,590)
Profit before income tax
Profit before income tax
1,725,015
Income tax expense
Income tax expense
(622,114)
Net profit for the period
Net profit for the period
1,102,901
Attributable to equity holders of the Bank
Attributable to equity holders of the Bank
1,101,712
Attributable to non-controlling interest
Attributable to non-controlling interest
1,189
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Bank Pekao S.A.
9. Separate Statement of Financial Position and Financial Results
Unconsolidated income statement containing cumulated items for the period from 1 January to 31 December, 2021 and 2020 respectively is presented in the Unconsolidated Financial Statements of Bank Pekao S.A. for the period ended on 31 December 2021 .
Below presented statement of financial position in a short form and income statement in a presentation form as well as the key, selected items from these statements are discussed.
Main P&L items
Net profit of the Bank Pekao S.A. in 2021 amounted to PLN 2,236.8 million. Net profit was higher by PLN 1,110.4 million i.e. 98.6% y/y, mainly due to higher opereiting income and lower net allowances for expected credit losses, which are gradually normalizing towards the levels observed before the pandemic. ROE reached the level of 8.7%.
In 2021, the operating income amounted to PLN 8,083.6 million and was higher by 8.4% in comparison with the 2020, thanks to both net interest income and net fee and commission income.
• Net interest income in 2021, amounted to PLN 5,413.1 million and was higher by PLN 384.7 million, i.e. 7.7% compared to 2020.
• Net fee and commission income in 2021, amounted to PLN 2,301.5 million and was higher by PLN 245.7 million, i.e. 12.0% as compared with 2020, mainly due to the adaptation of the offer to the changing market conditions, customer activity and positive sentiment on capital markets, which compensated for the negative impact of regulatory changes in the area of investment funds.
In 2021, operating costs including contributions and payments to the Bank Guarantee Fund, amounted to PLN 3,725.7 million and were higher by PLN 177.8 million, i.e. 5.0% as compared with 2020, (below inflation) mainly due to integration costs resulting from the acquisition of the part of Idea Bank, the reconstruction of variable salary costs and the growing depreciation, which is related to investments in the transformation of the Bank. The dynamics of costs was consistent with the assumptions of the Strategy.
The Bank’s Net allowances for expected credit losses amounted to PLN 663.9 million in 2021 , and was lower by half than in the corresponding period of 2020, mainly due to the gradual normalization of write-offs towards the levels observed before the pandemic.
Bank Guarantee Fund fee in the 2021, amounted to PLN 287.5 million, an decrease of PLN 91.0 million, i.e. in comparison with of 2020.
Tax on certain financial institutions in 2021 amounted to PLN 718.9 million and was higher by PLN 58.3 million, i.e. 8.8% compared to 2020 , due to an increase in Bank’s assets.
Volumes
As at the end of December 2021, loans and advances at nominal value amounted to PLN 164,096.2 million, an increase of PLN 18,201.4 million, i.e. 12.5% in comparison to the end of December 2020.
As at the end of December 2021 , the volume of retail loans amounted to PLN 80,016.5 million, an increase of PLN 2,265.4 million, i.e. 2.9% in comparison to the end of December 2020 , thanks to dynamic growth of PLN mortgage loans by 5% y/y. As at the end of December 2021, corporate loans and non-treasury debt securities amounted to PLN 84,079.7 million, an increase of PLN 15,936.0 million, i.e. 23.4% in comparison to the end of December 2020, with the growth recorded in the segment of medium-sized enterprises (25% y/y).
As at the end of December 2021, amounts due to the Group’s customers and debt securities issued amounted to PLN 198,003.6 million, an increase of PLN 16,446.0 million, i.e. 9.1% in comparison to the end of December 2020.
The value of net assets of investment funds managed by Pekao TFI S.A. amounted to PLN 20,285.3 million as at the end of December 2021, an increase of PLN 935.7 million, i.e. 4.8% in comparison to the end of December 2020.
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Bank Pekao S.A.
9.1 The Separate income statement – presentation form
Net profit of the Bank Pekao S.A. in 2021 amounted to PLN 2,236.8 million. Net profit was higher by PLN 1,110.4 million i.e. 98.6% y/y, mainly due to higher opereiting income and lower net allowances for expected credit losses, which are gradually normalizing towards the levels observed before the pandemic.
On 3 January, 2021, the Bank took over the enterprise and liabilities of Idea Bank S.A. with exclusions as a result of the BGF's application of the resolution instrument on 30 December, 2020.
(in PLN million)
2021
2020
CHANGE
Net interest income
5,413.1
5,028.4
7.7%
Net fee and commission income
2,301.5
2,055.8
12.0%
Dividend income
219.7
236.7
(7.2%)
Trading result
158.5
217.9
(27.3%)
Net other operating income and expenses (*)
(9.2)
(84.4)
>100%
Net non-interest income (*)
2,670.5
2,426.0
10.1%
Operating income (*)
8,083.6
7,454.4
8.4%
Operating costs
(3,438.2)
(3,169.5)
8.5%
Gross operating profit (*)
4,645.5
4,285.0
8.4%
Net allowances for expected credit losses
(663.9)
(1,549.5)
(57.2%)
Net operating profit
3,981.5
2,735.5
45.5%
Bank Guarantee Fund fee
(287.5)
(378.5)
(24.0%)
Tax on certain financial institutions
(718.9)
(660.6)
8.8%
Net result on investment activities
20.1
0.8
> 100%
Profit before tax
2,995.2
1,697.2
76.5%
Income tax expense
(758.3)
(570.8)
32.8%
Net profit
2,236.8
1,126.4
98.6%
Operating income
In 2021, the operating income amounted to PLN 8,083.6 million and was higher by 8.4% in comparison with the 2020, thanks to both net interest income and net fee and commission income.
Total net interest income
(in PLN million)
2021
2020
CHANGE
Interest income
5,551.2
5,576.2
(0.4%)
Interest expense
(138.1)
(547.8)
(74.8%)
Net interest income
5,413.1
5,028.4
7.7%
Net interest income in 2021, amounted to PLN 5,413.4 million and was higher by PLN 384.7 million, i.e. 7.7% compared to 2020.
Interest income
I n 2021 , the interest income amounted to PLN 5,551.2 million and was lower by PLN 25.0 million y/y due to the negative impact of interest rate cuts on the interest rate of assets.
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Bank Pekao S.A.
Interest expense
I n 2021 , the interest expense amounted to PLN 138.1 million and was lower by PLN 409.7 million y/y, (despite a strong increase in the volume of deposits), mainly due to the adaptation of the Bank's product offer to the market conditions.
Net interest margin
The interest margin achieved i n 2021, amounted to 2.38% and was lower by 0.08 p.p., than the margin achieved in 2020, under the pressure of the negative impact of interest rate cuts in the first half of 2021.
Net non-interest income
(in PLN million)
2021
2020
CHANGE
Fee and commission income
2,835.0
2,519.6
12.5%
Fee and commission expense
(533.5)
(463.8)
15.0%
Net fee and commission income
2,301.5
2,055.8
12.0%
Dividend income
219.7
236.7
(7.2%)
Trading result
158.5
217.9
(27.3%)
Net other operating income and expense
(9.2)
(84.4)
(89.1%)
Net non-interest income
2,670.5
2,426.0
10.1%
Net fee and commission income in 2020, amounted to PLN 2,301.5 million and was higher by PLN 245.7 million, i.e. 12.0% as compared with 2020, mainly due to the adaptation of the offer to the changing market conditions, customer activity and positive sentiment on capital markets, which compensated for the negative impact of regulatory changes in the area of investment funds.
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Bank Pekao S.A.
The table below presents the Bank’s net fee and commission income divided according to the main areas of the activity.
(in PLN million)
2021
2020
CHANGE
Net fee and commission income
2,301.5
2,055.8
12.2%
on loans
472.1
409.7
15.5%
on cards
243.7
260.3
(5.4%)
on mutual funds
121.8
132.8
(8.3%)
on brokerage activate
98.2
87.5
12.2%
on margins on foreign exchange transactions with clients
596.4
527.9
13.0%
other
769.3
637.6
20.7%
Operating costs
In 2021, operating costs including contributions and payments to the Bank Guarantee Fund, amounted to PLN 3,725.7 million and were higher by PLN 177.8 million, i.e. 5.0% as compared with 2020, (below inflation) mainly due to integration costs resulting from the acquisition of the part of Idea Bank , the reconstruction of variable salary costs and the growing depreciation, which is related to investments in the transformation of the Bank. The dynamics of costs was consistent with the assumptions of the Strategy.
(in PLN million)
2021
2020
CHANGE
Personnel expenses
(1,903.1)
(1,804.2)
5.5%
Other administrative expenses
(931.1)
(869.2)
7.1%
Depreciation and amortization
(604.0)
(496.0)
21.8%
Operating costs
(3,438.2)
(3,169.4)
8.5%
In 2021 , cost / income ratio excluding restructuring provision amounted to 42.5% and was on the same level as in 2020.
As of 31 December 2021, the Bank employed 12,661 employees as compared to 12,870 employees as at the end of December 2020 an was lower y/y despite of the acquisition of Idea Bank S.A. with exceptions on 3 January, 2021, whose employees became employees of the Bank pursuant to Art. 23 of the Labor Code.
Bank Guarantee Fund fee
Bank Guarantee Fund fee in the 2021, amounted to PLN 287.5 million, an decrease of PLN 91.0 million, i.e. in comparison with of 2020.
Tax on certain financial institutions
Tax on certain financial institutions in 2021 amounted to PLN 718.9 million and was higher by PLN 58.3 million, i.e. 8.8% compared to 2029 , due to an increase in Bank’s assets.
Net allowances for expected credit losses
(in PLN million)
2021
2020
CHANGE
financial assets measured at amortized cost excluding provisions for legal risk regarding foreign currency mortgage loans in CHF
(641,0)
(1 061,7)
(39,6%)
financial assets measured at fair value through other comprehensive income
11,6
(46,2)
x
financial liabilities measured at amortized cost
29,4
(139,7)
x
Net allowances for expected credit losses excluding provisions for legal risk regarding foreign currency mortgage loans in CHF
(600,0)
(1 247,6)
(51,9%)
financial assets measured at amortized cost - provisions for legal risk regarding foreign currency mortgage loans in CHF
(63,9)
(301,9)
(78,8%)
Net allowances for expected credit losses
(663,9)
(1 549,5)
(57,2%)
The Bank’s Net allowances for expected credit losses amounted to PLN 663.9 million in 2021 , and was lower by half than in the corresponding period of 2020, mainly due to the gradual normalization of write-offs towards the levels observed before the pandemic.
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Bank Pekao S.A.
Costs of risk
The costs of risk in 2021 amounted to 0.41% and was higher by 0.62 p.p. y/y. In four quarter of 2021, the Bank made an additional PLN 19.9 million provisions for legal risk regarding foreign currency mortgage loans in CHF.
9.2 Structure of the separate statement of financial position – short form
The table below presents the Bank’s statement of financial position – short form.
31.12.2021
31.12.2020
ASSETS
PLN MILLION
STRUCTURE
PLN MILLION
STRUCTURE
CHANGE
Cash and due from Central Bank
4,696.6
1.9%
4,456.3
2.0%
5.4%
Loans and advances to banks
3,998.6
1.7%
2,917.8
1.3%
37.0%
Loans and advances to customers (*)
157,783.0
65.4%
139,926.1
62.9%
12.8%
Reverse repo transactions
969.6
0.4%
280.6
0.1%
245.5%
Securities (**)
58,443.2
24.2%
62,791.0
28.2%
(6.9%)
Investments in subsidiaries
1,577.4
0.7%
1,542.8
0.7%
2.2%
Investments in associates
42.2
0.0%
-
-
x
Property. plant and equipment and intangible assets
3,191.0
1.3%
2,974.0
1.3%
7.3%
Other assets
10,573.6
4.4%
7,492.4
3.4%
41.1%
Total assets
241,275.2
100.0%
222,381.0
100.0%
8.5%
(*) Including non-treasury debt securities .
(**) Including financial assets held for trading, other financial instruments at fair value through profit and loss and excluding non-treasury debt securities .
31.12.2021
31.12.2020
EQUITY AND LIABILITIES
PLN MILLION
STRUCTURE
PLN MILLION
STRUCTURE
CHANGE
Amounts due to Central Bank
0.0
0.0%
0.0
0.0%
x
Amounts due to other banks
5,069.3
2.1%
5,225.5
2.3%
(3.0%)
Amounts due to customers
195,063.5
80.8%
178,276.4
80.2%
9.4%
Debt securities issued
178.6
0.1%
523.3
0.2%
(65.9%)
Subordinated liabilities
2,761.5
1.1%
2,757.9
1.2%
0.1%
Repo transactions
0.0
0.0%
152.6
0.1%
x
Lease liabilities
387.6
0.2%
398.3
0.2%
(2.7%)
Other liabilities
14,714.9
6.1%
10,399.6
4.7%
41.5%
Equity
23,099.8
9.6%
24,647.4
11.1%
(6.3%)
Total equity and liabilities
241,275.2
100.0%
222,381.0
100.0%
8.5%
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Bank Pekao S.A.
9.2.1 Assets
Changes in the structure of assets
Loans and advances to customers and securities represent items of the largest value under assets. As at the end of 2021, they accounted for 65.4% and 24.2% of the total assets respectively in comparison with 62.9% and 28.2% respectively as at the end of 2020.
Cash and due from Central Bank
(in PLN million)
31.12.2021
31.12.2020
CHANGE
Cash and due from Central Bank, including:
4,696.7
4,456.3
5.4%
Cash
3,699.7
4,306.1
(14.1%)
Current account at Central Bank
996.9
150.2
>100%
Customers’ Financing
Customer structure of loans and advances
(in PLN million)
31.12.2021
31.12.2020
CHANGE
Loans and advances at nominal value (*)
164,096.2
145,894.8
12.5%
Loans and investments in financial leases
148,697.8
134,382.1
10.7%
Retail
80,016.5
77,751.1
2.9%
Corporate
68,681.3
56,631.0
21.3%
Non-treasury debt securities
15,398.4
11,512.7
33.8%
Other (**)
1,208.6
1,053.8
14.7%
Impairment allowances
(7,521.8)
(7,022.5)
7.1%
Total net receivables
157,783.0
139,926.1
12.8%
Reverse repo transactions
969.6
280.5
>100%
Total Customers’ financing (***)
165,065.8
146,175.3
12.9%
(*) Excluding reverse repo transactions.
(**) Including interest and receivables in transit.
(***) Total customers’ financing includes loans and advances at nominal value, securities issued by non-monetary entities and reverse repo transactions.
As at the end of December 2021, loans and advances at nominal value amounted to PLN 164,096.2 million, an increase of PLN 18,201.4 million, i.e. 12.5% in comparison to the end of December 2020.
As at the end of December 2021 , the volume of retail loans amounted to PLN 80,016.5 million, an increase of PLN 2,265.4 million, i.e. 2.9% in comparison to the end of December 2020 , thanks to dynamic growth of PLN mortgage loans by 4.6% y/y.
As at the end of December 2021, corporate loans and non-treasury debt securities amounted to PLN 84,079.7 million, an increase of PLN 15 936,0 million, i.e. 23.4% in comparison to the end of December 2020, with the growth recorded in the segment of medium-sized enterprises (25% y/y).
Receivables and impairment losses (*)
(in PLN million)
31.12.2021
31.12.2020
CHANGE
Gross receivables
165,304.8
146,948.6
12.5%
Stage 1
132,359.9
113,200.1
16.9%
Stage 2
24,443.8
25,772.7
(5.2%)
Stage 3
8,501.1
7,975.8
6.6%
Impairment allowances
(7,521.8)
(7,022.5)
7.1%
Stage 1
(625.9)
(418.8)
49.5%
Stage 2
(1,027.8)
(1,145.1)
(10.2%)
Stage 3
(5,868.1)
(5,458.6)
7.5%
Total net receivables
157,783.0
139,926.1
12.8%
(*) Including non-treasury debt securities , interest and receivables in transit and excluding reverse repo transactions.
As at the end of December 2021 the ratio of impaired receivables (stage 3) to the gross receivables amounted to 5.1%.
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Bank Pekao S.A.
Loans and advances to customers by currency (*)
31.12.2021
31.12.2020
PLN MILLION
STRUCTURE
PLN MILLION
STRUCTURE
CHANGE
Denominated in PLN
138,076.4
83.5%
121,376.6
82.6%
13.8%
Denominated in foreign currencies (**)
27,228.4
16.5%
25,572.0
17.4%
6.5%
Total
165,304.8
100.0%
146,948.6
100.0%
12.5%
Impairment allowances
(7,521.8)
x
(7,022.5)
x
7.1%
Total net
157,783.0
x
139,926.2
x
12.8%
(*) Including non-treasury debt securities , interest and receivables in transit and excluding reverse repo transactions.
(**) Including indexed loans.
The currency structure of loans and advances to customers is dominated by amounts expressed in the Polish złoty; as at the end of December 2021, their share was 83.5%. The largest portion of foreign currency loans and advances to customers were represented by those denominated in EUR (74.0%), CHF (10.3%) and USD (4.5%).
Loans and advances to customers by contractual maturities (*)
31.12.2021
31.12.2020
PLN MILLION
STRUCTURE
PLN MILLION
STRUCTURE
CHANGE
Current and up to 1 month
15,802.8
9.6%
13,147.5
8.9%
20.2%
1 to 3 months
5,598.4
3.4%
3,823.6
2.6%
46.4%
3 months to 1 year
19,868.0
12.0%
15,570.6
10.6%
27.6%
1 to 5 years
53,861.3
32.6%
49,314.5
33.6%
9.2%
Over 5 years
63,593.4
38.5%
60,423.2
41.1%
5.2%
Past due
5,372.4
3.2%
3,615.4
2.5%
48.6%
Other
1,208.5
0.7%
1,053.8
0.7%
14.7%
Total
165,304.8
100.0%
146,948.6
100.0%
12.5%
Impairment allowances
(7,521.8)
x
(7,022.5)
x
7.1%
Total net
157,783.0
x
139,926.1
x
12.8%
(*) Including non-treasury debt securities , interest and receivables in transit and excluding reverse repo transactions.
As at the end of December 2021, loans and advances with maturity over 5 years represents 38.5% of total loans and advances (mainly attributed to mortgage loans, investment loans, and non-treasury debt securities).
Information on loan concentration is included in the Note 26 to the Separate Financial Statements of Bank Pekao S.A. for the year ended on 31 December 2021.
9.2.2 Liabilities
Changes in the structure of liabilities
Amounts due to customers were the main item under the Bank’s liabilities and equity. As at the end of 2021, amounts due to customers, debt securities issued and subordinated liabilities totaled PLN 203,072.9 million, and their share in the total assets was 82.1%, compared with 81.6% as at the end of 2020. The share of total shareholder’s equity in the total assets was 9.6% as at the end of 2020, compared with 11.1% as at the end of 2020.
External sources of financing
(in PLN million)
31.12.2021
31.12.2020
CHANGE
Amounts due to Central Bank
0.0
0.0
x
Amounts due to other banks
5,069.3
5,225.5
(3.0%)
Amounts due to customers
195,063.5
178,276.4
9.4%
Debt securities issued
178.6
523.3
(65.9%)
Subordinated liabilities
2,761.5
2,757.9
0.1%
Repo transactions
0.0
152.6
x
Total external sources of financing
203,072.9
186,935.7
8.6%
Amounts due to customers amounted to PLN 195,063.5 million, an increase by 9.4% to significant extent contributed to dynamic increase in loans.
The deposit base is widely diversified and is sourced from retail and corporate customers. In addition, the Bank uses also funds borrowed on the interbank market. The Bank is not dependent on any single customer nor group of customers.
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Bank Pekao S.A.
As at the end of 2021, the geographical structure of deposits acquired through the Bank’s domestic branches was as follows:
REGION
% OF TOTAL DEPOSITS
Warszawski
28.72%
Centralny
13.19%
Małopolski
12.00%
Południowo-Wschodni
11.69%
Mazowiecki
10.67%
Pomorski
8.51%
Śląski
8.08%
Zachodni
7.13%
Ogółem
100.00%
Amounts due to customers and debt securities issued
(in PLN million)
31.12.2021
31.12.2020
CHANGE
Corporate deposits
78,395.6
72,196.1
8.6%
Non-financial entities
57,422.0
54,778.7
4.8%
Non-banking financial entities
4,553.2
5,135.8
(11.3%)
Budget entities
16,420.4
12,281.6
33.7%
Retail deposits
116,342.0
105,734.2
10.0%
Other (*)
325.9
346.1
(5.8%)
Amounts due to customers (**)
195,063.5
178,276.4
9.4%
Debt securities issued of which
2,940.1
3,281.2
(10.4%)
Structured Certificates of Deposit (SCD)
178.6
523.3
(65.9%)
Subordinated bonds
2,750.0
2,750.0
0.0%
Interest
11.5
7.9
45.6%
Amounts due to customers and debt securities issued (**)
198,003.6
181,557.6
9.1%
Repo transactions
0.0
152.6
x
Lease liabilities
387.6
398.3
(2.7%)
Amounts due to customers and debt securities issued, total (***)
198,391.2
182,108.5
8.9%
Investment funds of Pekao TFI S.A. (ex. Pioneer Pekao TFI)
20,285.3
19,347.8
4.8%
including distributed through the Bank’s network
18,540.6
18,049.3
2.7%
(*) Other item includes interest and funds in transit.
(**) Excluding repo transactions and lease liabilities.
(***) Including repo transactions and lease liabilities.
As at the end of December 2021, amounts due to the Group’s customers and debt securities issued amounted to PLN 198,003.6 million, an increase of PLN 16,446.0 million, i.e. 9.1% in comparison to the end of December 2020.
The total volume of retail deposits, Structured Certificates of Deposit and other amounted to PLN 116,774.1 million as at the end of December 2021, an increase of PLN 10,196.3 million, i.e. 9.6% in comparison to the end of December 2020 and they increased their share in the structure of financing.
The total volume of corporate deposits, subordinated bonds, interest and other amounted to PLN 81,229.5 million as at the end December 2021, an increase of PLN 6,249.7 million, i.e. 8.3% as compared to the end of December 2020.
The value of net assets of investment funds managed by Pekao TFI S.A. amounted to PLN 20,285.3 million as at the end of December 2021, an increase of PLN 937.5 million, i.e. 4.8% in comparison to the end of December 2020.
Amounts due to customers by currency (*)
31.12.2021
31.12.2020
PLN MILLION
STRUCTURE
PLN MILLION
STRUCTURE
CHANGE
Denominated in PLN
163,970.0
84.1%
149,871.7
84.1%
9.4%
Denominated in foreign currencies
31,093.6
15.9%
28,404.7
15.9%
9.5%
Total
195,063.5
100.0%
178,276.4
100.0%
9.4%
(*) Including interest and amounts due in transit and excluding repo transactions and lease liabilities.
The bulk of the amounts due to customers are denominated in the Polish currency and its share as at the end of December 2021 amounted to 84.1%. The majority of amounts due to customers denominated in foreign currencies were in EUR (60.4%) and USD (32.8%).
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Amounts due to customers by contractual maturities (*)
31.12.2021
31.12.2020
PLN MILLION
STRUCTURE
PLN MILLION
STRUCTURE
CHANGE
Current accounts and overnight deposits
181,857.5
93.4%
157,542.1
88.5%
15.4%
Term deposits
12,880.0
6.6%
20,388.2
11.5%
(36.8%)
Total deposits
194,737.7
100.0%
177,930.3
100.0%
9.4%
Interest accrued
5.5
x
46.2
x
(88.1%)
Funds in transit
320.3
x
299.8
x
6.8%
Total
195,063.5
x
178,276.4
x
9.4%
(*) Excluding repo transactions and lease liabilities.
Provisions, deferred tax assets and liabilities
(mln zł)
31.12.2021
31.12.2020
CHANGE
Total provisions
936,0
1 052,8
(11,1%)
of which:
provisions for off-balance sheet commitments
440,8
468,2
(5,9%)
provisions for liabilities to employees
300,9
417,7
(28,0%)
other provisions
194,2
166,9
16,4%
Deferred tax liabilities
-
-
x
Deferred tax assets
1 364,7
940,0
45,2%
90
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Bank Pekao S.A.
9.3 Separate income statement – long form
Separate income statement for 2021 - Provided for comparability purposes.
(in PLN thousand)
Q4 2021
Q3 2021
Q2 2021
Q1 2021
Interest income
1,585,199
1,349,313
1,285,852
1,330,842
Interest income calculated using the effective interest method
1,489,305
1,274,526
1,216,296
1,262,050
Financial assets measured at amortised cost
1,379,350
1,173,575
1,096,818
1,113,557
Financial assets measured at fair value through other comprehensive income
109,955
100,951
119,478
148,493
Other interest income related to financial assets measured at fair value through profit or loss
95,894
74,787
69,556
68,792
Interest expense
(51,366)
(24,932)
(8,311)
(53,510)
Net interest income
1,533,833
1,324,381
1,277,541
1,277,332
Fee and commission income
757,986
734,556
703,689
638,810
Fee and commission expense
(156,731)
(135,440)
(124,797)
(116,552)
Net fee and commission income
601,255
599,116
578,892
522,258
Dividend income
51,516
1,062
167,104
-
Result on financial assets and liabilities measured at fair value through profit or loss and foreign exchange result
8,147
26,639
63,093
26,365
Result on fair value hedge accounting
723
335
847
1,799
Result on derecognition of financial assets and liabilities not measured at fair value through profit or loss
(6,393)
2,917
23,194
10,813
Net allowances for expected credit losses
(146,008)
(182,364)
(138,374)
(197,165)
Operating income
46,994
28,710
25,461
17,882
Operating expenses
(58,776)
(25,641)
(29,696)
(14,090)
Administrative expenses
(856,294)
(872,124)
(915,489)
(1,196,755)
Personnel expenses
(405,701)
(443,933)
(468,635)
(584,840)
Other administrative expenses
(450,593)
(428,191)
(446,854)
(611,915)
Depreciation and amortization
(156,037)
(152,485)
(149,384)
(146,058)
Gains (losses) on subsidiaries and associates
20,262
-
(170)
-
PROFIT BEFORE INCOME TAX
1,039,222
750,546
903,019
302,381
Income tax expense
(245,001)
(199,011)
(178,893)
(135,434)
NET PROFIT
794,221
551,535
724,126
166,947
(*) Other administrative expenses includes tax on certain financial institutions and Bank Guarantee Fund fee .
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Bank Pekao S.A.
Separate income statement for 2020 - Provided for comparability purposes.
(in PLN thousand)
Q4 2020
Q3 2020
Q2 2020
Q1 2020
Interest income
1,206,979
1,245,503
1,482,767
1,640,978
Interest income calculated using the effective interest method
1,154,759
1,185,718
1,413,433
1,580,643
Financial assets measured at amortised cost
1,003,989
1,028,651
1,248,876
1,422,403
Financial assets measured at fair value through other comprehensive income
150,770
157,067
164,557
158,240
Other interest income related to financial assets measured at fair value through profit or loss
52,220
59,785
69,334
60,335
Interest expense
(54,109)
(84,363)
(155,095)
(254,219)
Net interest income
1,152,870
1,161,140
1,327,672
1,386,759
Fee and commission income
685,563
624,546
592,536
616,962
Fee and commission expense
(134,823)
(118,295)
(107,211)
(103,460)
Net fee and commission income
550,740
506,251
485,325
513,502
Dividend income
62,555
269
173,601
255
Result on financial assets and liabilities measured at fair value through profit or loss and foreign exchange result
82,081
24,486
49,085
2,533
Result on fair value hedge accounting
22
(117)
992
(1,744)
Result on derecognition of financial assets and liabilities not measured at fair value through profit or loss
12,285
4,672
22,901
20,685
Net allowances for expected credit losses
(489,099)
(272,363)
(441,620)
(346,415)
Operating income
17,799
17,292
15,124
17,301
Operating expenses
(73,879)
(26,110)
(26,495)
(25,417)
Administrative expenses
(837,275)
(815,700)
(846,226)
(1,213,331)
Personnel expenses
(412,457)
(402,861)
(430,072)
(558,846)
Other administrative expenses
(424,818)
(412,839)
(416,154)
(654,485)
Depreciation and amortization
(129,991)
(128,753)
(124,142)
(113,147)
Gains (losses) on subsidiaries and associates
(331)
1,543
-
(365)
PROFIT BEFORE INCOME TAX
347,777
472,610
636,217
240,616
Income tax expense
(153,193)
(146,492)
(143,573)
(127,538)
NET PROFIT
194,584
326,118
492,644
113,078
(*) Other administrative expenses includes tax on certain financial institutions and Bank Guarantee Fund fee .
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Bank Pekao S.A.
9.4 Separate statement of comprehensive income
Separate statement of comprehensive income for 2021
(in PLN thousand)
Q4 2021
Q3 2021
Q2 2021
Q1 2021
Net profit
794,221
551,535
724,126
166,947
Other comprehensive income
Item that are or may be reclassified subsequently to profit or loss:
Impact of revaluation of debt financial instruments and loan measured at fair value through other comprehensive income (net):
(685,251)
(89,870)
(273,836)
(201,619)
profit or loss on fair value measurement
(682,385)
(87,401)
(256,978)
(195,434)
profit or loss reclassification to income statement after derecognition
(2,866)
(2,469)
(16,858)
(6,185)
Impact of revaluation of derivative instruments hedging cash flows (net)
(1,132,204)
(232,201)
(100,101)
(271,771)
Items that will never be reclassified to profit or loss:
Impact of revaluation of investments in equity instruments designated at fair value through other comprehensive income (net)
(23,774)
(36,638)
31,262
35,952
Remeasurements of the defined benefit liabilities (net)
38,201
-
-
-
Other comprehensive income (net of tax)
(1,803,028)
(358,709)
(342,675)
(437,438)
Total comprehensive income
(1,008,807)
192,826
381,451
(270,491)
Net profit
794,221
551,535
724,126
166,947
Separate statement of comprehensive income for 2020
(in PLN thousand)
Q4 2020
Q3 2020
Q2 2020
Q1 2020
Net profit
194,584
326,118
492,644
113,078
Other comprehensive income
Item that are or may be reclassified subsequently to profit or loss:
Impact of revaluation of debt financial instruments and loan measured at fair value through other comprehensive income (net):
166,356
102,223
424,972
(129,601)
profit or loss on fair value measurement
169,805
106,534
444,100
(119,072)
profit or loss reclassification to income statement after derecognition
(3,449)
(4,311)
(19,128)
(10,529)
Impact of revaluation of derivative instruments hedging cash flows (net)
(57,919)
3,509
96,353
336,097
Items that will never be reclassified to profit or loss:
Impact of revaluation of investments in equity instruments designated at fair value through other comprehensive income (net)
68,044
(5,323)
17,723
(9,099)
Remeasurements of the defined benefit liabilities (net)
(8,400)
-
-
-
Other comprehensive income (net of tax)
168,081
100,409
539,048
197,397
Total comprehensive income
362,665
426,527
1,031,692
310,475
93
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Bank Pekao S.A.
9.5 Separate income statement – presentation form
Separate income statement for 2021
(in PLN thousand)
Q4 2021
Q3 2021
Q2 2021
Q1 2021
Net interest income
1,533,833
1,324,381
1,277,541
1,277,332
Net fee and commission income
601,255
599,116
578,892
522,258
Dividend income
51,516
1,062
167,104
-
Trading result
2,477
29,891
87,134
38,977
Net other operating income and expenses
(11,782)
3,069
(4,235)
3,792
Net non-interest income
643,466
633,138
828,895
565,027
Operating income
2,177,299
1,957,519
2,106,436
1,842,359
Operating costs
(795,952)
(818,132)
(858,316)
(965,758)
Gross operating profit
1,381,347
1,139,387
1,248,120
876,601
Net allowances for expected credit losses
(146,008)
(182,364)
(138,374)
(197,165)
Net operating profit
1,235,339
957,023
1,109,746
679,436
Bank Guarantee Fund fee
(29,969)
(27,120)
(28,861)
(201,595)
Tax on certain financial institutions
(186,410)
(179,357)
(177,696)
(175,460)
Net result on investment activities
20,262
-
(170)
-
Profit before tax
1,039,222
750,546
903,019
302,381
Income tax expense
(245,001)
(199,011)
(178,893)
(135,434)
Net profit
794,221
551,535
724,126
166,947
Separate income statement for 2020
(in PLN thousand)
Q4 2020
Q3 2020
Q2 2020
Q1 2020
Net interest income
1,152,870
1,161,140
1,327,672
1,386,759
Net fee and commission income
550,740
506,251
485,325
513,502
Dividend income
62,555
269
173,601
255
Trading result
94,388
29,041
72,978
21,474
Net other operating income and expenses
(56,080)
(8,818)
(11,371)
(8,116)
Net non-interest income
651,603
526,743
720,533
527,115
Operating income
1,804,473
1,687,883
2,048,205
1,913,874
Operating costs
(757,660)
(732,743)
(757,445)
(921,624)
Gross operating profit
1,046,813
955,140
1,290,760
992,250
Net allowances for expected credit losses
(489,099)
(272,363)
(441,620)
(346,415)
Net operating profit
557,714
682,777
849,140
645,835
Bank Guarantee Fund fee
(43,912)
(43,163)
(43,080)
(248,348)
Tax on certain financial institutions
(165,694)
(168,547)
(169,843)
(156,506)
Net result on investment activities
(331)
1,543
-
(365)
Profit before tax
347,777
472,610
636,217
240,616
Income tax expense
(153,193)
(146,492)
(143,573)
(127,538)
Net profit
194,584
326,118
492,644
113,078
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Bank Pekao S.A.
9.6 Reconciliation of income statement – presentation form and long form
Separate income statement for 2021
(in PLN thousand)
INCOME STATEMENT – PRESENTATION FORM'S ITEMS
LONG FORM'S ITEMS RECLASSIFFIED TO PRESENTATION FORM
2021
Net interest income
Net interest income
5,413,087
Net fee and commission income
Net fee and commission income
2,301,521
Dividend income
Dividend income
219,682
Trading result
158,479
Net result on other financial instruments at fair value through profit and loss
124,244
Result on fair value hedge accounting
3,704
(Gains) losses on derecognition of financial assets and liabilities not measured at fair value through profit or loss
30,531
Net other operating income and expenses
(9,156)
Operating income
119,047
Operating expenses
(128,203)
Net non-interest income
2,670,526
Operating income
8,083,613
Operating costs
(3,438,158)
Personnel expenses
(1,903,109)
Other administrative expenses
(1,937,553)
less – Bank Guarantee Fund fee
287,545
less – Tax on certain financial institutions
718,923
Depreciation and amortization
(603,964)
Gross operating profit
4,645,455
Net allowances for expected credit losses
Net allowances for expected credit losses
(663,911)
Net operating profit
3,981,544
Bank Guarantee Fund fee
Bank Guarantee Fund fee
(287,545)
Tax on certain financial institutions
Tax on certain financial institutions
(718,923)
Net result on investment activities
20,092
Profit before income tax
2,995,168
Income tax expense
Income tax expense
(758,339)
Net profit for the period
Net profit for the period
2,236,829
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Report on the activities of Bank Pekao S.A. Group for the year 2021 rok
Bank Pekao S.A.
Separate income statement for 2020
(in PLN thousand)
INCOME STATEMENT – PRESENTATION FORM'S ITEMS
LONG FORM'S ITEMS RECLASSIFFIED TO PRESENTATION FORM
2020
Net interest income
Net interest income
5,028,441
Net fee and commission income
Net fee and commission income
2,055,818
Dividend income
Dividend income
236,680
Trading result
217,881
Net result on other financial instruments at fair value through profit and loss
158,185
Result on fair value hedge accounting
(847)
(Gains) losses on derecognition of financial assets and liabilities not measured at fair value through profit or loss
60,543
Net other operating income and expenses
(84,385)
Operating income
67,516
Operating expenses
(151,901)
Net non-interest income
2,425,994
Operating income
7,454,435
Operating costs
(3,169,472)
Personnel expenses
(1,804,236)
Other administrative expenses
(1,908,296)
less – Bank Guarantee Fund fee
378,503
less – Tax on certain financial institutions
660,590
Depreciation and amortization
(496,033)
Gross operating profit
4,284,963
Net allowances for expected credit losses
Net allowances for expected credit losses
(1,549,497)
Net operating profit
2,735,466
Bank Guarantee Fund fee
Bank Guarantee Fund fee
(378,503)
Tax on certain financial institutions
Tax on certain financial institutions
(660,590)
Net result on investment activities
847
Profit before income tax
1,697,220
Income tax expense
Income tax expense
(570,796)
Net profit for the period
Net profit for the period
1,126,424
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Report on the activities of Bank Pekao S.A. Group for the year 2021 rok
Bank Pekao S.A.
9.7 The structure of the net profit
(in PLN million)
2021
2020
CHANGE
Net profit of Bank Pekao S.A.
2,236.8
1,126.4
98.6%
Entities consolidated under full method
Pekao Investment Management S.A.
88.4
103.3
(14.4%)
Pekao Leasing Sp. z o.o.
74.8
31.0
> 100%
Pekao Faktoring Sp. z o.o.
39.9
25.8
54.7%
Pekao Investment Banking S.A. (*)
13.4
0.2
> 100%
Centrum Kart S.A.
8.8
4.2
> 100%
Pekao Financial Services Sp. z o.o.
5.0
3.6
38.9%
Pekao Bank Hipoteczny S.A.
2.3
2.3
x
Dom Inwestycyjny Xelion Sp. z o.o.
1.1
0.9
22.2%
Pekao Direct Sp. z o.o.
0.0
0.2
x
Pekao Powszechne Towarzystwo Emerytalne S.A. w likwidacji (**)
0.0
0.0
x
FPB "MEDIA" Sp. z o.o. w upadłości
(0.1)
-
x
PEUF Sp. z o.o. (***)
(0.3)
0.1
x
Pekao Fundusz Kapitałowy Sp. z o.o. w likwidacji
(0.4)
(0.3)
33.3%
Pekao Property S.A. w likwidacji
(90.3)
(12.4)
>100%
Entities valued under the equity method
Krajowy Integrator Płatności S.A. (****)
1.8
-
x
Exclusions and consolidation adjustments (*****)
(206.3)
(183.6)
12.4%
Net profit of the Group attributable to equity holders of the Bank
2,174.9
1,101.7
97.4%
(*) On 29 May, 2020, Pekao IB concluded a sales agreement with Bank Pekao S.A. as part of the consolidation and integration process of the brokerage activities in the Pekao Group. an organized part of the enterprise covering brokerage activities. This transaction was classified as an intra-group transaction and the result of this transaction was recognized in the Group's equity.
(**) The liquidation process of Pekao Powszechne Towarzystwo Emerytalne S.A. in liquidation has been completed. On November 19, 2020, the Company was removed from the National Court Register.
(***) Pekao Leasing Sp. z o.o., a subsidiary of the Bank, acquired 100% of the shares of Metsi Sp. z o.o. with its seat in Warsaw, which then changed its name to PeUF Sp. z o.o. with its seat in Warsaw, which constitutes 100% of the votes at the Shareholders' Meeting of PeUF Sp. z o.o.
(****) On 31 March, 2021, the purchase transaction was completed, as a result of which the Bank became the owner of shares representing 38.33% of the capital and entitling to 38.33% votes at the General Meeting of Krajowy Integrator Płatności SA with its registered office in Poznań, a Tpay.com guide.
(*****) Includes, among others, transactions within the Group (including dividends from subsidiaries for the previous years), and net profit attributable to non- controlling interest.
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Report on the activities of Bank Pekao S.A. Group for the year 2021 rok
Bank Pekao S.A.
Results of the Bank’s major related entities
Pekao Investment Management S.A. - Pekao IM
Consolidated net profit of Pekao IM in 2021 amounted to PLN 88.4 million, compared to PLN 103.3million in 2020. The decline in the result was due to reductions in fund management fees.
Pekao Leasing Sp. z o.o. - Pekao Leasing
In 2021, Pekao Leasing generated a net profit of PLN 74.8 million, compared to a profit of PLN 31.0 million in 2020. The result in 2020 was lower due to the pandemic, including an increase in costs of risk. As a result of the stabilization of the COVID-19 situation in 2021, the costs of risk are lower, and the Company achieved an increase in revenues by 30.4%, while maintaining strict cost control.
Pekao Faktoring Sp. z o.o. - Pekao Faktoring
In 2021, Pekao Faktoring generated a net profit of PLN 39.9 million, compared to a profit of PLN 25.8 million in 2020. In 2021, the Company achieved an increase in factoring involvement by 23.3% y/y and revenues by 38.3%, with strict cost control. Pekao Faktoring ranks first in terms of turnover on the Polish factoring market.
Pekao Investment Banking S.A. - Pekao IB
In 2021, Pekao IB achieved a net profit of PLN 13.4 million, compared to a profit of PLN 0.2 million in 2020. The profit generated is the result of a greater number of advisory transactions, in the last year, the lack of projects was the result of the unfavorable economic situation resulting from the pandemic.
Centrum Kart S.A. – Centrum Kart
In 2021, Centrum Kart achieved a net profit of PLN 8.8 million, compared to a profit of PLN 4.2 million in 2020. The higher net result is related to the increase in the income generated as part of the services provided for the Bank.
Pekao Financial Services Sp. z o.o. - PFS
In 2021, PFS generated a net profit of PLN 5.0 million (including the Bank's share of PLN 3.3 million), compared to a profit of PLN 3.6 million in 2020. The net result was higher mainly due to the revenues generated from servicing the implemented 4 stages of the PPK program.
Pekao Direct Sp. z o.o. - Pekao Direct
In 2021, Pekao Direct recorded a net profit of PLN 2.3 million and was at a comparable level to the profit achieved in 2020. Revenues in 2021 were higher by 4.9% y/y, with an increase in costs resulting from the growing pressure on remuneration of telemarketers.
Dom Inwestycyjny Xelion Sp. z o.o. - DI Xelion
Due to the sale of DI Xelion shares in October 2021, the result for ten months was recognized in the Group's result and amounted to PLN 1.1 million, compared to a profit of PLN 0.9 million achieved in the entire 2020. Due to the stabilization of the pandemic situation, DI Xelion's clients returned to investing in mutual funds, which had a positive impact on the achievement of higher income.
Pekao Bank Hipoteczny S.A. - Pekao Bank Hipoteczny
In 2021, Pekao Bank Hipoteczny reported a net loss of PLN 90.3 million, compared to a loss of PLN 12.4 million in 2020. In 2021, the Bank increased the provision for legal risk regarding foreign currency mortgage loans in CHF by PLN 94.9 million, compared to the provision of PLN 14.1 million created in the previous year..
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Report on the activities of Bank Pekao S.A. Group for the year 2021 rok
Bank Pekao S.A.
9.8 Off–balance sheet items
Statement of Off-balance sheet items
(in PLN million)
31.12.2021
31.12.2020
CHANGE
Contingent liabilities granted and received
81,980.2
75,731.5
8.3%
Liabilities granted:
57,673.3
54,822.2
5.2%
financial
43,225.4
41,203.9
4.9%
guarantees
14,447.9
13,618.3
6.1%
Liabilities received:
24,306.9
20,909.3
16.2%
financial
1,127.5
563.5
100.1%
guarantees
23,179.4
20,345.8
13.9%
Derivative financial instruments
446,208.7
412,393.8
8.2%
interest rate transactions
293,802.1
247,242.1
18.8%
transactions in foreign currency and in gold
146,470.2
161,854.2
(9.5%)
transactions based on commodities and equity securities
5,936.4
3,297.5
80.0%
Total off-balance sheet items
528,188.9
488,125.3
8.2%
Information on loan concentration is included in the Notes to the Consolidated Financial Statements of Bank Pekao S.A. Group for the year ended on 31 December 202 1
Statement of Off-balance sheet items
(in PLN million)
31.12.2021
31.12.2020
CHANGE
Contingent liabilities granted and received
100,047.0
92,437.0
8.2%
Liabilities granted:
76,876.1
72,058.4
6.7%
financial
44,785.0
45,095.1
(0.7%)
guarantees
32,091.1
26,963.3
19.0%
Liabilities received:
23,170.9
20,378.6
13.7%
financial
520.4
563.5
(7.6%)
guarantees
22,650.5
19,815.1
14.3%
Derivative financial instruments
449,621.0
417,710.2
7.6%
interest rate transactions
293,871.0
247,381.2
18.8%
transactions in foreign currency and in gold
149,813.7
167,031.6
(10.3%)
transactions based on commodities and equity securities
5,936.3
3,297.4
80.0%
Total off-balance sheet items
549,668.0
510,147.2
7.7%
Information on loan concentration is included in the Notes to the Separate Financial Statements of Bank Pekao S.A. for the year ended on 31 December 2021.
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Report on the activities of Bank Pekao S.A. Group for the year 2021 rok
Bank Pekao S.A.
10. Other Information
Information required pursuant to Art. 111a of the Banking Law
Bank Pekao S.A. is a universal commercial bank providing a full range of banking services to individual and institutional clients in Poland. Bank Pekao S.A. Group includes financial institutions operating in banking, asset management, pension funds, brokerage services, transactional advisory, leasing and factoring markets.
The Bank and all subsidiaries of the Bank, within a consolidated basis under article 4, section 1, point 48 of the Regulation No. 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms, run its activities on territory of Poland.
As at the end of December 2021, the number of full-time jobs in the Group was 14,188 compared to 14 633 as at the end of 2020. As at the end of December 2021, the number of full-time jobs in the Bank was 12,308 compared to 12,693 as at the end of 2020.
In 2021, the Group’s operating income amounted to PLN 8 522.2 million, and was higher by PLN 726.3 million, i.e. 9.3% in comparison 2020.
In 2021, the Bank’s operating income amounted to PLN 8,083.6 million, and was higher by PLN 629.2 million, i.e. 8.4% in comparison 2020.
Profit before tax of Bank Pekao S.A. Group in 2021 amounted to PLN 3 001.6 million and was higher by PLN 1 276.6 million, i.e. 74.0% in comparison to 2020. Income tax expense in 2021 amounted to PLN 825.0 million vs. PLN 622.1 million in 2020 and was higher by 32.6%.
Profit before tax of Bank Pekao S.A. in 2021 amounted to PLN 2,995.2 million and was higher by PLN 1,298.0 million, i.e. 73.5% in comparison to 2020. Income tax expense in 2021 amounted to PLN 758.3 million vs. PLN 570.8 million in 2020 and was higher by 32.8%.
As at the end of December 2021, the return on assets (ROA) of the Group was 0.9% vs. 0.5% at the end of December 2020.
As at the end of December 2021, the return on assets (ROA) of the Bank was 0.9% vs. 0.5% at the end of December 2020.
In 2021, the Bank do not conclude any agreements according to article 141t, section 1 of the Banking Law Act.
Management Board position regarding the possibility of achieving previously published forecasts
The Bank has not published the forecast of the financial results for 2021.
Management Board remunerations
The amount of remunerations or benefits (in cash, payments in kind or in any form) paid or due to the Management Board Members in 2021.
( in PLN thousand )
NAME
PERIOD
BASE SALARY
VARIABLE REMUNERATION (*)
OTHER BENEFITS (**)
Leszek Skiba
01.01.2021 - 31.12.2021
1 018
204
9
Jarosław Fuchs
01.01.2021 - 31.12.2021
984
245
228
Marcin Gadomski
01.01.2021 - 31.12.2021
984
226
27
Krzysztof Kozłowski
01.01.2021 - 03.08.2021
582
195
61
Tomasz Kubiak
01.01.2021 - 04.11.2021
831
747
176
Jerzy Kwieciński
01.02.2021 - 31.12.2021
902
-
15
Paweł Strączyński
05.08.2021 - 31.12.2021
402
-
44
Tomasz Styczyński
01.01.2021 - 31.01.2021
82
763
515
Błażej Szczecki
15.01.2021 - 31.12.2021
949
-
48
Wojciech Werochowski
15.01.2021 - 31.12.2021
949
-
34
Piotr Zborowski
05.11.2021 - 31.12.2021
153
-
9
Magdalena Zmitrowicz
01.01.2021 - 31.12.2021
984
565
190
(*) The variable remuneration includes the cash bonuses paid in 2021 for 2017-2020 and phantom shares for 2017-2019 resulting from the Variable Remuneration System.
(**) Other benefits include, among others: compensation for non-competition, insurance policies, medical care.
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Report on the activities of Bank Pekao S.A. Group for the year 2021 rok
Bank Pekao S.A.
The present Members of the Bank's Management Board and former Members of the Bank's Management Board who held the positions during 2021 and the remainder of the variable remuneration in phantom shares is 30,253 shares. The value of this part of the variable remuneration as at 31 December, 2021 is PLN 3,691 thousand at the Bank Pekao share price as at 30 December 2021 amounting to PLN 122.
The present Members of the Bank's Management Board and former Members of the Bank's Management Board, who held the position in the Management Board during 2021, did not receive any remuneration or have no receivables in this respect from the Bank's subsidiaries and associates.
Former Members of the Bank's Management Board remuneration
( in PLN thousand )
NAME
VARIABLE
REMUNERATION
OTHER BENEFITS (*)
Diego Biondo
324
-
Roksana Ciurysek Gedir
85
-
Andrzej Kopyrski
381
-
Michał Krupiński
586
-
Michał Lehmann
440
-
Luigi Lovaglio
2,911
-
Marek Lusztyn
519
-
Adam Niewiński
253
-
Grzegorz Olszewski
416
482
Grzegorz Piwowar
635
-
Stefano Santini
214
-
Marek Tomczuk
770
503
Marian Ważyński
246
-
Piotr Wetmański
209
-
(*) other benefits include, compensation for non-competition agreement and insurance policies.
The part of the variable remuneration in phantom shares due to former Members of the Bank's Management Board who held the position of members of the Bank's Management Board before 1 January, 2021, amount to phantom 63,397 shares.The value of this part of the variable remuneration as at 31 December 2021 is PLN 7,734 thousand at the Bank Pekao share price as at 30 December 2020 amounting to PLN 122.
Supervisory Board remunerations
The amount of remunerations or benefits (in cash, payments in kind or in any form) paid or due to the Supervisory Board Members in 2021:
( in PLN thousand )
PERIOD
TOTAL
Sabina Bigos-Jaworowska
01.01.2021 - 31.12.2021
187
Joanna Dynysiuk
01.01.2021 - 31.12.2021
203
Justyna Głębikowska-Michalak
01.01.2021 - 31.12.2021
203
Stanisław Kaczoruk
01.01.2021 - 31.12.2021
203
Michał Kaszyński
01.01.2021 - 31.12.2021
187
Marian Majcher
01.01.2021 - 31.12.2021
187
Marcin Izdebski
11.06.2021 - 31.12.2021
104
Beata Kozłowska-Chyła
01.01.2021 - 31.12.2021
0
Marcin Eckert
01.01.2021 - 07.06.2021
0
Małgorzata Sadurska
01.01.2021 - 31.12.2021
0
In 2021, the Supervisory Board Members did not receive nor are due any compensation from subsidiaries and associated entities of Bank Pekao S.A.
Shares in the Bank and related entities held by the Bank's Directors
According to information available to the Bank, as at the date of submitting of Report on the activities of Bank Pekao S.A. Group for 2021 and as at the date of submitting of Report on the activities of Bank Pekao S.A. Group for the three quarters 2021, the Members of the Bank’s management and supervisory bodies did not held shares of Bank Pekao S.A.
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Report on the activities of Bank Pekao S.A. Group for the year 2021 rok
Bank Pekao S.A.
Compensation for the Non-Competition after the termination of the Management Services Agreement
The following Members of the Bank's Management Board: Mr. Leszek Skiba - President of the Management, Mr. Jarosław Fuchs - Vice President of the Management Board, Marcin Gadomski - Vice President of the Management Board, Mr. Jerzy Kwieciński - Vice President of the Management Board, Mr. Paweł Strączyński - Vice President of the Management Board, Mr. Błażej Szczecki - Vice President of the Management Board, Mr. Wojciech Werochowski - Vice President of the Management Board, Mr. Piotr Zborowski - Vice President of the Management Board, Ms Magdalena Zmitrowicz - Vice President of the Management Board, , in accordance with the provisions in the Management Services Agreement, are obliged to comply with the Competition Prohibition and not to conduct competitive activities during the term of the agreement and for the period specified in the agreement after its termination.
Members of the Management Board who resigned and stopped performing their functions were also subject to the Competition Prohibition, and the payment of Compensation under the Competition Prohibition was, is or will be made subject to the submission by the Managing Person of a written declaration of compliance with the Non-Competition.
Liabilities due to pensions for former supervisors and managers
In 2021, there were no liabilities due to pension and similar benefits for former managers, supervisors or former members of the administrative authorities and liabilities incurred in relation to these pensions occurred.
Agreements with companies entitled to auditing of financial reports
On the basis of the agreement concluded on July 24, 2018, audit company KPMG Audyt sp. z o.o. Sp.k. is the company appointed to audit and review the financial statements of Bank Pekao S.A. and Bank Pekao S.A. Group for the years 2021- 2023 (with subsequent annexes).
Audit remuneration for services of Bank Pekao S.A. Group is presented in the tale below.
(in PLN thousand)
The amounts above do not include value added tax (VAT).
Audit remuneration for services of Bank Pekao S.A. is presented in the tale below.
(in PLN thousand)
The amounts above do not include value added tax (VAT).
Average interest rates in Bank Pekao S.A. in 2021
The average nominal interest rates for the basic types of PLN deposits for non-financial sector residents:
PLN retail deposits
0.1% p.a
PLN corporate clients deposits
0.1% p.a
The average nominal interest rates for the PLN loans for non-financial sector residents:
Total retail loans
3,0% p.a.
Mortgage
2.2% p.a.
Consumption
6.3% p.a.
Other
4.6% p.a.
Corporate loans
2.2% p.a.
Number and value of titles of execution and value of collaterals
Bank Pekao S.A. has established specific policy with regard to collateral accepted to secure loans and guarantees. This policy is reflected under internal rules and regulations in the Bank. The type of collateral and its value are carefully analyzed and chosen regarding the particular risk of the secured transaction.
The Bank obeys the rule, according to which the value of collateral should relate directly to the value of secured liability, that is cash provided by the Bank to a client (capital or the amount of off-balance sheet commitments granted by the Bank) together with extraneous amounts due, for example, interest or commissions.
2021
2020
Fee for the audit of annual financial statements
2,523
2,550
Fee for other attestation services, including review of financial statements
1,972
1,395
2021
2020
Fee for the audit of annual financial statements
1,789
1,788
Fee for other attestation services, including review of financial statements
1,457
860
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Report on the activities of Bank Pekao S.A. Group for the year 2021 rok
Bank Pekao S.A.
In order to hedge risk related to lending activities the Bank accepts legal collateral under the Civil Code, the law on bills of exchange or resulting from the habits adopted in domestic or foreign trade, i.e. bank guarantees, guarantee under the Civil Code, blank of promissory notes, aval, transfer of debts, mortgages, registered pledges, pledges, assignment as collateral, transfer of assets in bank account, blockade assets on client’s account.
For corporate clients, the total value of the collateral for impaired transactions as at 31 December, 2021 amounted to PLN 1,948.4 million. For retail clients, the total value of the collateral for impaired transactions as at 31 December, 2021 amounted to PLN 990.7 million.
Pending litigations
Information on significant legal proceedings pending before courts, arbitration bodies or public administration authorities in respect of liabilities and receivables of the Bank and its subsidiaries is included in Note 37 to the Consolidated Financial Statements of Bank Pekao S.A. Group for the year ended on 31 December 2021.
Information on significant agreements
In 2021, there have been no other significant agreements concluded by the Bank, in particular the Bank has not concluded material agreements with central bank or the competent supervision authorities.
Information on derivative financial instruments and hedge accounting
Information on derivative financial instruments and hedge accounting is included in Note 23 to the Consolidated Financial Statements of Bank Pekao S.A. Group for the year ended on 31 December 2021.
Related party transactions
In 2021, the Bank and its subsidiaries have not concluded any significant transactions (single or aggregate) with related entities other than those executed on arm’s length.
In 2021, the Bank and its subsidiaries did not provide any sureties in respect of loans or advances or did not provide any guarantees to an entity or a subsidiary of such entity, which the total value would be significant.
Detailed information on related party transactions is included in Note 49 to the Consolidated Financial Statements of Bank Pekao S.A. Group for the year ended on 31 December 2021.
Accounting principles adopted in the preparation of the report
Accounting principles adopted in the preparation of the report are described in Note 5 to the Consolidated Financial Statements of Bank Pekao S.A. Group for the year ended on 31 December 2021.
Seasonality or cyclical nature of the Bank’s activity
The demand for the financial services offered by the Bank is stable with no material impact of seasonal changes. Due to the nature of the Bank’s activity, it is not subject to seasonal or cyclical changes.
Issuance, redemption and repayment of debt securities
Structured Certificates of Deposit
Structured Certificates of Deposit are investment products for the Bank’s clients that form an alternative to traditional banks’ deposits. The total value of the Bank’s liabilities relating to these products amounted to PLN 178.6 (principal value) as at the end of December 2021. There is 1 issuance of Structured Certificates of Deposit open in PLN with the maximum maturity date on 27 December, 2022.
Subordinated bonds
On 30 October 2017, the Bank issued 10 years subordinated bonds with a total nominal value of 1.25 PLN billion. The funds from the issue were designated – after receiving the approval of the Polish Financial Supervision Authority on 21 December 2017 – to increase the Bank's supplementary capital, pursuant to art. 127 para. 2 point 2 of the Banking Law and art. 63 of Regulation No. 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms . The bonds were introduced to trading on the ASO Catalyst market.
On 15 October 2018, the Bank issued 10 years subordinated bonds with a total nominal value of PLN 0.55 billion. The funds from the issue were designated – after receiving the approval of the Polish Financial Supervision Authority on 16 November 2018 – to increase the Bank's supplementary capital, pursuant to art. 127 para. 2 point 2 of the Banking Law and art. 63 of Regulation No. 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms . The bonds were introduced to trading on the ASO Catalyst market.
On 15 October 2018, the Bank issued 15 years subordinated bonds with a total nominal value of PLN 0.20 billion. The funds from the issue were designated – after receiving the approval of the Polish Financial Supervision Authority on 18 October 2018 – to increase the Bank's supplementary capital, pursuant to art. 127 para. 2 point 2 of the Banking Law and art. 63 of Regulation No. 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms . The bonds were introduced to trading on the ASO Catalyst market.
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Bank Pekao S.A.
On 4 June 2019, the Bank issued 12 years subordinated bonds with a total nominal value of PLN 0.35 billion. The funds from the issue were designated – after receiving the approval of the Polish Financial Supervision Authority on 8 July 2019 – to increase the Bank's supplementary capital, pursuant to art. 127 para. 2 point 2 of the Banking Law and art. 63 of Regulation No. 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms . The bonds were introduced to trading on the ASO Catalyst market.
On 4 December 2019, the Bank issued 12 years subordinated bonds with a total nominal value of PLN 0.40 billion. The funds from the issue were designated – after receiving the approval of the Polish Financial Supervision Authority on 10 December 2019 – to increase the Bank's supplementary capital, pursuant to art. 127 para. 2 point 2 of the Banking Law and art. 63 of Regulation No. 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms . The bonds were introduced to trading on the ASO Catalyst market.
Pekao Bank Hipoteczny S.A. covered bonds
The total value of the company’s liabilities due to covered bonds amounted to PLN 1,086.8 million (principal value) as at the end of December 2021. Liabilities from covered bonds with maturity up to 3 months account for 7.0%, up to 1 year account for 1.2%, up to 2 years account for 31.8%, up to 5 years account for 27.6% , up to 10 years account for 32.4% of the total nominal value.
Pekao Bank Hipoteczny S.A. bonds
The total value of the company’s liabilities under bonds amounted to PLN 156.0 million (principal value) as at the end of December 2021 with maturity date up to 6 months account for 50.1%, up to 1 year account for 49.9% of the total nominal value.
Pekao Leasing Sp. z o.o. bonds
The total value of the company’s liabilities under bonds amounted to PLN 1,366.9 million (principal value) as at the end of Decemebr 2021 with maturity date up to 3 months account for 27.9%, up to 6 months account for 18.8%, up to 1 year account for 30.1% and up to 2 years account for 23.2% of the total nominal value.
Pekao Faktoring Sp. z o.o. bonds
The total value of the company’s liabilities under bonds with maturity date to 6 months amounted to PLN 2,559.9 million (principal value) as at the end of December 2021.
Subsequent events
On 24 February 2022, there was an armed attack by Russia and Belarus on Ukraine. On the day the conflict broke out, the Bank launched increased monitoring of the situation. In particular, the daytime meetings of the Crisis Committee were activated with the participation of Members of the Bank's Management Board, which monitors the impact of the conflict on the Group and takes key decisions. Additionally, where it was justified, appropriate emergency plans were activated and operational bodies managing their implementation were launched.
In terms of potential risks, the Group identifies short-term and medium / long-term threats, i.e. in particular:
1) in the area of short-term threats:
• threats to cash liquidity, i.e. the Bank is observing increased cash withdrawals from branches and ATMs. However, a similar situation was already observed at the beginning of the COVID-19 pandemic. This made it possible to test and optimize the Bank's procedures in this regard. At present, there are no restrictions on the international transportation of cash (unlike during a pandemic). In view of the factors discussed, the Group assumes that disruptions in cash transactions do not pose a significant risk for it and will expire in the time horizon from a few days to several weeks,
• financial market disturbances affecting the value of the portfolio of financial instruments in which the Bank's liquidity surplus is stored. A significant fall in the value of government bonds could reduce their liquidity. However, due to the fact that the Bank currently has a high excess of liquidity and the disturbances in the Treasury bond market are not significant, the Bank assesses the risk in question as insignificant at the moment,
• operational disturbances (continuity of operations of departments, systems, etc.). These risks are constantly monitored and secured by responsible units of the Bank.
2) in the area of medium-term and long-term threats:
• credit loss risk for exposures to entities from Russia (with an off-balance sheet exposure in the amount of PLN 161.5 million as at 31 December 2021), Belarus (with a net carrying amount of PLN 201 million and an off-balance sheet exposure in the amount of PLN 128 million as at 31 December 2021) and Ukraine (with a net carrying amount of PLN 55 million as at 31 December 2021), with the Group's exposure in this regard mostly covered KUKE policies,
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• the risk that the conflict will translate into deterioration of the economic and credit conditions for the rest of the portfolio (through the raw material price growth channel, disruption of economic relations, deterioration of consumer sentiment, etc.). This risk is reflected in the allowances for expected credit losses for working loans, the calculation of which takes into account the risk of an armed conflict.
In the Group's opinion, as at the date of approval of financial statements for publication, the situation does not affect the numerical values presented in financial statements and does not threaten the assumption that the Group will continue as a going concern for a period not shorter than one year from the balance sheet date.
However, depending on the further development of the situation, it may have a negative impact on the future financial results of the Group. Due to the unprecedented nature of the current situation, it results in the possibility of materialization of other risks in the future, not indicated above, and all assessments and forecasts in this respect are subject to uncertainty and will be monitored and analyzed by the Group.
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11. Prospects for Development
11.1 Factors which will affect the results of the Group
The activity of Bank Pekao S.A. and the Group’s companies is in majority conducted on the Polish territory, hence the Group’s performance will be mainly affected by economic situation in the country and international events that have influence on domestic economy.
The year 2021 was a period of a dynamic economic rebound, strongly supported by the first success in the fight against the pandemic and an overall rise in optimism. Poland’s GDP increased by 5.7% y/y due to revival of economic activity, though it faced a new challenge from very high level of inflation. For the year 2022 we predict a slowdown of the pace of economic growth towards 4% y/y, with the trough of the cycle at the turn of the year 2022/2023 due to transfer effect coupled with a gradual cooling of the overall economic activity. In our opinion the main sources of this slowdown would be: weakening of private consumption (including the effects of high inflation), delays in public investments and a steep cycle of interest rates hikes. Furthermore, among the downside risk we identify the uncertainty concerning further development of the COVID-19 pandemic as well as the current geopolitical situation.
The outlook for future economic development will have an impact on demand for banking products and possible further changes in the cost of risk as a result of updated assumptions about the economic situation.
Monetary policy is an important factor influencing banks' performance. The current economic outlook as well as an elevated inflation level have prompted the MPC to start a cycle of interest rates hikes in October 2021. During the last few months the main interest rate have been raised in a number of hikes from 0.10% to 2.25%, and we expect that it will reach the level of 4.00%. Rising interest rates are beneficial for banks, since it positively impacts their net interest income which is the key source of operational income of the sector.
Independently from economic situation, tax and regulatory environment invariably plays major role for banks. In particular, this includes tax on certain financial institutions, high capital requirements, contributions to Bank Guarantee Fund (BFG), costs of further adjustment to a number of regulatory solutions (MIFID II, RODO/GDPR, PSD II, MREL, among others), as well as introduction in Poland of cap on asset management fees. After a temporary reduction in in banks’ mandatory contributions to BFG in 2021, they will return to their pre-pandemic level and thus will rise significantly during the current year. In general the tax and regulatory environment of the sector remains very restrictive, which, combined with the unprecedented economic situation, may constrain certain banks’ credit expansion and impact their financial results.
The issue of foreign currency mortgages continues to be one of the most important factors in the institutional environment. Considering no systemic solution in this matter, the banking system will be most affected by court decisions in individual cases. A number of events (i.a. the rulings of CJEU) has led towards higher number of borrowers seeking judicial resolution. This will have a strong negative impact on the performance of banks, especially those with a large portfolio of such loans. So far, the reserves established by banks due to the expected legal risk have been the main channel of influence - they have already strongly impacted the 2020 as well as 2021 results. According to most estimates, the total costs for the sector may reach several dozen billion zlotys, but they are difficult to estimate and will be spread over time. Much will depend on, among others, the actual number of lawsuits (how many borrowers will decide to take legal action), the interpretation of national courts in individual cases, the reactions of national supervisory institutions or the actions of the banks themselves. Moreover, it cannot be ruled out that the issue of CHF loans will find a final solution by way of legislation.
Bank Pekao S.A. will monitor the direction of decisions made by Polish courts, as well as market practice and borrowers' behaviour, and will assess on an ongoing basis the probability of cash outflow with respect to the mortgage loans in question. However, the impact may be indirect in case of potential financial problems of some smaller institutions with a particularly large exposure to the discussed risk.
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11.2 Strategic directions and business priorities
„Responsible Bank. Modern banking" is the new strategy of Bank Pekao S.A. for the years 2021-2024, announced in March 2021.
According to the strategic plan, Bank Pekao S.A .:
• will be a universal bank of first choice for its customers,
• will develop remote distribution and customer service model ,
• will focus on cost and process efficiency ,
• will grow in most profitable market segments .
Our ambition in the 2024 horizon is to be among the most profitable and effective banks in Poland. Therefore, as part of the implementation of the new strategy, the Bank focuses on:
• significant increase in the return on equity (ROE) and
• reduction of the cost-to-income ratio (C / I).
The main strategic goals also include an increase in the number of active mobile banking customers from 2 million in 2020 to 3.2 million in 2024.
The strategy is based on four pillars: Customer, Growth, Efficiency and Responsibility.
The „Customer” pillar
We will put customers and their needs at the center of all its activities, therefore it intends to intensively develop digital channels as well as fast and convenient service processes. We will strive to enable retail clients to handle almost any matter online. The digitization rate amounting to nearly 100% is one of the key strategic aspirations for 2024. The PeoPay mobile application will be the main contact channel with our customers. We are planning to make even greater use of advanced data analytics and modern sales support tools in order to personalize the offer, improve the quality of service and increase customers’ willingness to recommend its services. A key measure of success that we will strive for is a significant improvement in customer satisfaction rankings.
The „Growth” pillar
In line with the Strategy, we will focus on business growth in the most profitable market segments, product groups and areas of untapped potential, which will bring improved profitability, i.e. consumer finance, microbusiness, SME and MID enterprises.
Over the next years, we want to acquire over 400 thousands individual customers every year and increase its market share in cash loans. Moreover, we will seek to rejuvenate the demographic structure of the retail customer base. Our goal is to acquire over 600 thousands customers under 26 years of age by 2024.
The growth in the SME segment is to result in an increase in the market share up to 12%. In the microbusiness segment we plan to acquire over 40 thousands customers annually and increase the market share by 3 pp. up to 8 percent.
Our goal is also to grow digital sales of investment products – ultimately over 80 percent of sales volume of mutual funds is to be processed in remote channels.
We plan also to strengthen business synergies and cooperation with PZU, which will result in an increase in sales of insurance products and a twofold increase in the gross written premium by 2024.
In line with our Strategy, we will strengthen our presence on the e-commerce market. Therefore, we will make available deferred payments and launch offer of installment loans available on-line. We will also offer solutions for e-stores and e- commerce platforms enabling sale in installments.
The „Efficiency” pillar
In times of strong pressure on the profitability of the banking sector, the ability to effectively manage costs and process excellence has become even more important, which is why the Bank will focus on technological transformation and improvement of efficiency of operations, will accelerate digitization and migration of processes to remote channels and optimize credit processes. An important element of the Strategy is the expansion of the self-service zone for customers in remote channels. We will strive to increase the level of customer self-service so that by 2024 80% of customers from the SME, MID and Corporate segments will use the self-service zone in digital channels.
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Due to the challenges in technological transformation, we plan to invest and develop the following IT areas:
• technology and innovation,
• modern architecture,
• rapid software development,
• infrastructure reliability,
• people and competences.
In line with the Strategy, we strive to optimise key credit processes, which should result in shortening the time to loan decision (up to 8 days for a mortgage loan and up to 1 day for a loan for micro-enterprises and SMEs).
The „Responsibility” pillar
We want to support economic development by actively engaging in governmental, EU economic recovery, and climate transformation programs for our clients. Our commercial and operational activities will be even more based on the factors of sustainable development.
We will strive to maintain a safe risk profile in the changing market environment and to maintain one of the lowest costs of risk among the largest banks. To achieve that, we will improve the infrastructure of risk models and automate credit assessment processes.
Strategy execution in 2021
Key strategic goals:
The Bank's financial and business results in 2021 were in line with the strategic assumptions, mainly due to improved commercial results supported by the economic recovery while maintaining strong cost discipline, as well as increasing popularity of remote distribution channels among customers.
CEL STRATEGICZNY
ACHIEVED
IN 2020
ACHIEVED
IN 2021
2024 GOAL*
ROE (%)
4,5%
8,7%
~10%
C/I (%, incl. BFG)
49%
48%
42%
Number of mobile banking customers (mln)
2,0
2,4
3,2
Total digitalization ratio (%)
n/d
57%
~100%
Digitalization ratio – individual customers (%)
n/d
61%
~100%
Digitalization ratio – mikro business clients (%)
n/d
49%
~100%
(*) In response to the dynamic changes in the economic environment, including the increase in the reference interest rate, we plan to update the strategic financial goals adopted and published in March 2021.
The „Customer” Pillar
Bearing in mind the priorities defined in the strategic pillar "Customer", we will carry out intensive work on the development of the functionality of digital service channels, with particular emphasis on mobile banking for retail customers. In 2021, the Bank implemented a new version of the Peopay application, in which functions were redesigned, simplified and extended to better meet the needs of our customers. The number of active mobile banking users and the level of satisfaction – measured as an increase in the net satisfaction index, have increased systematically. The number of active mobile customers in relation to the current accounts number was 52% at the end of 2021 (+4 pp as compared to 2020), which brings the Bank closer to achieving the strategic aspiration of at least 60% in 2024. In addition, the sale of cash loans in remote channels (measured by the share in the number of products sold) increased and at the end of 2021 amounted to 61% compared to 57% in the previous year.
The „Growth” pillar
In 2021, we consistently carried out activities aimed at strengthening our position in the highest profitable segments, i.e. consumer finance, micro-enterprises, SMEs and MID enterprises.
The goal in the area of current accounts (CAs) acquisition of individual clients set out in the Strategy at the level of min. 400 thousand CAs annually was achieved. In 2021, 443 thousand CAs were opened (+34 thousands more than the year before). In 2021, we recorded a high dynamics of sales of mortgage loans (+29% y/y) and sales of cash loans by +40% as compared to 2020. The increase in sales of cash loans took place in particular in remote channels, the sales dynamics reached the level of +79% y/y. The growth dynamics in terms of credit sales for micro-enterprises reached +46% y/y. In line with the Strategy, the Bank leveraged business synergies with the PZU Group, developing its product offer (including standalone travel insurance) and digitizing subsequent processes, which resulted in an increase in gross written premium by +58% compared to 2020.
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Thanks to effective business activities aimed at strengthening the existing and building new competitive advantages in the SME segment, there was a significant acceleration in acquisition in this group of clients – the assumed strategic aspiration at the level of min. 2,200 new clients annually the Bank achieved after 9 months of the year. The growth dynamics of acquisitions in the SME segment was +54% y/y, and in the second strategic segment – MID enterprises it was + 47% y/y. At the end of 2021, the value of the loan portfolio in the SME segment was higher by +31% y/y, while in the MID segment it was higher by +23% y/y. From the strategic perspective, an important parameter is also the generated income per customer. In 2021, thanks to effective sales activities and the increasing number of products per customer, we recorded an increase of revenue per customer in both of the above segments: +20% (SME) and +8% (MID) respectively, above the 2020 level.
The „Efficiency” pillar
One of the strategic directions defined in the „Efficiency” pillar is the acceleration of digitalization and migration of processes to remote channels, which includes not only retail banking customers, and the development of the Peopay mobile application (as mentioned in the „Customer” pillar section), but also digital services for corporate customers. We have consistently developed the self-service zone for corporate clients in the PekaoBiznes24 electronic banking, providing clients with new processes, including submitting applications in the field of credit card service, PFR financial shield, closing sub-accounts. In cooperation with Tpay, the Bank offered clients a new service supporting the dynamically developing e-commerce segment – a payment gateway for online payments. In the first half of 2021, we implemented a new biometric remote method (“on a selfie” ) of verifying the identity of representatives of a potential client. This method, using solutions known from the area of retail banking, enables clients from the SME and corporate segment to establish relationships completely remotely, regardless of their legal form. The solution is intended for companies registered in Poland, represented by people with Polish identity cards
The development of remote distribution channels was accompanied by improvement in the effectiveness of the Bank's branch network. In 2021, the Bank reduced its branch network by 63 units.
Our priorities also include improving the efficiency of credit processes. We implement processes related to the optimization and increasing the use of analytical tools in credit processes in every customer segment. These activities will bring tangible results in the coming quarters.
The „Responsibility” pillar
In order to maintain a safe risk profile in the changing market environment, we have consistently kept the costs of risk below the target level assumed in the Strategy (i.e. 50-60 bps). Throughout 2021, the cost of risk amounted to 45 bps, stabilizing at the pre-COVID level. At the same time, a significant capital surplus above the regulatory minimum was maintained, i.e. the Tier 1 ratio reached 16,9%.
In June 2021, the Bank adopted and announced the ESG strategy for 2021-2024, defining the goals connected to caring for the natural environment, supporting the development of the economy and society, and the bank's sustainable development. The effects of the first 6 months of its implementation were presented in the non-financial report for 2021. In particular, the Bank is even more involved in the energy and ecological transformation of Poland and environmental protection, including active participation in the development of renewable energy sources (RES) sector in Poland, offering and organizing the issue of sustainable development bonds (ESG).
Business priorities for 2022
We constantly monitor the developments in the market environment, in particular the situation in the macroeconomic environment and the development of the epidemic situation in the country. In the context of the directions of the observed changes, the business assumptions of the “Responsible Bank. Modern banking” Strategy remain valid, and the goals of the implemented strategic initiatives are periodically reviewed in order to ensure they are adjusted to the current external and internal conditions. In response to the dynamic changes in the economic environment, including the increase in the NBP reference interest rate, we plan to update the strategic financial goals adopted and published in March 2021.
In line with the adopted strategy, in 2022 we will consistently implement a number of projects and strategic initiatives aimed primarily at:
• dynamic business growth in profitable market segments (consumer finance, Micro, SME, MID),
• strengthening the market position among young customers,
• digital channels development and migration of processes to remote channels,
• improving the quality of services offered and increasing the level of customer satisfaction,
• achieving the goals defined in the ESG Strategy,
• optimization and digitalization of credit processes,
• automation and robotization of operations.
In addition, we will strive to strengthen a structured approach to data management and develop competences in the field of data analytics. The Bank will continue to develop cooperation with the PZU Group in the area of insurance and investment products.
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12. Representations of the Bank’s Management Board
The Management Board of Bank Pekao S.A. declares to the best of its knowledge that:
• Consolidated Financial Statements of Bank Pekao S.A. Group for the year ended on 31 December 2021 and comparative figures have been prepared in accordance with the binding accounting policies and that they reflect in a true, fair and clear manner Bank Pekao S.A. Group financial position and their results,
• Unconsolidated Financial Statements of Bank Pekao S.A. for the year ended on 31 December 2021 and comparative figures have been prepared in accordance with the binding accounting policies and that they reflect in a true, fair and clear manner Bank Pekao S.A. financial position and their results,
• Report on the activities of Bank Pekao S.A. Group for the year 2021(prepared jointly with the Report on the activities of Bank Pekao S.A.) provides the true picture of Bank Pekao S.A. Group development, achievements and situation, including the main threats and risks.
Acting on the basis of art. 66 par. 4 of the Act on accounting of 29 September 1994 and § 13 point 17 of the Statute of the Bank, the Ordinary General Meeting of June 11, 2021 selected KPMG Audyt Sp.z o.o. Sp.k. as an audit firm to audit and review the unconsolidated financial statements of Bank Polska Kasa Opieki Spółka Akcyjna and consolidated financial statements of the Capital Group of Bank Polska Kasa Opieki Spółka Akcyjna for the years 2021-2023.
The Management Board of Bank Pekao S.A. declares that the registered audit company performing the review of Consolidated Financial Statements of Bank Pekao S.A. Group for the period ended on 31 December 2021 and Unconsolidated Financial Statements of Bank Pekao S.A. for the year ended on 31 December 2021 has been selected in line with the binding legal regulations. The company and the registered auditors performing the review meet the requirements indispensable for issuing an objective and independent report on the annual consolidated financial statement, in line with the binding provisions of the law and professional standards.
As a public interest entity, the Bank implemented, based on the resolutions of the Supervisory Board of the Bank, the policies and procedures set out in Article 130 para. 1 item 5-7 of the Act of 11 May 2017 on statutory auditors, audit firms and public supervision (Journal of Laws of 2017, item 1089, hereinafter the "Act").
In order to meet the requirements of the Act, the following documents have been issued for use:
− The policy of selecting an audit firm to carry out statutory audit of Bank Pekao S.A. financial statements,
− The procedure of selecting an audit firm to carry out statutory audit of Bank Pekao S.A. financial statements,
− The policy of carrying out the permitted non-audit services by the audit firm conducting the audit, by entities related to this audit firm and by any member of the network to which the audit firm belongs.
Maximum duration of continued duration of statutory audits, carried out by the same audit firm or audit firm associated with this audit firm or any member of the network operating in the European Union countries to which these audit firms belong, must not exceed 5 years. This period also applies to the key statutory auditor.
After the maximum duration of the order, the Bank cannot commission a statutory audit to the audit firm or any entity from its network operating within the European Union for the next 4 years, and in the case of a key statutory auditor after at least 3 years from the end of the last statutory audit.
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13. Statement of Bank Polska Kasa Opieki Spółka Akcyjna on application of Corporate Governance Standards in 2021
According to § 70 item 6 point 5 a and b of the ordinance of Minister of Finance dated March 29, 2018 on current and periodic information published by issuers of securities and the conditions for recognition as equivalent the information required by the laws of a non- member state 12 (hereinafter referred to as “the ordinance of the Minister of Finance dated March 29, 2018 ”), Bank Polska Kasa Opieki Spółka Akcyjna (hereinafter referred to as the “Bank”) states that it falls within the following set of corporate governance rules, including standards that issuer applies voluntarily and corporate governance practices used by issuer beyond the requirements of national law. 13
Corporate governance rules applied in the Bank i.e. a system of regulations and procedures defining guidelines for the activities of the Bank’s governing bodies , including their relations with entities interested in the Bank’s activities (stakeholders ) result from generally applicable law, especially from the Commercial Companies Code , the Banking Law and capital market regulations , as well as the rules laid down in : Code of Best Practice for WSE Listed Companies 2016, Code of Best Practice for WSE Listed Companies 2021, Corporate Governance Rules for the Supervised Institutions issued by the Financial Supervision Authority on July 22, 2014 and Code of Banking Ethics of Polish Bank Association.
Subject with the exception of the matters presented below in the period from 01.01.2021 to 30.06.2021 the Bank applied corporate governance rules laid down in the Code of Best Practice for WSE Listed Companies 2016 14 (hereinafter referred to as “Best Practice 2016”) set by WSE Supervisory Board’s Resolution No. 26/1413/2015 of October 13, 2015. The Bank partly applied the recommendation No. VI.R.3 and the detailed principle No . II.Z.7 of the Best Practice 2016, regarding the tasks and functioning of committees operating on the supervisory board, according to which the Bank should apply the provisions of Annex I to the Commission Recommendation 2005/162 / EC of February 15, 2005 on the role of non-executive directors or supervisory directors of listed companies and on the committees of the (supervisory) board (hereinafter referred to as “ EC Recommendation ") 15 . Bank did not apply the EC Recommendation concerning composition of Nomination and Remuneration Committee due to the necessity of providing consistent remuneration standards for management board members and key managers within the group.
Subject to the matters presented below in the period from 01.07.2021 to 31.12.2021, the Bank applied corporate governance rules laid down in the Code of Best Practice for WSE Listed Companies 2021 16 (hereinafter referred to as “Best Practice 2021”) set by WSE Supervisory Board’s Resolution No. 13/1834/2021 of March 29, 2021.
The Bank did not apply 4 detailed principles: 2.1; 2.2; 2.4, 6.4 of "Best Practice 2021" concerning the diversity policy, the openness of voting of the Management Board and the Supervisory Board and the manner of remuneration of Members of the Supervisory Board. In accordance with § 29 section 3 of the Rules of the Warsaw Stock Exchange, the Bank published Information on the application of the "Best Practice 2021" in Report No. 1/2021 of August 4, 2021, where explained reasons for non-application of the above-mentioned detailed rules.
The Bank did not apply detailed rules 2.1 and 2.2. of "Best Practice 2021" according to which, in terms of gender diversity, the condition for ensuring the diversity of company bodies is the participation of minority in a given body at a level not lower than 30%.
12 Journal of Laws 2018.757
13 Par. 70.6.5.a and b of the ordinance of the Minister of Finance of March 29, 2018
14 The document is publicly available on the WSE website: https://www.gpw.pl/dobre-praktyki
15 Dz.U.UE.L.2005.52.5, the document is publicly available on the website: http://eur-lex.europa.eu/legal-content/PL/TXT/?uri=CELEX%3A32005H0162
16 The document is publicly available on the WSE website: https://www.gpw.pl/dobre-praktyki
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The Bank has the “Policy on Gender Equality and Diversity with regard to the Bank's Employees, including Members of the Supervisory Board, Members of the Management Board and Persons Performing Key Functions in Bank Polska Kasa Opieki Spółka Akcyjna" approved by the Supervisory Board. The Policy defines the objectives and criteria of diversity, including in the scope indicated in the Best Practice 2021. The Bank's Policy has been developed taking into consideration requirements resulting from generally applicable regulations addressed to entities operating in the banking sector and recommendations of authorities that exercise control and supervision over that sector, including in particular recommendations included in the European Banking Authority and the European Securities and Markets Authority Guidelines on the assessment of the suitability of members of the management body and key functions holders . According to the Guidelines,a target for the representation of the under-represented gender in the statutory body should be specified by means of a Policy implemented in the Bank and, in principle, should be determined for the Bank's Supervisory Board and the Management Board jointly, which was applied in the aforementioned Policy implemented in the Bank. The total share of representatives of the under-represented gender in the composition of the Bank's Supervisory Board and the Management Board is in line with the target set out in the Policy implemented in the Bank and exceeds 30%. The Bank will present the aforementioned Policy in the part regarding the Supervisory Board to the General Meeting’s approval.
The Bank also did not apply the detailed rule 2.4 of the "Best Practice 2021" according to which the votes of the supervisory board and the management board should be public, unless otherwise provided for by law. The Bank shares the WSE Corporate Governance Committee’s view that, in general, all resolutions of the Bank's Management Board and Supervisory Board should be adopted in a transparent manner, i.e. after they are duly discussed and after all members of the body have expressed their opinion. Therefore, both the Rules of the Supervisory Board and the Rules of the Bank's Management Board, generally provide for open vote, with exceptions which allow the secret vote in cases provided for by law and in other indicated cases:
1) The Rules of the Supervisory Board stipulate that the Chairman shall order a secret vote only in one case, namely at the request of at least one member of the Supervisory Board, as an exception to the principle of open vote (§ 11 section 8 of the Rules). Other provisions of the Rules relating to secret vote have already been repealed or amended by the Supervisory Board,
2) The Rules of the Bank's Management Board stipulate that resolutions are adopted in an open vote. As an exception to this rule, the Rules indicate that only in situations specified by law or in other justified cases, the President of the Management Board may order a secret vote (§ 8 section 2 of the Rules).
In the Bank’s view, due to the specific nature of the banking sector, it is not possible to exhaustively define all situations in which secret vote would be the optimal solution for the Bank's corporate governance. For this reason, the Bank does not completely exclude the ability to order a secret vote in cases other than those provided for by law. The Bank limited such ability to the abovementioned cases, considering such a solution to be the optimal compromise between the postulate of full transparency of the decision-making process in the Bank and the need to provide the members of the Bank's Management Board and Supervisory Board with the ability to adjust the manner of operation to unique circumstances.
The Bank also did not apply the detailed rule 6.4 of the "Best Practice 2021" according to which the remuneration of members of committees, in particular the audit committee, should take into account the additional workload associated with work in these committees. The rules for remunerating members of the Supervisory Board of Bank Pekao S.A. established by the General Meeting do not provide for additional remuneration for members of the committees operating within the Supervisory Board, except for an increase in the remuneration of the chairmen of such committees. The Bank will propose to the General Meeting relevant changes in the rules of remunerating members of the Supervisory Board at the next General Meeting.
In 2021, the Bank also applied Corporate Governance Rules for the Supervised Institutions issued by the Polish Financial Supervision Authority on July 22, 2014 17 , with the exception of:
− chapter 9 of the Rules related to asset management at the client's risk , in view of the fact that the Bank does not pursue any activity in this area ,
− § 49 section 4 and § 52 section 2 of the Rules in view of the fact that there is an audit unit and a compliance unit functioning in the Bank.
17 The document is publicly accessible on the Polish Financial Supervision Authority website: https://www.knf.gov.pl/dla_rynku/regulacje_i_praktyka/zasady_ladu_korporacyjnego
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Bank Pekao S.A.
The Bank partially applied the principle set out in § 21 section 2 of the Corporate Governance Principles for the Supervised Institutions regarding the composition of the supervisory body, as regards the chairman of the Supervisory Board. The election of the chairman of the Supervisory Board was made on the basis of knowledge, experience, including the management of the body, and skills that confirm the competences necessary for the proper performance of supervision duties. In the view of the above, the criterion of independence was waived. The composition of the Bank's Supervisory Board meets the independence criteria resulting from the Bank's Statute and the Best Practices.
In 2021, the Bank applied corporate governance rules laid down in the Code of Banking Ethics of Polish Bank Association 18 .
Furthermore, the Bank has introduced the Integrity Charter, constituting a set of basic values for the Bank's employees, which are based on honesty, recognized as a guarantee of permanent transformation of profit into value for all stakeholders (including shareholders and investors).
The activities undertaken by the Bank comply with the laws regulations, the Bank’s Statute, internal Bank’s regulations, market standards and ethic norms.
Acting in compliance with par. 70.6.5c–m of above mentioned ordinance of Minister of Finance dated March 29, 2018, the Bank presents following information:
1) The description of key features of the Bank’s internal control and risk management systems related to the preparation of financial statements and consolidated financial statements 19
The Management Board of the Bank is responsible for developing and implementing of an independent, adequate and efficient Internal Control System, one of whose objectives is to ensure the reliability of financial reporting .
The Supervisory Board supervises the introduction and ensuring the functioning of an adequate and effective Internal Control System. The Supervisory Board performs an annual assessment of the adequacy and effectiveness of the Internal Control System, including an annual assessment of the adequacy and effectiveness of control functions, compliance units and internal audit units.
The internal control system within the process of financial statements preparation is aimed at ensuring reliable, complete and correct disclosure of all commercial transactions executed over a given period
In order to carry out the reporting process, the Bank shall have established accounting policies in accordance with the requirements of International Financial Reporting Standards and other applicable regulations, an account plan, detailed internal instructions, rules for the recording of particular types of economic transactions, as well as reporting systems.
At the same time, the Bank shall monitor developments in external legislation on an ongoing basis and shall carry out an assessment of the possible impact of these changes on accounting policies and reporting processes.
IT systems shall ensure that clear and centralised data obtained, confirming the entries in the accounts and ensuring the continuity of records and the transfer of turnover and balances and the preparation of financial statements.
The Bank shall have a formalised process for closing the accounts and drawing up its accounts, in particular on the basis of a fixed timetable which defines the activities and the bodies responsible for their implementation.
The responsibility for preparation of financial statements, periodic financial and supervisory reporting and the provision of information management information rests with the Financial Division supervised by the Vice President of the Bank’s Management Board .
2) Identification of shareholders owning directly or indirectly a significant block of shares together with identification of number of shares owned by those shareholders, percentage of shareholders share in share capital , number and percentage of votes at general meeting resulting from owned shares 20
18 The document is publicly accessible on the Polish Bank Association website: https://zbp.pl/Dla-Bankow/Prawo-i-legislacja/Komisja-Etyki-Bankowej
19 Par. 70.6.5.c of the ordinance of the Minister of Finance of March 29, 2018
20 Par. 70.6.5.d of the ordinance of the Minister of Finance of March 29, 2018
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Bank Pekao S.A.
The main shareholders of the Bank from June 7, 2017 are:
- Powszechny Zakład Ubezpieczeń S.A. holding shares in the number of 52 . 494 . 007 (fifty-two million four hundred ninety four thousand seven) shares of the Bank, constituting approximately 20% (twenty percent) of the Bank's share capital and entitling to exercise 52 . 494 . 007 (fifty-two million four hundred and ninety four thousand seven) votes , representing about 20% of the total number of votes , and
- Polski Fundusz Rozwoju S.A. holding shares in the number of 33 . 596 . 166 (thirty-three million five hundred ninety six thousand one hundred and sixty six) of the Bank's shares , representing approximately 12.8% of the Bank's share capital and entitling to 33 . 596 . 166 (thirty-three million five hundred ninety six thousand one hundred sixty six ) votes representing about 12.8% of the total number of votes.
The shareholders of the Bank owning directly or indirectly through their subsidiaries at least 5% of the total number of voting rights at the Bank’s General Shareholders Meeting are as follows:
NUMBER OF SHARES AND VOTES AT THE GENERAL MEETINGM
SHARE IN SHARE CAPITAL AND TOTAL NUMBER OF VOTES AT THE GENERAL MEETING
NUMER OF SHARES AND VOTES AT THE GENERAL MEETING
SHARE IN SHARE CAPITAL AND TOTAL NUMBER OF VOTES AT THE GENERAL MEETING
SHAREHOLDER NAME
DECEMBER, 31 2021
DECEMBER, 31 2020
PZU S.A.
52 494 007
20,00%
52 494 007
20,00%
PFR S.A.
33 596 166
12,80%
33 596 166
12,80%
Aviva OFE
13 281 544
5,06%
13 281 544
5,06%
Nationale-Nederlanden PTE SA
13 201 655
5,03%
13 201 655
5,03%
Other shareholders (below 5%)
149 896 662
57,11%
149 896 662
57,11%
Total
262 470 034
100,00%
262 470 034
100,00%
3) Identification of holders of any securities with special control rights with description of those rights 21
According to the Bank’s Statute all the existing Bank’s shares are ordinary bearer shares. There are no special preferences or limitations connected with the shares, or differences in the rights attached to them. The rights and obligations related to the Bank’s shares result from generally applicable laws, in particular provisions of the Polish Commercial Companies Code.
Securities issued by the Bank do not give their holders any special control rights.
4) Identification of any restrictions of voting rights, such as restriction of voting rights of holders of given number or percentage of votes, temporary restrictions of voting or provisions according to which rights resulting from securities are separated from the fact of holding those securities 22
According to the Bank’s Statute there are no restrictions regarding voting rights of Bank’s shares (generally applicable laws may in certain circumstances restrict voting rights of shareholder).
5) Identification of any restrictions of ownership transfer of securities issued by the Bank 23
According to the Bank’s Statute there are no restrictions of ownership transfer of securities issued by the Bank (generally applicable laws may in certain circumstances restrict ownership transfer of securities issued by the Bank).
6) Description of rules governing appointment and dismissal of Members of managerial bodies and their rights, in particular right to decide whether to issue or repurchase shares 24
Management Board
As stated in the Bank’s Statute the Management Board is composed of 5 to 9 Members. Vice Presidents and Members of the Bank's Management Board are appointed and dismissed by the Supervisory Board at the request of the President of the Management Board, taking into account the assessment of compliance with the suitability requirements. Members of the Bank's Management Board are appointed for a joint term of office of three years.
21 Par. 70.6.5.e of the ordinance of the Minister of Finance of March 29, 2018
22 Par. 70.6.5.f of the ordinance of the Minister of Finance of March 29, 2018
23 Par. 70.6.5.g of the ordinance of the Minister of Finance of March 29, 2018
24 Par. 70.6.5.h of the ordinance of the Minister of Finance of March 29, 2018
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The Management Board comprises the President of the Management Board of the Bank, Vice Presidents of the Management Board of the Bank and Members of the Management Board of the Bank. Vice Presidents and Members of the Management Board are appointed and removed on the motion of the President. Appointment of the President of the Management Board and the Member of the Management Board supervising significant risk management or entrusting this function to the appointed Member of the Management Board, is subject to approval by the Financial Supervision Authority. The body which applies to the Financial Supervision Authority for the approval is the Supervisory Board.
At least half of the Members of the Management Board, including its President, should possess a thorough knowledge of the Polish banking market, i.e. they should meet all of the following criteria:
− they have professional experience gained on the Polish market, relevant for the performance of a managerial function at the Bank,
− they are permanently domiciled in Poland,
− they have command of the Polish language.
The Management Board runs the business and represents the Bank. Each Member of the Bank’s Management Board is obliged to undertake actions in Bank’s interest. Members of the Management Board are prohibited from taking any decisions or actions that would lead to conflicts of interests or that would be incompatible with the Bank’s interests or their official duties. A Management Board Member is obliged to notify the Management Board of the Bank of any situation in which a conflict of interests might occur or has occurred as well as refrain from participating in discussion and voting on resolution in case of which a conflict of interest has occurred.
Members of the Management Board shall have rights under the generally applicable law.
The Bank’s Statute does not provide for the Management Board or its members right to decide whether to issue or purchase shares.
7) Description of rules governing amendment of the Statute of the Bank 25
Amendment of the Bank’s Statute requires adoption by way of resolution of the Bank’s General Shareholders Meeting as well as registering the amendment in the National Court Register. Procedure of the General Shareholders Meeting of the Bank 26 defines detailed rules of conducting the Bank’s General Shareholders Meetings and adopting resolutions. The Bank’s General Shareholders Meetings resolutions concerning the amendments of the Bank’s Statute are being adopted by the three-quarter majority. Moreover, as stated in Par. 34.2 of the Banking Act, any amendment of the Statute of the Bank shall require the authorization of the Polish Financial Supervision Authority.
8) Functioning of the General Shareholders Meeting and its key powers, as well as description of the rights of shareholders and the manner of exercising these rights, in particular rules resulting from Rules of Procedure for the General Shareholders Meeting, unless these rules result directly from generally applicable law 27
The operation of the Bank’s General Shareholders Meeting is governed by the Rules of Procedure for the Bank’s General Shareholders Meeting, adopted by way of Resolution No. 19 of April 8, 2003, amended by way of Resolution No. 41 of May 5, 2009, Resolution No. 41 of June 1, 2012 and Resolution No. 42 dated June 16, 2016. The Regulation of Shareholders’ Meetings of the Bank defines detailed rules of conducting General Shareholders Meetings and adopting resolutions. The Rules of Procedure are available to the public on the Bank’s website 28 .
Apart from powers and authorities mentioned in binding laws, in particular in the Code of Commercial Companies and the Banking Law Act, in the Regulators’ recommendations and the Bank’s Statute, the Bank’s General Shareholders Meeting has the following powers and authority:
− to review and approve the report on the Bank’s operations and the Bank’s financial statements for the previous financial year,
− to adopt a resolution on profit distribution or coverage of loss,
25 Par. 70.6.5.i of the ordinance of the Minister of Finance of March 29, 2018
26 Introduced by Resolution of the General Meeting No. 19 of April 8, 2003, as amended
27 Par. 70.6.5.j of the ordinance of the Minister of Finance of March 29, 2018
28 https://www.pekao.com.pl/o-banku/lad-korporacyjny.html
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− to review and approve the report on the activities of the Supervisory Board,
− to grant discharge to Members of the Supervisory Board and Management Board in respect of their duties,
− to review and approve the report on the Group’s operations and the Group’s financial statements,
− to set the dividend record date and dividend payment date,
− to dispose of or lease a business or its organized part, and to encumber it with limited property rights,
− to amend the Bank’s Statute and to draft its consolidated text,
− to increase or decrease the Bank’s share capital,
− to issue convertible bonds, bonds with pre-emptive rights to acquire shares, and subscription warrants,
− to retire shares and to define the terms of retirement,
− to decide on the Bank’s merger, demerger or liquidation,
− to create and release special accounts,
− to appoint and remove from office Members of the Supervisory Board, taking into account assessment of fulfilment of the suitability requirements,
− to define the remuneration rules for Members of the Supervisory Board,
− to conclude an agreement with a subsidiary which provides for the management of the subsidiary or for the transfer of profit by the subsidiary,
− to select of on audit firm to audit financial statements,
− to deal with other matters falling within the scope of the Bank’s activities which are submitted to the Bank’s General Shareholders Meeting .
The Bank’s General Shareholders Meeting is convened via the Bank’s website and in a way determined for passing current information according to rules regarding public offer and conditions, under which the financial instruments are introduced to organized turnover system and to rules regarding public companies. The convocation have to take place at least twenty-six days before the Bank’s General Shareholders Meeting.
The Ordinary General Shareholders Meeting should take place once a year, not later than six months after the end of each financial year. When determining the date of the Bank’s General Shareholders Meeting, the Management Board seeks to enable as many shareholders as possible to participate in the Meeting.
The Statute allows the participation in the General Meeting with the use of electronic communication means if the Management Board adopts such decision. Management Board adopts decision mentioned in the previous sentence in the case of fulfilling by the Bank technical conditions necessary for participation in the General Meeting with the use of electronic communication means what covers in particular:
1) real-life broadcast of General Meeting,
2) real-time bilateral communication where shareholders may take the floor during a General Meeting from location other than the General Meeting,
3) exercising the rights to vote during a General Meeting either in person or through a plenipotentiary.
According to the Bank’s Statute, in each case of convening the General Meeting, the Management Board of the Bank defines whether the participation in the General Meeting with the use of electronic communication means is possible and what are the requirements and limitations necessary to identify of shareholders and to ensure the safety of electronic communication. Detailed conditions for participation in the General Meeting using electronic means of communication are set out in the rules adopted by the General Meeting, the announcement on convening the General Meeting and the Rules for participation in the General Meeting of the company under the name Bank Polska Kasa Opieki Spółka Akcyjna with its registered office in Warsaw using electronic means of communication adopted by Resolution No. 94/21 of the Supervisory Board of the Bank of May 5, 2021 on the adoption of Rules for participation in the General Meeting of the Company using electronic means of communication.
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The Bank’s Supervisory Board can convene Annual General Shareholders Meeting, if the Management Board does not convene it in due time stated in the Statute and the Extraordinary Shareholders Meeting, if necessary.
The full documentation which is to be presented to the Bank’s General Meeting, together with the drafts of resolutions and information concerning the Bank’s General Meeting are made available to persons entitled to participate in the Bank’s General Meeting on the Bank’s website and in paper form which is available in the place indicated in the announcement about convening the General Meeting, published in accordance with Art. 402² of Code of Commercial Companies.
Official copies of the Bank’s Management Board on the Bank’s operations and financial statements as well as copies of the Supervisory Board’s report and external auditor’s opinion are issued to shareholders upon request no later than 15 days prior to the Bank’s General Meeting date.
The rights of the Bank’s shareholders include in particular:
- the right of shareholders holding at least a half of the share capital or at least a half of the votes to convene Extraordinary Meeting of Shareholders. In this case, the shareholders elect the chairman of the Bank’s General Meeting,
- the right of shareholders holding at least the twentieth of share capital to demand that specific issues be placed on the agenda of the next Bank’s General Shareholders Meeting. The demand should include the justification and the project of resolution’s project concerning proposed issue and should be submitted to the Management Board no later than twenty one days prior to the Meeting date. The demand can be submitted also in electronic form. The Management Board is obliged to announce changes in the Meeting agenda introduced because of shareholder’s demand as fast as possible and no later than eighteen days prior to the Meeting date. The Announcement takes place according to the way proper for General Meeting convocation,
- the right of shareholders holding at least the twentieth of share capital to submit via electronic communication media projects of resolutions concerning issues introduced to the Bank’s General Meeting agenda or issues, which are supposed to be introduced to the Meeting agenda before the date of holding the Bank’s General Meeting. The Bank instantly announces projects of resolutions on the Bank’s website,
- the right of every shareholder to submit projects of resolutions concerning issues introduced to the Meeting’s agenda,
- the right of shareholders to participate in the Bank’s General Shareholders Meeting personally or by proxy,
- the right of shareholders holding a tenth of the share capital represented at the Bank’s General Shareholders Meeting to demand that the attendance list of the Bank’s General Shareholders Meeting be checked by a committee appointed for that purpose and composed of at least three persons, including one person appointed by the parties making the demand,
- the right according to which the Bank’s General Shareholders Meeting is not allowed to adopt a resolution to remove an item from the agenda or not to consider an issue which was placed on the agenda upon request of shareholders unless the shareholders express their consent to the same,
- the right according to which the Bank’s General Shareholders Meeting may not be adjourned deliberately to obstruct the exercise of the shareholders rights,
- the right of each individual participant of the Bank’s General Shareholders Meeting to nominate one or more candidates for membership on the Bank’s Supervisory Board,
- the right of shareholders holding at least a fifth of the share capital to demand block voting on the appointment of the Supervisory Board; a relevant request should be submitted to the Management Board in writing at such time as to enable its placement on the agenda of the Bank’s General Shareholders Meeting,
- the right to inspect the book of minutes and to receive copies of resolutions authenticated by the Management Board,
- the right according to which the Chairperson of the Bank’s General Shareholders Meeting is obliged to ensure that the rights of minority shareholders are respected,
- the right of shareholders who raise an objection against a resolution to justify the objection in a concise manner.
All issues submitted to the Bank’s General Shareholders Meeting have the opinion of the Supervisory Board. According to Par. 9 of the Bank’s Statute, issues submitted to the Bank’s General Shareholders Meeting should be submitted to the Supervisory Board for consideration.
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The Bank’s General Shareholders Meetings are attended by Members of the Management Board and Supervisory Board in makeup that enables providing content-related answers to question in discussion. An auditor is present at the General Shareholders Meeting in particular Ordinary General Shareholders Meeting, if financial matters of the Bank are to be discussed at the Meeting.
The Bank’s Management Board, as a body responsible for providing legal service to the Bank’s General Shareholders Meeting, exerts every effort to ensure that resolutions are formulated in a clear and unambiguous manner.
The Rules of Procedure for the Bank’s General Shareholders Meeting contain provisions (Par. 13.10–17) regarding block voting on the appointment of the Supervisory Board.
Any amendments to the Rules of Procedure for the Bank’s General Shareholders Meeting take effect as of the date of the next General Shareholders Meeting.
Responsibilities and powers of the Chairperson of the General Shareholders Meeting include in particular taking care of the orderly and compliant with the agreed agenda conduct of the meeting, ensuring that the rights and interests of all shareholders are respected, counteracting any abuse of rights by the participants, and ensuring that the rights of minority shareholders are observed.
Within the scope of their competence and to the extent necessary to resolve issues placed under discussion of the Bank’s General Shareholders Meeting, Members of the Supervisory Board, Members of the Management Board and the auditor provide the participants with the required explanations and information concerning the Bank.
Voting on procedural matters may be carried out only on issues related to the conduct of the Meeting. This voting procedure cannot be applied to resolutions which may have impact on the exercise of the shareholders rights.
Removing an item from the agenda or a decision not to consider an issue placed on the agenda at the request of shareholders requires a resolution of the Bank’s General Shareholders Meeting, adopted with a three-quarter majority of the votes, following approval by all the present shareholders who submitted such a request.
9) Rules of procedure of the Bank’s managerial, supervisory or administrative bodies and it’s committees, indicating its composition and changes that occurred during last financial year as 29
Management Board
The Management Board of the Bank acts according to the Bank’s Statute and the Rules of procedure adopted by virtue of its Resolution No. 64/II/19 of February 25, 2019, amended in 2020 by Resolution No. 92/III/20 of March 12, 2020, Resolution No. 153/IV/20 of April 17, 2020 and Resolution No. 328/VII/20 of July 24, 2020. As at the date of preparation of the statement, the Rules of the Management Board of Bank Polska Kasa Opieki Spółka Akcyjna adopted by Resolution No. 3/I/22 of the Management Board of Bank Polska Kasa Opieki Spółka Akcyjna of January 5, 2022 were in force taking into account the requirements resulting from the Recommendation Z of the Polish Financial Supervision Authority.
The Rules of procedure shall in particular define the matters which require joint consideration by the Management Board, and rules of holding Management Board meetings, including meetings held through means of remote communication and the rules for adopting resolutions by written procedure or by means of remote communication. The Rules of Procedure of the Management Board are available on the Bank’s website 30 . The Management Board of the Bank believes that the Rules of the Management Board of Bank Polska Kasa Opieki Spółka Akcyjna as a regulation defining the functioning of the Management Board are adequate and consistent with the law and the requirements of supervisory authorities. Members of the Bank's Management Board coordinate and supervise the Bank's activities in accordance with the division of competences adopted by the Bank's Management Board and approved by the Supervisory Board.
According to the Bank’s Statute, the Management Board shall conduct the matters of the Bank and represent the Bank. Issues not reserved by virtue of the provisions of the law or of the Statute to fall within the scope of competence of other Bank’s statutory bodies, shall fall within the scope of competence of the Bank’s Management Board.
29 Par. 70.6.5.k and l of the ordinance of the Minister of Finance of March 29, 2018
30 https://www.pekao.com.pl/o-banku/lad-korporacyjny.html
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Bank Pekao S.A.
Pursuant to the provisions of the Management Board’s Rules of procedure, the Bank’s Management Board prepares the development strategy for the Bank. The Supervisory Board issues its opinions on the Bank’s long-term development plans and annual financial plans, prepared by the Management Board. The Management Board ensures that the risk management system at the Bank is transparent and effective, and runs the Bank’s affairs in compliance with applicable laws and Best Practices. The core values underlying the management of the Bank are professionalism, credibility, while customer relations are underpinned by reliability and integrity, as well as compliance with applicable laws, including the provisions on anti-money laundering and financing of terrorism.
Pursuing the principle of efficient and prudent management, the Management Board is responsible for initiation and implementation of programs aimed at increasing the Bank’s value and rate of return for the shareholders, as well as protection of the employees’ long-term interests. In its decisions, the Bank’s Management Board makes every effort to ensure, to the maximum extent possible, the promotion of the interests of the shareholders, creditors, employees, as well as other entities and persons co-operating with the Bank in its business activity.
In the opinion of the Bank's Management Board, the actions taken by the Bank's Management Board to perform the tasks entrusted to it in 2021 were effective.
As at January 1, 2021 , the Management Board of the Bank was composed of the following persons:
Leszek Skiba Vice President of the Management Board, managing the work of the Management Board of the Bank (on February 4, 2021, the Polish Financial Supervision Authority, unanimously approved the appointment of Mr. Leszek Skiba as the President of the Management Board of the Bank),
Magdalena Zmitrowicz Vice President of the Management Board,
Marcin Gadomski Vice President of the Management Board (on February 15, 2021, the Polish Financial Supervision Authority unanimously approved the appointment of Mr. Marcin Gadomski as a Member of the Management Board supervising the management of risks significant for the Bank’s activity),
Tomasz Kubiak Vice President of the Management Board,
Tomasz Styczyński Vice President of the Management Board,
Jarosław Fuchs Vice President of the Management Board,
Krzysztof Kozłowski Vice President of the Management Board.
On December 31, 2020, Mr. Tomasz Styczyński and Mr. Grzegorz Olszewski resigned from the position of the Vice Presidents of the Management Board of the Bank, as well as from the composition of the Management Board of the Bank. Mr. Tomasz Styczyński submitted his resignation on January 31, 2021. Mr. Grzegorz Olszewski submitted his resignation with effect at the end of December 31, 2020. The Bank informed about the reasons of the above-mentioned resignation in the Statement of Bank Polska Kasa Opieki Spółka Akcyjna on application of Corporate Governance Standards in 2020.
On January 14, 2021, the Supervisory Board of the Bank , after assessing suitability, appointed:
▪ Mr. Błażej Szczecki to the Management Board of the Bank for the current joint term of office as Vice President of the Management Board of the Bank, with the effect from January 15, 2021;
▪ Mr. Wojciech Werochowski to the Management Board of the Bank for the current joint term of office as Vice President of the Management Board of the Bank, with the effect from January 15, 2021; and
▪ Mr. Jerzy Kwieciński to the Management Board of the Bank for the current joint term of office as the Vice President of the Management Board of the Bank, with the effect from February 1, 2021.
On July 20, 2021, Mr. Krzysztof Kozłowski resigned from the position of Vice President of the Management Board of the Bank, as well as from the Management Board of the Bank, with effect at the end of August 3, 2021. The resignation did not contain information about its reasons.
On August 3, 2021, the Supervisory Board of the Bank, after assessing suitability , appointed Mr. Paweł Strączyński to the Management Board of the Bank for the current joint term of office as the Vice President of the Bank's Management Board, with effect from August 5, 2021.
On October 29, 2021, Mr. Tomasz Kubiak resigned from the position of Vice - President of the Management Board of the Bank, as well as from the Management Board of the Bank with effect at the end of November 4, 2021.
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On October 29, 2021, the Supervisory Board of the Bank, after assessing suitability , appointed Mr. Piotr Zborowski to the Management Board of the Bank for the current joint term of office as the Vice -President of the Management Board of the Bank, with effect from November 5, 2021.
As at December 31, 2021, the composition of the Bank's Management Board was as follows:
Leszek Skiba President of the Management Board
Magdalena Zmitrowicz Vice President of the Management Board,
Marcin Gadomski Vice President of the Management Board supervising the management of significant risk in the Bank's activity,
Jarosław Fuchs Vice President of the Management Board,
Jerzy Kwieciński Vice President of the Management Board,
Paweł Strączyński Vice President of the Management Board,
Błażej Szczecki Vice President of the Management Board,
Wojciech Werochowski Vice President of the Management Board,
Piotr Zborowski Vice President of the Management Board.
Supervisory Board
The Supervisory Board operates on the basis of the Rules of the Supervisory Board of Bank Polska Kasa Opieki Spółka Akcyjna adopted by Resolution No. 10/15 of the Supervisory Board of February 6, 2015, as amended by Resolution No. 9/18 of the Supervisory Board of March 13, 2018 and Resolution No. 128/20 of July 15, 2020; Resolution No. 157/20 of November 13, 2020; Resolution No. 168/20 of November 10, 2020 and Resolution No. 108/21 of July 8, 2021. As at the date of preparation of the statement, the Rules of the Supervisory Board of Bank Polska Kasa Opieki Spółka Akcyjna adopted by Resolution No. 10/22 of the Supervisory Board of Bank Polska Kasa Opieki Spółka Akcyjna of January 24, 2022 were in force, taking into account the requirements resulting from the Recommendation Z of the Polish Financial Supervision Authority.
The Rules of the Supervisory Board are available on the Bank's website. website 31
The role of the Supervisory Board is to exercise a general and permanent supervision over the Bank’s activities, taking into consideration the Bank’s function of a parent company regarding subsidiaries of the Bank. Apart from the competence defined in law, the Supervisory Board possesses competences stated in the Bank’s Statute, the Supervisory Board in particular examines every matter submitted to the Bank’s General Shareholders Meeting.
The Supervisory Board Members always act with due regard to the Bank’s interests and take all actions necessary to ensure efficient functioning of the Supervisory Board. Moreover, Members of the Supervisory Board of the Bank are prohibited from taking any decisions or actions that would lead to conflicts of interests or that would be not in line with the Bank’s best interest. About existing or potential conflict of interests the Member of the Supervisory Board informs the Supervisory Board and restrains from participating in a discussion and voting on resolution regarding issue in the case of which a conflict of interest occurred.
Each year, according to regulations in force, the Supervisory Board prepares and submits to the Bank’s General Shareholders Meeting an assessment of the report on the activities of the Bank and the Group prepared by the Bank’s Management Board, assessment of the Bank’s financial statements and consolidated financial statements of the Group, assessment of motion concerning profit’s division or losses coverage, as well as the Supervisory Board activities statements. The assessments prepared by the Supervisory Board are made available to the shareholders before the Bank’s General Shareholders Meeting
The Supervisory Board set up dedicated committees which deal with specific areas of the Bank’s operations, including
the Audit Committee, the Nomination and Remuneration Committee, and Risk Committee. Reports of the committees set up by the Supervisory Board are stored at the Bank’s Head Office. Annual reports of committees are annexed to and published with the Supervisory Board statement.
31 https://www.pekao.com.pl/o-banku/lad-korporacyjny.html
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As at January 1, 2021, the composition of the Supervisory Board was as follows:
Beata Kozłowska-Chyła Chairwoman of the Supervisory Board,
Joanna Dynysiuk Vice Chairwoman of the Supervisory Board,
Marcin Eckert Vice Chairman of the Supervisory Board,
Stanisław Ryszard Kaczoruk Secretary of the Supervisory Board,
Małgorzata Sadurska Member of the Supervisory Board,
Sabina Bigos-Jaworowska Member of the Supervisory Board,
Justyna Głębikowska-Michalak Member of the Supervisory Board,
Michał Kaszyński Member of the Supervisory Board,
Marian Majcher Member of the Supervisory Board.
On June 7, 2021, Mr. Marcin Eckert submitted his resignation, with effect from the position of Vice Chairman of the Supervisory Board and from membership in the Supervisory Board with effect from the moment of its submission. The resignation did not contain information about its reasons.
By Resolution No. 102/21 of the Supervisory Board of Bank Polska Kasa Opieki Spółka Akcyjna of June 10, 2021, the Supervisory Board elected Małgorzata Sadurska as Vice Chairwoman of the Supervisory Board for the duration of the current, joint term of office of the Bank's Supervisory Board.
The Ordinary General Meeting of the Bank on June 11, 2021, taking into account the assessment of compliance with the suitability requirements, appointed Mr. Marcin Izdebski to the Supervisory Board of the Bank as of June 11, 2021 for the period until the end of the current joint term of office of the Supervisory Board of the Bank.
As at December 31, 2021, the composition of the Supervisory Board was as follows:
Beata Kozłowska-Chyła Chairwoman of the Supervisory Board,
Joanna Dynysiuk Vice Chairwoman of the Supervisory Board,
Małgorzata Sadurska Vice Chairwoman of the Supervisory Board,
Stanisław Ryszard Kaczoruk Secretary of the Supervisory Board,
Marcin Izdebski Member of the Supervisory Board,
Sabina Bigos-Jaworowska Member of the Supervisory Board,
Justyna Głębikowska-Michalak Member of the Supervisory Board,
Michał Kaszyński Member of the Supervisory Board,
Marian Majcher Member of the Supervisory Board.
Audit Committee
The Audit Committee operates on the basis of the Rules of the Supervisory Board and the Rules of the Audit Committee of the Supervisory Board of Bank Polska Kasa Opieki Spółka Akcyjna, which was adopted by the Supervisory Board by Resolution No. 98/19 of November 5, 2019 and then amended by resolutions of the Supervisory Board of Bank Polska Kasa Opieki Spółka Akcyjna No. 129/20 and 130/20 of July 15, 2020. The consolidated text of the Rules of the Audit Committee of the Supervisory Board of Bank Polska Kasa Opieki Spółka Akcyjna was established by Resolution No. 131/20 of July 15, 2020. On November 3, 2020, the Supervisory Board of the Bank, by Resolution No. 158/20, and then by Resolution No. 165/20 of November 10, 2020, adopted amendments to the Rules of the Audit Committee of the Supervisory Board of Bank Polska Kasa Opieki Spółka Akcyjna and adopted a uniform text of the "Rules of the Audit Committee of the Supervisory Board of Bank Polska Kasa Opieki Spółka Akcyjna". As at the date of preparation of the statement, the Rules of the Audit Committee of the Supervisory Board of Bank Polska Kasa Opieki Spółka Akcyjna adopted by Resolution No. 11/22 of the Supervisory Board of Bank Polska Kasa Opieki Spółka Akcyjna of January 24, 2022 were in force, taking into account the requirements resulting from the Recommendation Z of the Polish Financial Supervision Authority.
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The purpose of the Audit Committee is to support the Supervisory Board in fulfilling its duties regarding: monitoring the financial reporting process, financial audit activities and the correctness and effectiveness of internal control and risk management systems and the internal audit function, compliance with the law and procedures governing the Bank's operations, the independence of the statutory auditor and the audit firm and the resources of the Internal Audit Department. The Audit Committee consists of 3 (three) to 5 (five) Members elected from among the Members of the Supervisory Board. At least one Member of the Audit Committee has the knowledge and skills in accounting or auditing financial statements.
Most Members of the Audit Committee, including its Chairwoman and a Member of the Committee with knowledge and skills in accounting or auditing of financial statements , are independent of the Bank in the meaning of the Par. 129 section 3 Act on statutory auditors, audit firms and public supervision
The members of the Audit Committee have the skills necessary to properly perform the entrusted function, including appropriate education and professional experience. Qualifications of the members of the Audit Committee, including education and professional experience, together with an indication of how were acquired, were presented on the Bank’s website. 32
Meetings of the Audit Committee are held as depending to the needs, but not less frequently than four times a year, in compatible terms with key dates in the Bank’s quarterly reporting cycle and the review of the annual audit plan presented by the Chief of the Internal Audit Department . In 2021 there were 11 meetings of the Audit Committee.
As at January 1, 2021, the composition of the Audit Committee was as follows:
Justyna Głębikowska-Michalak President of the Committee (independent member, has the qualifications of a statutory auditor, graduate of the Faculty of Economics UMCS in Lublin and post-graduate studies "Accounting" at the University of Economics in Poznań),
Marcin Eckert Secretary of the Committee,
Joanna Dynysiuk Member of the Committee,
Sabina Bigos-Jaworowska Member of the Committee (independent member),
Michał Kaszyński Member of the Committee (independent member).
In connection with Marcin Eckert's resignation from the position of Vice Chairman of the Supervisory Board and from the position of the Supervisory Board, the Supervisory Board, by Resolution No. 110/21 of the Supervisory Board of Bank Polska Kasa Opieki Spółka Akcyjna of July 8, 2021, elected Mr. Marcin Izdebski to the Composition of the Audit Committee of the Supervisory Board of the Bank for the current period, joint term of office of the Supervisory Board. By Resolution No. 70/21 of the Audit Committee of July 8, 2021, the Audit Committee elected Mr. Marcin Izdebski as the Secretary of the Committee for the current joint term of office of the Supervisory Board of Bank Polska Kasa Opieki Spółka Akcyjna.
As at December 31, 2021, the composition of the Audit Committee was as follows:
Justyna Głębikowska-Michalak President of the Committee (independent member, has the qualifications of a statutory auditor, graduate of the Faculty of Economics UMCS in Lublin and post-graduate studies "Accounting" at the University of Economics in Poznań),
Marcin Izdebski Secretary of the Committee,
Joanna Dynysiuk Member of the Committee,
Sabina Bigos-Jaworowska Member of the Committee (independent member),
Michał Kaszyński Member of the Committee (independent member).
In 2021, the audit firm selected to audit the financial statements of Bank Polska Kasa Opieki Spółka Akcyjna and the consolidated financial statements of the Bank Polska Kasa Opieki Spółka Akcyjna Capital Group provided permitted non-audit services to the Bank and its Subsidiaries.
Pursuant to the provisions of the policy adopted by the Bank - “Policy for conducting permitted non-audit services by an audit firm carrying out the statutory audit, entities related to this audit firm and any member of the network to which the audit firm belongs”, the Audit Committee of the Bank, the Audit Committee of the subsidiaries that are public interest entities and the Audit Committee of the Parent Entity granted an approval for provision of permitted services by the audit firm for the Bank and its subsidiaries.
32 https://www.pekao.com.pl/o-banku/wladze-banku.html
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Obtaining an approval was preceded by the Bank and its subsidiaries conducting an appropriate assessment of the threats and safeguards of independence referred to in art. 69-73 of the Act of 11 May 2017 on statutory auditors, audit firms and public supervision (Journal of Laws of 2019, item 1421, as amended, hereinafter referred to as the "Act").
As a public interest entity, the Bank implemented, based on the resolutions of the Supervisory Board of the Bank, the policies and procedures set out in Article 130 para. 1 item 5-7 of the Act
In order to meet the requirements of the Act, the following documents have been issued for use:
1) The policy of selecting an audit firm to carry out statutory audit of Bank Pekao S.A. financial statements and the principles of cooperation with the audit firm, the statutory auditor and the supervisory authority,
2) The procedure of selecting an audit firm to carry out statutory audit of Bank Pekao S.A. financial statements,
3) The policy of carrying out the permitted non-audit services by the audit firm conducting the audit, by entities related to this audit firm and by any member of the network to which the audit firm belongs.
The main assumptions of the policies are as follows:
A. The policy of selecting an audit firm to carry out statutory audit of Bank Pekao S.A. financial statements and the principles of cooperation with the audit firm, the statutory auditor and the supervisory authority
• The selection of a firm authorized to conduct statutory audit of the Bank's financial statements and the Group’s consolidated financial statements is made by the General Meeting specifying the years for which the Bank's financial statements and the Group’s consolidated financial statements will be subject to statutory audit by a selected audit firm based on proposal of the Supervisory Board.
• The Supervisory Board presents to the General Meeting a proposal regarding the appointment of an audit firm. The proposal takes into account the recommendation and preferences of the Audit Committee. In its recommendation, the Audit Committee states that its recommendation is free from the influence of a third party and that the Bank did not conclude agreements containing clauses limiting the possibility of selecting an audit firm by the General Meeting
• Recommendation of the Audit Committee regarding the selection of an audit firm carrying out a statutory audit, which does not concern the extension of the contract for the audit of the financial statements:
- contains at least two options for the selection of the audit firm with justification and indication of the justified preference of the Audit Committee with respect to one of them;
- is prepared following a selection procedure organized by the Bank, carried out in accordance with the principles set out in the Procedure of selecting an audit firm to carry out statutory audit of Bank Pekao S.A. financial statements.
• The first contract for the audit of the financial statements is concluded with the audit firm for a period of not less than 2 years with the possibility of extension for another period of at least two years.
• Maximum duration of continued duration of statutory audits, carried out by the same audit firm or audit firm associated with this audit firm or any member of the network operating in the European Union countries to which these audit firms belong, must not exceed 10 years, respectively for the key statutory auditor.
• After the maximum duration of the order, the Bank cannot commission a statutory audit to the audit firm or any entity from its network operating within the European Union for the next 4 years, and in the case of a key statutory auditor after at least 3 years from the end of the last statutory audit.
B. "B. The policy of carrying out the permitted non-audit services by the audit firm conducting the audit, by entities related to this audit firm and by any member of the network to which the audit firm belongs
• The auditing firm carrying out the statutory audit of the Bank or any member of the network to which the audit firm belongs do not directly or indirectly provide to the Bank, its Parent Entity or its subsidiaries any prohibited services that are not audit of the financial statements in the following periods:
- the period between the beginning of the period audited and the issuing of the audit report mentioned in the Article 5 para. 1 (without point e) of Regulation (EU) No 537/2014 of the European Parliament and of the Council of 16 April 2014 on specific requirements regarding statutory audits of public interest entities and repealing Commission Decision 2005/909/EC, and
- the financial year immediately preceding the period between the beginning of the period audited and the issuing of the audit report in relation to the services of designing and implementing internal control or risk management procedures related to the preparation or control of financial information or designing and implementing financial information technology systems.
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• The audit firm carrying out the statutory audit of the Bank and each member of the network to which the audit firm belongs may provide to the Bank, its Parent Entity or its controlled undertakings the so-called permitted services that are not statutory audits of financial statements subject to the approval of the Audit Committee after it has properly assessed threats to independence and the safeguards as referred to in art. 69-73 of the Act.
• The organizational unit of the Bank or entity controlled by the Bank requesting the purchase of services provided by the audit firm carrying out the statutory audit of the Bank or by members of the network to which the audit firm belongs must obtain the approval of the Audit Committee for the provision of a permitted service, after assessing whether the requested service is not a prohibited service and whether the requested permitted service will not exceed the limit for permitted services limited to no more than 70% of the average of the fees paid in the last three consecutive financial years for the statutory audits of the Bank and of its Parent Entity, of its controlled undertakings and of consolidated financial statements of that group of undertakings.
• Entities belonging to the Pekao Group are required to obtain the approval of the Parent Entity's Audit Committee (PZU S.A.) for the purchase of a permitted service provided to these entities after the Parent Company's Audit Committee performs an assessment of threats to independence and the safeguards as referred to in art. 69-73 of the Act..
Recommendation of the Bank's Audit Committee regarding the selection of an audit firm carrying out statutory audit of the Bank's financial statements, which did not concern the extension of the contract for the audit of the financial statements:
- was drawn up following a selection procedure organized by the Bank, carried out in accordance with the principles set out in the Procedure of selecting an audit firm to carry out statutory audit of Bank Pekao S.A. financial statements.
- ensured the selection of an audit firm that meets the conditions for expressing unbiased and independent opinion on the financial statements of the Bank and of the Bank’s Group.
- ensured the selection of an audit firm that has experience and knowledge to accurately assess the accuracy and reliability of recognition in the financial statements of any operations arising from the Bank's operations.
- it contained justification and two options for the selection of the audit firm, along with an indication of the justified preferences of the Audit Committee with respect to one of them.
- was free from third party influence
Nomination and Remuneration Committee
The Nomination and Remuneration Committee operates on the basis of the Rules of the Supervisory Board and the Rules of the Nomination and Remuneration Committee of the Supervisory Board of Bank Polska Kasa Opieki Spółka Akcyjna, which was adopted by the Supervisory Board by Resolution No. 25/20 of April 10, 2020, and then amended by resolutions of the Supervisory Board of Bank Polska Kasa Opieki Spółka Akcyjna No.: 133/20 of July 15,2020, 160/20 of November 3, 2020, 167/20 of November 10 2020.
The purpose of the Nomination and Remuneration Committee is to assist the Supervisory Board in carrying out its tasks related, among other things, to the formation of the Management Board of the Bank and the supervision of the policy of the Management Board of the Bank with regard to the selection and appointment of persons holding managerial positions at the Bank. The Committee shall, in its action, be guided by prudent and stable management of risk, capital and liquidity and special attention to the long-term well-being of the Bank and the interests of the Bank's shareholders.
The Nomination and Remuneration Committee shall be responsible for, among other things :
a) determining the responsibilities of a candidate for the Board, as well as the requirements of knowledge and competence and the expected commitment in terms of the time spent necessary for the performance of the functions;
b) periodically assess, at least once a year, the knowledge, competence and experience of the Management Board of the Bank as a whole and of the individual Members of the Management Board of the Bank and to inform the Management Board of the Bank of the results of that assessment
c) submitting proposals to the Supervisory Board in the field of: determining the remuneration for the members of the Management Board of the Bank, submitting proposals on remuneration to the General Meeting on remuneration for members of the Supervisory Board, the amount of remuneration (including bonuses) of the Director of the Compliance Department and the Director of the Internal Audit Department;
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d) making recommendations to the Supervisory Board regarding: assessing the individual suitability of candidates for members of the Management Board of the Bank and members of the Supervisory Board at the stage of appointment of these bodies and members of those bodies in the performance of their duties, assessing the collective suitability of the Management Board of the Bank and the Supervisory Board in order to ensure an adequate level of collegial management or supervision of the Bank, succession plans of the members of the Management Board of the Bank in order to ensure the continuity of management.
e) preparation and submission to the Supervisory Board once a year of the report on the evaluation of the functioning of the Remuneration Policy of the Bank Polska Kasa Opieki Spółka Akcyjna
As at January 1, 2021, the composition of the Nomination and Remuneration Committee was as follows:
Beata Kozłowska-Chyła President of the Committee,
Małgorzata Sadurska Secretary of the Committee,
Sabina Bigos-Jaworowska Member of the Committee,
Joanna Dynysiuk Member of the Committee ,
Marian Majcher Member of the Committee.
and has not changed until December 31, 2021.
Risk Committee
The Risk Committee operates on the basis of the Rules of the Supervisory Board and the Rules of the Risk Committee of the Supervisory Board of Bank Polska Kasa Opieki Spółka Akcyjna, which was adopted by the Supervisory Board by Resolution No. 99/19 of 5 November 2019, and then amended in 2020 by resolutions of the Supervisory Board of Bank Polska Kasa Opieki Spółka Akcyjna No.: 101/20 of 29 May 2020, 118/20 of 10 July 2020, 132/20 of 15 July 2020, 159/20 of 3 November 2020 and 166/20 of 10 November 2020. As at the date of preparation of the statement, the Rules of the Risk Committee of the Supervisory Board of Bank Polska Kasa Opieki Spółka Akcyjna adopted by Resolution No. 12/22 of the Supervisory Board of Bank Polska Kasa Opieki Spółka Akcyjna of 24 January 2022, taking into account the requirements resulting from the Recommendation Z of the Polish Financial Supervision Authority, were in force.
The mission of the Committee is to support the Supervisory Board in fulfilling its duties regarding: supervising the risk management system and assessing the adequacy and effectiveness of this system. In its activities, the Committee shall be guided by prudent and stable management of risk, capital and liquidity, as well as by particular attention to the long-term well- being of the Bank and the interests of shareholders.
The tasks of the Risk Committee m.in include expressing opinions on:
a) the Bank's overall current and future risk appetite expressed in risk appetite,
b) the risk management strategy developed by the Bank's Management Board in the Bank's activities, including policies in the area of credit, financial and operational risk,
c) reports on the risk profile and implementation of the risk management strategy presented by the Bank's Management Board.
As at January 1, 2021, the composition of the Risk Committee was as follows:
Stanisław Ryszard Kaczoruk President of the Committee,
Marcin Eckert Secretary of the Committee,
Michał Kaszyński Member of the Committee,
Marian Majcher Member of the Committee,
Małgorzata Sadurska Member of the Committee.
In connection with Marcin Eckert's resignation from the position of Vice Chairman of the Bank's Supervisory Board and from membership in the Bank's Supervisory Board, the Supervisory Board, by Resolution No. 111/21 of the Supervisory Board of Bank Polska Kasa Opieki Spółka Akcyjna of July 8, 2021, elected Mr. Marcin Izdebski to the Risk Committee of the Bank's Supervisory Board for the duration of the current, joint term of office of the Supervisory Board. By Resolution No. 45/21 of the Risk Committee of July 8, 2021, the Risk Committee elected Mr. Marcin Izdebski as the Secretary of the Committee for the current joint term of office of the Bank’s Supervisory.
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As at 31 December 2021, the composition of the Risk Committee was as follows:
Stanisław Ryszard Kaczoruk Chairman of the Risk Committee,
Marcin Izdebski Secretary of the Risk Committee,
Michał Kaszyński Member of the Risk Committee,
Marian Majcher Member of the Risk Committee,
Małgorzata Sadurska Member of the Risk Committee.
10. Description of the Bank's diversity Policy applied to governing, managing and supervising bodies with respect in particular to such factors as age, gender or education and professional experience, aims of the diversity policy, manner of its realisation and results in the given reporting period 33
On November 3, 2020, the Management Board adopted by way of a resolution and the Supervisory Board on November 4, 2020 approved by way of a resolution the "Gender Equality and Diversity Policy with regard to the Bank's employees, including Members of the Supervisory Board, members of the Management Board and persons performing key functions in Bank Polska Kasa Opieki Spółka Akcyjna" (hereinafter referred to as the "Policy").
This Policy defines the Bank’s strategy of for managing the diversity of the Bank's employees , including diversity in reference to appointment the Supervisory Board members, Management Board members and Key Function Holders in the Bank, and defines guidelines aimed at ensuring that the Bank's employees are able to manage their careers, achieve success and evaluate their work on the basis of individual achievements, regardless of gender.
The purpose of diversity strategy of the Bank is to provide high quality of tasks execution by its employees, including selection of qualified people to hold function in the Supervisory Board, the Management Board and Key Function Holders in the Bank, using as the first objective criteria and taking into account the benefits of diversity.
The diversity strategy includes and uses to achieve the best outcome differences, which in addition to knowledge, skills and work experience result from educational background, geographical origin, gender and age. The diversity strategy, with regard to the selection of members of the Supervisory Board/ members of the Management Board / persons performing a key function in the Bank, is also conducted in the processes of selection, suitability assessment and succession.
The current share of women in managerial positions in the Bank is > 57.2% and in senior management positions > 31.3%. In 2021, there was a change in the categorization of positions, as a result of which the number of senior management positions decreased.
Application of diversity policy takes place in decision making processes in scope of: external selection, internal appointment, succession planning, taking into account provisions on equal treatment in the field of establishing an employment relationship, which include principle of gender equality.
Due to the regulations adopted in this regard and the importance that the Management Board pays for the values presented in the Policy, it is subject to constant review.
In 2019 - 2021, the share of women and men in the Bank's Management Board was following:
31.12.2019
31.12.2020
31.12.2021
No. of persons
%
No. of persons
%
No of persons
%
Women
1
14
1
12,5%
1
11%
Men
6
86%
7
87,5%
8
89%
Sum
7
100%
8
100%
9
100%
In the 2019 - 2021, the share of women and men in the Supervisory Board was following:
31.12.2019
31.12.2020
31.12.2021
No. of persons
%
No. of persons
%
No. Of persons
%
Women
3
33%
5
55,5%
5
55,5%
Men
6
67%
4
44,5%
4
44,5%
Sum
9
100%
9
100%
9
100%
33 Par. 70.6.5.m of the ordinance of the Minister of Finance of March 29, 2018
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14. Statement of Bank Pekao S.A. Group on Non-financial Data for 2021
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1 Statement of non-financial information ................................................................................................................................................................. 129
1.1 Bank Pekao S.A. and Pekao S.A. Group. .......................................................................................................................................................... 129
1.1.1 Business model ...................................................................................................................................................................................... 131
1.1.2 Scale of operations ................................................................................................................................................................................ 131
1.1.3 Organizational and management structure ............................................................................................................................................ 131
1.1.4 Risk management approach .................................................................................................................................................................. 134
1.2 Macroeconomic environment ............................................................................................................................................................................. 137
1.2.1 Key factors with a significant impact on the operations and performance of the Bank and Pekao Group ............................................. 137
1.2.2 Factors that will affect the Group's results ............................................................................................................................................. 138
1.2.3 Economic contribution to the environment ............................................................................................................................................. 139
1.3 Business Strategy and ESG Strategy ................................................................................................................................................................ 140
1.3.1 Strategy 2021-2024: Responsible Bank. Modern banking ..................................................................................................................... 140
1.3.2 Mission, vision and values - the evolution of organizational culture ....................................................................................................... 140
1.3.3 Social responsibility ................................................................................................................................................................................ 141
1.3.4 ESG Strategy 2021-2024: Responsible Bank supporting sustainable development ............................................................................. 142
1.4 The first pillar of the ESG Strategy: The natural environment ........................................................................................................................... 143
1.4.1 Climate neutrality in business operations ............................................................................................................................................... 144
1.4.2 PekaoGroup carbon footprint calculation ............................................................................................................................................... 147
1.4.3 Support for energy transition and low-carbon economy ......................................................................................................................... 148
1.4.4 Disclosures required in accordance with the Regulation of the European Parliament and of the Council (EU) 2020/852 on the so-called taxonomy ............................................................................................................................................................................................................... 149
1.4.5 Disclosures under the SFDR regulation ................................................................................................................................................. 150
1.4.6 Environmental risk in lending activities .................................................................................................................................................. 151
1.5 The second pillar of the ESG Strategy: Commitment ........................................................................................................................................ 152
1.5.1 Actions aimed at providing aid, equal opportunities and preventing exclusion ...................................................................................... 152
1.5.2 Community service, charity and sponsorship ......................................................................................................................................... 155
1.5.3 Partnerships for sustainable development ............................................................................................................................................. 158
1.5.4 Providing digital tools to customers ........................................................................................................................................................ 158
1.5.5 Programmes supporting the development and innovation of Polish enterprises ................................................................................... 158
1.5.6 Designing innovation .............................................................................................................................................................................. 159
1.6 The third pillar of ESG strategy: Governance .................................................................................................................................................... 161
1.6.1 Corporate governance and an ethical approach to business ................................................................................................................. 161
1.6.2 An inclusive organization - growth, diversity and equality ...................................................................................................................... 165
1.6.3 Health and safety at work ....................................................................................................................................................................... 173
1.6.4 Health-promoting activities ..................................................................................................................................................................... 175
1.6.5 Values-based organizational culture ...................................................................................................................................................... 175
1.6.6 Training and professional development ................................................................................................................................................. 175
1.6.7 Development of competencies and skills ............................................................................................................................................... 176
1.6.8 Recruitment, Internship and Apprenticeship Programmes ..................................................................................................................... 177
1.6.9 Diversity and equality ............................................................................................................................................................................. 178
1.7 Bank as a market participant and service recipient ........................................................................................................................................... 184
1.7.1 Customer Relationships ......................................................................................................................................................................... 184
1.7.2 Responsible purchasing process ........................................................................................................................................................... 187
1.7.3 Personal data protection ........................................................................................................................................................................ 188
1.8 Cooperation with the environment ..................................................................................................................................................................... 191
1.8.1 Communication with stakeholders ......................................................................................................................................................... 191
1.8.2 Bank's cooperation with industry organizations ..................................................................................................................................... 194
1.9 Information about the Statement ....................................................................................................................................................................... 195
Table of compliance with the Accounting Act .................................................................................................................................................................... 197
GRI Content Index ............................................................................................................................................................................................................. 197
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1 Statement of non-financial information
1.1 Bank Pekao S.A. and Pekao S.A. Group.
GRI 102-1 Name of the organization
GRI 102-2 Description of the organization's activities, main brands, products or services
GRI 102-5 Nature of ownership and legal form
GRI 102-6 Markets served
Bank Polska Kasa Opieki S.A. (hereinafter referred to as "Bank", "Bank Pekao"), established in 1929, is one of the largest financial institutions in the region of Central and Eastern Europe and the second largest universal bank in Poland, with over PLN 200 billion in assets. The Bank conducts operations both in PLN and foreign currencies and actively participates in trading on the domestic and foreign financial markets. It offers a full range of banking services to individual and institutional customers. The Bank operates in the territory of the Republic of Poland. The activities of Bank Pekao are supervised by the Polish Financial Supervision Authority (KNF). Starting from 2017, Bank Pekao is part of the PZU S.A. Group (hereinafter referred to as the "PZU Group"), the largest financial institution in Central and Eastern Europe. Since 1998, Bank Pekao has been listed on the Warsaw Stock Exchange.
Shareholding structure as of December 31, 2021 :
SHAREHOLDER NAME
NUMBER OF SHARES
PARTICIPATION IN THE SHARE CAPITAL
Powszechny Zakład Ubezpieczeń S.A.
52,494,007
20.00%
Polski Fundusz Rozwoju S.A.
33,596,166
12.80%
Aviva PTE Aviva Santander S.A.
13,281,544
5.06%
Nationale-Nederlanden PTE S.A.
13,201,655
5.03%
Other shareholders
149,896,662
57.11%
Total
262,470,034
100.00%
GRI 102-3 Location of the organisation's headquarters
GRI 102-4 Location of operating activities
GRI 102-7 Scale of operations
In 2021, the Bank had the second largest network of branches in the country, 650 outlets (563 outlets of its own retail network and 87 partner outlets) and 71 outlets of Pekao Group companies) and 1,475 ATMs located in all voivodeships. Until May 2021, there was a representative office of Bank Pekao S.A. in London. Apart from this one, the Bank did not have branches or ATMs abroad, but its customers were able to make transactions and use ATMs of other banks. As a corporate bank, Bank Pekao serves every second corporation in Poland. The Bank has an established market leadership position in private banking, asset management and brokerage activities. Pekao Bank's diversified business profile is supported by a strong capital and liquidity position while maintaining the highest standards of risk management. The head office of Bank Pekao S.A. is located in Warsaw, at Grzybowska 53/57. The additional office is located at Żwirki i Wigury 31 in Warsaw.
Bank Pekao S.A. Group. (hereinafter referred to as: "Pekao Group") consists of Bank Pekao as the parent company and its subsidiaries and indirect subsidiaries: financial institutions operating on the markets of banking, asset management, brokerage services, transaction consulting, leasing and factoring. Moreover, the Bank holds shares and stocks in associates, as well as minority interests.
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In 2021, the Pekao Group included Bank Pekao and the following subsidiaries:
NAME
SEAT
SCOPE OF ACTIVITY
Pekao Bank Hipoteczny S.A.
Warsaw
Banking
Centrum Kart S.A.
Warsaw
Financial auxiliary
Pekao Direct Sp. z o.o.
Krakow
Call-centre services
Pekao Faktoring Sp. z o.o.
Lublin
Factoring services
Pekao Financial Services Sp. z o.o.
Warsaw
Transfer agent
Pekao Investment Banking S.A.
Warsaw
Brokerage
Pekao Investment Management S.A., including:
Warsaw
Holding
Pekao TFI S.A.
Warsaw
Asset management
Pekao Leasing Sp. z o.o.
Warsaw
Leasing services
Dom Inwestycyjny Xelion Sp. z o.o. (*)
Warsaw
Financial intermediation
(*) All data concerning DI Xelion Sp. z o. o. presented in Statement on non-financial information of Bank Pekao for 2021 relate to 10 months of the year2021 (on October 29, 2021, an agreement for the sale of 100% DI Xelion shares was signed).
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GRI 102-10 Significant changes to the organization and its supply chain
The most important changes in the Pekao Group that occurred in 2021 are listed below:
- Acquisition of shares in Krajowy Integrator Płatności S.A.,
- Acquisition of shares in PeUF Sp. z o.o,
- Sale of shares of Dom Inwestycyjny Xelion Sp. z o.o.,
- Increase of the share capital of Pekao Bank Hipoteczny S.A.
There were no significant changes in the organization's supply chain. For more information on the changes in the Pekao Group, see "Report on the Activities of the Bank Pekao S.A. Group for 2021" in subchapter 5.1.
At the time of publication of this disclosure, a war between Russia and Ukraine is ongoing. Bank Pekao became involved in helping victims of the war - it started by providing humanitarian aid to refugees coming to Poland. A special offer has been introduced for Ukrainian citizens and entrepreneurs, free of charge and linguistically adjusted. Bank Pekao is ready to provide further necessary assistance.
1.1.1 Business model
GRI 102-2 Description of the organization's activities, main brands, products or services
The Bank's business model is based on customer segmentation into the following areas:
− RETAIL AND PRIVATE BANKING - serving individual customers, including affluent private banking customers and micro- businesses. Private banking clients are offered investment advice through private banking centres and remote channels, while all individual and micro-enterprise clients are serviced through an extensive proprietary network of branches and partner outlets supported by market-leading remote service channels, including digital channels,
− BUSINESS BANKING - providing financial services to clients from the SME sector, who are served by advisers with the support of product specialists. Service is provided in specialized Business Customer Centres, Corporate Centres and universal retail branches. Customers are offered products and services tailored to their individual needs based on solutions proven in corporate banking and tailored to the needs of the enterprise segment,
− CORPORATE AND INVESTMENT BANKING - providing financial services to large corporate clients, public sector entities, financial institutions, and commercial real estate finance entities. Corporate and investment banking clients are served by advisers with the support of product specialists.
For more information on the business model and sales network, see "Bank Pekao S.A. Group Management Report 2021" in subchapter 7.4.
1.1.2 Scale of operations
GRI 102-7 Scale of operations
31/12/2021
PEKAO GROUP
BANK PEKAO
Total number of employees (in persons)
14,842
12,766
Total number of establishments / locations (outlets, points, etc.)
721
650
Net interest income
5,661
5,414
Net commission income
2,691
2,306
Balance sheet total
250,571
241,280
Amount of equity
23,863
23,100
Total liabilities
226,708
218,180
1.1.3 Organizational and management structure
GRI 102-11 Number and gender of members of the highest governance body and its committees
GRI 102-18 Management Structure
GRI 102-22 Structure of the highest governance body and its committees
Bank Pekao and entities of the Pekao Group have an organizational structure adapted to the size and specificity of their operations. The scope of powers of the company's governing bodies is set forth in legal regulations, and in particular in the Commercial Companies Code , the Banking Law Act, in the recommendations of supervisory bodies and in the Articles of Association of Bank Polska Kasa Opieki Pekao Spółka Akcyjna (hereinafter referred to as the Articles of Association ): “Articles of Association of Bank Pekao") as well as company statutes / agreements and internal regulations of Pekao Group entities.
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General Meeting of Shareholders
The supreme authority of Pekao Bank is the General Meeting of Shareholders, which operates on the basis of the Commercial Companies Code and Pekao Bank's Articles of Association . The scope of competences of the General Meeting of Shareholders is defined in legal provisions, in particular, in the Code of Commercial Companies and the Banking Law , in recommendations of supervisory bodies and in the Bank Pekao Articles of Association . Resolutions are adopted by an absolute majority of votes, subject to the provisions of the Commercial Companies Code and of the Articles of Association of Bank Pekao .
Supervisory Board
The Supervisory Board exercises constant supervision over the activities of Pekao Bank. It is composed of seven to nine members appointed by the General Meeting for a joint term of three years. The organization and the manner of operation of the Board are specified in the Regulations of the Supervisory Board of Bank Polska Kasa Opieki Pekao Spółka Akcyjna .
The composition of the Bank's Supervisory Board is as follows:
AS OF THE DATE OF THE
REPORT FOR 2021
31/12/2021
Beata Kozłowska-Chyła
Chairperson of the Supervisory Board
Beata Kozłowska-Chyła
Chairperson of the Supervisory Board
Joanna Dynysiuk
Vice-Chairperson of the Supervisory Board
Joanna Dynysiuk
Vice-Chairperson of the Supervisory Board
Małgorzata Sadurska
Vice-Chairperson of the Supervisory Board
Małgorzata Sadurska
Vice-Chairperson of the Supervisory Board
Stanisław Ryszard Kaczoruk
Secretary of the Supervisory Board (independent member)
Stanisław Ryszard Kaczoruk
Secretary of the Supervisory Board
Sabina Bigos-Jaworowska
Member of the Supervisory Board (independent member)
Sabina Bigos-Jaworowska
Member of the Supervisory Board
Justyna Głębikowska-Michalak
Member of the Supervisory Board (independent member)
Justyna Głębikowska-Michalak
Member of the Supervisory Board
Michał Kaszyński
Member of the Supervisory Board (independent member)
Michał Kaszyński
Member of the Supervisory Board
Marian Majcher
Member of the Supervisory Board (independent member)
Marian Majcher
Member of the Supervisory Board
Marcin Izdebski
Member of the Supervisory Board
Marcin Izdebski
Member of the Supervisory Board
The Supervisory Board performs its duties on a collegial basis; however, in order to perform certain actions or to streamline its work it may appoint committees and teams from among its members. In addition, the Board may delegate one or more members of the Supervisory Board to exercise independent supervision to the extent determined by the Supervisory Board. The following functions within the Supervisory Board of Bank Pekao: Audit Committee, Nominating and Compensation Committee and Risk Committee. The committees appointed by the Supervisory Board submit annual activity reports to the Supervisory Board.
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Management Board of the Bank
The Management Board of Pekao Bank manages the Bank's affairs and represents the Bank. All matters that are not restricted by law or the Articles of Association of Bank Pekao, to the competence of other bodies, fall within the scope of activities of the Bank's Management Board. The Management Board is composed of five to nine members, appointed for a joint three-year term of office.
The Board of Directors of the Bank consisted of nine members and was as follows:
AS OF THE DATE OF THE
REPORT FOR 2021
31/12/2021
Leszek Skiba
President of the Bank's Management Board
Leszek Skiba
President of the Bank's Management Board
Jarosław Fuchs
Vice-President of the Bank's Management Board
Jarosław Fuchs
Vice-President of the Bank's Management Board
Marcin Gadomski
Vice-President of the Bank's Management Board
Marcin Gadomski
Vice-President of the Bank's Management Board
Jerzy Kwieciński
Vice-President of the Bank's Management Board
Jerzy Kwieciński
Vice-President of the Bank's Management Board
Paweł Strączyński
Vice-President of the Bank's Management Board
Paweł Strączyński
Vice-President of the Bank's Management Board
Błażej Szczecki
Vice-President of the Bank's Management Board
Błażej Szczecki
Vice-President of the Bank's Management Board
Wojciech Werochowski
Vice-President of the Bank's Management Board
Wojciech Werochowski
Vice-President of the Bank's Management Board
Piotr Zborowski
Vice-President of the Bank's Management Board
Piotr Zborowski
Vice-President of the Bank's Management Board
Magdalena Zmitrowicz
Vice-President of the Bank's Management Board
Magdalena Zmitrowicz
Vice-President of the Bank's Management Board
As of December 31, 2021, the division of powers among the members of the Bank's Management Board was as follows:
President of the Bank Management Board Leszek Skiba convenes and chairs meetings of the Bank Management Board, presents the position of the Bank Management Board to the Bank authorities and in external relations, in particular to the State authorities. Leszek Skiba, President of the Management Board of the Bank, coordinates the work of the members of the Management Board of the Bank, issues orders in accordance with the provisions of the Bank's internal regulations.
The President of the Management Board of the Bank supervises the following areas of the Bank's operations: internal audit, compliance risk, corporate communication, investor relations, security, legal risk, strategic projects, human resources management, as well as macroeconomic analyses and digital transformation.
The President of the Bank's Management Board, Leszek Skiba, is appointed as the Member of the Management Board responsible for the implementation of the obligations set out in the Act on counteracting money laundering and financing of terrorism.
Marcin Gadomski, Vice President of the Management Board of the Bank, supervises the activities of the Risk Management Division and is responsible for overseeing the risk management process ( banc assurance) .
Vice-President of the Management Board of the Bank, Paweł Strączyński, supervises the activities of the Financial Division and has been appointed as a member of the Management Board to whom violations will be reported and who will be responsible for the day-to-day operation of the Breach Reporting Procedure (the so-called whistleblowing ).
Jerzy Kwieciński, Vice President of the Management Board of the Bank, supervises the activities of the Corporate Banking, Markets and Investment Banking Division.
Wojciech Werochowski, Vice President of the Bank's Management Board, supervises the activities of the Retail Banking Division.
Magdalena Zmitrowicz, Vice President of the Management Board of the Bank, supervises the activities of the Corporate Banking Division.
Jarosław Fuchs, Vice President of the Management Board of the Bank, supervises the Private Banking and Investment Products Division.
Piotr Zborowski, Vice-President of the Management Board of the Bank, supervises the Strategy Division.
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Błażej Szczecki, Vice-President of the Management Board of the Bank, supervises the activities of the Technology and Operations Division and coordinates activities aimed at appropriate risk management regarding the ICT environment security.
For more information on the Bank's organizational and management structure, see "Report on the Activities of the Bank Pekao S.A.Group for 2021" in subchapter 5.
1.1.4 Risk management approach
Bank Pekao has a risk management strategy described in ICAAP Policy - Principles of risk and capital management (hereinafter "ICAAP Policy"), adopted by the Bank's Management Board and approved by the Bank's Supervisory Board. This document sets out the main elements of a comprehensive approach to the risk related to the Bank's operations and resulting from the adopted business strategy, both at the level of the Bank and the entire Bank Group. The ICAAP policy defines the identified types of risk and criteria for considering them as significant, indicating the objectives and accompanying principles of risk management, the target risk structure related to the business as well as the accepted level and structure of risk, determined within the adopted risk appetite.
Each identified risk is assessed in terms of its significance and - if considered significant - it is measured (if it is classified as measurable risk) or assessed (in the case of risks that are difficult to measure) and monitored and controlled in accordance with the methods and procedures established for a given type risk. Risk assessment and measurement methodologies are designed to maintain compliance with applicable legal requirements, supervisory guidelines and best practices.
The Bank applies formalized risk mitigation limits in line with the adopted risk appetite and defines the rules of conduct in the event of exceeding the limits. The management information system in place allows the level of risk to be monitored. The Bank's organizational structure is adapted to the size and profile of the risk incurred by the Bank. In managing the risks of the Group, the Bank oversees the risks associated with the activities of its subsidiaries.
In the risk management system in place at the Bank, the Bank's Management Board is responsible for the development, implementation and effective functioning of risk management processes and the internal capital estimation process, adjusted to the size and profile of the risk incurred (risk appetite), taking into account the risk of subsidiaries. The Management Board of the Bank is regularly informed about the current risk profile of the Bank, about the largest exposures and concentrations of credit exposures.
The Bank's Supervisory Board, supported by the Risk Committee, supervises the risk management system and assesses its adequacy and effectiveness. Moreover, the Supervisory Board supervises the compliance of the Group's risk-taking policy with the strategy and financial plan.
The risk management strategy (including risk appetite) and the risk management system at the Bank are subject to regular reviews and necessary updates in order to maintain their adequacy in relation to the scale and complexity of the Bank's activities.
The risk management system functioning in the Bank is an integral part of the Bank's management system. Risk management streamlines decision-making processes while ensuring that decisions are consistent with best market practices and applicable regulatory requirements.
Due to the nature of the Bank's operations, all types of risk identified as material and resulting from the guidelines of regulatory authorities, including risks related to social issues, employee issues, the natural environment, respect for human rights, anti- corruption, related to products and relations with the external environment, including contractors, have been properly defined and included in separate regulations. Selected regulations in this respect are quoted in this Statement on non-financial information of the Bank Pekao S.A. Group . for 2021.
In 2021, the Bank continued to develop its risk management competences and undertook activities related to the optimization of credit processes in all business segments by simplifying procedures and implementing modern tools to improve processes, including the implementation of automatic tools supporting credit decision making.
At the end of 2021, the Bank's cost of risk, excluding provisions for FX housing loans, amounted to 0.35%. As the leader in risk management, the Bank kept the cost of risk at one of the lowest levels in the sector.
Reputation risk management
Reputation protection is of key importance for the Bank due to the potential impact of this risk on the financial results and capital of the Bank, but also due to the role of the Bank as a public trust institution. In accordance with the guidelines of the ICAAP Policy , which defines reputation risk as material, Pekao Bank has implemented a separate regulation relating to this type of risk (Principles of reputation risk management in Pekao Bank ).
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Reputation is an assessment of the Bank's image, i.e. the way the Bank is perceived at a given moment by the environment, which includes customers, counterparties, investors, shareholders, regulators and the general public. The image is not only a marketing concept, but also a business concept - the acceptance of the Bank by market participants and the resulting support for sales of products and services depends on the image. The Bank's reputation risk is therefore understood as the risk of a negative perception of the Bank's image, which results in a loss of the Bank's current or future revenues or loss of capital.
Reputation risk is secondary in nature and is closely correlated with other risks present in the Bank's daily operations, such as credit, operational, market, liquidity and compliance risks. For each of the above-mentioned types of risk, actions potentially affecting the risk of losing reputation have been defined. Among the most important of these are:
1. In terms of credit risk:
• financing enterprises from sensitive sectors of the economy,
• financing of political organizations,
• financing activities that generate significant environmental risk,
• financing of authoritarian states, states that do not comply with international provisions, states with low protection of human rights or those subject to embargoes.
2. In terms of operational risk:
• the occurrence of internal and external fraud,
• failure to comply with employment and workplace safety rules,
• the occurrence of incidents of unequal treatment, employee discrimination, harassment or labour disputes,
• the occurrence of irregularities in customer service, product design and the use of unfair operating practices,
• improper accounting for transactions, deliveries, and mismanagement of operational processes,
• business disruptions and system failures affecting customer service.
3. In terms of compliance risk:
• use of business practices that are prohibited or inconsistent with good practice,
• the Bank's action in violation of the law,
• incorrect implementation or failure to implement the recommendations and instructions of control and supervision authorities,
• the occurrence of conflicts of interest,
• the occurrence of market abuse.
4. In terms of market risk:
• taking dominant positions, including by concluding large transactions, using monopolistic practices.
By its nature, reputational risk is classified as a hard-to-measure risk. In line with the ICAAP Policy it is not subject to quantitative measurement. The day-to-day management of the Bank's reputation risk comes down to managing the primary types of risk, supported by qualitative assessment, monitoring, reporting and mitigating the Bank's reputational risk.
Bank Pekao consistently reduces the risk of losing reputation, among others by:
- application of an appropriate credit policy (taking into account, among others, sectors of the economy in which the Bank is not involved in financing),
- implementation and application of best practices and ethical principles, incl. Principles of Good Banking Practice of the Association of Polish Banks, Canon of Good Financial Market Practices, Best Practices of Companies Listed on the WSE and of the Pekao Group Code of Conduct which defines a set of basic values and standards of conduct for the Bank's employees in order to ensure the highest standards of service provision and protection of the Bank's reputation,
- promoting knowledge of legal regulations, ethics and corporate governance rules among the Bank's employees and their proper application, conducting training on compliance risk,
- managing conflicts of interest,
- counteracting corruption
- preventing the use of the Bank's activities for purposes related to money laundering or terrorist financing,
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- fraud management (with particular emphasis on internal fraud) by preventing, detecting and combating fraud, minimizing its effects and conducting actions to detect its perpetrators, as well as, in justified cases, notifying law enforcement authorities,
- ensuring an appropriate level of information security, in particular with regard to customers' personal data, as well as ensuring that only authorized individuals have access to this information,
- taking actions and initiatives aimed at increasing the level of customer satisfaction,
- managing the process of considering customer complaints,
- management by objectives (setting goals for the Bank's employees in sales and managerial positions regarding the quality of service and customer satisfaction),
- analysing new products and services as well as marketing campaigns in terms of reputational risk,
- consulting with the Management Board and Supervisory Board of the Bank and on activities significant for the Bank's reputation.
The Bank's reputation management is a continuous process in which all organizational units and employees actively participate. The Bank's statutory bodies and organizational units directly responsible for primary risk types play a special role in this process, in line with the competences resulting from separate internal regulations of the Bank. Regularly conducted since 2020 at the request of the Bank, the monitoring of Pekao brand indicators and the company's image profile indicates a stable position compared to the competition. Bank Pekao is at the forefront of banking brands with the best spontaneous awareness; and its image profile defines it as a traditional, Polish and trustworthy bank.
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1.2 Macroeconomic environment
1.2.1 Key factors with a significant impact on the operations and performance of the Bank and Pekao Group
Economic growth
In 2021, the Polish economy grew by 5.7%, compared to a decline of 2.5% a year earlier. According to quarterly data, the pre- pandemic GDP level was reached in the second quarter of 2021. This year can be summed up as a period of post-pandemic consumer demand normalization, inventory rebuilding and an incomplete recovery in investment.
According to the forecasts of the team of economists at Bank Pekao, in 2022 economic growth will slow down to 4% y/y as a consequence of several factors: weak consumer sentiment, lower investment growth and the tightening of monetary policy.
Labour market
In 2021, the domestic labour market was making up for the losses related to the pandemic, especially in the second half of the year, after a significant easing of epidemic restrictions. The crisis caused by the COVID-19 pandemic, which had the features of a natural disaster rather than a cyclical downturn, did not generate long-term negative consequences for the labour market. Government aid shields also played an important role. Concerns about the reduction of employment as part of the adaptation to the prevailing economic situation by enterprises at the time of settling the PFR Financial Shield conditioning the cancellation of the subsidy by maintaining employment for 12 months from its receipt, did not materialize.
The unemployment rate at the end of 2021 was 5.4% compared to 6.3% at the end of 2020.
The wage dynamics in the enterprise sector recorded a clear rebound in 2021 to 8.6% from 4.8% in 2020. Despite the low statistical base effect, the rate of wage growth in the period of post-pandemic recovery exceeded market expectations. The real wage dynamics in 2021 was 3.4% y/y. In line with the expectations of Bank Pekao economists, the unemployment rate in 2022 will continue to decline, but at a slower pace than in 2021. It will be 4.9% at the end of 2022 compared to 5.4% at the end of 2021
Inflation and monetary policy
The average annual price index of consumer goods and services in 2021 was 5.1% compared to 3.4% in 2020. The inflation level in 2021 turned out to be much higher than market expectations. The very rapid post-pandemic rebound in global demand has encountered the barrier of a much slower recovery in production capacity. Problems with broken supply chains, shortages of raw materials and semi-finished products pushed prices of many industrial goods in the second half of the year to unprecedented levels. This can be evidenced by the high level of producer price inflation (PPI), which averaged 7.9 in 2021 and was already 14.2 at the end of the year in December.
The price increase in 2021 was also influenced by an increase in core inflation (excluding food and energy prices), which rose to 4.1 from 3.9 in 2020, due in part to price increases in the service sector recovering from the pandemic. Rising energy and labour costs were passed on to final goods prices in a high demand environment. Inflation was also boosted by fuels due to the high rise in market prices of crude oil. Fuel prices increased by 22.9% in 2021.
In the baseline scenario of the team of Bank Pekao economists, the average annual inflation in 2022 will amount to around 7% with the peak inflation at the beginning of the year - over 9% y/y. The Anti-Inflation Shield will probably protect us from a double- digit inflation scenario in the first half of 2022. The cost will be to extend the period of elevated inflation and thus postpone its return to target until at least 2024.
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Fiscal policy
2021 was a year of fiscal consolidation after a sharp spike in public deficit and debt a year earlier. Subsequent waves of pandemics were no longer accompanied by deep economic lock-downs. The anti-crisis shields had a much smaller scale. This limited the increase in budget expenditures in 2021 to around 5% y/y. The recovery of the economy after the pandemic and the acceleration of inflation translated into a dynamic increase in tax revenues. Throughout the year, they increased by approximately 17% y/y. Non-tax income grew even stronger (26% y/y), mainly due to rising prices of CO 2 emission allowances 2 . The revenues from the auction of the aforementioned allowances exceeded PLN 25 billion, while the budget act assumed PLN 10.4 billion. The budget was also supported by a payment from the NBP profit in the amount of almost PLN 9 billion.
1.2.2 Factors that will affect the Group's results
As Bank Pekao and Pekao Group companies operate predominantly in Poland, the Group's results will be affected primarily by economic events taking place in Poland and international events impacting the domestic economy.
2021 was a year of dynamic economic recovery, supported by the first successes in fighting the pandemic and growing optimism. Polish GDP increased by 5.7% y/y, reflecting the returning economic conditions, although very high inflation levels became a new challenge. In 2022, a slowdown in economic growth to 4% y/y is forecasted after a strong rebound in the previous year.
The outlook for the economy will affect demand for banking products and any further changes in the cost of risk as a result of updated assumptions about economic conditions.
An important factor affecting bank performance is monetary policy. The economic situation and very high inflation (and its forecasts) prompted the Monetary Policy Council to start the cycle of further interest rate increases in October 2021. Over the past few months, the reference rate has been raised in several steps from 0.10% to 2.75%, and is expected to eventually reach 4.00%. An environment of rising interest rates is a favourable situation for banks, which will translate into an improvement in their net interest income, a major part of the sector's operating income.
Regardless of the economic situation, the tax and regulatory environment plays an invariably important role for banks, including in particular the tax on certain financial institutions, high equity requirements, charges to the Bank Guarantee Fund (BFG), costs of further adjustments to numerous regulatory solutions (e.g. MIFID II 34 , GDPR 35 , PSD II 36 , BRRD II 37 ), as well as the introduction in Poland of a maximum fixed remuneration for the management of investment funds. After temporary reductions in BFG contributions in 2021, they will return to the pre-pandemic trend again in 2022 and thus rise sharply. The tax and regulatory environment of the sector remains very restrictive, which, combined with the uncertain economic situation, may translate into the ability of individual institutions to develop lending, as well as their financial results.
One of the most important factors in the institutional environment remains the issue of foreign currency mortgage loans. In the absence of a final systemic solution in this matter, court decisions in individual, individual case-by-case contracts will have the greatest impact on the banking system. A number of events (including the rulings of the Court of Justice of the European Union - CJEU) prompted a growing number of borrowers to resolve their dispute in court. This will have a strong negative impact on the results of banks, in particular those with a large portfolio of this type of loans, to which Bank Pekao does not belong. To date, the main channel of impact has been the provisions made by banks for anticipated legal risks - these have had a strong negative impact on sector performance in 2020 as well as 2021. According to most estimates, the total cost to the sector could reach tens of billions of zlotys, but these are difficult to estimate and may be spread over time. Much will depend, among others on the actual number of lawsuits (how many borrowers will go to court), the interpretation of national courts in individual cases, the reactions of national supervisory authorities or the actions of the banks themselves. We also cannot exclude a scenario in which the issue of franking credits will find a final solution by way of legislation.
Bank Pekao S.A. will monitor the direction of decisions made by Polish courts and the market practice and behaviour of borrowers, and will assess on an ongoing basis the likelihood of cash outflows with respect to the mortgage loans in question. However, the impact may be indirect in terms of the possible financial difficulties of some smaller institutions, particularly high- exposure to the risk in question.
1.2.3 Economic contribution to the environment
34 Directive 2014/65/EU of the European Parliament and of the Council of May 15, 2014 on markets of financial instruments.
35 Regulation (EU) 2016/679 of the European Parliament and of the Council of April 27, 2016 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data and repealing Directive 95/46/EC (General Data Protection Regulation).
36 Directive (EU) 2015/2366 of the European Parliament and of the Council of November 25, 2015 on payment services in the internal market.
37 Directive of the European Parliament and of the Council (EU) 2014/59/EU of May 15, 2014 establishing a framework for the recovery and resolution of credit institutions and investment firms
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GRI 201-1 Direct economic value generated and distributed (partially reported*)
(in PLN million)
PEKAO GROUP
PEKAO BANK
Operating revenues
8,527
8,089
Operating costs (incl. BFG charges, not incl. banking tax)
(3,380)
(3,122)
Cost/income ratio
47,2%
46,1%
Risk provisions
(783)
(669)
Banking tax
(719)
(719)
Corporate income tax
(825)
(758)
Customer financing
169,073
157,783
Customer liabilities
194,804
195,064
Net result
2,175
2,237
Dividend
843
(*) Retained economic value is not reportable in accordance with GRI Standards, because the Bank recognizes required items differently, such as payments to the state, social investments, and has other items generating costs that are not included in the GRI standard, such as risk costs .
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1.3 Business Strategy and ESG Strategy
1.3.1 Strategy 2021-2024: Responsible Bank. Modern banking
In March 2021, Pekao Bank announced a new Strategy for 2021-2024: “Responsible Bank. Modern Banking." According to the strategic plan, Bank Pekao will: become a universal bank, the bank of first choice for its clients, develop a remote distribution and customer service model, focus on cost and process efficiency, and grow in the most profitable market segments.
The strategy is based on four pillars: Customer, Growth, Efficiency and Responsibility .
- PILLAR: CUSTOMER The Bank will put the customer and their needs at the centre of all its activities, and therefore intends to intensively develop digital channels and fast and convenient service processes. Bank Pekao will strive to enable retail clients to handle almost any matter online. A digitization rate of nearly 100 percent is one of the key strategic aspirations. The PeoPay mobile application will be the main channel of contact with the client. Bank Pekao will make even greater use of advanced data analytics and modern sales support tools in order to personalize the offer, improve service quality and increase the propensity to recommend its services. A key measure of success that Bank Pekao will strive for is promotion in customer satisfaction rankings,
- PILLAR: GROWTH The bank will focus on business growth in the most profitable market segments, product groups and areas of untapped potential, i.e. consumer finance, micro-enterprises, SMEs and MID enterprises (medium-sized enterprises). Over the next four years, Pekao wants to acquire more than 400,000 individual customers every year and increase its share in the cash loan market from 7 percent to 10 percent. By 2024, the demographic structure of the retail customer base is expected to rejuvenate over 600,000 customers under the age of 26. The growth in the SME segment will translate into an increase in the market share in this segment to 12%. On the other hand, in the micro-business segment the Bank plans to acquire over 40 thousand clients a year and increase its market share by 3 percentage points to 8%. Pekao will also focus on digital growth in investment products and will strengthen business synergies and cooperation with the PZU Group. The Bank also aspires to strengthen its presence in the online shopping and e-commerce market,
- PILLAR: EFFICIENCY The bank will focus on technological transformation and improving the efficiency of operations, accelerate digitization and migration of processes to remote channels, and optimize credit processes. The driving force behind the transformation and execution of the strategy will be IT - flexible and able to respond quickly to the needs of the bank's operating units and customers in changing market conditions. Looking ahead to 2024, the Bank plans to invest in transformation and develop IT in the areas of technology and innovation, modern architecture, rapid software development, infrastructure reliability, human resources and competence,
- PILLAR: RESPONSIBILITY Bank Pekao wants to support economic development by focusing on distributing government and EU economic recovery and climate transformation programmes to its customers. At the same time, the very commercial and operating activities of the Bank will be more based on the factors of sustainable development. Pekao wants to maintain a safe risk profile in the changing market environment and have one of the lowest risk costs among the largest banks. To do so, it will improve its risk model infrastructure, automate credit scoring processes, and ensure cybersecurity.
More information on the implementation of the business strategy "Responsible Bank. Modern Banking" can be found in the Bank Pekao S.A. Group Activity Report for 2021 in chapter 11.
1.3.2 Mission, vision and values - the evolution of organizational culture
GRI 102-16 Organizational values, principles, standards, and norms of behaviour
Pekao Bank, adopting the Business Strategy for 2021-2024, has redefined its mission, which is: "The simple and safe world of banking . Thus, the bank wants to set standards in the market, while being a responsible partner in the everyday life of millions of Poles. It understands its business as positively impacting the growth of the economy, building strong relationships with businesses and providing security to customers. The Bank's vision captured in the slogan "Let's be the best together" is an aspiration to be a leader on the Polish banking market, i.e. the fastest-growing, modern bank with an offer that goes beyond traditional services. Bank Pekao wants to strengthen the power of homegrown brands, as well as be an inspiring place to work.
Simultaneously with the formulation of the principles of the Strategy for 2021-2024, the process of changing the organizational culture began within the organization. It was a grassroots initiative with the participation of all willing employees who redefined the Bank's values. Thanks to this, the synergy effect was achieved - work on setting strategic business goals was carried out simultaneously with the analysis of ways to achieve them and the formulation of common values, that is: #Simple, #Together, #Bold and #Responsible . These values were also included in the key regulation relating to ethical behaviour in the everyday behaviour of employees - Code of Conduct of the Pekao Group.
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1.3.3 Social responsibility
GRI 102-12 External initiatives
Pekao Group companies and the Bank comply with the applicable laws and ethical standards of respect for human rights. The key comprehensive regulation capturing these principles is the Pekao Group Code of Conduct. The obligation to respect the rules is incumbent on all employees regardless of their position, seniority, location and working hours. The Bank is focused on building employee awareness and continuous improvement of procedures in the field of human rights protection in internal and external relations. By responsible shaping of a work environment free from practices that violate human rights, the Bank builds a system of values addressed to shareholders, customers, investors, contractors, suppliers, local communities and other stakeholders.
Bank Pekao S.A. is also guided in its activities by the 10 Principles of the UN Global Compact. These are:
1. Promotion and observance of human rights adopted by the international community
2. Elimination of all human rights violations by the company
3. Respecting the freedom of association
4. Eliminating all forms of forced labour
5. Prohibition of child labour
6. Effective counteracting of discrimination in the area of employment
7. A preventive approach to the natural environment
8. Undertaking initiatives aimed at promoting an attitude of ecological responsibility
9. Use and dissemination of environmentally friendly technologies
10. Countering corruption in all forms, including extortion and bribery
The various principles of the UN Global Compact are reflected in the policies and internal regulations of the Bank and Pekao Group S.A. cited in this statement.
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1.3.4 ESG Strategy 2021-2024: Responsible Bank supporting sustainable development
An extension of the fourth pillar of the Bank's Business Strategy, "Responsibility," is the ESG Strategy "Responsible Bank Supporting Sustainable Development" adopted on June 25, 2021 (hereinafter: ESG Strategy). It is the first document of Bank Pekao regulating the issue of its responsibility for the environment, social environment and the rules applicable within the organization. These themes are grouped under the three pillars "Environment", "Commitment" and "Governance". In each of these areas, the Bank has set specific goals that it will pursue over the coming years.
In the Environment pillar, Pekao Bank has declared, among other things, to increase its commitment to financing sustainable projects, supporting the energy transformation and the transition to a low-carbon economy, and achieving its own climate neutrality by 2030.
Actions for the sustainable development of society and economy as well as prosperity are defined in the second pillar of the ESG Strategy - "Commitment". Its goals are focused on providing help and equal opportunities as well as preventing exclusion, e.g. through charity and employee volunteering.
The Governance pillar includes attention to the highest standards of corporate governance: an ethical approach to business that takes into account ESG issues and the promotion of employee development, diversity and equality in a modern, inclusive organization.
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1.4 The first pillar of the ESG Strategy: The natural environment
In line with the ESG Strategy, Bank Pekao will become even more involved than before in Poland's energy and environmental transformation and protection in line with the principles of the European Green Deal. As part of this effort, the Bank anticipates arranging financing for new sustainable projects both through new financing for sustainable projects that include green and social projects and through supporting the issuance of ESG bonds of the Bank's clients. In line with the objectives set out in the Strategy, the Bank will continue to implement environmental improvements in its locations and will focus on monitoring the consumption of raw materials and other materials as well as less waste activities. Bank Pekao wants to be responsible to future generations by carrying out activities for climate neutrality. The aspiration in this area is to reduce own emissions in 2024, and then achieve its own climate neutrality in 2030.
ESG STRATEGY IMPLEMENTATION INDEX
1. PILLAR - ENVIRONMENT
IMPLEMENTATION 2020
IMPLEMENTATION 2021
TARGET FOR 2024
(PLN million)
1.
Financing sustainable projects
n/a
929
> 8,000
2.
Supporting the issuance of clients' ESG bonds
n/a
5,934
> 22,000
3.
Share of green financing
3.2%
4.1%
> 4.0%
4.
Share of high-carbon financing
1.3%
1.2%
< 1.0
5.
Change in the balance sheet exposure in nominal terms in relation to high-carbon activities as compared to the exposure at the end of 2020
n/a
-11
< -1,900
Bank Pekao S.A. financed almost PLN 1 billion of sustainable projects, e.g. green consumer loans (over 4-fold increase of the balance sheet volume y/y), green corporate mortgages (21% increase of the balance sheet volume y/y), green loans to strategic customers (9% increase of the balance sheet volume y/y).
Support for the Bank's customers' ESG bond issues amounted to nearly PLN 6 billion, where the main customers were strategic and public sector customers.
The share of green financing increased to 4.1%, mainly due to the green bonds of strategic and public sector clients covered by the Bank and the financing of further loan agreements.
The share of high-carbon financing declined to 1.2% percent as a result of reduced sales of loans and bond issues to entities in high-carbon sectors (i.e., coal and lignite mining, electricity and heat generation using coal and lignite, high-carbon industrial processing, electricity trading, distribution, and transmission, coal wholesaling, and coal furnace manufacturing). This reduction resulted in a decrease in nominal balance sheet exposure of nearly PLN 11 million compared to 2020.
The methodology of disclosure of ESG indicators in the 1st pillar of the ESG Environment Strategy was based on the following assumptions:
1. Financing sustainable projects means financing in the form of loans and green or social leases 38 on the basis of contracts concluded in a given reporting year,
2. Supporting the issuance of customer ESG bonds are funded green bonds and social bonds for new contracts entered into during the reporting year,
3. The share of green financing is the share of green loans, leasing and covered bond issues as at 31/12/2021 in the Bank's gross financing,
4. The share of high-carbon financing is the share of high-carbon loans, leases and bond issues covered as of the end of the reporting year (31/12/.2021) in the Bank's gross financing,
5. The change in the balance sheet exposure in nominal terms to high-carbon activities (vs. 2020) means the nominal change in exposures to loans, leasing and covered bond issues as at the end of the reporting year.
38 As defined in the ESG Strategy:
Green financing : includes environmental projects aimed at, among others, reducing CO 2 emissions and carbon consumption and producing energy from renewable sources with balance sheet exposure to corporate client bonds issued for ESG purposes in the portion corresponding to the bank's investment policy.
Financing with a social impact ( social impact ): includes projects supporting sustainable social development, improving the quality of life of citizens and ensuring access to public infrastructure, implemented by local governments and social organizations.
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1.4.1 Climate neutrality in business operations
Reducing the consumption of raw materials and consumables
In its daily operations, Pekao Bank is guided by a desire to reduce its negative impact on the climate and by an environmentally friendly attitude. This is achieved by means of technical solutions that are gradually being implemented in the branch network and headquarters facilities.
In 2021, the implementation of ecological solutions was continued with a special focus on reducing electricity consumption and negative environmental impact, i.e.:
- implementation of energy-efficient LED lighting technology,
- optimization of energy consumption (limiting so-called contracted capacity),
- replacement of technologically obsolete UPS (uninterruptible power supply) devices with new ones of higher maximum efficiency,
- elimination of unnecessary backup power connections,
- installation of air conditioning systems characterized by increasingly better indicators, with particular emphasis on solutions in the highest energy efficiency classes,
- replacing air-conditioning devices using refrigerants harmful to the environment with devices based on a mixture of ecological gases,
- analyses aimed at the installation of reactive power compensation devices 39 (and as a result, the elimination of unnecessary energy expenditure),
- switching electronic devices to "stand by" mode during evening hours.
During comprehensive modernization of properties owned by the Bank, modern solutions were used, e.g. energy-saving LED lighting systems or sanitary faucets with aerators, which reduce water consumption.
Car fleet
Cars belonging to the Bank's fleet are successively replaced with models that emit less exhaust gas into the atmosphere. At present, the Bank is replacing a significant part of its fleet (approx. 75%) with new cars with the Euro 6DG emission standard.
At the turn of 2020 and 2021, 1,020 new low-emission cars with a convenient configuration of consumption were put into service. The bank also plans to purchase new electric cars. Conceptual work is currently underway on the possibility of replacing conventionally powered (internal combustion) cars with electric cars.
Bank Pekao was also involved in the sale of end-of-life cars. Since 2021, a total of 970 cars have been sold. The sales volume amounted to nearly PLN 20 million. As part of the pre-purchase, 310 cars were sold, which constitutes 32%, for the amount of PLN 5,772,880. As part of the internal auction (addressed to all employees of the Bank), 267 cars were sold, which constitutes 27.5%, for the amount of PLN 5,428,060. At the external auction 393 cars were sold which is 40.5% for the amount of PLN 8,697,300
Energy consumption
The key regulation on reducing the consumption of raw materials and consumables is the Policy on optimizing energy consumption in Bank Polska Kasa Opieki Spółka Akcyjna . This document sets out the principles and rules regarding standards and guidelines for optimizing the Bank's energy consumption in terms of environmental protection based on a commitment to properly monitor and prevent, as far as possible, any negative impact on the environment. The principles outlined in the Policy are guidelines for every employee to follow in order to raise awareness of environmental issues by optimizing energy consumption. They should be applied with reasonable flexibility, taking into account the specific situations of each job.
GRI 302-1 Energy consumption within the organization
PEKAO GROUP
BANK
COMPANIES
ENERGY CONSUMPTION
GIGAWATT HOUR (GWH)
2020
2021
2020
2021
2020
2021
Electricity purchased for consumption purposes
57.6
54.8
56.2
53.5
1.5
1.4
Electricity purchased while working remotely
1.0
1.2
0.8
0.8
0.2
0.4
39 Effective elimination of uncompensated reactive power of electricity receivers allows for financial savings (due to the reduction of charges for excessive reactive power consumption), and also contributes to the rational operation of electrical devices.
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Thermal energy generated by the organization (natural gas)
11.6
13.8
11.6
13.8
0.02
0.04
Thermal energy purchased for consumption purposes
77.0
78.9
76.1
77.8
0.9
1.1
Total energy consumption within the organization
147.3
148.7
144.6
145.9
2.6
2.9
PEKAO GROUP
BANK
COMPANIES
OTHER TYPES OF ENERGY
(M 3 )
2020
2021
2020
2021
2020
2021
Heating oil
234
250
234
250
-
-
Diesel
211
137
173
102
38
35
Gasoline
1,312
1,833
1,083
1,563
229
267
Liquefied petroleum gas (LPG)
3.5
0.6
-
-
3.5
0.6
Paper consumption
In the day-to-day operations of the Pekao Group and the Bank, measures are implemented to significantly reduce the consumption of paper. The solutions used in the Bank include multifunctional printing devices with a default option of two-sided printing and a central system allowing buffering of printouts and the possibility for the user to cancel outdated, unnecessary or erroneous printouts, which facilitates paper saving; scanning and sending documents in an electronic form, a system of optional printing of paper confirmations of ATM and cash register operations, processing applications and documents used in HR processes in an electronic form, limiting the number of printed documents for customers, a system of mail handling and correspondence circulation with an emphasis on keeping electronic registers of correspondence. In 2021, the Bank intensified its work to implement the Electronic Personal Files project. The implementation of Electronic Personal Files in the near future will allow for the elimination of paper at the level of 80% of the current consumption, and will eliminate the costs related to the archiving of HR and payroll documentation as well as the costs related to the flow of paper correspondence between the Bank and employees. At the same time, a project called Gutenberg was carried out at the Bank in 2021, concerning the modernization of the print area, which is intended to settle the printouts per click .
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GRI 301-1 Materials used by weight or volume
2021
PEKAO GROUP
PEKAO BANK
COMPANIES*
A4 paper (ream)
29.2 thousand
23.6 thousand
5.6 thousand
A3 paper (ream)
141
123
18
Business cards (sets of 100)
11.4 thousand
11.1 thousand
277
Envelopes of different types (sets of 50)
30.2 thousand
27.4 thousand
2.7 thousand
Roll up paper rolls
621 pcs.
138 pcs.
483 pcs.
Plastic document sleeves (pieces)
1.7 million
1.69 million
0.07 million
Binders (kg)
2,416
2,058
359
Printer toners
6.4 thousand pcs.
6 thousand pcs.
0.4 thousand pcs.
Batteries of any capacity (pack of 12)
990
947
43
(*) Data excluding DI Xelion.
The aspect of saving office materials and paper is also important in the current operations of Pekao Group companies, according to their business profile. The majority of procedures for digitization are implemented, and the demand for stationery and office materials is verified on an ongoing basis in accordance with internal purchasing procedures.
Paperless concept
For many years, Pekao Bank has been using new solutions and offering its clients communication via the Internet with the use of electronic documents. In addition to confirming some of the instructions at the branch in the PeoPay application or via SMS, the Bank has also implemented solutions thanks to which customers can receive, among others confirmation of the renewal of the policy or certificates of accounts, transactions, salaries in an electronic form. In 2021, the Bank continued its activities aimed at popularizing the paperless concept among customers, encouraging them to give up paper correspondence and jointly care for the environment. For this purpose, i.e. a special website www.pekao.com.pl/epapier was created with explanations on how to change paper correspondence to electronic correspondence. It is possible to make changes in a branch, on the Pekao24 website or in the PeoPay application. In remote channels, campaigns are carried out periodically, encouraging people to resign from receiving paper statements, regulations or notifications of repayment of liabilities. From year to year, customers are becoming more and more active parties to the processes aimed at reducing the use of paper by the Bank.
DATA ON BANK STATEMENTS
2020
2021
Percentage of retail customers receiving electronic statements*
86.1%
88.0%
Percentage of retail customers receiving paper statements*
13.9%
12.0%
(*) Applies only to Bank Pekao.
Waste
GRI 306-3 Waste generated
As part of waste management, the Bank systematically transfers paper documentation, IT media, furniture or household appliances and audio/video devices for specialist disposal. These products are recycled and prepared for reuse as a secondary raw material or as an input for alternative fuels. When ordering new audio/video devices, the service of collecting and disposing of old devices is included.
BREAKDOWN BY WASTE STREAM
2020
2021
Other media (cell phones, hard drives, network devices)
7,717 pcs.
21,425 pcs.
Floppy disks, streamer tapes, VHS tapes
10.75 t
8.0 t
Paper records sent for destruction and recycled
989.1 t
403.3 t
(*) Applies only to Bank Pekao.
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1.4.2 PekaoGroup carbon footprint calculation
In line with the commitments adopted in the ESG Strategy, in 2021 the Bank started calculating greenhouse gas emissions for the Pekao Group. Calculations were performed in accordance with the methodology of the international GHG Protocol standard for Scope 1, i.e. direct emissions arising from facilities owned or supervised by the Group, and for Scope 2, i.e. indirect emissions from purchased electricity, steam, heat and cooling from external suppliers. The value chain emissions calculation (GHG Protocol Scope 3) is scheduled to be performed in 2023. In the following years, the Bank intends to carry out activities to reduce emissions - the goal by 2024 is to reduce its own emissions compared to 2020, incl. by rationalizing business trips, pro-ecological improvements in the Bank's locations (limiting direct visits to the customer in favour of remote contact, gradual replacement of the car fleet with models that emit less fumes into the atmosphere; changing the way of heating outlets, optimization of processes aimed at reducing the consumption of paper). The Bank will monitor the consumption of raw materials and materials and conduct less waste activities. It also plans to introduce offsetting activities in the future.
GRI 305-1 Direct greenhouse gas emissions (Scope 1.)
PEKAO GROUP
BANK
COMPANIES
EMISSION SOURCE CATEGORY
[t CO 2 e]
2020
2021
2020
2021
2020
2021
Vehicles
Gasoline
3,017.7
4,211.1
2,485.5
3,586.4
532.3
624.7
Diesel
551.2
359.7
453.1
269.8
98.2
89.8
Liquefied Petroleum Gas (LPG)
5.4
0.9
0.0
0.0
5.4
0.9
Total
3,574.4
4,571.7
2,938.5
3,856.2
635.8
715.4
% in scope 1.
53%
56%
48%
52%
99%
99%
Real Estate
Natural gas for central heating and hot water.
2,319.2
2,759.7
2,316
2,751
3.2
8.7
Heating oil for central heating and hot water.
645.3
671.8
645.3
671.8
0
0
Diesel for emergency power
2.1
0
2.1
0
0
0
Refilling of refrigerants in own installations
257.1
101.2
257.1
101.1
0
0
Total (*)
3,223.8
3,532.6
3,220.6
3,523.9
3.2
8.7
% in scope 1.
47%
44%
52%
48%
1%
1%
Total Scope 1.
6,798.2
8,104.3
6,159.1
7,380.2
639.1
724.1
% in Total scope 1.+ 2. (location-based)
9%
11%
9%
11%
29%
32%
(*) According to the location-based method, the average indicator for Poland was adopted as the greenhouse gas emission indicator related to the generation of the electricity unit.
In 2020 and 2021, emissions from the consumption of liquefied LPG for central heating and hot water, hard coal for the needs of central heating and hot water were 0. Renewable energy was also not generated from its own sources.
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GRI 305-2 Energy indirect (Scope 2) GHG emissions
PEKAO GROUP
BANK
COMPANIES
EMISSION SOURCE CATEGORY
[t CO 2 e]
2020
2021
2020
2021
2020
2021
Total electricity consumption
for real estate (*)
37,578.6
35,750.3
36,623.3
34,852.7
955.3
897.5
Total electricity consumption
for powering vehicles
0
0
0
0
0
0
Total thermal energy consumption
26,752.6
27,407.4
26,426.9
27,023.7
325.7
383.6
Remote Work
630.7
765.8
493.6
533.7
137.1
232.1
Used fuel refills
for the emergency power supply of the generator
3.7
1.2
3.6
0.9
0.2
0.3
Refilling of refrigerants
in leased facilities
218.1
228.5
84.4
222.5
133.7
6
Total Scope 2.
65,183.8
64,153.1
63,631.8
62,633.6
1,552.0
1,519.5
% in Total scope 1.+ 2.
91%
89%
91%
89%
71%
68%
Total scope 1.+2.
71,982.0
72,257.3
69,790.9
70,013.7
2,191.0
2,243.6
(*) According to the location-based method, the average indicator for Poland was adopted as the greenhouse gas emission indicator related to the generation of the electricity unit.
1.4.3 Support for energy transition and low-carbon economy
Under Pillar 1. Iin its ESG Strategy, the Bank committed to actively support the transformation of the Polish energy sector and the coal regions most negatively affected by the transformation as part of a just transition. In line with the ESG Strategy, the Bank declares no new targeted financing for hard coal and lignite mining projects 40 and energy projects based on hard coal and lignite.
Pekao Bank and some Pekao Group companies have a balanced product offering addressed to different customer segments.
Green products
In 2021, the Express Loan was available for customers of Bank Pekao for environmental purposes, e.g. for renewable energy sources, the purchase of central heating boilers, windows, doors or home insulation materials. Its funds could also be used to finance the purchase of electric or hybrid passenger cars as well as electric motorcycles and scooters, electric bikes, or to refinance the incurred costs of purchases made from the beginning of 2021.
The EKO Housing Loan was used to support environmentally friendly solutions. As part of it, financing was available for the installation of solar collectors, photovoltaic panels and heat pumps during the construction or renovation of the property.
The Pekao TFI's offer was joined in 2021 by the Pekao Ecological sub-fund, focused on supporting sustainable investments. Its portfolio includes companies from environmentally friendly and pro-ecological sectors (renewable energy, electromobility, energy efficiency, recycling and waste management). When analysing their selection, in addition to financial factors, ESG issues were equally important, i.e. environmental, social and corporate governance aspects.
In 2021, Bank Pekao was involved in numerous projects aimed at improving the energy efficiency of business clients, implementing ecological projects and financing renewable energy sources (including wind farms, photovoltaic installations and low-emission urban transport). In September 2021, the Bank and the Polish Development Fund (hereinafter: PFR) announced a joint project to finance investments in renewable energy sources called "PFR Green Hub". The total amount of the programme is PLN 1 billion. The programme is designed to enable the implementation of the first 500 MW of new photovoltaic installations built on the basis of market energy prices.
In Q3. 2021, Bank Pekao took part in the issue of bonds for the amount of PLN 491 million, for the implementation of an investment programme improving the standard of public transport in Wrocław. In a consortium with Bank Gospodarstwa Krajowego (hereinafter: BGK) Pekao participated in PLN 496 million worth of financing for the modernization and construction of track infrastructure in the Silesian Agglomeration and for the purchase of tramway rolling stock and specialized rail vehicles. In the commercial real estate sector, the Bank financed projects with the highest quality environmental certificates. The Bank's
40 High-carbon financing: covers the industries of hard coal and lignite mining, electricity generation using hard coal and lignite, heat generation using hard coal and lignite, supplementary activities related to energy using hard coal and lignite within the following industries: trade, distribution, transmission electricity, wholesale of coal, industrial processing, production of coal furnaces. The financing does not include: industries related to the use (mining, processing) of coking coal as a raw material included in the list of critical raw materials of the EU, coal-related activities including the production of machinery for coal mining and installations for coal mining and the financing of projects supporting the energy transition. Excluding transformational projects.
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good practice was to finance projects in the commercial real estate segment aimed at building or revitalizing various types of buildings in order to make them environmentally friendly.
In terms of supporting the issue of ESG bonds of clients in 2021, Bank Pekao was:
- The sole organizer and dealer of the 10-year rating-linked bond issue ESG with a fixed interest rate (interest rate related to the company's ESG rating level) for PKN ORLEN with a total nominal value 1 billion zloty;
- One of the global coordinators and co-book-holders of the issue of 7-year green Eurobonds ( green bonds ) PKN ORLEN worth EUR 500 million , carried out on the international market. The net proceeds from the bond issue will be used to finance or refinance the group's green projects;
- Co-organizer of the first Polish issue of green municipal bonds for the city of Łódź. The bond amount was 418 million, of which 50 million were green bonds. The proceeds from the bonds will be used to finance projects related to low-emission urban transport and sewage treatment;
- The coordinator and dealer of PLN 1 billion issue of 10-year ESG-linked bonds (fixed interest rate linked to the company's ESG rating) for PKN ORLEN;
- One of the organizers and dealers for the issue of Famur S.A. green bonds worth PLN 400 million. The purpose of the issue was direct and indirect financing or refinancing of the development, purchase, construction and operation of green projects of the Famur group.
In December 2021, Bank Pekao signed a green bond issue program agreement with Miejskie Przedsiębiorstwo Oczyszczania- Łódź Sp. z o. o The value of the programme is PLN 400 million, which will finance the construction of the Łódź Recycling Centre, i.e. a set of installations for the treatment of municipal waste.
1.4.4 Disclosures required in accordance with the Regulation of the European Parliament and of the Council (EU) 2020/852 on the so-called taxonomy
Pursuant to Regulation (EU) 2020/852 of the European Parliament and of the Council of June 18, 2020 on establishing a framework to facilitate sustainable investments, amending Regulation (EU) 2019/2088 (Taxonomy Regulation, hereinafter: "Taxonomy" or "EU Taxonomy") and its implementing acts:
- Commission Delegated Regulation (EU) 2021/2178 of July 6, 2021 supplementing Regulation (EU) 2020/852 of the European Parliament and of the Council by clarifying the content and presentation of the information on environmentally sustainable business activities to be disclosed by companies subject to Article 19a or 29a of Directive 2013/34/EU, and specifying the method for complying with this disclosure obligation (Delegated Regulation to Article 8 of the Regulation on the so-called taxonomy), and
- Commission Delegated Regulation (EU) 2021/2139 of June 4, 2021 supplementing Regulation (EU) 2020/852 of the European Parliament and of the Council by establishing technical eligibility criteria for determining the conditions under which an economic activity qualifies as making a significant contribution to climate change mitigation or adaptation, and whether that economic activity does not cause serious harm to any of the other objectives,
First of all, the bank is required to disclose the proportion of exposures to activities described in accordance with the technical eligibility criteria for achieving the goals of adaptation to climate change or mitigating climate change.
This obligation entered into force on January 1, 2022 and covers the reporting period for 2021.
As the EU Taxonomy is a continuously developing set of legislation and companies are required to disclose the proportion of their activities described in the Taxonomy from 2022 onwards, the Bank has estimated the required proportion of exposures to activities described in the Taxonomy based on internal data (disclosure based on Annex XI of the Delegated Regulation to Article 8 of the Taxonomy Regulation). The analysis of the subject of the activity covered entities to which the Regulation on the so-called taxonomy in accordance with Art. 1 clause 2 of this Regulation.
Pursuant to Article 10(3) of the Delegated Regulation, the Bank, as a financial enterprise, from 1 January 2022 to 31 December 2023, discloses only the data specified in the above-mentioned regulation. The table below shows the above disclosures.
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TAXONOMIC DISCLOSURES
(AS AT 31/12/2021)
CONTEXTUAL INFORMATION
Article 10.3.a)
Percentage of total assets of exposures to economic activities that qualify for taxonomy
0.4%
Business activities of financial and non-financial entities subject to Directive 2014/95.EU of the European Parliament and of the Council (NFRD Directive) as described in the Delegated Regulation on the establishment of technical eligibility criteria for determining contributions to climate change mitigation or adaptation to climate change to prudentially consolidated total assets in accordance with Regulation (EU) No 575/2013 of the European Parliament and of the Council (CRR Regulation). The exposures included loans, leases, factoring, corporate bonds and equity interests at gross carrying value
Article 10.3.a)
Percentage of total assets of exposures to economic activities that qualify for taxonomy
2.2%
Business activities of financial and non-financial entities subject to the NFRD not described in the Delegated Regulation concerning the establishment of technical eligibility criteria for determining the contribution to climate change mitigation or adaptation to climate change to the total assets prudentially consolidated in accordance with the CRR Regulation. The exposures included loans, leases, factoring, corporate bonds and equity interests at gross carrying value
Art. 10.3(b)
Percentage share in total assets of exposures to central governments, central banks and supranational issuers
25.0%
Exposures in gross carrying amount to central governments, central banks and supranational issuers to total prudentially consolidated assets in accordance with the CRR Regulation. The exposure includes credit receivables and bonds in the non- commercial portfolio, including bonds issued by the Polish Development Fund and Bank Gospodarstwa Krajowego which are guaranteed by the State Treasury
Art. 10.3(b)
Percentage of the total assets of derivatives
3.2%
Gross carrying amount of derivatives to total assets prudentially consolidated in accordance with the CRR Regulation
Article 10.3.c)
Percentage of total assets of exposures to business entities that are not subject to non- financial reporting
34.6%
Business activities of financial and non-financial entities not subject to the NFRD Directive, i.e. companies in the micro segment (including sole proprietorships), SMEs, corporations, companies in the public sector (including local government units) in gross balance sheet value to total assets prudentially consolidated in accordance with the CRR Regulation
Article 10.3
Percentage share in total assets of the trading portfolio
0.2%
Gross carrying amount of the trading portfolio excluding derivatives, equity instruments as well as loans and advances measured at fair value through profit or loss to total prudentially consolidated assets in accordance with the CRR Regulation
Article 10.3
Percentage of total assets of interbank loans on demand
0.2%
Gross carrying amount of interbank loans on demand to total assets prudentially consolidated in accordance with the CRR Regulation
Total prudentially consolidated assets (PLN million)
250,642
The value of prudentially consolidated assets in accordance with the CRR Regulation
At the moment, Bank Pekao does not have any objectives related to ensuring the growth of the volume of exposures consistent with the taxonomy in its business strategy and does not take into account these objectives in cooperation with clients and counterparties (disclosure pursuant to Annex XI to the Delegated Regulation to Article 8 of the Taxonomy Regulation). As of the date of this report, work is still ongoing on sustainable finance regulations, which the Bank is reviewing and plans to include in future disclosures.
The shares presented above differ from the ratios reported in accordance with the Bank's ESG Strategy due to the different methodology of their calculation.
1.4.5 Disclosures under the SFDR regulation
In accordance with Article 3(1) of Regulation (EU) 2019/2088 of the European Parliament and of the Council of November 27, 2019 on disclosure of information relating to sustainable development in the financial services sector (hereinafter: Regulation of the SFDR), entities providing investment advisory services of the Pekao Group (Pekao TFI, Biuro Maklerskie Pekao), as participants of the financial market, were required to publish on their website information on their strategies regarding introducing risks for sustainable development into the business in the process of making investment decisions.
On March 10, 2021, Pekao TFI:
- in accordance with Article 3(1) of the Regulation, SFDR has published a "Strategy for Incorporating Sustainability Risks into Investment Decision Making on Sustainability Disclosures in the Financial Services Industry."
- pursuant to Article 4 of the Regulation, SFDR has issued a Statement that it does not currently consider the main adverse effects of investment decisions on sustainability factors.
- in accordance with Article 5 of the Regulation, SFDR informed that the remuneration policy for persons whose responsibilities include activities that materially affect the risk profile of the Company and the managed funds and portfolios of TFI's clients has been amended accordingly.
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On March 10, 2021, the Pekao Brokerage House:
- in accordance with Article 3(1) of the Regulation, SFDR published "Strategy of Pekao Brokerage House for introducing sustainability risks into its activities as part of providing investment advisory services",
- in accordance with Art. 4 of the Regulation, SFDR issued a statement that Pekao Brokerage House does not take into account the adverse effects on sustainable development factors in the investment advisory process.
1.4.6 Environmental risk in lending activities
Bank Pekao supports environmentally friendly projects and takes environmental issues into account in the process of credit risk analysis and monitoring of transactions.
The Bank supports customers and environmental projects aimed at mitigating climate change, reducing environmental pollution, and projects that support sustainable social development. Therefore, the Bank supports a gradual and orderly transition to a low-carbon economy by limiting the financing of coal mining and energy production from fossil fuels (oil, coal), and increasing the financing of energy from renewable sources (water, wind, sun). The Bank considers infrastructure investments that have low CO 2 emissions and are resilient to climate change and disasters as desirable.
The bank, together with the assessment of creditworthiness and credit risk in the strict sense, carefully assesses the specific risk of a transaction, in particular legal, reputational, political and environmental risk, as well as the risk of non-compliance by the client with the principles of corporate social responsibility, money laundering and terrorist financing (e.g. conflict of interest, transparency, companies operating in tax havens).
In assessing environmental risk, the Bank considers climate, environmental and social risks. It is particularly cautious about the risks posed by, among others, the transition to a low-carbon and "climate-resilient" economy and the risks posed by the so-called physical risks of climate change.
In its day-to-day operations, Bank Pekao is particularly committed to environmental issues. ESG risk assessment is one of the integral elements of the assessment of credit transactions concluded with business entities. Its goal is to promote informed credit decision-making and appropriate relationship management with customers who operate in areas that significantly impact the environment in which we live. Wherever possible, negative environmental, social and climate impacts should be avoided. If avoidance is not possible, negative effects should be adequately reduced, mitigated or compensated for. When there are environmental risks associated with the type of business activities conducted by borrowers, the Bank works with customers to reduce potential consequences that may arise from environmental risks. This cooperation is aimed at identifying, assessing the extent of and mitigating environmental, social and climate risks and is carried out as part of the credit risk assessment process, based on methodologies and using relevant guidelines developed by the European Bank for Reconstruction and Development and the European Banking Authority : EBA).
If it is found that the customer is unable to minimize the ESG risk, the Bank determines the conditions for taking specific environmental measures during the transaction, including the possibility of including appropriate environmental clauses in the loan agreement.
Taking into account environmental concerns, the Bank does not finance a number of activities, i.e.:
- new hard coal and lignite mining projects, including trade, and new energy projects based on hard and lignite coal,
- activities that generate a significant threat to the environment, i.e., but not limited to:
• activities declared illegal, phased out or banned (e.g. production or trade in products containing PCBs, hazardous chemicals, psychoactive substances, ozone-depleting substances, persistent organic pollutants, wildlife and their products),
• cross-border shipment of waste,
• keeping animals for the primary purpose of fur production or any activity related to the production of fur,
• the production, placing on the market and use of asbestos fibres, articles and mixtures containing these fibres intentionally added,
• exports of mercury and mercury compounds as well as the production, export and import of a wide range of mercury-added products,
• activities prohibited by the legislation of the host country or international conventions relating to the protection of biodiversity or cultural heritage resources,
• drift fishing in the marine environment with nets exceeding 2.5 km in length,
• forced evictions.
The Bank is currently exploring the possibility of supporting the nuclear energy transition.
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1.5 The second pillar of the ESG Strategy: Commitment
As part of the second pillar of the ESG Strategy, the Bank will strengthen actions to support the sustainable development of society and the economy. The Bank's goal is to engage in social activities aimed at providing help, providing equal opportunities and preventing exclusion. The strategy assumes that the amount allocated by the Bank for social and environmental purposes will increase from year to year. In addition, the bank plans to increase employee involvement in social and environmental activities. It will also focus on education and raising environmental awareness of the society through partnerships with social organizations and providing digital tools to clients. An important intention is also ecological, convenient for customers and easy access to banking services. Moreover, the Bank intends to participate even more extensively in programmes supporting the development and innovation of companies.
ESG STRATEGY IMPLEMENTATION INDEX
2. PILLAR - COMMITMENT
2020
2021
TARGET FOR 2024
Number of new ESG initiatives undertaken annually
n/a
over 60 (*)
+5 per year
Systematic increase in volunteer hours worked
4,400
6,531
>5 500
Digitization rate
50%
57%
~100%
(*) The Bank undertook 5 key initiatives for the implementation of the ESG Strategy and over 60 supporting initiatives.
1.5.1 Actions aimed at providing aid, equal opportunities and preventing exclusion
Employee volunteering
GRI 413-1 Operations with local community engagement, impact assessments, and development programs
The idea of helping those in need, involvement in numerous charity, educational, sports and pro-health campaigns have become a permanent part of the organizational culture of Bank Pekao. The comprehensive employee volunteering programme is implemented in accordance with the Bank's Strategy for 2021-2024, where voluntary activities are part of the 4th pillar of the Bank's Strategy: “Responsibility", in particular in the area of "Society", and in line with the ESG Strategy, based on the goals set out in the second pillar of the ESG Strategy "Commitment". In order to facilitate participation in volunteering, the Bank enables each employee in the units to use two working days in a calendar year for volunteering organized with the support of the employer. For volunteer leaders and those interested in becoming involved in helping, workshops are held to prepare for volunteering. The "Volunteering" portal operates on the banking intranet, in which information about volunteering campaigns and their effects are published, profiles of volunteer leaders are presented. Information is also published in banking newsletters. Members of the Bank's Management Board are also involved in volunteering.
Participation of Pekao Bank employees in volunteering is governed by the Rules for Participation of Pekao S.A. Employees in the Employee Volunteer Programme . At the Bank, the employee appointed to act as the coordinator for employee volunteering at the Bank is responsible for managing voluntary activities at the central level. In each action, a leader of the voluntary action is appointed - responsible for the course and implementation of one selected action, the duration of which is strictly defined, and the implementation rules are described in a separate document. In addition, an important role is played by a local volunteer coordinator - a volunteer who acts and organizes volunteer projects among employees in the Bank's units, working with the local community or with a selected organization that accepts volunteer assistance in the employee's immediate environment. Employees of any unit (branch) of the Bank, regardless of their location and size, can participate in employee volunteering. Each volunteering action is documented - volunteer campaign leaders are required to submit a substantive report to the Bank, including, among others, photos, video material of the course and information on the number of volunteer action team members, the number of beneficiaries of the action, the number of hours spent by the team on the voluntary project implementation. Volunteer-related campaigns were promoted consecutively at all Bank locations in 2021 and received interest from employees.
In 2021, due to the COVID-19 virus pandemic, the scope of volunteering and the method of operation were adapted to the requirements and restrictions resulting from an epidemiological threat situation. The actions took place in small groups, in accordance with the rules of the sanitary regime. Each of the participants of the initiative was required to complete a written declaration regarding the state of health in the context of the coronavirus threat. The 110 actions organized with the Bank's support involved 1,170 employees who worked more than 6,351 hours for the benefit of volunteering.
Pekao Bank willingly engages in partnerships in volunteer actions. The opportunity to learn about the knowledge and experience of experts from foundations, associations and NGOs is an additional motivation for employees-volunteers and at the same time a guarantee of versatility, timeliness and relevance of the programme to be implemented. In 2021, the Bank's volunteer partners were: National Foundation for Environmental Protection, Apiterra Foundation - A World Full of Bees, Warsaw Banking Institute, SOS Children's Villages Association in Poland, Polish Red Cross and Society for Care of Animals in Poland.
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“We are close" grant competition
One of the forms of corporate volunteering is the competition "We are close", addressed to employees working for local communities in their environment, who recognize their needs. As part of the competition, each submitted project, in categories such as ecology, education, sport, culture and art, health promotion, and helping animals, can apply for a grant for implementation from the Pekao Bank S.A. Foundation named after Dr. Marian Kanton. In the 3rd and 4th editions of the competition held in 2021, Bank employees submitted 170 ideas. Grants worth a total of PLN 383,000 were awarded to 86 diverse projects, such as: first aid training, renovation of sports clubs' training rooms and day care centres, ecological workshops, dance classes for senior citizens and youth, an initiative for the Rural Housewives Association, and organization of a sightseeing trip for the deaf. Another idea for helping and integrating was to organize a theatrical evening for women associated in the Amazon Women Federation. Thanks to the competition, two educational films were also made: training exercises for children in a wheelchair and a video presenting the topic of blood donation and transplantation. Direct beneficiaries of the competition are members of organizations receiving aid, wards of care and educational institutions where volunteer actions are carried out, participants of workshops and classes, members of sports clubs and recipients of educational films. Among them in 2021 were: 255 seniors, 1,493 people with disabilities, 5,090 children and adolescents (in total: 37,061 people ). Help under the competition also went to 1,646 animals under the care of shelters. Initiatives were carried out in 60 towns all over Poland, 430 employees acted as volunteers, who worked in total 4,816 hours .
Voluntary blood donation
In addition to the "We are close" grant competition, Pekao Bank successfully engages in numerous actions based on the idea of employee volunteering. An example of this is the long-running action of honorary blood donation with the participation of employees. In 2021, mobile blood collections were established for the first time in several locations in Poland. The campaign was co-organized with experts from the Polish Red Cross. To introduce employees to the idea of blood donation, a lecture on blood donation was organized. Employees were provided with educational materials and a publication about honorary blood donors among the bank's employees. More than 50 litres of blood were collected during actions organized at the Bank's branches or headquarters (Krakow, Gdansk, Katowice, Warsaw). As a result of the campaign, many people decided to donate blood for the first time in their lives. Debuting in the role of blood donors declared their readiness to continue their commitment to the benefit of patients.
Equal opportunities for all at every stage of life
The SOS Children's Villages Association in Poland has been the Bank's long-standing volunteer partner. The cooperation includes not only the organization of individual actions, but also competence volunteering. In 2021, the project "First job" was continued - an initiative for the charges of the Association entering adulthood, which consisted in the organization of on-line workshops for a group of 40 people. They covered two topics: "Entering the Job Market" and "Motivation and Your Strengths." In response to the needs expressed by the youth educators, a thematic workshop on personal finance was organized for those entering adulthood, entitled: "Your money - your business." Moreover, as part of the annual gift campaigns, donors - bank employees prepared surprises for children and young people on the occasion of Children's Day and the "Santa Claus Campaign". In 2021 over 400 packages with gifts were handed over to the wards of care facilities in Biłgoraj and Kraśnik. Representatives of the Polish national men's basketball team also participated in the final of "Santa Claus Campaign".
Bank Pekao is also a partner of the Warsaw Institute of Banking in the Bakcyl educational programme. The purpose of the initiative is to provide financial literacy to children and teenagers from schools across Poland. In 2021, 6 bank employees participated in training to prepare for their role as educators in the Bakcyl program. Bank employees as Bakcyl volunteers conducted 77 lessons for children and teenagers.
The educational initiative called SeniorOn was addressed to the representatives of the oldest social group. Since September 2018, the Polish Red Cross has been conducting the SeniorON project, which aims to improve the quality and standard of life of older people and prepare them to age with dignity through social activity. Pekao Bank was invited to cooperate in the project as the main partner. 1945 seniors took part in three editions of the initiative. 96 workshops were conducted, 36 of which were led by volunteers from the Bank. They covered the basics of online banking, security in finance and mobile banking. In 2021, it was 5 educational meetings for a group of 90 seniors.
Moreover, the Bank also supports employee-initiated campaigns of various course and topics. In 2021, they included: a campaign to collect gifts for seniors from the Warsaw DPS (nursing home), participation in an educational campaign against violence organized for youth from Siedlce, a collection of gifts for a kindergarten in Sopotnia Mała, and a campaign to prepare gifts for children from a care centre in Brwinów.
Helping Animals
As part of their voluntary activities, the Bank's employees do not forget about animals shelters. In cooperation with the Society for Care of Animals in Poland, two aid campaigns for the shelter in Celestynow were organized. In the December campaign, volunteers from the bank accepted an invitation from a group of volunteers from PZU and joined forces to help. On the occasion
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of "Santa Claus in Celestynów" a local collection of donations for animals was conducted, and volunteers took part in minor repair work at the shelter. To promote the idea of adopting homeless animals, the Bank launched a special social media campaign with the slogan "Don't buy, adopt". Volunteers with experience in animal rescue operations prepared photo reports and videos to encourage people to take care of abandoned animals. The campaign included an expert lecture for the Bank's employees, during which everyone could gain knowledge on how to prepare for the adoption of a pet and how to take care of the pet during the first days and months in a new home.
Pekao Group companies also get involved in social activities. In 2021, Pekao TFI employees donated items for the annual charity auction. The funds collected during the auction were donated to selected foundations. At DI Xelion, fundraising for orphanages and educational centres, etc. was held among employees and associates. Financial support for the orphanage was provided by the Card Centre in 2021. In turn, the winners of the integration game - gamification at Pekao Financial Services each month indicated a social benefit organization to which a donation from the management board was directed. Pekao Direct employees got involved in the "Zakrętaki" campaign. As part of it, thanks to financial resources obtained from the recycling of plastic caps, three charges from the Łupkowa Hospice for Children in Łódź received material assistance. Employees of Pekao Faktoring have joined Pekao Bank's "Sporting Edge of the World" volunteer campaign, donating sports equipment to an elementary school in Rutka-Tartak, Podlaskie Province.
Environmental education
In 2021, thanks to the cooperation with the National Environmental Protection Foundation (UNEP/GRID Centre - Warsaw), the Bank hosted the first of a series of thematic lectures on environmental protection called Nature of the Bison. Lectures conducted by UNEP/GRID experts brought closer the knowledge about climate, described the relationship of climate with our lifestyle, both professional and private. Staff members were provided with educational materials and tools useful for conducting educational workshops. The materials were used during locally implemented initiatives to support environmental protection. In 2021, the project "Bank płynący miodem" ("Bank flowing with honey") was continued and developed. Its purpose is to protect bees, including the wild bee, and to promote urban beekeeping through educational outreach to employees. Thanks to the cooperation with the Apiterra Foundation, employees were provided with thematic materials on the importance of bees in the preservation of biodiversity, interesting facts about these beneficial insects and advice for people setting up home apiaries. Educational videos for beekeeping enthusiasts have also been published, providing a record of visits to the bank's apiary as well as practical knowledge and tips. The partnership included two educational events at the Bank's headquarters, combined with the opportunity to visit the city apiary and meet the city beekeeper. On the roof of the bank headquarters building, bank volunteers checked the condition of the apiary and helped with cleaning works. In the summer of 2021, a "beehive knitting" campaign was conducted in the areas next to the Pilica River. In cooperation with the members of the Beekeeping Brotherhood from Augustów, a group of volunteers prepared two beehives (hollowed out logs of wood), which became home to wild bees living in the Stromecki Forest.
1.5.2 Community service, charity and sponsorship
Bank Pekao’s charitable activity is carried out mainly through the Pekao S.A. Bank Foundation named after doctor Marian Kanton. In addition to the activity carried out through this agency, the Bank directly cooperates with selected public benefit organizations to which it makes donations to support their statutory activity. The key internal regulation of the Bank defining the guidelines in this area are the Rules for granting donations and sponsorship by Bank Polska Kasa Opieki Spółka Akcyjna . The regulation included, among others, appointing a sponsorship and donation committee supporting the Bank's Management Board in the process of making decisions by the Bank regarding involvement in sponsorship projects or granting donations by the Bank. Pursuant to the applicable Anti-Corruption Policy in the Pekao Group , prior to making a donation or entering into a sponsorship agreement, a risk analysis (due diligence ) is conducted to minimize corruption and reputation risks.
Sponsorship activities
The policy pursued by the Bank and Pekao Group in the area of sponsoring and charity work is aimed at strengthening the image of the Bank and Pekao Group companies as open and modern institutions, close to customers and the communities in which the Bank and Pekao Group operate. In the charity and sponsorship area, there is no single policy at the Pekao Group level. Several Pekao Group companies have implemented donation and CSR policies, e.g. Pekao Factoring has an internal Social and Sponsorship Policy and Pekao TFI has a Charitable Activities Policy .
In selecting initiatives, the Bank is moving away from activities based on one-time grants and reactive responses to requests for support to long-term community engagement based on partnerships with organizations that enjoy public recognition and trust. In particular, the Bank engages in projects in such areas as responsible economic development, promotion of the national brand and Polish values, support of culture, sport, assistance to children in need or environmental protection. The Bank's support is provided on two levels: nationwide - where the Bank sponsors strategic events that have a significant impact on Polish culture, and local - supporting initiatives dedicated to local communities.
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In 2021, analogically to 2020, due to the ongoing global pandemic caused by the coronavirus, the activities of Bank Pekao as part of sponsorship and charity activities were adjusted to the national requirements and restrictions set by the Polish government and banking supervision. Nevertheless, in 2021, after a one-year break due to the pandemic, Bank Pekao S.A. could once again be the title sponsor of one of the biggest tennis tournaments in Poland - Pekao Szczecin. The greatest involvement in sport, however, was the establishment of cooperation with the Polish Basketball Association (PZKosz) and the Polish Basketball League S.A. (PLK). Bank Pekao has thus become a sponsor of the Polish National Basketball Team and the Polish National Wheelchair Basketball Team as well as of league games. As an official sponsor, the Bank is present at all levels of the games supervised by PZKosz and PLK.
Pekao Leasing has become involved in sponsoring the "Land of the river Bug" Triathlon, a sports event aimed at supporting people with disabilities. Income from entry fees and sponsor contributions was allocated for sheltered housing, which will provide disabled people with conditions for independent living.
Bank Pekao S.A. Foundation named after doctor Marian Kanton
The statutory goals of the Foundation include supporting activities in the field of:
- education and upbringing of children and youth,
- research and teaching projects of scientific institutions and schools,
- popularization of banking knowledge,
- helping people with illnesses and disabilities,
- promoting physical culture and sport,
- environmental protection,
- implementation of projects and activities of charity organizations,
- promoting culture.
In 2021, the Foundation provided support to a wide variety of institutions. Examples of initiatives include purchasing equipment for the Territorial Defence Forces. Helping to educate students, the Foundation purchased equipment for a computer lab at Primary School named after Lwów Eaglets, funded scholarships for students of the John Paul II Catholic University of Lublin and subsidized renovation of the campus of Cardinal Stefan Wyszyński University in Warsaw. Remembering the Poles in the East, the Polish cultural heritage and the history of the Borderlands region, the Foundation also provided funds for the preparation of 80 Christmas packages for Polish families in and around Krzemieniec. In the area of support and development of reading, the Foundation donated funds for the renovation of the social library in Gdańsk. As part of promoting physical culture and sport, support was given to the organization of the "Postcresima" youth camp. The Foundation has also funded scholarships for talented young people from the Healthy Movement Foundation, which promotes sports among as many people as possible and at various sports levels. Bank employees were also involved in the campaign. In 2021 the Bank donated to the Pekao S.A. Bank Foundation named after doctor Marian Kanton donation in the amount of PLN 1,785,000.
Virtual art gallery
A pioneering activity on the market of financial institutions in 2021 was the opening of the virtual Art Gallery of Bank Pekao S.A. and the publication of an album containing photos of the most important works. The collection of almost 1,200 valuable exhibits includes works of art by early artists such as Jan Matejko, Stanislaw Wyspianski, Wojciech Kossak, Julian Falat, Jozef Mehoffer and Zygmunt Waliszewski, as well as works by contemporary artists such as Tadeusz Dominik, Jerzy Nowosielski, Jerzy Duda-Gracz, Franciszek Starowieyski and Bożenna Biskupska. The collection also includes sculptures and furniture, lamps and clocks - from the 19th and 20th centuries. The symbolic opening of the virtual gallery was accompanied by the donation of two items from the Bank's collection with an estimated value of PLN 400 thousand to the collections of the Royal Castle Museum and the National Museum in Warsaw. The Museum at the Royal Castle received a 16th-century tapestry by Cornelis de Ronde, entitled "The abduction of Helen", while the National Museum in Warsaw was given a silver casket for jewellery from the beginning of the 18th century made by Daniel Friedrich von Mylius. Bank Pekao has also established cooperation with the Academy of Fine Arts in Warsaw, which produces films promoting works of art from the collection. The first was the report from the exhibition at the William Morris Gallery in London, where, thanks to the cooperation with the National Museum in Krakow, the works of Young Poland artists were shown for the first time on such a large scale. This particular exhibition featured Stanisław Wyspiański's "Pansies" from the Bank's collection.
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Bison protection
For many years the Bank has been consistently involved in the protection of Polish bisons. The Bank's support goes towards, among others, population diversification and development, herd care, and subsidizing scientific and educational projects that promote the conservation of this exceptional and unique endangered species. For two decades, Pekao Bank has been supporting the implementation of statutory tasks of the Białowieża National Park as a sponsor and partner of the park. The funds provided by the Bank cover some of the park's expenses for monitoring bison in the wilderness, purchasing winter food, and winter inventories. Thanks to the support of Bank Pekao, it was possible to modernize the Bison Show Reserve - the most visited tourist facility in the Białowieża National Park and to equip the educational pavilion, which is part of it. The Bank also supports the activities of other institutions that provide care for European bison, including, among others, the European Bison Reservation in Pszczyna. The facility hosts nature lessons, and there is a chance to learn about the bison family and other animal species during the walk. Another place where the Bank directs its financial aid is the Warsaw Zoological Garden. Pekao donates funds to the Panda Foundation, which operates at the facility and helps to care for the Warsaw herd of nine European bison.
Bank Pekao and the Pekao Group companies, as responsible organizations and active participants in social life, also follow the guidelines of the "Code of Best Practice for WSE Listed Companies 2021" issued by the Warsaw Stock Exchange in 2021, including rule 1.5 regarding charity and sponsorship activities. In 2021, the Pekao Group carried out a number of initiatives to support culture, sport, charity institutions, the media, and social organizations. As a rule, Pekao Group does not support trade unions and political parties through sponsoring or charity activities. The table below presents the expenses incurred in this respect in 2021, along with the distinction of key initiatives.
The expenditure of the Bank and Pekao Group companies according to the areas included in Recommendation 1.5 WSE DPSN 2021 (gross):
- Culture support: 697 thousand PLN, including
• donation to the Royal Castle
- Sports Support: 2,421 thousand PLN, including
• Sponsorship of the Polish Basketball League
• Sponsorship of the Pekao Szczecin Open tennis tournament
- Support for charitable institutions
- Support for public benefit organizations
- Support for social organizations: 411 thousand PLN, including
• Support for the protection of bison species
- Media support: 751 thousand PLN, including
• A number of activities related to galas and plebiscites as well as economic discussions such as the eForum of "Parkiet" and "Rzeczpospolita"
- Support for trade unions - PLN 0.
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1.5.3 Partnerships for sustainable development
GRI 102-12 External initiatives supported by the organization
The Bank has a long-standing commitment to sustainability as a trusted financial institution, reliable business partner and responsible employer.
On May 5, 2021, Pekao Bank joined the Partnership for the Implementation of the Environmental Sustainable Development Goals "Together for the Environment" in cooperation with the National Environmental Foundation. It is a declaration of active support and implementation of projects to achieve the environmental UN Sustainable Development Goals. As part of it, the Bank, along with 21 other business representatives, announced its commitments on September 16, 2021 climate, i.e. .: reduction of the carbon footprint by 2030 - achievement of own climate neutrality (scope 1 and 2. GHG Protocol) and reducing CO 2 emissions in the value chain (Scope 3. GHG Protocol).
Confirmation of the Bank's long-term and comprehensive approach to achieving the ESG goals came when it joined the United Nations Global Compact (hereafter UNGC) on October 19, 2021. Membership in the UN Global Compact means participation in the world's largest platform of corporate sustainability leaders, representing almost every business sector. The Bank thus reaffirmed its readiness to work towards the 2030 Agenda and to integrate the 10 Principles of the UN Global Compact into its strategies, committing itself to far-reaching social, economic and environmental goals.
1.5.4 Providing digital tools to customers
Bank Pekao has been investing in modern digital technologies for years. Thanks to the wide range of innovative solutions, the company meets the needs of customers and develops their digital awareness. In addition, the Bank continues to enhance security and invest in cyber-security to ensure secure banking for customers across all business segments. By 2021, the Bank had nearly 2.4 million active mobile banking customers.
The Bank's main mobile banking tool , the PeoPay application , offers a number of innovative solutions. They guarantee customers full availability of services, greater range of orders, automation of recurring payments, instant authorization of transactions. In 2021, the version of the PeoPay application was expanded to include self-service processes, thanks to which customers could place orders for a housing loan, student loan, loan, bill or card on their own without leaving home, including an instruction for the complete early repayment of a mortgage and a loan, a certificate of the amount of debt, issuing a bank opinion or preparation of documents for establishing a mortgage. In 2021, as announced, Bank Pekao was the first in Poland to implement the possibility of opening a selfie account using an e-ID card. In addition, Bank Pekao, through the PeoPay application, also made it possible to use the offer of Pekao TFI investment funds without the need to visit the bank's office.
The PeoPay KIDS application, offered since 2020 and aimed at children aged 6-13, has become increasingly popular and appreciated. As part of it, the Bank's youngest customers receive access to Konto Przekorzystny dla młodych (Advantageous Account for Youth), the My Skarb (My Treasure) savings account and the PeoPay KIDS debit card. Thanks to the application, children can learn how to save and manage their money in an easy and accessible way, and thanks to the payment card they can make cashless payments in stores and withdraw cash from ATMs. There is also a coach feature in the app that introduces your child to the world of finance. The PeoPay KIDS app is connected to PeoPay mobile banking and Pekao24 online banking, allowing guardians to view and authorize their child's finances.
Bank Pekao expanded the PekaoID digital identity service and the Trusted Profile, enabling remote confirmation of the identity of retail customers. Thanks to the integration with the eIDAS National Node, there has been a surge in PekaoID activations.
1.5.5 Programmes supporting the development and innovation of Polish enterprises
The Pekao Group is involved in the development and promotion of entrepreneurship in Poland, targeting the market with a competitive offer of preferential financing for investment development. A long-standing partner in this effort is the European Investment Bank (hereinafter: EIB). In 2021, another loan agreement at the turn of the years was signed between Pekao Leasing and EIB, for the amount of EUR 100 million. The loan was secured by a guarantee from Bank Pekao. Under the terms of its agreement, a significant portion of the funds have been earmarked to finance energy efficiency improvements and RES development and to prepare a competitive leasing offering for companies owned or managed by women.
Energy efficiency of companies from northern Poland was to be increased by the second edition of Pekao Bank's Energy Saving Loan. The offer was the result of cooperation between Bank Pekao, the EIB and the Marshal's Office of the Kuyavian- Pomeranian Voivodeship. As part of the Energy Saving Loan, it was possible to obtain funds for the replacement of machines and devices with more energy-efficient ones. With its help, it was also possible to finance the reconstruction of production lines, construction or reconstruction of installations of renewable energy sources used in the enterprise, as well as many other projects aimed at improving the energy efficiency of companies.
In 2021, another year of the crisis caused by the COVID-19 pandemic, an important activity of the Pekao Group was additional support for companies in running their business. As part of cooperation with Bank Gospodarstwa Krajowego (BGK), a new
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four-year loan for the amount of PLN 350 million was launched for Pekao Leasing. Within the framework of this project, the company financed the purchase of vehicles and equipment, ultimately intended for Polish entrepreneurs. On the other hand, the POIR (Smart Growth Operational Programme) liquidity loan for entrepreneurs from the Masovian voivodeship was used to help in maintaining the current operations of companies. The budget of the programme for this region amounted to PLN 25 million.
Pekao Bank customers, including the former Idea Bank, were also able to apply for the Financial Shield 2.0 subsidy in January 2021. The purpose of the programme was to provide financial assistance to companies in industries forced to curtail or suspend operations due to the outbreak of COVID-19. In total, PLN 13 billion was allocated to the value of aid for micro, small and medium-sized enterprises. Entrepreneurs particularly affected by the outbreak of the epidemic could submit their applications via Pekao24, PekaoBiznes24 and Idea Cloud e-banking.
In 2021, the Bank continued to work on increasing access to remote customer services, including self-service processes. This was intended both to ensure personal safety during a pandemic and to simplify and expedite service delivery in the corporate banking market. The process of opening a selfie account for individual customers has been expanded to include the ability to confirm identity using the electronic layer of the eID using the NFC feature on the smartphone (instead of uploading a photo or scan of the ID). The solution was then made available to corporate customers with an electronic qualified signature - without restrictions and without the need for an in-person meeting or an office visit. The SelfieSign mode, compliant with all regulations and completely safe, also has an additional advantage for a business client, which is the ability to sign a whole set of documents with one click, from anywhere in the world, at a convenient time. Unlike other such solutions, SelfieSign does not entail any product restrictions or transaction limits from the beginning of the relationship. SelfieSign can be used not only by companies, but also by public institutions and local governments. An example was the agreement between the City of Łódź and Pekao Bank to service the local government's budget. It was signed in October 2021 using the verification mode on "selfie" and authorization of documentation by qualified signature.
Pekao Bank was the first bank in Poland to allow customers from the SME and corporate sectors using PekaoBiznes24 e- banking to make a transfer to the phone. From March 2021, they could make a transfer to the phone number of an individual payment recipient, registered in the Polish Payment Standard (PSP) database - in the BLIK system. The advantages of phone transfers are their real-time processing and the fact that the sender does not need to know the recipient's account number, and therefore does not spend time obtaining it and entering it into the transfer form. This proved to be particularly important during the pandemic restrictions associated with COVID-19. It allows to quickly credit an employee's account for the purposes of paying an invoice, making a company purchase, or paying an advance on future remuneration. This form of payment can be used, among other things, to transfer funds as part of a refund, claim or other form of claim by an individual payee, as well as to quickly disburse funds to beneficiaries of insurance or other benefits, such as social security .
Pekao Bank customers have also gained a new platform that brings together and presents a range of financial solutions to help run a business and a collection of useful tips for business owners. The "All in one place" site collects hints of beneficial products and interesting value-added services, presented according to the needs of micro businesses, as well as their stages of development. The platform also features modern tools and attractive offers from partners, such as legal services or IT support.
1.5.6 Designing innovation
The challenges of the COVID-19 pandemic have energized process digitization in all business areas. In Bank Pekao, the unit responsible for creating a culture of innovation, accelerating the implementation of innovative solutions and cooperating with fintechs, startups and technology companies is the Innovation Lab. In its activities, the Laboratory focuses especially on innovations that allow building modern banking and adjusting products and services to customers' expectations. The Innovation Laboratory uses both market and non-industry practices, as well as research on trends, crowdsourced ideas and technologies provided by young companies.
In 2021, Bank Pekao was looking for a solution provider that, based on artificial intelligence, would analyse customer comments in the bank's mobile application on Google Play and the App Store. Twenty-four startups and technology companies responded to the open call announced by the Innovation Lab. Two projects focusing on the most effective use of customer feedback analysis in terms of user experience and development of the Bank's offer qualified for the pilot (the so-called Proof of Concept ).
In 2021, Pekao Bank together with Huge Tech launched a call for startups and technology companies to join the Idea Global accelerator. The winning project was a grant from the ScaleUp programme of the Polish Agency for Enterprise Development to carry out - in cooperation with the Bank - a pilot of submitted projects that will accelerate the process of digital transformation of the Bank. The result of participation in the programme was the acceleration of four startups.
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One of the Bank's biggest achievements in the area of innovation in 2021 was the implementation of a process where ideas solutions are inspired by trends and based on thinking about how the future of banking will evolve. The Innovation Lab has established a team to study trends and signals of change. The research results were analysed during workshops with representatives of all business areas of the bank. The ultimate goal of the project is to build competitive advantage in areas that are not obvious in the financial sector, e.g. by creating new business models or customer segments, also in the ESG sector.
Cooperation with universities
The intensive development of Bank Pekao is possible, among others, thanks to its current and future employees, which is why the bank focuses, on the one hand, on improving the qualifications of its employees, and on the other, on recruiting staff that are just entering the labour market. This is achieved through cooperation with leading universities in the country, which also aims to exchange experiences between business practitioners and representatives of the world of science. Bank Pekao has been committed to the academic community for years, taking part, among others, in many initiatives organized by student councils and universities, and implementing about 500 different projects addressed to students every year.
The most important events in 2021 were:
- signing an agreement to link Bank Pekao and the University of Warsaw with a strategic agreement, which includes the strengthening of the existing cooperation, implementation of joint projects, exchange of knowledge and experience. In addition, the Bank made donations to the university to retrofit educational classrooms,
- a partnership in the Warsaw School of Economics competition for the best Master's thesis together with funding the main prize for the winner,
- conclusion of an agreement between Bank Pekao and the Rzeszów University of Technology, whereby the Bank will support the university's student government in the organization of cultural events.
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1.6 The third pillar of ESG strategy: Governance
In pursuit of the highest standards of corporate governance, the Bank is committed to an ethical approach to business, taking into account ESG issues in all key areas. It declares transparency in the field of sustainable reporting and promotion of development, diversity and equality of employees. The key objectives are to increase employee satisfaction and engagement - e.g. through development programs, succession plans and a performance-related attractive remuneration system. 3. The pillar of the ESG Strategy is also the care for gender equality and further reduction of the pay gap as well as maintaining a balanced level of the number of women and men in managerial positions. It is also the Bank's aspiration to strengthen its position in ESG rankings and indices.
ESG STRATEGY IMPLEMENTATION INDEX
3. PILLAR - GOVERNANCE
2020
2021
TARGET FOR 2024
Gender pay gap (*)
37.0%
37.9%
<35 (-5)
Maintaining a balanced level of the number of men and women in managerial positions
42% (men)
43% (men)
50%
(*) The indicated pay gap between the average remuneration of women and men reflects the Bank’s ratio of total remuneration between women and men. The overall employment structure has an impact on gender pay gap. In areas related to technology and data analytics (big data), in which the market competitiveness of nominal salaries is high, the majority of employees are men, as it reflects the availability of candidates and affects the average salaries of men in Bank in relation to the average salaries of women in the Bank, who dominate among employed in other areas. The Bank pays attention to ensuring equal treatment with regard to remuneration and non-wage benefits, regardless of age, race, culture, gender, disability, sexual orientation, religion, nationality, political beliefs or views, trade union membership, ethnic origin, religion, marital status, employment fixed-term or permanent, full- time or part-time, and ensures that the pay and any related terms and conditions of employment that affect the pay, including those relating to award and payment conditions, are gender neutral, i.e. not differentiated by gender. In its activities, Bank Pekao pays attention to and analyzes factors that may affect the differences, and takes steps to eliminate them.
1.6.1 Corporate governance and an ethical approach to business
In line with the ESG Strategy, the Bank strives to maintain the highest standards of corporate governance and develops an ethical approach to business. The purpose of corporate governance is to create tools that support effective management, efficient supervision, respect for shareholder rights and transparent communication between the company and the market.
High standards of corporate governance
In 2021, the Management Board of Bank Pekao S.A. passed a resolution on the adoption by the Bank of the Code of Best Practice for WSE Listed Companies 2021 (hereinafter: “Best Practices") issued by the Warsaw Stock Exchange The Best Practices have replaced the Best Practices of WSE Listed Companies 2016, which the Bank was applying until June 30, 2021. The Code of Best Practice is a set of corporate governance principles which have been binding on issuers of shares listed on the WSE Main Market since 2002 under the Warsaw Stock Exchange Rules. The Best Practices take into account the current legal status and the latest trends in corporate governance , as well as the demands of market participants interested in increasingly better corporate governance in listed companies. The Best Practices also include requirements related to the ESG area, such as sustainable development, diversity in the composition of company boards and equal remuneration.
The Best Practices are an important element in building the competitive position of companies and significantly contribute to strengthening the attractiveness of the Polish capital market. The Bank makes every effort to ensure that The Best Practices are applied in full. In accordance with the requirements of the WSE Rules, information on the current state of application of the corporate governance rules is published, including explanations of the reasons for not applying the rules in accordance with the comply or explain rule . The benefit resulting from the implementation of the Best Practices was the improvement of standards and transparency of the Bank's operations.
Pekao Group Code of Conduct
The Pekao Group operates in accordance with applicable law and market standards, and promotes ethical behavior in business, i.e. acting based on the adopted values and principles. The Code of Conduct of the Pekao Group (next: "Code of Conduct") includes the most important principles that should be followed by all employees of the Pekao Group, regardless of their position or basis of employment.
In the Code of Conduct, the Pekao Group expresses its support for sustainable economic and social development as well as activities for environmental protection and counteracting climate change. The Code of Conduct refers to the adopted ESG Strategy, which summarizes the approach and priorities in the field of the environment, society and corporate governance.
The Code of Conduct refers to the Bank's values: #Simple, #Together, #Bold and #Responsible .
The Code of Conduct contains the most important principles of conduct for employees of the Bank and Pekao Group or any other reference setting dating to Bank Pekao Group, in relation to an employment relationship or other control that applies to similar brands as regards the statutes of the Bank or other groups of the Group in their relations with stakeholders: clients, business partners, representatives of local communities, business environment and colleagues. They are unambiguous and
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apply to all areas of the Bank's and other Pekao Group entities' activities so as to ensure the highest standards of service provision.
Compliance with the Code of Conduct is the basic duty of every employee of the Bank and every employee of other entities of the Pekao Group . Newly hired employees are required to familiarize themselves with the contents of the Code of Conduct and confirm it in writing or via the information system before starting work and performing their duties.
The Code of Conduct obliges employees to act ethically, respect the values that shape the organizational culture of the Pekao Group entities, to honesty and integrity, professionalism. Its provisions indicate the need to:
- perform actions in accordance with the law, internal regulations, recommendations of supervisory and control bodies and generally accepted market standards,
- strive to improve the quality of work and standards in order to achieve the desired goals,
- build long-term relationships with clients based on mutual trust and transparent rules of cooperation, providing high quality services tailored to the specificity and needs of each client,
- acknowledge the risk culture, i.e. of the risk limits relating to the activities performed, as defined by the Bank or other Pekao Group entities.
People managing employees are expected to take all possible steps to ensure compliance of the activities of the employees of the structure they manage with the applicable provisions of law, recommendations of supervisory bodies, internal regulations and accepted standards of conduct.
The Code of Conduct shapes the attitude of an employee aware of the fact that his or her conduct, both in the course of performing his or her duties and in his or her free time, may affect the way the Pekao Group is perceived. Everyone should act in a way that will not expose the Pekao Group to reputational risk - while performing official duties, representing companies or referring to employment in them.
The Code of Conduct addresses the following:
• law enforcement
• ethical culture
• values
• ethical action
• proper rules of conduct for employees of the Pekao Group
• treating others with dignity and respect
• work culture
• respect for human rights
• ethical product offering
• consumer protection
• principles for dealing with customer complaints
• responsible marketing and promotional activities
• reputation protection
• communication standards
• financial reporting
• protection of legally protected information
• bank secrecy
• personal information
• company secret
• professional secrecy within the meaning of the Act on Trading in Financial Instruments (so-called brokerage secrecy)
• professional secrecy within the meaning of the Act on investment funds and management of alternative investment funds
• counteracting monopoly practices and fair competition
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• confidential information and market abuse
• conflict of interest management policy
• prevention of money laundering and terrorist financing
• counteracting corruption
• accepting or offering gifts and entertainment
• using the services of intermediaries and contractors
• asset protection
• occupational safety and health
• reporting violations ( whistleblowing )
• actions for sustainable development, ESG strategy.
The Code of Conduct includes examples of acceptable and unacceptable behaviour and actions (case studies) based on the Recommendations of the Banking Ethics Committee of the Polish Bank Association.
Counteracting corruption
Pekao Bank strongly fights against any signs of corruption or situations that could encourage it. The Bank does not tolerate corrupt activities carried out by Bank employees, or by other persons or entities having any relations with the Bank. Employees who refuse to participate in corrupt activities, and those who disclose that such activities have been performed or attempted by other persons/entities, are fully protected. In addition, the Bank does not accept the offering, promising, requesting, giving or accepting of any facilitation payments by Bank employees or other persons or entities having a relationship with the Bank. The bank does not operate in tax havens.
In the Bank, in accordance with the guidelines of the "Policy of counteracting corruption in Pekao S.A. Bank Group" (hereinafter: “Anti-Corruption Policy"), the "Anti-Corruption Programme" was adopted. It consists of the following components:
1. Policies and Procedures for:
• cooperation with intermediaries,
• gifts and entertainment,
• recruitment process,
• cooperation with contractors,
• donations and sponsorships (including donations to political parties),
• mergers and acquisitions,
• significant investments,
• the Bank's participation in the public procurement procedure,
2. Anti-corruption training and information programs for Bank employees,
3. The process of designing, supervising the implementation of anti-corruption control mechanisms, applying them independently and monitoring their compliance by other organizational units of the Bank, in accordance with the Bank's internal regulations,
4. Compliance risk assessment for the "Anti-corruption" process,
5. Ensuring safe and easily accessible communication channels by means of which the Bank's employees or other persons can confidentially report corruption attempts or actions that have the hallmarks of corruption,
6. Reporting to the Bank's Management Board - as part of the quarterly report on the activities of the Compliance Department on the status of implementation of the Anti-Corruption Programme,
7. Accurate and honest recording of all transactions in the Bank's books and documents and avoidance of undisclosed or unrecorded accounts, funds, assets or transactions.
Anti-Corruption Officer
An Anti-Corruption Officer has been appointed in Pekao Bank's Compliance Department to whom information on attempted corruption or activities with the hallmarks of corruption should be reported. The Anti-Corruption Officer is authorized to investigate suspected or actual corrupt activities, including requesting and reviewing documents from the person suspected of
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corrupt activities and reporting such cases in accordance with the prescribed procedure. Detailed tasks of the Anti-Corruption Officer, including developing, implementing and supervising an effective Anti-Corruption Programme, carrying out the legislative process on the Bank's internal regulations on anti-corruption are defined in the "Anti-Corruption Policy".
GRI 205-1 Operations assessed for risks related to corruption
In 2021, the corruption risk was analyzed both at the Bank and Pekao Group companies. Bank Pekao has defined the main areas of corruption risk related to its business activity, which are:
• use of intermediaries,
• gifts and entertainment,
• recruitment policy,
• use of contractors,
• donations and sponsorships, (including donations to political parties),
• merger and acquisition transactions,
• significant investments,
• participation of the Bank in public procurement procedures.
Corruption risk analysis in the main corruption risk areas, complements the Bank's procedures for assessing other risks (due diligence ) in these areas.
In terms of anti-corruption, the subsidiaries are guided by the Code of Conduct and the same principles as the Bank. The vast majority of companies have appropriate anti-corruption regulations tailored to the size and specific nature of their business. Some companies have specialized coordinating positions or teams responsible for anti-corruption activities. The following were identified as potential corruption risk areas: cooperation with intermediaries and contractors, entering and renewing contracts with contractors, the process of handing gifts and invitations, the recruitment process, donations and sponsorships, merger and acquisition transactions and participation in public procurement procedures. No significant corruption risks were identified in the six subsidiaries.
GRI 205-3 Confirmed incidents of corruption and actions taken
No corruption cases were reported in the Pekao Group in 2021.
Breach Notification Policy
GRI 102-17 Mechanisms for advice and concerns about ethics
The existing Whistleblowing Policy of Bank Pekao S.A . is an expression of commitment of Pekao Bank to promote a corporate culture that supports ethical behaviour in compliance with laws, procedures and ethical standards binding at the Bank. Its purpose is to provide secure channels for reporting observed practices at the Bank that are inconsistent with applicable laws, internal regulations, unfair or unethical, or reasonably suspected of occurring, and to ensure that reported concerns are received, investigated and appropriately managed, and that the person reporting them in good faith is protected from retaliation.
Early detection of a breach and the consequent remedial actions lead to a reduction or complete elimination of the Bank's reputation risk. A culture of openness and honesty, as opposed to a "culture of silence," leads to increased confidence in the Bank's transparent operations and sends a clear message of zero tolerance for behaviour that is not in compliance with the law or ethical standards.
The policy applies to:
- all persons who are in an employment relationship with the Bank or in any other legal relationship of a similar nature, including members of the Bank's statutory bodies - regardless of the matter reported,
- entities/persons performing activities for the Bank, regardless of the type of agreement between the Bank and a given entity/person - regarding the reporting of actual or potential violations of anti-money laundering and terrorist financing regulations.
In the event of reasonable suspicion that a breach has occurred, or if you have information about a possible breach, you should immediately contact the designated member of the Management Board, and in special cases (e.g. when the report concerns a member of the Management Board) with the Supervisory Board. Reports can be made verbally, electronically, or in writing through dedicated communication channels such as an anonymous telephone hotline, a dedicated email box, or traditional correspondence. All applications shall be treated with utmost care by the Bank and shall be subjected to the procedure prescribed in the Policy. Reporting of a breach may be made in an anonymous form or with the disclosure of the identity of the reporting person.
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If the identity of the reporting person is disclosed, this data is protected. Information regarding the submitted application is classified as "Confidential" and is stored with due security measures, in accordance with applicable law and the Bank's rules of classification and management of information.
NUMBER OF WHISTLEBLOWING CASES
2020
2021
Pekao Bank
9
8
Group companies
14
0
Managing conflicts of interest
The Policy of managing conflicts of interest in the Pekao Group out the rules for managing conflicts of interest and defines the circumstances causing or likely to cause a conflict of interest in the Bank's operations.
The Bank uses a conflict of interest management methodology that enables it to identify, assess the compliance risk associated with a conflict, select appropriate measures to ensure that conflicts of interest are prevented, their adverse effects minimized or extinguished, and monitored.
The Bank defines the circumstances in which conflicts of interest are most frequently identified, taking into account both the areas potentially exposed to the risk of a conflict of interest and the types of relationships concerning the Bank, its employees, Pekao Group entities and third parties, in particular the Bank's clients and counterparties.
The types of conflicts of interest identified and the measures to manage those conflicts that should be followed by Employees identifying conflicts of interest are included in the Conflicts of Interest Matrix.
Conflict of interest management measures used by the Bank in the event of a potential conflict of interest include measures based on:
- organizational structure and consisting of:
• establishing information barriers (the so-called Chinese walls),
• introducing the division of tasks taking into account the physical and competence separation of various organizational units of the Bank and the Group's entities in activities which may result in a conflict of interest, in particular the separation of the Bank's organizational units,
• introducing structural independence consisting in assigning specific competences to each organizational unit of the Bank, description of methods, types of activities and operational behaviours enabling independent decision-making and supervision over the Bank's employees,
• preventing the simultaneous or subsequent involvement of the Bank's employees in the provision of services, if such involvement may adversely affect the effectiveness of managing conflicts of interest,
- internal regulations introducing rules for remuneration of the Bank's employees, consisting in defining:
• remuneration principles so that they do not have a negative impact on the interests of the Stakeholder and eliminate direct relationships between the variable part of the remuneration and business goals,
• entering into own transactions, introducing procedures to prevent abuses related to carrying out own transactions on financial instruments, consisting in setting restrictions on the execution of transactions on the employee's or the Bank's own account,
• transferring the Bank's employees to other positions in the event of a business subordination between relatives.
- introducing and observing the principles of ethics and corporate culture by employees and conducting appropriate training.
Where, despite all possible measures to manage conflicts of interest, there is a risk of damage to the interests of the stakeholder to whom the conflict relates or there is a significant reputational risk, the conflict of interest shall be disclosed to the stakeholder. Each disclosure shall include a description of the conflict of interest giving rise to the disclosure, adapted to the stakeholder's knowledge and experience, enabling the stakeholder to make an informed decision regarding a specific service and information on the measures applied by the Bank to manage the conflict of interest in order to mitigate the risks associated with the conflict of interest. Disclosure of a conflict of interest does not relieve the Bank of its obligation to apply all possible measures to manage the conflict of interest.
1.6.2 An inclusive organization - growth, diversity and equality
The Pekao Group is the employer of first choice. It recruits the best candidates for work, and provides employees with working conditions conducive to increasing motivation, satisfaction and their commitment. An important goal of the Bank's personnel policy is to invest in the development of skills of all employees. The priority of development programs at the Bank is to identify,
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review, verify and develop current and future leaders. The Pekao Group and the Bank create opportunities for individual professional development for employees by investing in training and improving the competences and skills of employees. By creating a friendly work environment, the Bank conducts employee satisfaction and opinion surveys in order to constantly improve working conditions, communication and employee relations. The Pekao Group and the Bank provide employees with equal treatment, personal and professional development and respect for civil liberties.
Human Capital Management
The terms and conditions of employment, work and social benefits at Bank Pekao are regulated by internal legal acts, including in particular: Company Collective Labour Agreement , individual employment contracts / managerial contracts, Labour Regulations and Regulations for Company Social Benefits Fund . Most companies of the Bank's Group have introduced Labour Regulations, Remuneration Regulations and Regulations of Company Social Benefits Funds.
TOTAL NUMBER OF EMPLOYEES ACCORDING TO THE CALCULATION METHODOLOGY ADOPTED BY THE PEKAO GROUP*
PEKAO GROUP
PEKAO BANK
FTEs
14,324
12,412
People
14,842
12,766
(*) Full-time jobs / active people (excluding people on long-term leaves), employed on the basis of an employment contract, excluding management boards.
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GRI 102-8 Total number of employees by type of employment, type of employment contract and region, as well as gender
PEKAO GROUP
BANK
2021
WOMEN
MEN
TOTAL
WOMEN
MEN
TOTAL
(a) Number of employees by contract type
employed under employment contract (permanent + fixed term) - per FTE
10,092
4,275
14,368
8,847
3,564
12,410
employed on so-called civil law contracts and trainee contracts - per FTE (according to the conversion rate of the salary)
37
69
106
19
28
47
Total (FTEs according to GRI methodology)
10,129
4,345
14,474
8,866
3,592
12,458
employed on so-called civil law contracts and trainee contracts - per person
95
101
196
40
47
87
b) Number of all employees with employment contract (permanent + fixed term) by place of employment
employed in the Bank's Head Office or in the Head Office of a Group company - per FTE
4,630
3,151
7,781
3,465
2,507
5,972
employed outside the Bank's head office or outside the head office of the Group's companies, calculated as FTEs
5,463
1,124
6,587
5,381
1,057
6,438
Number of employees employed on so-called civil law contracts and traineeships, broken down by place of employment
employed in the Bank's Head Office or in the Headquarters of the Group's companies - per FTE (according to the salary scale)
35
69
105
19
28
47
employed outside the Bank's head office or outside the head office of the Group's companies, converted into full-time equivalents (according to the salary scale)
1.4
-
1.4
0.5
-
0.5
Total (FTEs according to GRI methodology)
37
69
106
19
28
47
c) The number of all employees by type of employment, including employees employed under so-called civil law contracts and trainee contracts
full-time employees - number of people
9,784
4,159
13,943
8,791
3,533
12,324
part-time employees - number of people
547
485
1,032
230
295
525
Total (persons)
10,331
4,644
14,975
9,021
3,828
12,849
(*) Persons employed under an employment contract, excluding the Bank's Management Board .
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GRI 401-1 New employee hires and employee turnover
2021
PEKAO GROUP
BANK PEKAO
Number of employees
Women
Men
Total
Women
Men
Total
at the company's headquarters
4,717
3,243
7 960
3,469
2,515
5,984
at the company's facilities
5,476
1,144
6 620
5,382
1,057
6,439
Total
10,193
4,387
14,580
8,851
3,572
12,423
a) Number of employees newly hired during the reporting period by age
<30
523
374
897
272
206
478
30-50
968
655
1,623
705
473
1,178
>50
96
64
160
59
37
96
Total
1,587
1,092
2,679
1,036
715
1,751
Percentage of employees newly hired during the reporting period by age
Women
Men
Total
Women
Men
Total
<30
33%
34%
33%
26%
29%
27%
30-50
61%
60%
61%
68%
66%
67%
>50
6%
6%
6%
6%
5%
5%
a) Number of employees newly hired during the reporting period by region
Women
Men
Total
Women
Men
Total
headquarters
1,152
907
2,059
644
575
1,219
company's facilities
436
186
622
392
140
532
Total
1,588
1,093
2,681
1,036
715
1,751
Percentage - company head office
73%
83%
77%
62%
80%
70%
Percentage - company establishments
27%
17%
23%
38%
20%
30%
b) Number of employees who left the organization in 2021 by age and gender*
Women
Men
Total
Women
Men
Total
<30
393
277
669
146
122
267
30-50
805
457
1,262
672
359
1,031
>50
777
164
937
751
153
904
Total
1,975
898
2,869
1,569
634
2,203
Percentage:
<30
20%
31%
23%
9%
19%
12%
30-50
41%
51%
44%
43%
57%
47%
>50
39%
18%
33%
48%
24%
41%
PEKAO GROUP
PEKAO BANK
SP3 - WSE LABOUR TURNOVER INDEX
WOMEN
MEN
TOTAL
WOMEN
MEN
TOTAL
Number of voluntary departures (including retirements) during the reporting period
739
490
1 229
406
282
688
Number of involuntary redundancies*
1 225
400
1 624
1 151
345
1 496
Total
1 964
890
2 854
1 557
627
2 184
Voluntary staff turnover rate
7%
11%
8%
5%
8%
6%
Forced staff turnover rate
12%
9%
11%
13%
10%
12%
(*) When the employer has decided to terminate the contract as a result of planned layoffs, budget cuts, liquidation of the position or failure to renew the contract
Labour regulations
Labour Regulations of Bank Polska Kasa Opieki Spółka Akcyjna (hereinafter referred to as: "Labour Regulations") establish the organization and order of the work process in Bank Pekao and define the related rights and obligations of the Bank and its employees. The Regulations apply to all employees of Bank Pekao S.A., regardless of the type of work and position held, and irrespective of the basis on which the employment relationship was established. Labour Regulations specifically:
• clarify the basic responsibilities of employees and the Bank,
• indicate the working time systems used in the Bank and the starting and ending times of work,
• establish time recording policies, time schedules for monthly periods during pay periods,
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• regulate the issue of occupational health and safety training, employee testing, informing employees of work environment hazards, and establish rules for the allocation of work and protective clothing.
Bank Pekao does not apply any additional, apart from the generally applicable, pension security systems. As an employer, the Bank fully complies with the obligations arising from the general pension system, not in arrears with contributions due from employees' remuneration and with employer's contributions. In the Bank, pursuant to the Company Collective Bargaining Agreement of Bank Pekao S.A. (hereinafter: "Company Collective Bargaining Agreement", Collective Bargaining Agreement) additional retirement and disability severance payments are applied to employees who become entitled to benefits from the general pension insurance.
The Bank applies notice periods under the Labour Code or under provisions arising from employment contracts, which are no less favourable than those under the Labour Law. Consultations at the Bank with respect to termination of employment contracts are carried out in accordance with the applicable Polish laws. In 2021, the Bank usually used one or three months' notice periods.
Pekao Group and the Bank, in accordance with the applicable laws, shall counteract discrimination in respect of establishing and terminating employment relationships, terms and conditions of employment, promotion and access to training to improve professional qualifications, in particular on the grounds of sex, age, disability, race, religion, nationality, political opinion, union membership, ethnic origin, creed, sexual orientation, and also on the grounds of employment for a definite or indefinite period of time, or full-time or part-time employment.
Company Collective Bargaining Agreement
The Company Collective Bargaining Agreement defines the principles of the Bank's HR and remuneration policy, including the principles and conditions of remunerating the Bank's employees and granting other work-related benefits, among others:
• principles of personnel policy,
• working hours,
• principles of the remuneration policy,
• principles of shaping basic salaries,
• bonus fund,
• incentive award fund,
• bonuses,
• retirement and disability benefits,
• severance pay related to termination of employment relationships for reasons not related to employees.
The currently binding Company Collective Bargaining Agreement (ZUZP) was concluded on December 15, 2005 between Bank Polska Kasa Opieki S.A. and the trade unions operating at the Bank.
In the light of the labour law, Bank Pekao is a single employer where the remuneration conditions and the granting of other work-related benefits are regulated by the Collective Bargaining Agreement (ZUZP) and for the employees excluded from the Collective Bargaining Agreement, for whom the remuneration conditions and the granting of other work-related benefits are regulated on the basis of individual managerial contracts (employment contracts).
GRI 102-41 Percentage of all employees covered by collective bargaining agreements
In 2021, at Bank Pekao, similar to the previous 12 months, the percentage of employees covered by the collective agreement was 77%. There are no collective agreements in Pekao Group companies.
Benefits from the Company Social Benefits Fund
GRI 401-2 Benefits provided to full-time employees that are not provided to temporary or part-time employees
The Bank's social activity is organized in accordance with generally applicable legal regulations, and ensures social security for employees. The Regulations of the Company Social Benefits Fund specify the principles and conditions for the use of services and benefits financed from the Fund, as well as rules for the allocation of resources of the Fund for various purposes and types of social activities.
The Company Social Benefits Fund is created at the Bank from an annual basic contribution, in accordance with the provisions of the Company Collective Bargaining Agreement - per one employee the contribution amounts to 50% of the average monthly salary in the national economy in the previous year or in the second half of the previous year if the average salary in that period was higher. In 2021, the Bank applied the provisions of the Act on Special Arrangements for Preventing, Counteracting and Combating COVID-19, Other Infectious Diseases and Crisis Situations Caused by Them (Article 15ge (3))
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in establishing the allowance for the Social Benefits Fund, according to which the allowance for the Social Benefits Fund was made at the rate of 37.5 per employee. The Bank does not charge a deduction for retirees; instead, it takes care of them.
Social fund at Bank Pekao is intended for:
• co-financing of vacation holidays for employees, children of employees up to 17 years of age and bank retirees and pensioners,
• individual financial and in-kind assistance,
• housing loans,
• cultural and educational as well as sports and recreational activities.
The Fund's expenditure plan is agreed annually with trade unions in the manner and on the terms set out in the Regulations. Financing from the Company Social Benefits Fund is provided to employees of the Bank employed solely under employment contracts. The housing loan benefit may be applied for by persons with at least two years of work experience at the Bank.
Most of the Pekao Group companies offer employees various social benefits, incl. co-financing of a sports card and holiday leave, Christmas vouchers, financial support in difficult life situations, a wide range of insurance. The companies, with few exceptions, provided the same access to benefits to all employees, regardless of FTE.
Remuneration policy
The remuneration strategy, developed in line with the Bank's business standards and values underlying its mission, is reflected in internal regulations and is a factor in building and protecting the Bank's reputation and creating sustainable value for all stakeholders. The key regulation in this area is the Remuneration Policy of Bank Polska Kasa Opieki Spółka Akcyjna . This policy reflects the mission and values in the Bank's approach to compensation systems, specifically:
• defines the pillars of compensation, structure management, corporate and organizational processes,
• confirms the requirements of compliance of the adopted remuneration systems with generally applicable law,
• sets out the principles for monitoring market practices and the approach to the issue of remuneration systems ensuring the sustainability of the Bank's operations.
The remuneration structure ensures a direct link between remuneration and performance by guaranteeing financial stability and levels of variable remuneration appropriate to the Bank's financial capacity, establishing performance-based remuneration caps and developing incentive schemes that provide for minimum levels of Bank performance below which no bonus is paid. Variable remuneration includes all remuneration components, the award of which depends on the result, and its payment is directly dependent on individual achievements and the Bank's risk-adjusted performance.
Sustainable performance that contributes to the creation of long-term stakeholder value refers to the actual results achieved and how they are achieved, with a view to measuring performance consistent with shareholder interests and profitability principles based on a safe level of risk, sustainable risk management practices and multidimensional analysis of performance and quality of operations.
To ensure competitiveness of remuneration structures, as well as their transparency and an effective and fair remuneration system, the Bank monitors market trends in remuneration forms and the level of remuneration offered in the market. Decisions regarding the remuneration system in the Bank are made taking into account available data on market trends in the area of fixed remuneration and incentive systems. Such data is obtained from consulting firms offering financial sector analysis. At the level of the Bank's organizational units, comparative analysis is additionally performed to ensure consistency of remuneration in particular areas. In 2021, attention was paid to the analysis of wage coherence between women and men in identical positions, in order to make efforts to compensate for the wage gap existing at the Bank.
As part of the remuneration system, employees are offered non-wage benefits that ensure fair treatment and the consistency of the remuneration system.
Each year, a report is prepared on the operation of the Remuneration Policy in the Bank, which is then presented at the Bank's General Meeting to all shareholders in order to assess whether the operation of the Remuneration Policy in force in the Bank is conducive to the development and security of the Bank's operations.
The companies of the Bank's Pekao Group have remuneration policies adapted to the size and specific nature of their business and remuneration principles.
Motivational systems
There are three main motivational systems at the Bank: The variable remuneration system for the Management Staff, the Management by Objectives (MBO) system and the system based on the provisions of the Company's Collective Bargaining Agreement, which is based on a quarterly bonus and an incentive bonus.
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The top management is covered by a variable remuneration system dedicated to people with a significant impact on the Bank's risk profile. The purpose of the system is to support the implementation of the Bank's strategy and to limit excessive risk and conflicts of interest. Under the scheme, a participant may receive variable remuneration based on a bonus pool concept. The system provides comprehensive performance measurement at the individual level, organizational unit level and the results of the entire Bank, including the participant's compliance with the law and standards adopted by the Bank and risk assessment. In order to strengthen the care for building the Bank's sustainable value in the long term, under the system, at least 50% of the bonus is realized in phantom shares based on the value of the Bank's shares, and at least 40% of the bonus is deferred and paid after the end of the assessment period for which it is due.
The system of variable remuneration components is developed by the Human Resources Division with the involvement and participation of other organizational units of the Bank. This is to ensure compliance with regulations, the Bank's Articles of Association and ethical or other standards of conduct applicable to the Bank, such that legal, compliance and reputation risks mostly related to customer relationships are properly controlled and managed.
The variable remuneration systems implemented in the Bank's subsidiaries have analogous patterns of allocating remuneration to cash and financial instruments, taking into account the general provisions and guidelines of market regulators regarding the sectors in which the companies operate.
The MBO system covers employees employed under managerial contracts and applies in particular to sales positions and managerial positions having a significant impact on the achievement of the Bank's planned commercial objectives. Under the MBO system, employees are given individual goals to achieve, which are based on the financial plan adopted for the year and the Bank's key objectives. The amount of the annual bonus depends on the level of performance of these tasks as well as the result achieved by the Bank. Sales employees, cyclically in each quarter, can receive an advance payment towards the annual bonus in the implementation of the set goals.
The system based on the provisions of the Company Collective Bargaining Agreement (ZUZP) applies to all employees who are covered by it. Pursuant to the provisions of the Collective Bargaining Agreement, the basis of the system is a quarterly bonus, which is discretionary in nature and its amount depends on the assessment of the employee's performance and the level of involvement and results achieved by the Bank in a given year, as well as an incentive award, which is granted for special achievements in professional work. In 2021, there were guidelines for variable remuneration, i.e., quarterly bonuses for sales network employees covered by the Collective Bargaining Agreement, which take into account both performance and quality targets.
GRI 405-2: Ratio of basic salary and remuneration of women to men broken down by categories of employees
2021
PEKAO GROUP
PEKAO BANK
Ratio of the average (*) basic salary of women to the average basic salary of men in the Bank's head office or the company's head office
Members of the Management Board
0.81
0.98
Managers
0.62
0.74
Others
0.73
0.73
Ratio of the average (*) total salary of women to the average total salary of men at the Bank's headquarters or corporate headquarters
Members of the Management Board
0.89
1.31
Managers
0.63
0.74
Others
0.73
0.73
Ratio of average (*) women's basic salary to average men's basic salary at Bank or company outlets (**)
Members of the Management Board
n.a.
n.a.
Managers
0.87
0.86
Others
0.86
0.82
Ratio of average (*) total salary of women to average total salary of men in Bank or company outlets (**)
Members of the Management Board
n.a.
n.a.
Managers
0.90
0.88
Others
0.85
0.81
(* ) Average weighted with the number of employees of a given gender in a given category in individual companies.
(**) It applies to companies from the Pekao Group that have both their headquarters and branches.
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In fulfilment of the obligation referred to in Article 9ca (5)(1) of the Banking Law Act of August 29, 1997, the Bank provides the PFSA with information for 2021 on the gender pay gap, using the ratio of the average remuneration of women to the average remuneration of men based on the GRI 405-2 reporting standard on the basis of the headcount as at December 31, 2021, based on the base salary as at December 31, 2021, and taking into account those classified as active and employed more than 0.1 FTE as at December 31, 2021:
a) the gender pay gap for the entire Bank, understood as the ratio of the average remuneration of women to the average remuneration of men working at the Bank, is 37.9% for the total remuneration;
b) the gender pay gap, calculated as a weighted average for employee subgroups, taking into account job levels, business lines and work at the Bank's headquarters or in the network is 8.4% for total remuneration;
c) the share of women in employment is 70.8%.
Relations with trade unions and respect for the right to freedom of association
The Bank respects employees' freedom of association and maintains a dialogue with trade union organizations based on respect for the legitimate interests of the parties. The Bank documents social dialogue and provides trade union organizations with dedicated intranet pages for communication with employees.
In 2021, the Bank's cooperation with trade union organizations with regard to consultations, negotiations and agreements was carried out in accordance with the procedure and principles laid down in the Labour Law, respecting the interests of the parties and the principles of social dialogue - 32 meetings were held between the Bank and trade union organizations. Meetings were held in-person as well as, due to the COVID-19 pandemic announcement, via teleconference. The topics of the meetings were mainly negotiations and agreements resulting from the intra-company labour law and generally binding regulations, changes in the intra-company labour law, agreements on the use of the company's social benefits fund and other topics related to collective employee rights.
Additionally, in 2021, the Bank consulted with trade union organizations on the intention to carry out collective redundancies pursuant to Art. 2 of the Act of March 13, 2003 on special rules for terminating employment relationships with employees for reasons not related to employees. On March 23, 2021, the Bank entered into an agreement with seven trade unions operating at the Bank, setting out the principles of group layoffs. One of the Trade Unions did not sign up to this agreement. The parties to the agreement agreed, among other things, on the criteria for selecting employees whose employment contracts were terminated and whose terms of employment were changed, the terms of severance pay and additional benefits, and the scope of the assistance program for the dismissed employees. It was also agreed that the group layoffs would cover, with respect to termination of employment contracts, a maximum of 1,110 employees and with respect to changes in employment conditions, a maximum of 1,250 employees of the Bank until June 30, 2021.
GRI 407-1 Operations and suppliers in which the right to freedom of association and collective bargaining may be at risk
In 2021, there were three collective labour disputes initiated in 2016, 2019 and 2021 by one of the trade unions operating with the Bank, and a collective dispute initiated in 2021 by the other trade unions operating at the Bank.
Trade union organizations may publish their newsletters and information on important employee matters, including dialogue with the employer, on the Bank's intranet sites.
In its mutual relations with the Trade Unions, the Bank was guided by the principle of good faith in developing the best collective labour law solutions for both employees and the Bank. The right to freedom of association and collective bargaining is not violated or threatened to be violated at any Pekao Group facility or location.
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Employee Council
On February 22, 2021, pursuant to the Act of April 7, 2006 on informing employees and conducting consultations with them, the Bank's employees in the second round of general elections elected Members of the Employee Council for the term of office of 2021-2025.
A total of 10 meetings/teleconferences were held with the Employee Council in 2021, which included consultation on the intention to make group layoffs in 2021, organizational changes in the Bank's structure, and amendments to the Regulations. The Employee Council has an available intranet page where it publishes its messages addressed to the Bank's employees.
DATA ON TRADE UNIONS IN PEKAO BANK
2020
2021
Number of trade union organizations operating in Pekao Bank
8
9
Number of members of the Employee Council of Bank Pekao
0
7
Unionization in Bank Pekao
54%
53%
Number of days lost due to strike
0
0
Policy Charter Ombudsperson
GRI 102-17 Internal and external mechanisms for obtaining advice on ethical and legal behaviour and organizational integrity issues
The effect of caring for the formation of high quality principles of social coexistence in the workplace, as referred to in Article 94 point. 10 of the Labor Code, there is a function of the Ombudsperson for the Charter of Principles, which operates on the basis of Principles and mode of operation of the Principles Charter Ombudsperson when considering reports of the Bank's employees for a breach of the Principle Charter value .
Employees may report to the Ombudsperson if they observe or experience personal behaviour inconsistent with the principles of social coexistence. The Ombudsperson is a shop steward for employees because he or she is bound by confidentiality and discretion. The Ombudsperson's job is to help solve problems resulting from violations of values. Upon receipt of a notification, the Ombudsperson takes appropriate action to reconcile the conflicting parties and repair the relationship, determine the further course of action and its implications for the future.
Counteracting harassment and discrimination
GRI 406-1 Total number of incidents of discrimination and corrective actions taken
The Bank has in force an Anti-harassment policy of Bank Polska Kasa Opieki Spółka Akcyjna (hereinafter: "Anti-harassment policy"). This regulation sets out the rules for counteracting actions and behaviours indicating harassment. In addition, the " Anti-Harassment Policy " is designed to support the implementation of labour laws regarding the duty to prevent harassment. The Bank shall in no way tolerate any actions or behaviour of harassment nature towards employees (including manifestations of sexual harassment), and perpetrators thereof shall be immediately subjected to appropriate consequences. According to the provisions of the "Anti-Harassment Policy", each report is reviewed by the Anti-Harassment Committee, a collegial body appointed by the employer to investigate complaints of harassment. Some of the Bank's subsidiaries have developed internal procedures regulating the issues of counteracting harassment, including Pekao Bank Hipoteczny S.A. , Pekao Investment Banking S.A., Pekao TFI S.A. and Pekao Financial Services Sp. z o.o. In 2021, no cases of discrimination were recorded at the Bank and the Pekao Group's companies.
1.6.3 Health and safety at work
GRI 403-2 Hazard identification, risk assessment and incident investigation
Pekao Group and the Bank, as institutions aware of their responsibility for the safety and health protection of their employees, are obliged, first and foremost, to:
• prevention of accidents at work, occupational diseases and near misses, using, among other things, technical and organizational progress,
• meeting the requirements of legal regulations and other requirements related to the Bank,
• striving to constantly improve the health and safety at work,
• participation in documenting and updating the occupational risk assessment,
• improving activities in the field of occupational health and safety in order to avoid losses caused by accidents at work,
• raising qualifications and increasing the involvement of employees in activities for health and safety at work,
• providing the necessary technical and financial resources as well as competent personnel to perform the agreed tasks in the field of safety and health protection of employees.
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At the Bank, the basic regulations in the field of employee safety are introduced on December 14, 2020 by the Order of the President of the Management Board Occupational health and safety instruction and Fire protection instruction .
The most important duty of the occupational health and safety service is to control the conditions under which work is performed, in particular with regard to: the organization of work processes and their impact on working conditions and the technical condition of work premises, including the submission of proposals regarding occupational health and safety requirements, as well as participation in the commissioning of reconstructed facilities.
By examining various aspects of work, the occupational health and safety service has a significant role in making risk assessments. The process is designed to determine what hazards in the work environment may cause injury or impairment to a worker and whether those hazards can be eliminated, and if not, what actions should be taken to reduce the occupational risks associated with those hazards.
According to the demand, the OSH service organizes and ensures an appropriate level of training in occupational safety and health for newly hired employees, cooperates with relevant organizational units in the field of periodic training, as well as with persons performing the tasks of a social labour inspector.
In order to facilitate the performance of these tasks, the Occupational Health and Safety Commission was established in April 2001, whose rights and obligations are defined in a separate regulation Establishment of the Occupational Health and Safety Commission at Bank Polska Kasa Opieki Spółka Akcyjna. The last update of this regulation was implemented in October 2020 by the Order of the President of the Management Board.
The task of the Occupational Health and Safety Commission is to review working conditions, periodically assess the state of occupational safety and health, give opinions on measures taken by the employer to prevent accidents at work and occupational diseases, formulate proposals to improve working conditions and cooperate with the employer in carrying out his obligations in the area of occupational safety and health.
GRI 403-9 Work-related injuries (reported partially)
In 2021, the number of injuries in the Pekao Group was 30, 28 of which involved Pekao Bank employees. No fatal or serious injuries were reported. In terms of the characteristics of the injuries sustained, the main ones to note are: sprains, contusions, and fractures of extremities, spinal injuries, and superficial injuries. In each of these cases, the circumstances and causes of work accidents were analysed, working conditions were inspected, and post-accident recommendations were made.
Medical care
Bank Pekao offers medical care to all employees of the Bank, provided from April 2020 by PZU Zdrowie. The Bank's employees can take advantage of the basic medical benefits package with the possibility of extending them. The wide range of medical services negotiated by Bank Pekao S.A. can also be used by family members indicated by the employee, i.e. children, children over 26 years of age, spouses, partners, parents, in-laws and seniors. The offer of medical care also covers pensioners of Bank Pekao S.A. as part of a specially negotiated package.
The Bank, in cooperation with a company providing medical services, organizes additional initiatives that are part of activities to improve the health of its employees. Among the most important measures are flu vaccinations or additional preventive screenings.
The average monthly number of packages paid by the Bank for employees is 15,873 and the average monthly number of packages paid by employees for themselves and reported family members is 10,707. Pekao Group companies also provide medical care for their employees.
In 2021, the Bank continued its COVID-19 prevention by implementing a number of initiatives to reduce the risk of infection and spread of COVID-19 in bank branches, including through the purchase of personal protective equipment (disposable masks, disposable gloves, disinfectants), purchase of dispenser stands, remote work, equipping customer service stations with plexiglass, implementing internal procedures based on the recommendations of the Chief Sanitary Inspectorate, the Ministry of Health, and also relevant agencies of the World Health Organization. Similar activities took place in Pekao Group companies.
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1.6.4 Health-promoting activities
GRI 403-6 Employee health promotion
The "Take Health by the Horns" programme motivating employees to be physically active, follow healthy diet and fight stress was continued for another year in a row at Bank Pekao. The willingness to exercise outdoors and act for the benefit of others was combined in one action "MiLOVE runs with Żubr - helping by running", during which "virtual" miles collected by employees during walks or runs were used for a noble cause. Thanks to the involvement of nearly 400 people and the over 20,000 miles they covered, Pekao Bank provided support to three young scholarship holders of the Run into the Future Programme. The issue of healthy eating was devoted to 14 webinars with a dietitian, seasonal menu suggestions, published tips, recipes and culinary curiosities. The "Stress Reduction Program in 12 Steps", based on the exercise of mindfulness, focused on strengthening the mental resilience of employees and techniques for counteracting stress. The above activities were complemented by a broad preventive campaign conducted with PZU Health physicians. Its aim was both to draw attention to the special protection of health during COVID-19, and to emphasize the need for regular examinations and not postponing them due to the pandemic. As every year, training in first aid was also carried out - including the procedure in the event of suspected coronavirus infection in their programme.
1.6.5 Values-based organizational culture
Caring for employee development with respect for diversity and creating an attractive workplace will remain the cornerstones of Pekao Group's operations. In April 2021, in parallel with the new business strategy, the Bank adopted the values developed with employees: #Simple, #Together, #Bold and #Responsible . They are the pillars of the new organizational culture, setting the course of action and style of work. In parallel with the identification of the four new values, their definitions and the behaviours assigned to them, 10 principles for managers were also developed - the Value Principles of Team Management. They are guideposts for executives on how to work with their teams based on new values.
Nearly 5 thousand employees of the Bank and its subsidiaries participated in creating the concept of the new organizational culture. Two questionnaire surveys were conducted, 20 individual interviews with members of the management board and managers, and 40 workshops with the participation of representatives of all divisions in the bank from various organizational levels. Particularly important in this process were the communication and promotion of a work style based on the new values and identification with them so that they became the prevailing norm.
The implementation of new values into the practice of everyday life was facilitated by numerous internal initiatives. As part of the "Collaborating means thanking" campaign, employees sent electronic cards appreciating the actions of their colleagues. Two editions of the "Stars of Cooperation" contest were held to promote attitudes open to cooperation with others. As a result, a total of 2.3 thousand employees (including 1 thousand managers) were appreciated, voted for by almost 3 thousand people. In turn, the values of #Simple and #Together were the subject of a workshop on simplifying business processes. Another edition of the "in Polish, simply" gamification was also created, in which participants solved tasks related to the Bank's values and the ESG Strategy. In addition, four new values were included in the onboarding process so that they could accompany new employees from the very first day of work at the Bank.
1.6.6 Training and professional development
Pekao Group and the Bank provide educational opportunities and access to various forms of training for its employees. The Bank's educational programs include local training and general development webinars, international training and programmes, mentoring, internal and external coaching, and certification training (CFA/ACCA/CIA). The basic internal regulation defining this area is the Training and Professional Qualification Improvement Policy for Employees of Bank Polska Kasa Opieki Spółka Akcyjna , which also defines procedures related to the processes of employees' participation in various forms of professional qualification improvement, such as
• classroom group training procedure,
• national individual training procedure,
• procedure for individual language courses,
• training needs survey,
• postgraduate studies and MBAs,
• e-learning group training procedure.
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GRI 404-1 Average number of hours of training per year per employee
PEKAO GROUP
BANK
2021
WOMEN
MEN
TOTAL
WOMEN
MEN
TOTAL
(a) i Number of training hours per employee
Total number of training hours by gender (in thousand)
396
136
533
357
119
476
Average number of hours of training per employee by gender
39
31
37
40
33
38
2021
PEKAO GROUP
PEKAO BANK
(a) ii Total number of training hours by employee category
Members of the Management Board
1.2 thousand
636
Managers
96 thousand
93 thousand
Others
435 thousand
382 thousand
Total
533 thousand
476 thousand
(a) ii Average number of training hours per employee by job level
Members of the Management Board
31
71
Managers
57
65
Others
33
34
Total
36
37
1.6.7 Development of competencies and skills
In 2021, the Bank's top training priorities included:
• expanding the specialist knowledge of the Bank's employees,
• leadership development - training for managerial staff,
• cybersecurity training,
Thus, the Bank continued to implement training projects related to the implementation of the adopted business strategies. Training targeted to high-potential employees and induction training for new employees took place. In 2021, the Bank implemented more than 237,000 hours of synchronous training (classroom and virtual classroom) attended by more than 11,000 employees, demonstrating effective implementation of required regulations and concern for customer welfare. E- learning courses and training were delivered at a similar level of over 304,000 hours.
In 2021, several important projects took place at Bank Pekao S.A. as part of general development activities. One of them was "Discovery Week - Learning Week" - an initiative offering a wide range of opportunities to improve and acquire knowledge depending on individual interests, competencies or duties. Its purpose was to educate on hard and soft competencies and increase motivation for self-development. More than 2,000 employees have benefited from the programme. All trainings were designed in an interactive, workshop format that translated into the development of specific skills. In addition to training and workshops, employees could attend one of five lectures with well-known inspirational speakers. All speeches were profiled in terms of banking and professional challenges of the industry, such as self-development, the role of optimism in business or innovation in sales.
Also in 2021, the Robotics Academy was established, a program that develops digital competencies and teaches the basics of automation, including building robots for own needs. The original training programme was developed by practitioners employed by the Bank in cooperation with a partner - the largest provider of automation solutions in the world.
Another offering was the Agile Forge, a three-year training programme that gives every employee a chance to learn essential agile competencies and process optimization through two tracks: Agile and Lean. A comprehensive programme of training, exchange of practical knowledge and coaching is addressed both to people working in product teams and all employees, potential stakeholders of agile methods.
The first edition of the innovative development program TalentsUP, based on practical experience, was also successfully implemented in the Bank. It was addressed to all employees of Bank Pekao, regardless of age, position or work experience. TalentsUP is based on the organization's core and promoted values of #Simple #Together, #Bold, #Responsible . Its main element is a year-long project path that gives the opportunity to participate in a team implementing one of eight strategic business projects. During this activity, participants learned about trends, research tools, techniques for prototyping and testing. The programme placed great emphasis on ensuring that the solutions developed were fully or at least partially implemented in
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the Bank. The project path is complemented by an 18-month development path based on close cooperation with a coach and a jointly agreed individual development goal and plan.
Leadership development - training for managers
The Leadership Academy and Retail Manager Academy, training and development programmes designed for the bank's management staff, were launched in 2021. The programme was carried out with the support of an external training company and was aimed at preparing the managerial staff both to achieve the business objectives set out in the new strategy of Bank Pekao S.A. and to implement the Bank's values and introduce key changes. The academy was also designed to help managers cope with the day-to-day operational work in a VUCA environment 41 . The programmes are designed so that managers gain knowledge in a systematic way and translate it into specific skills on an ongoing basis.
Cyber Security Training
In 2021, the Bank continued its extensive cyber security training project in collaboration with prominent market experts. The theme of the first cycle - "Safe on the Web" - was the conscious and safe use of the Internet, both at work and in private time. The program discussed specific real-world examples and methods to counter a variety of cybersecurity incidents. In addition, the Bank's 2021 "CyberWell" programme was built around an interactive conference format that allows people to choose a path of interest and participate in inspirational lectures and online workshops. The primary goal of the "CyberWell" was to improve digital competencies among IT and security professionals.
Development programmes and initiatives
The priority of development programmes at the Bank is to identify, review, verify and develop current and future leaders. Employees can take advantage of development initiatives focused on supporting professional development, skills, knowledge and competencies, as well as participate in initiatives to strengthen engagement. In 2021, programmes and initiatives were implemented to provide support in developing interpersonal and managerial skills. An example of activities in this area are Succession Plans, which are fundamental to ensure continuity of employment in strategic positions, implementation of long- term projects and minimization of operational risk. In addition, an annual appraisal system takes place - which includes assessing the competencies, potential, planning individual development and business goals of the Bank's employees. Assessment Centre/Development Centre sessions, on the other hand, are aimed at testing professional potential, and their results are used in decision-making processes regarding employment, promotion and development of employees.
1.6.8 Recruitment, Internship and Apprenticeship Programmes
Bank Pekao, as a reliable and responsible employer, comprehensively approaches issues related to the recruitment of the Bank's employees, both internal and external, and provides support in the systematic development of employees.
Pekao Group's recruitment policy is aimed at attracting the best external candidates while promoting internal talent. Thanks to this, Pekao Group employs people with diverse experience and professional competencies. The Bank conducts activities encouraging employees to participate in internal recruitment (throughout the Pekao Group) as part of their professional development in other business areas.
The primary regulation in this regard is the External and Internal Recruitment Procedure. The regulation allows to guarantee an optimal and uniform process of selection of people for the tasks performed in line with the Bank's HR policy and business plans and strategy. The procedure regulates the recruitment process for positions covered by the Company's Collective Bargaining Agreement and the MBO System for positions from and including the N-3 level. Recruitment to positions above the N-3 level takes place according to separate procedures, including in particular the Selection Policy for Candidates for the Position of Member of the Management Board and Key Function and the Assessment of the Suitability of Proposed and Appointed Members of the Management Board, Supervisory Board and Persons Performing Key Functions in Bank Polska Kasa Opieki Spółka Akcyjna.
The recruitment process is each time focused on identifying and verifying the best candidate who meets the job requirements as well as those specified in the recruitment requisition and who has the right attitude as well as competencies that are key from the organization's point of view in accordance with the Competency Model in force at the Bank.
One of the annual goals of the Bank is to acquire a certain number of graduates from the best universities both in Poland and abroad and to offer them professional development within the organization: in the branch network and in units of the Bank's Head Office. With this in mind, in 2021, the Bank offered a year-round internship programme to college students and graduates. Internships last from 2 to 3 months and give the opportunity to gain experience in selected areas of banking, in all organizational units of the Bank. An additional opportunity to gain experience was the Summer Internship Programme "Academy of the Bison"
41 VUCA is an acronym derived from the words volatility , uncertainty , complexity , and ambiguity . On the business front, it defines an environment that is like never before in history: volatile, uncertain, complex and ambiguous.
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carried out for two months. In 2021, 54 people participated in the summer internship programme. Students had the opportunity to learn about the specifics of working in different business areas, such as corporate and SME banking, retail banking, risk management, IT, operations and services, finance. Each participant in the internship program was assigned a mentor who oversaw the collaboration and kept track of the assigned individual's progress. The interns had clear tasks in the teams they joined and a real influence on the course of ongoing projects. The cooperation with the bank was on the basis of a fixed-term employment contract.
The dimension of interaction with job candidates, already verified by Bank Pekao, was recruitment in the virtual world as part of Jobicon Festival. It is a place to meet candidates in a safe virtual reality and a customized development environment for young people, created at the intersection of knowledge, technology and entertainment. Jobicon Online provided a space for engaging meetings with thousands of candidates. The events held included:
• interactive and in-person live online meetings with candidates - meetings in private rooms that participants had previously signed up for,
• group sessions,
• webinars for a wider audience.
In 2021, the Bank participated in this event twice. Thanks to the Jobicon practice, the most desired candidates for work from all over Poland were efficiently and quickly acquired, and deep and long-term relationships with the candidates were established and built. The internship provided an opportunity to share knowledge and experience with young people entering the workforce.
Employer branding activities
Bank Pekao takes care to shape the image of a stable and attractive employer, among other things, through cooperation with universities. Major initiatives in 2021 include:
• Substantive partnership in the evaluation of the works the role of the main founder of the financial award in the prestigious "Dean's Award of the Master's Study at the Warsaw School of Economics". The purpose of the award is to honour the best student of the Warsaw School of Economics, whose excellent academic results and original diploma thesis met the competition criteria.
• Participation in the "SGH Career Day" job fair at the Warsaw School of Economics.
• Support for the initiative of the National Conference of the Students' Parliament of the Republic of Poland "Young people on the labour market", as part of which the Bank organised a webinar entitled "A career in the COVID era - is it possible and how to start it", as well as provided a series of individual recruitment interviews,
• Meeting during the Warsaw Information Technology Days - an event addressed to people connected with broadly understood computer science and data science, regardless of their level of advancement.
• Participation in the UKSW Employer Days, during which Bank Pekao S.A. offered individual consultations with our Recruitment Team, concerning the choice and development of one's career path, recruitment conditions, the nature of work, required competencies, chances for promotion.
• Career Week of Military University of Technology - an event during which the Bank's representatives introduced recruitment plans and familiarized students of the Military University of Technology with the expectations and specificity of work at Pekao S.A.
1.6.9 Diversity and equality
In line with the ESG Strategy , the Bank's priority is to integrate ESG factors into the incentive system of the Bank's key management personnel and to strengthen gender equality. The Bank intends to achieve this through the integration of ESG factors into the incentive system of the Bank's Management Board and key management personnel, an annual performance appraisal based on the achievement of targets, an annual salary review, and a succession plan and development programs to support the professional development of women. The Bank declares the development of networking activities and mentoring programmes for women, while continuing to reduce the gender pay gap. Pekao's priority will be to maintain a balanced number of women and men in managerial positions. Providing flexible work arrangements and supporting work- life balance will remain important.
Pekao Bank has a gender equality policy in place to help effectively manage careers, achieve success and evaluate work based on individual performance, regardless of gender. Guidelines of this policy are, for example, striving to ensure the representation of both genders in recruitment, eliminating discriminatory criteria in the preparation of job offers or including gender equality issues in training programmes.
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Pekao has also had an anti-harassment policy in place for over ten years. Supporting the equality policy is the Charter of Principles, an internal set of corporate values that include : respect, trust equality, freedom (understood as freedom of action), reciprocity and transparency.
GRI 405-1 Composition of supervisory bodies and staff by gender, age and other indicators of diversity
2021
PEKAO GROUP
Women
Percentage
Men
Percentage
Total
Percentage
(a) i. Number of Supervisory Board Members (in persons)
22
39
61
% of Supervisory Board members
36%
64%
100%
(a) ii. Composition of the Supervisory Board - by age groups (FTEs)
<30
0
0%
0
0%
0
0%
30-50
11
82%
19
83%
30
83%
>50
2
18%
4
17%
6
17%
Total
14
100%
23
100%
37
100%
(b) i. Number of employees by employment structure (per person):
Board members
7
18%
33
83%
40
0%
Managers
933
56%
746
44%
1,679
11%
Others
9,392
71%
3,844
29%
13,236
89%
Total
10,332
69%
4,623
31%
14,955
100%
(b) ii. Total number of employees by age group (FTE) - Board members:
<30
0
0%
0
0%
0
0%
30-50
3
43%
24
83%
27
75%
>50
4
57%
5
17%
9
25%
Total
7
100%
29
100%
36
100%
(b) ii. Total number of employees by age group (in FTEs) - managers:
<30
6
1%
7
1%
13
1%
30-50
653
71%
561
79%
1,214
75%
>50
256
28%
139
20%
395
24%
Total
915
100%
707
100%
1,622
100%
(b) ii. Total number of employees by age group (FTE) - Others:
<30
658
7%
427
12%
1,085
9%
30-50
5,140
57%
2,183
63%
7,323
59%
>50
3,192
36%
868
25%
4,060
33%
Total
8,990
100%
3,478
100%
12,468
100%
Total number of all employees by age group (FTE, excluding management)
<30
664.5
7%
433.9
10%
1,098.4
8%
30-50
5,793.3
58%
2,743.9
66%
8,537.2
61%
>50
3,448.1
35%
1,007.0
24%
4,455.2
32%
Total
9,905.8
100%
4,184.9
100%
14,090.7
100%
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2021
PEKAO BANK
Women
Percentage
Men
Percentage
Total
Percentage
(a) i. Number of Supervisory Board Members (in persons)
5
4
9
% of Supervisory Board members
56%
44%
100%
(a) ii. Composition of the Supervisory Board - by age groups (FTEs)
<30
0
0%
0
0%
0
0%
30-50
1
60%
0
25%
1
44%
>50
0
40%
1
75%
1
56%
Total
1
100%
1
100%
2
100%
(b) i. Number of employees by employment structure (per person):
Board members
1
11%
8
89%
9
0%
Managers
815
57%
615
43%
1,430
11%
Others
8,170
72%
3,166
28%
11,336
89%
Total
8,986
70%
3,789
30%
12,775
100%
(b) ii. Total number of employees by age group (FTE) - Board members:
<30
0
0%
0
0%
0
0%
30-50
1
100%
7
88%
8
89%
>50
0
0%
1
13%
1
11%
Total
1
100%
8
100%
9
100%
(b) ii. Total number of employees by age group (in FTEs) - managers:
<30
4
0%
4
1%
8
1%
30-50
572
70%
486
79%
1,058
74%
>50
238
29%
125
20%
363
25%
Total
814
100%
614
100%
1,428
100%
(b) ii. Total number of employees by age group (FTE) - Others:
<30
380
5%
255
9%
634
6%
30-50
4,570
57%
1,884
64%
6,454
59%
>50
3,085
38%
811
27%
3,896
35%
Total
8,034.4
100%
2,949.5
100%
10,984
100%
Total number of all employees by age group (FTE, excluding management)
<30
383.7
4%
258.7
7%
642.4
5%
30-50
5,141.9
58%
2,369.5
66%
7,511.4
61%
>50
3,323.1
38%
935.4
26%
4,258.5
34%
Total
8,848.7
100%
3,563.6
100%
12,412.2
100%
(a) iii. Distribution of employees according to other diversity indicators
citizenship other than Polish
4
5
9
certified disability
183
44
227
Total
187
49
236
Gender equality and diversity policy
The Bank has a gender equality and diversity policy with regard to members of the Supervisory Board, members of the Management Board and persons holding Key Functions at Bank Polska Kasa Opieki Spółka Akcyjna (Gender equality and diversity policy), which defines the strategy for managing diversity of the Bank's employees, including diversity with regard to the appointment of members of the Supervisory Board, members of the Management Board and persons performing Key Functions at the Bank. The Gender Equality and Diversity Policy defines guidelines to ensure that Bank employees are able to manage their careers, achieve success, and have their work evaluated based on individual performance, regardless of gender. The purpose of the Bank's diversity strategy, as referred to in the Gender Equality and Diversity Policy, is to ensure high quality performance by the Bank's employees, including the selection of competent persons to perform functions in the Supervisory Board, the Management Board and Key Functions in the Bank, using objective merit criteria in the first instance and taking into account the benefits of diversity.
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Gender equality provides opportunities for Bank employees to manage their careers, achieve success, and have their work evaluated based on individual performance, regardless of gender. The Gender Equality Guidelines apply to all HR processes implemented by the Human Resources Division and specify:
• striving to ensure the representation of both genders in external recruitment processes, by preparing lists of recommended candidates, which include at least one candidate of each gender,
• striving to ensure the representation of both genders in internal recruitment processes, by preparing lists of recommended candidates for a given position, which contain at least one candidate of each gender,
• eliminating discriminatory gender criteria in the preparation of job offers and job descriptions,
• informing external partners operating in the areas of recruitment and training (temporary work agencies, recruitment agencies, employment agencies, public employment agencies/employment offices, head-hunting agencies) about the scope and content of the implemented Gender Equality and Diversity Policy and the Bank's commitment to its objectives,
• ensuring equal opportunities of professional development for the Bank's employees (training, coaching, mentoring and other development activities during work) regardless of gender, taking into account job responsibilities, efficiency, professional potential in accordance with the organizational needs, standards and criteria of the Bank, defined by separate internal regulations,
• ensuring equal treatment of Bank employees with respect to remuneration and additional benefits, irrespective of gender, in accordance with the Remuneration Policy of Bank Polska Kasa Opieki Spółka Akcyjna and generally applicable provisions of law in this respect,
• promoting work-life balance for employees by taking advantage of opportunities provided by relevant regulations in this area and available facilities such as:
a) offering flexible work models (part-time employment, etc.) in a manner consistent with applicable laws, in particular labour and social security laws and internal regulations and taking into account business and organizational requirements and needs,
b) supporting employees during and after long-term absence (e.g. after parental leave, unpaid leave, sickness and any other long-term absence) by avoiding discrimination during and after long-term absence, enabling employees to stay in touch with the company during long-term absence and facilitating their return after long-term absence in accordance with applicable laws, in particular: labour and social security laws and the Bank's internal regulations,
c) integrating gender issues into training programs, including, but not limited to, management, adaptation programs and other forms of training and communication.
The Gender Equality and Diversity Policy, in accordance with the legislative process applicable to the Bank, has been adopted by the Bank's Management Board and approved by the Supervisory Board. Gender equality and diversity policies are also in place at 8 subsidiaries: Pekao Direct Sp. z o.o., Centrum Kart S.A., Pekao Bank Hipoteczny S.A., Pekao Financial Services Sp. z o.o., Pekao Investment Banking S.A., Pekao Leasing Sp. z o.o., Pekao TFI S.A. and Pekao Faktoring Sp. z o.o.
Selection and suitability assessment policy
The Bank applies the Policy on Selection of Candidates for the Position of Member of the Board of Executives and Key Function and Assessment of Suitability of the Proposed and Appointed Members of the Board of Executives, Supervisory Board and Persons Performing Key Functions in Bank Polska Kasa Opieki Spółka Akcyjna (Selection and Suitability Assessment Policy) approved by the Bank's Supervisory Board on December 30, 2020, which is aimed at ensuring an optimal and uniform selection process of candidates to the position of a member of the Board of Executives and the Key Functions at the Bank, so as to ensure that the tasks related to the implementation of the Bank's business plans and strategy are performed by persons who have the required knowledge, experience and skills, as well as a good reputation.
The Selection and Suitability Assessment Policy also sets out the criteria for assessing the individual and collective suitability of candidates and members of the Board of Executives, Supervisory Board and persons performing Key Functions in the Bank at the appointment stage and in the course of their functions, as well as the events triggering the need for a suitability assessment, the course of the suitability assessment process, including roles and tasks in the process and the effects of the assessment, including corrective measures to be applied to ensure that suitability requirements are met.
Activities promoting diversity
The Pekao Group and the Bank implement many initiatives proposing to support diversity, addressed to all employees, including the submission of their initiatives and the active use of existing projects. The overarching goal of these activities is:
• full use of the potential of all employees in the process of managing the intellectual capital of the company and building an organizational culture based on sharing knowledge and experience,
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• increased employee engagement and satisfaction across all age groups, including through development programmes, motivational goals, succession plans and compensation systems,
• improving the strategy of managing people in the organization through the development of leadership,
• developing an employee-friendly organization.
Bank employees may participate in the following initiatives to promote support for diversity:
• workshops promoting diversity of operation and communication styles among employees, which discuss personality types and the resulting differences in the communication process, relationship building and preferred methods of operation based on the Insight Discovery methodology,
• training for managers "Managing a team based on Insight Discovery". Their aim is to provide managers with knowledge on diversity management, drawing attention to the diverse needs and ways to motivate employees depending on their age, experience, competencies and skills. The training discusses diversity management, the challenges faced by managers managing a diverse team, taking into account generational differences, the diverse experience of subordinates and their individual needs and motivators.
The Bank also has initiatives to strengthen diverse leadership and develop women in management positions. The intranet website has a separate section "Women Leaders for the Bank" devoted to this topic, presenting extraordinary stories of women managers who have successfully achieved their professional goals.
An important action taken by the Bank to promote open dialogue with women and discuss the needs of this group of employees (ladies account for over 70% of the Bank's workforce), was the launch of the "Sugar Free" programme in 2020 under the patronage of Vice President Magdalena Zmitrowicz. The main activities undertaken in 2021 were focused on areas related to the development of women's personal and professional competences. More than 50 hours were spent on various activities such as webinars, training and sessions of Action Learning . During 70 hours of online training, topics related to, among others, the development of personal skills, strengthening competences, overcoming own limitations, building an image and personal brand. The Sugar Free program was present at one of the most important market events of "Perspectives” Women in Tech Days aimed at women interested in modern technology: Pekao S.A. Bank and the "Sugar Free" programme were represented by 5 ladies from the IT and Risk divisions who were speakers, mentors and workshop leaders, sharing their knowledge and experience.
Diversity efforts support initiatives open to all employees regardless of gender, position or organizational assignment, such as "Take Health by the Horns," the Stars of Collaboration competition and Talents Up .
Integration of ESG factors across all key business areas
In the process of managing environmental, social and corporate governance topics, it is crucial to position ESG appropriately in the organizational structure. In order to coordinate issues related to this topic as efficiently as possible, in December 2020, Bank Pekao S.A. established the ESG Council, an advisory body to the Bank's Management Board that meets at least quarterly. The main task of the Board is to recommend to the Bank's Management the necessary actions in the ESG area. At the same time, the Council is intended to consult widely on strategic ESG topics, taking into account the commercial perspective. The Board was composed of Board members and representatives of the Bank's key units (both business and support) for ESG topics. With their participation, and the full support of the Bank's Management Board and Supervisory Board, the ESG Strategy 2021-2024 "Responsible Bank supporting sustainable development" was developed. When developing the assumptions of the Strategy, a top-down approach was adopted with the use of workshops and consultations with units involved in the process. The ESG Coordinators, appointed in different areas of the Bank's operations, and the ESG Team combining competencies in environmental, social and corporate governance topics, are responsible for the ongoing monitoring of the strategy.
The Bank aims to integrate ESG into all key processes of Pekao's operations, including lending, investment and advisory processes, procurement, and the incentive system. The Bank also recognizes the potential inherent in ESG product offerings and is taking steps to increase its "green" portfolio across all business segments. Transparency of ESG policies and non- financial reporting remains a priority, especially in the context of recent regulations that require banks to increase non-financial disclosures such as reporting of greenhouse gas emissions or labelling of industries and customer transactions in terms of sustainable investments consistent with the so-called taxonomy regulation 42 . The integration of ESG goals at the Bank is fostered by the regular participation of the Bank's representatives in sustainable development initiatives, e.g. under the United Nations Global Compact Poland, in the work of committees and working groups of the Polish Bank Association and other industry organisations.
The Bank's commitment to ESG is evaluated by the market in international rankings and indices. The Bank's priority is to increase its position in environmental, social and corporate governance statements as a result of systematically undertaking and disclosing ESG activities.
42 Regulation No. 2020/852 of the European Parliament and of the Council of June 18, 2020 on establishing a framework to facilitate sustainable investment.
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RATING
2020
2021
CONTEXTUAL INFORMATION
MSCI ESG Ratings
A
A
MSCI ESG measures the resilience of companies to long-term risks in the areas of: environmental protection, corporate social responsibility and corporate governance.
FTSE4Good Russell
3.1
3.1
FTSE Russell ESG evaluates the data of approximately 4100 companies in 47 developed and developing countries. The FTSE rating is designed to facilitate investment in companies that meet internationally recognized standards of corporate responsibility and is the basis for a company's inclusion in the FTSE4Good index. Companies in the FTSE4Good index series have met rigorous environmental, social and corporate governance criteria and are well placed to harness the benefits of responsible business practices.
WIG-ESG
Proportion of share
in the index: 4.8%
Proportion of share
in the index: 5.6% 43
The WIG-ESG Index has been published since September 2019, based on the value of a portfolio of stocks of companies considered socially responsible. The base value of the index was established as at December 28, 2018 and amounted to 10,000.00 points. WIG-ESG is a total return index, which means that its calculation takes into account both the prices of transactions concluded in it and dividend income. The share of one company in the index is limited to 10%, while the total share of companies, each of which exceeds 5%, is limited to 40%.
Bloomberg
Gender Equality-Index
73/100
79/100
The Bloomberg Gender-Equality Index may include large listed companies actively striving for gender equality in the work environment. Globally, in 2022, the index included 418 companies from 45 countries and representing 11 sectors of the economy. Participants in the index were selected from publicly traded companies with capitalizations greater than $1 billion. To be included in the index, it was required to obtain a high enough result in a survey based on five areas: women's leadership and talent development, equal pay and wage parity, inclusive work culture, sexual harassment policy, and the female brand. The Bloomberg GEI rating, issues of respect for diversity and gender equality are analysed in terms of, among others, conditions of employment, educational activities , employee benefits and perks , professional development opportunities, promotion path and compensation .
Sustainalitycs
26.9 medium risk
29.1 medium risk
The ESG risk assessments issued by Sustainalytics focus on financially significant ESG risks and cover more than 20,000 companies from 172 countries. The agency's methodology includes an analysis of companies' exposure to significant ESG risks and an assessment of how companies manage these risks. Risk factors are determined on an industry basis and are determined by analysing 20 factors specific to each industry.
Vigeo Eiris
32/100
47/100
The Vigeo Eiris score presents the extent to which companies integrate environmental, social and governance factors into their strategies and operations. The index includes entities from 40 different industries from around the world. During the ESG assessment, 38 issues are reviewed.
Responsible Companies Ranking
Item 9. (410/500 points) out of 74 companies in the general classification
Item 11. (84/100 points) 44 , out of 70 companies in the general classification
List of companies operating in Poland assessed in terms of the quality of their corporate social responsibility management system. The ranking enables companies to reliably assess their progress in meeting the challenges of sustainable development. The basis for the Responsible Companies Ranking is a questionnaire, which is completed by the companies in accordance with the principles of due diligence and professional ethics.
43 WIG-ESG index portfolio (as revised on December 17, 2021, as of November 30, 2021).
44 The ranking organizer has made changes to the scoring methodology.
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1.7 Bank as a market participant and service recipient
1.7.1 Customer Relationships
Satisfaction management
Taking care of the high quality of customer relations, their satisfaction and loyalty are key to building lasting value for all the Bank's Stakeholders. In 2021, the Bank re-launched customer satisfaction and loyalty surveys covering the most important processes and touchpoints. More than 10,000 customers using services in the branch and in remote and digital channels participated in the research on customer satisfaction with the services provided by the bank. Findings were used on an ongoing basis to manage negative events at the operational and strategic levels. As part of the study of the level of service quality in the facilities, a study of the quality of service of corporate customers and a study of the quality of service of individual customers were conducted. The results of this research were used to improve the services provided by the bank. The research conducted in 2021 targeted customer feedback on satisfaction ratings with the service provided by the advisor, in the branch, on the hotline, and in digital channels and in the complaints process. In 2021, the bank also launched relationship research with Premium, Biznes and SME clients.
In addition to research commissioned by business units, the Bank systematically uses benchmark reports on customer satisfaction, loyalty and service quality in Pekao Bank and competitive banks.
NON-FINANCIAL PERFORMANCE INDICATORS (BANK)
2020
2021
NPS Indicator (*)
42
38
(*) Calculated by an internal survey method based on a single question posed to customers by telephone with the content: "Considering your cooperation with Pekao Bank so far, would you recommend its services to your friends and family? Please use a scale from 1 to 10, where 1 means you would definitely not recommend this bank and 10 means you would definitely recommend this bank."
Complaints management
Pekao Group companies systematically improve the procedures and take the necessary measures to respond quickly to customer complaints and to consider them in a way that takes into account the legitimate interests of customers to the maximum extent. This is ensured by internal regulations on the complaint management process, as well as strict compliance with generally applicable laws. The detailed operating procedures for complaint management contained in the bank's regulations clearly and precisely define the responsibilities and competencies necessary to meet the requirements for handling complaints. Complaints are handled in a fair and objective manner, taking into account all information and documents related to the problem reported by the customer and in accordance with the provisions of the law and agreements concluded.
The process of considering complaints at the Bank is primarily aimed at:
• transparently informing current and potential customers about the possibility of submitting complaints as well as the terms and dates of considering complaints,
• independent, reliable, objective and timely handling of complaints,
• taking improvement or corrective action in the event of any irregularities resulting in a customer complaint.
In 2021, the Bank continued to manage the complaint process in accordance with the guidelines adopted so far: it thoroughly analysed each complaint, and in the case of identified irregularities, took appropriate corrective actions. Systematic analysis of complaints enabled appropriate actions to be taken to improve processes and procedures applied in Pekao Bank or their elements.
Complaint Process Indicators:
• In 2021, Pekao Bank received a total of 136,629 customer complaints,
• 98.5% of complaints were examined within the statutory deadline. The ratio improved by 6.5 pp compared to the previous year (2020 - 92),
• 51,402 complaints were resolved within 14 days,
• 71,466 (52%) of the submissions were fully or partially considered in favour of the client.
During the resolution of disputes that may arise in connection with the services offered, customers may use the assistance of the Customer Ombudsperson. The Ombudsperson deals with the most difficult and non-standard cases that require an individual approach and additional legal opinions. Any customer may contact the Ombudsperson if he or she does not agree with the decision regarding the complaint submitted, if he or she believes that the matter is complicated and requires an individual approach or if he or she wishes to make comments on the functioning of the Bank. The customer who is a consumer of the Bank may also apply for out-of-court proceedings before the Banking Arbitrator operating at the Polish Bank Association or before the Financial Ombudsperson.
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The companies of the Pekao Group manage complaints on their own, based on the implemented and implemented procedures for accepting and considering customer complaints. These procedures have been defined in the form of internal regulations, included in regulations and contracts concluded with customers or result from generally applicable legal regulations.
In 2021, in connection with the acquisition by Bank Pekao of part of the Idea Bank S.A. enterprise, the process of handling complaints from former Idea Bank SA customers was adjusted to the standards in force at Bank Pekao. Acquired customers were informed about the rules of filing and processing of complaints applicable in Pekao Bank.
Caring for the consumer
Pekao Group provides services in a competent and professional manner. According to the Code of Conduct of Pekao S.A. Group, it is unacceptable to use practices that infringe collective consumer interests, such as:
• failure to provide consumers with accurate, truthful and complete product information,
• application of prohibited contractual terms;
• unfair market practices or acts of unfair competition;
• offering consumers to purchase financial services that do not meet the needs of those consumers or offering to purchase those services in a manner that is inappropriate to their nature (misselling ).
Ethical consideration is given to the implementation of new products and services. When offering products and services, employees provide full information about the current offer in a reliable and understandable manner. They explain the terms of the contract and inform about the risks associated with the products and services offered. This area is covered by the provisions of two regulations: Rules for the sale of credit and payment products to consumers at Bank Polska Kasa Opieki Spółka Akcyjna and Policy of sale of investment products . The first relates to the Bank's activities in the product sales process, as well as general guidelines for advertising products to customers. It also includes an exemplary list of inappropriate practices in the sale of credit and deposit products. Policy, on the other hand, lays down uniform rules for the sale of investment products for all organizational levels of the Bank and introduces consistent assumptions regarding the standards for implementing investment products. Its purpose is to ensure that the Bank acts in the best interest of the client, as well as to mitigate compliance risk and protect the Bank's reputation.
In addition, as part of the "In Polish, simply" programme, the Bank continues to work on simplifying the content of its messages. In 2021, the Simple Communication Commission was established, which recommends organizational units to simplify specific texts addressed to customers and prepared for the needs of internal communication. As part of the practical activities, over 40 employees took part in the course of plain language consultants led by linguists. Those who complete the course will help other employees create simple messages. They will also participate - as trainers - in an in-house training programme on plain language. The bank also actively participates in the work of the interbank group under the patronage of the Polish Bank Association, whose task is to create standards for straightforward bank documents.
Principles for the fair design and sale of financial products and services
GRI 417-2 Incidents of non-compliance concerning product and service information and labelling
Pursuant to the generally applicable laws and regulations, both the Bank and Pekao Group companies, engaged in offering financial products and services, have in place a number of regulations defining the standard of their operations and setting out the principles to be followed to protect clients' interests, minimize compliance and reputation risks in selling products and services to consumers. At Bank Pekao, this area is comprehensively regulated by the New Product Introduction Process Policy at Bank Pekao S.A. (hereinafter: New Product Introduction Policy) and the Rules for Developing Marketing Communications of Bank Polska Kasa Opieki Spółka Akcyjna (hereinafter: Principles of creating marketing communication) . The standards of offering and selling also define: Rules for the sale of credit and payment products to consumers at Bank Polska Kasa Opieki Spółka Akcyjna and Policy of sale of investment products . The risk of misleading the customer about the product designation is managed through ongoing verification, i.e. through the process of opinion on marketing materials by, among others, the Compliance Department. The process of giving opinions on marketing materials and official instructions is covered by the Bank's Internal Control System.
In 2021, there were no cases of non-compliance with the provisions on information and labelling of products and services and no cases of non-compliance with regulations resulting in a warning in the Bank and in the Pekao Group companies to which the disclosure related to the GRI 417-2 index was concerned.
Responsible marketing
In accordance with the applicable internal regulations, marketing and advertising activities carried out in the Bank and Pekao Group take into account the provisions of the generally applicable law and guidelines of the supervisory authorities, principles of fair trading in the financial market, good manners and customer declarations of intent pertaining to such activities. Moreover, they are carried out in line with the Bank's communication strategy, while preserving its visual identity and image, adopted internal regulations and the clarity of the communication message. Bank Pekao S.A. observes the principles of the Code of
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Banking Ethics of the Polish Bank Association and the Canon of Good Financial Market Practices adopted by the Polish Financial Supervision Authority. The Pekao Group's Code of Conduct emphasizes that each employee is an ambassador of products and services offered both by the Bank and by other entities of the Pekao Group. Professional promotion of products and services strengthens customer confidence and helps build relationships based on mutual respect and trust.
The Bank's responsible promotion is based on reliable and transparent knowledge about products, including possible risks arising from changing macroeconomic conditions or the activities of regulators. Marketing and advertising activities carried out in Pekao Group take into account the provisions of generally applicable laws and the guidelines of the supervisory authorities, the principles of fair trading in the financial market, good manners, and are conducted with respect for the client's wishes concerning these activities. The key regulations related to this area in terms of compliance risk assessment are the New Product Introduction Policy and the Principles for Creation of Marketing Communication , which were prepared in connection with the decision of the Bank's Board of Executives to adopt the Corporate Governance Principles for Supervised Institutions issued by the Financial Supervision Authority. This regulation includes, among others, the basic requirements for the content of marketing and advertising materials, taking into account the nature and specificity of a given product, including: consumer credit, mortgage credit, bank account (in particular savings account, savings and checking account or savings term deposit account), insurance product and investment product.
In addition, Bank Pekao applies the Standard and Crisis Communication Policy of Bank Polska Kasa Opieki Spółka Akcyjna and the Principles of Appropriate Behaviour in Social Media , which comprehensively refer to communication and promotional activities carried out with the Bank's stakeholders through social media. In 2021, a new regulation was introduced, the Pekao Group Brand Architecture Management Policy, addressed to all subsidiaries, which relates to the protection and promotion of the Bank's brand and includes a comprehensive Book of Visual Identification.
Bank Pekao shall make every effort to ensure that the advertising message does not undermine public confidence in advertising activities, does not contain content or images that offend commonly applicable moral norms, does not abuse customer confidence by exploiting customers' lack of experience or knowledge, does not appeal to feelings of fear, does not contain elements that could lead to or encourage acts of violence and, finally, does not condone discrimination, in particular on the grounds of race, religion or gender.
In 2021, Bank Pekao S.A., in order to meet the expectations of its customers in a difficult year marked by a pandemic, decided to launch a number of promotional campaigns aimed at reducing the costs of banking services, such as the campaign for a consolidation loan or the campaign for a free account with an additional Assistance insurance package. In addition, Bank Pekao, as the leader of banking digitization, continued marketing campaigns on the Internet and social media, strengthening virtual social relations with seniors, children and youth.
In 2021, experts and customers appreciated in particular the promotion of the unique product PeoPay KIDS, which is a kind of tool for financial education of the youngest, for which Bank Pekao S.A. received a number of awards, including a distinction in the IAB MIXX Awards - for the product launch of PeoPay KIDS, strategy, creation, execution and use of media, as well as the results and effectiveness of the action and the TOP 5 in the Multiscreen Excellence YT Works Awards for creative use of the YouTube channel as part of a comprehensive campaign, including both traditional and digital media.
GRI 417-3 Incidents of non-compliance with marketing communications
In 2021, analogous to the previous years covered by non-financial reporting, the Bank and Pekao Group companies did not report any instances of non-observance or non-compliance in the area of marketing communications.
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Principles of free competition
GRI 206-1 Legal actions for anti-competitive behaviour, anti-trust, and monopoly practices
The Bank and its subsidiaries are bound by the Bank Pekao S.A. Group Policy on counteracting practices that limit competition and infringe collective consumer interests . The Policy defines the basic principles of Bank employees' actions in compliance with antitrust and unfair market practice regulations and the main tasks of the Bank's organizational units in this respect. In 2021, the Bank did not pay penalties for violations of collective consumer rights and free competition.
The companies comprising the Pekao S.A. Group in 2021 also had their own regulations in this area, such as: Pekao Direct's policy on counteracting competition-restricting practices and practices violating collective consumer interests , Policy of Pekao Bank Hipoteczny S.A. in the field of counteracting practices restricting competition and practices violating collective consumer interests , Anti-monopoly Procedure. Counteracting Restrictive Practices and Violating Collective Interests of Consumers (Pekao Leasing), Instruction concerning anti-monopoly behaviours and unfair market practice (DI Xelion).
Legal risk issues related to foreign currency mortgage loans in CHF are included in the Consolidated Financial Statements of the Bank Pekao S.A. Group for the year ended December 31, 2021, note 37. Risk Management, subsection 6.2 Credit risk, paragraph 2) Litigation related to CHF foreign currency mortgage loans.
LEGAL STEPS TAKEN AGAINST ORGANIZATIONS FOR VIOLATIONS OF FREE COMPETITION RULES AND MONOPOLISTIC PRACTICES
2021
Bank Pekao
3 (ongoing)
Pekao Group entities
0
Availability of services
The Bank is committed to reducing financial exclusion, defined as limitations in access to financial services due to disability. In 2021, a new functionality was introduced, consisting in the possibility of video chat with a Pekao Direct consultant using sign language. This service is available to Pekao Bank customers in the Pekao24 service without logging in.
Additionally, in 2021, 177 direct service branch network employees participated in "Standards of Service for Individuals with Special Needs" training, which addressed the following topics:
• How to understand disability: variety of definitions and meanings of disability; types of disability; stereotypes associated with disability,
• Identification of barriers faced by people with disabilities: difficulties that people with various types of disability may experience; barriers resulting from the attitude of the environment and ways of reacting to them; discussion of attitudes - prejudices, pity, overprotection, overacting, compassion, fears,
• Communication and savoir-vivre towards people with disabilities: how to adapt communication to the type of disability; how to recognize needs, what to ask and how to ask; customs, social forms and polite rules in contacts with people with disabilities,
• Assertiveness towards people with disabilities: where is the line between being sensitive and being assertive and what are the methods to deal with attitudes of people who use their disability to influence.
1.7.2 Responsible purchasing process
Pekao Group and the Bank treat their counterparties with due respect and select suppliers of goods and services objectively and impartially, thus ensuring good and fair business relations. When selecting suppliers, the Pekao Group and the Bank apply internal procedures in line with the best practices and the mandatory provisions of Polish law. Pekao Group builds long-term relationships with suppliers based on mutual trust, respect and professionalism. In particular, suppliers who apply proven market practices and represent the highest level of professional ethics are appreciated.
The course of purchasing processes is defined by three key regulations in force since 2018: Purchasing policy at Bank Polska Kasa Opieki Spółka Akcyjna; Principles for the execution of purchases by the Purchasing Department at Bank Polska Kasa Opieki Spółka Akcyjna and The rules for the execution of purchases without the participation of the Purchasing Department at Bank Polska Kasa Opieki Spółka Akcyjna . The rules were revised again in 2019 and 2020 following the further transformation of the Bank's purchasing function. Another improvement step initiated in 2019 was the full digitalization of the procurement processes and the communication carried out with bidders at the stage of procurement proceedings and orders placed. The result of the work done so far on the digitalization of purchasing processes is the implementation of the Integrated Purchasing Tool. The new system was followed by an update of the Bank's purchasing procedure.
In the procurement procedures conducted, the subject matter of the contract shall be defined uniformly for all contractors in a manner that ensures fair competition. Each company may be invited to participate in the procedure and, provided that the
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Bank's internal requirements are met, submit an offer. All bidders planned to be included in procurement procedures are registered in the supplier database and taken into account when constructing a list of potential suppliers.
The companies invited to participate in the procedure may ask questions regarding the submitted specification. Information on the outcome of a given procedure is sent to all participating bidders. In order to ensure impartial selection of suppliers of goods and services, committees are appointed to ensure the transparency of the supplier selection process and to approve the recommendations of the most advantageous offer.
In accordance with the accepted principles applied in awarding contracts, the Bank uses the electronic method of conducting negotiations in a significant part of proceedings, which definitely facilitates conducting proceedings of national and international range. The advantage of using such a solution is high efficiency and transparency of the negotiation process.
In addition, when conducting tenders, the Bank verifies potential bidders in terms of the risk of corruption and in terms of sanction lists (US and EU sanction lists) and public warnings of the Polish Financial Supervision Authority. Companies that execute orders for the Bank are informed of the violation process adopted and the relevant provisions of the Bank's anti- corruption policy.
Environmental and social criteria
GRI 414-1 New suppliers that were screened using social criteria
When the Bank conducts tenders (with the net value exceeding PLN 1 million), suppliers are required to fill out a "Corporate Social and Environmental Responsibility (CSR) Form". In this way, Bank Pekao undertakes actions for sustainable development, environmental protection and preventing human rights violations by the Bank's business partners. The form contains questions about the incorporation of environmental protection regulations and respect for human rights in the daily activities of the supplier or contractor. The scope of issues on the form includes:
1. In terms of the environment:
• possession of certificates confirming the pro-environmental profile of the business of a given contractor,
• compliance with the laws and regulations in the field of environmental protection, carried out inspections and criminal cases related to non-compliance with the provisions in force in this regard,
• implementation of innovative, environmentally friendly new technologies,
• organizing training and information meetings for employees on environmental issues.
2. In the social field:
• prohibition of forced labour,
• respect for the laws governing working hours,
• respecting the provisions of the law on health and safety,
• compliance with labour law and regulations, including payment of remuneration customary in a given sector for all employees.
The percentage of procedures carried out with suppliers selected in terms of meeting environmental and social criteria in 2021 amounted to approx. 20%.
1.7.3 Personal data protection
The Bank and the Pekao Group entities shall comply with the generally applicable laws and principles set out in Regulation (EU) 2016/679 of the European Parliament and of the Council of April 27, 2016 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data and repealing Directive 95/46/EC - General Data Protection Regulation (hereinafter the "GDPR").
Personal data is processed in Bank Pekao in accordance with the provisions of law and with due diligence in order to protect the interests of the data subjects.
Bank Pekao is both a data controller and a processor within the meaning of the provisions of the GDPR and is fully responsible for compliance with the provisions on the protection of personal data, in particular taking into account the rules on the processing of personal data indicated in the GDPR, such as:
• The principle of lawfulness, fairness, transparency and accuracy through the processing of personal data in accordance with the law, fairly and transparently for the data subject (Article 5 (1) (a) and (d) of the GDPR),
• The principle of purpose limitation by taking into account that data are collected for specific, explicit and legitimate purposes (Article 5 (1) (b)). GDPR),
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• The principle of minimization by considering that the scope of the processed data must be adequate and limited to the minimum necessary to achieve the indicated purpose. (Article 5(1)(c). GDPR),
• The principle of integrity and confidentiality through the application by the controller of appropriate technical and organizational measures ensuring data security (Article 5 (1) (f) of the GDPR),
In order to ensure comprehensive measures in the area of personal data protection, the Bank carried out a project aimed at preparing the organization to meet the requirements resulting from GDPR; as a result, the Bank's activities were analysed for compliance with the requirements indicated in GDPR with respect to IT systems, processes, internal regulations, as well as operations performed and document templates.
As a result of the analysis, the scope of necessary actions to be taken by the Bank was defined and a number of internal regulations relating to particular areas of the Bank's operations were implemented. These regulations include:
• Information Security Policy along with the Information Security Policy Documents,
• Methodology of managing the risk of infringement of rights or freedoms of natural persons in Bank Pekao S.A. (PIA Methodology),
• Rules of personal data protection and rules of obtaining consents for Bank Polska Kasa Opieki Spółka Akcyjna to undertake activities for direct marketing purposes,
• Register of processing activities and Register of processing activities categories kept by Bank Polska Kasa Opieki Spółka Akcyjna,
• The rules of granting personal data processing authorizations and authorizations of access to the Bank's information to persons employed in the Bank,
• The procedure for examining the requests of data subjects under the GDPR by Bank Polska Kasa Opieki Spółka Akcyjna,
• Personal Data Retention Policy at Bank Polska Kasa Opieki Spółka Akcyjna,
• Procedure for managing personal data protection violations in Bank Pekao S.A,
• The rules and procedure at Bank Polska Kasa Opieki Spółka Akcyjna in connection with the commissioning of services involving the processing of personal data,
• Application Security Policy at Bank Polska Kasa Opieki Spółka Akcyjna,
• Rules of protection and the manner of proceeding with information in Bank Polska Kasa Opieki Spółka Akcyjna,
• Protection of electronic information in Bank Polska Kasa Opieki S.A.
Directors of the Bank's organizational units and information owners are fully responsible for the organization, security, processing of personal data in their subordinate units. Employees, on the other hand, are obliged to process personal data in accordance with the authorization given to them resulting from the scope of activities specified for their position. To this end, Bank Pekao develops and implements mandatory training programmes for employees on the protection of personal data, systematically monitoring the progress of the training courses.
The aspect of personal data protection is also taken into account in the current activities of the Data Protection Inspector's Office (hereinafter referred to as DPO) when giving opinions on new processes, projects and initiatives as well as analysing internal regulations or contracts concluded by the Bank in terms of personal data. The DPO and the DPO Office, as well as the Bank's Security Department, verify new technological solutions in order to ensure compliance with the requirements and principles set out in the GDPR and the highest possible level of security of personal data processed.
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Moreover, the Bank decided to implement the principles of personal data protection with regard to the application of technical and organizational measures ensuring the protection of the processed data. The Operational Security Centre (OCC) was established, a unit that supervises unauthorized access to data (including personal data), as well as (through the systems operating at the Bank) to prevent leakage of such data.
GRI 418-1 Substantiated complaints concerning breaches of customer privacy and losses of customer data
GRI 418-1 SUBSTANTIATED COMPLAINTS REGARDING BREACHES OF CUSTOMER PRIVACY AND DATA LOSS
PEKAO BANK
PEKAO GROUP
Complaints received from external parties in 2021 and supported by the organization
0
0
Complaints from regulators in 2021
61 new complaints (no continuation)
3
Total number of identified leaks, thefts or losses of customer data
27
20
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1.8 Cooperation with the environment
1.8.1 Communication with stakeholders
GRI 102-40 List of stakeholder groups engaged by the organization
STAKEHOLDER GROUP
COMMUNICATION TOOLS
FREQUENCY OF COMMUNICATION
TOPICS REPORTED
BANK OPERATIONS
General Meeting of Shareholders
At least once a year
Roadshows and conferences
Several times a year
Investor Day
Depending on the needs
Meetings and teleconferences
Several hundred a year
Stock Exchange and Press Releases
Ongoing
Financial Reports,
data summaries and presentations
of results
Quarterly
Bank's website and online information channels
Ongoing
Meetings with rating agencies
At least once a year
Investors (shareholders, bondholders and purchasers of other securities issued by the Bank, market analysts and rating agencies
Permanent Cooperation of IR & ESG Strategy Department
(institutional investors
and individuals, analysts
and capital market organizations);
Ongoing
• Strategy execution, value building, organizational change
• Macroeconomic and market forecasts
• Distribution of profits to shareholders
Transparency of operations, easy and quick access to information about the Bank, application of external regulations and market standards.
Branches, online and mobile banking
Ongoing
Bank's website and online information channels
Ongoing
Hotline
Ongoing
Complaints
Ongoing
Product and service satisfaction and service quality surveys
Ongoing
Advertising campaigns and marketing activities
Ongoing
Product offers, mailing
Ongoing
Customers
Participation in trade fairs
Depending on the possibilities
• High quality products and services offered,
• Fair consumer practices
• Safety of entrusted funds
• Ease of communication with the Bank
Offering competitive, high-quality products and services tailored to clients' needs; applying procedures to ensure fair and secure management of client funds; providing multiple access channels; creating transparent
terms and conditions of offers and contracts. collecting expectations and opinions
of customers; contribution to and adhering to best practices of financial services advertising standards.
Internal communication
Ongoing
Intranet, chat rooms, discussion forum
Ongoing
Company trade union organizations
Ongoing
Meetings with the Management Board
Several times a year
Competition trips, “Olympic games”
At least once a year
Employee volunteering
Ongoing
Webinars
Ongoing
Employee assessment
At least once a year
Internal publications
Ongoing
Thematic surveys, evaluation surveys, employee opinion surveys
Several times a year
Employees
Whistleblowing Reporting System
Ongoing
• Job stability and professional development opportunities
• Attractive remuneration system
• Bank strategy and key objectives
• Transparent organizational structure
• Work-life balance
Listening to employees' opinions (chats, satisfaction surveys), providing employees with development opportunities (promotions, trainings), clear, measurable goals to achieve which are subject to monitoring, adequate wage and benefit policy, meetings with employees and current communication with employees, providing a friendly place to work: including the implementation of the possibility of remote work and health- promoting and preventive actions.
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Meetings with suppliers, negotiations
Ongoing
Special purchasing platform, Phone, e-mail
Ongoing
Suppliers
Ongoing cooperation and implementation of contracts
Ongoing
• Transparent rules for selecting and working with suppliers
Use of transparent supplier selection procedures; timely execution of contract provisions, promotion of good purchasing practices.
Charity and sponsorship activities, activities for the climate
Ongoing
Employee volunteering
Ongoing
Social and natural environment
Meetings with students, student internships
At least once a year
• Social and environmental projects
• Reducing negative impact on the environment, environmental education of customers and employees
• Work and development opportunities for students
Implementation of projects related to
sponsorships
and charities; supporting
community development; encouraging employees
to participate in social and environmental actions, reducing negative impact on the environment.
Press conferences
Several times a year
Press releases
Ongoing
Social networks
Ongoing
Interviews, expert speeches
Ongoing
Attending economic conferences, etc.
Several dozen times a year
Media
Permanent cooperation of the Communication Office (journalists, media)
Ongoing
• Implementation and promotion of the bank's strategy
• Reliably informing all stakeholder groups about the bank's activities/situation through the media
• Building a leadership position/ financial sector expert
Transparency of operations, easy and quick access to information about the Bank.
Regulators (e.g. KNF, BFG, UOKiK, NBP, KSF 45 , WSE, KDPW 46 )
Reports, correspondence, inspections
Ongoing
• Compliance with requirements and regulations;
• Supporting the creation of new rules in the market, including best practices.
Compliance with requirements, regulations and best practices, ongoing cooperation with Regulators.
GRI 102-42 Basis for identification and selection of stakeholder groups involved
GRI 102-43 Approach to stakeholder engagement, including frequency of engagement by stakeholder type and group
GRI 102-44 Key issues and questions raised by stakeholders in stakeholder engagement processes
Pekao Bank maintains active, transparent and effective communication with all stakeholders of the Bank, taking into account their needs and providing them with equal access to information using various communication tools. Major stakeholder groups include:
• Investors, market analysts and rating agencies
• Customers
• Employees
• Suppliers
• Social environment
• Media
• Supervision institutions (including KNF, BFG, UOKiK, NBP, KSF)
45 Financial Stability Committee (KSF).
46 National Depository for Securities (KDPW).
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These stakeholder groups that are particularly important when it comes to our business model, strategy execution and the Bank's further development.
The rules of the Bank's information policy with respect to contacts with investors and securities market analysts, the media and clients are governed by the Bank's information policy which is available on the Bank's website under the "Responsible Business" tab:
https://www.pekao.com.pl/relacje-inwestorskie/raporty-i-sprawozdania/odpowiedzialny-biznes.html
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1.8.2 Bank's cooperation with industry organizations
GRI 102-13 Membership of Associations and Organizations
Pekao Bank is actively involved in industry associations and organizations. Engagement in this area can be divided into four main areas:
• The Polish Bank Association together with its Committees and Boards, including: Bank Cyber Security Centre Committee, Real Estate Finance Committee, Clearing Agents Committee, Bank Card Issuers Council, Electronic Banking Council,
• Associations and organizations with international reach, including: International Swaps and Derivatives Association (ISDA), Institute of International Finance (IIF), Association of Chartered Certified Accountants (ACCA), United Nations Global Compact,
• Associations and organizations with national reach, including: Association of Stock Exchange Issuers, Chamber of Brokerage Houses, Polish Human Resources Management Association, Association of Bank Dealers ACI Polska, Polish Association of Capital Investors,
• Associations and organizations with a local focus: Lublin Business Club, Podkarpacie Business Club.
GRI 102-13 Membership of Associations and Organizations
THE BANK'S ACTIVITY IN ASSOCIATIONS AND
PROFESSIONAL ORGANIZATIONS IN A GIVEN YEAR (NUMBER OF AFFILIATIONS)
2020
2021
ZBP and Committees and Councils operating at ZBP
14
14
Associations and organizations
with international reach
14
14
Associations and organizations
with national reach
6
6
Local associations and organizations
2
2
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1.9 Information about the Statement
GRI 102-45 All entities included in the consolidated financial statements or equivalent documents
GRI 102-50 Reporting period
GRI 102-54 Indicate whether the report was prepared in accordance with Standard in the Core or Comprehensive option
This Non-Financial Data Statement, published on 3/3/2022, has been prepared in accordance with the GRI Standards methodology at Core level and GHG Protocol for the calendar year 1/1/2021-31/12/2021 as part of the Bank Pekao S.A. Group Performance Report . It covers the entire Group, i.e. the companies:
1. Bank Pekao S.A.
2. Pekao Bank Hipoteczny S.A.
3. Centrum Kart S.A.
4. Pekao Direct Sp. z o.o.
5. Pekao Faktoring Sp. z o.o.
6. Pekao Financial Services Sp. z o.o.
7. Pekao Investment Banking S.A.
8. Pekao Investment Management S.A., including: Pekao TFI S.A.
9. Pekao Leasing Sp. z o.o.
10. Dom Inwestycyjny Xelion Sp. z o.o. (for the period 1/1/2021 - 31/10/2021)
The Statement does not include PeUF Sp. z o.o. and companies of companies in liquidation.
GRI 102-52 Reporting Cycle
The Bank Pekao S.A. Group reports data on an annual basis.
GRI 102-46 Process for defining report content and boundaries for reporting material aspects
GRI 102-47 Important aspects identified in the process of defining the content of the report
GRI 102-48 Impact of any changes to information provided in previous reports and reasons for such changes
GRI 102-49 Significant changes from previous reporting periods in the scope and boundaries of aspects
The analysis of relevant topics for the report was conducted based on the expectations of stakeholders (primarily - rating agencies, investors and stock analysts), the ESG Strategy and the Bank's business strategy and regulatory requirements. Consideration was given primarily to:
• Requirements of the NFRD directive (implemented into Polish law in the form of amendments to the Accounting Act)
• Best Practice of WSE Listed Companies 2021
• ESG reporting guidelines issued by the WSE
• European Securities and Markets Authority guidelines
• Requirements resulting from the reporting principles within the PZU Group
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Based on the analysis, the following topics were identified as important to report in the Statement:
ISSUE NAME
COMPANY PERSPECTIVE (IMPACT ON THE COMPANY)
PERSPECTIVE ON THE ENVIRONMENT (INFLUENCE ON THE ENVIRONMENT)
Factors having significant impact on the Bank's and Pekao Group's operations and performance, including COVID-19 pandemic, inflation, rising energy prices, Idea Bank acquisition, exposure to franking credits, as well as changes in the regulatory environment - Taxonomy Regulation, SFDR Directive, CSRD Directive project, etc.
5
5
Financing sustainable projects, orderly and gradual transition to a low-carbon economy, supporting energy transition, offering ESG products, green financing, use and diffusion of environmentally friendly technologies
5
5
Reducing carbon footprint and striving for climate neutrality, organization's attitude towards climate change, reducing resource consumption, taking initiatives to promote environmental responsibility attitude, preventive environmental approach
5
5
Community engagement, educational activities, volunteering, financial inclusion, making a positive impact through products for disadvantaged groups, access to services for clients with disabilities, financial education
5
4
Supporting the development of Polish companies, innovation, digital and innovative solutions
5
4
Workforce issues - employment, compensation policies, employee training and development, and changes related to the COVID-19 pandemic
3
4
Anti-corruption and conflict of interest measures
5
5
Involvement of the highest authorities of the Bank in ESG issues, integration of ESG in all key processes
5
3
Business ethics and governance, risk management, audit and internal controls, transaction and information security, cyber security
4
3.5
Attention to development, diversity and equality of the workforce, inclusiveness, demographic change (ageing population), diversity, effective action against discrimination in employment
5
5
Pay gap, effective action against discrimination in employment
5
5
Support and respect for internationally accepted human rights, elimination of all human rights violations by the company, elimination of all forms of forced labour, abolition of child labour, code of conduct - no respect for any manifestation of bullying/harassment or sexual harassment
5
5
Trade unions, collective redundancies, respect for freedom of association and collective bargaining
5
5
Responsible selling, ethical approach to offer communication, no misselling, responsible marketing
3
5
Membership in ESG-related organizations
4
4
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The changes with respect to the previous Statement relate primarily to its content layout - the structure of this Statement is based on the structure of the ESG Strategy that the Bank published in 2021. The 10 Principles of the Global Compact are also included - this document is also the Communication on Progress report.
GRI 102-51 Date of most recent report
GRI 102-56 Policy and current practice for external verification of the report.
The statement was not externally verified or audited. The previous Statement was published on February 25, 2021.
GRI 102-53 Contact person for questions regarding the report
Contact regarding the report:
Ewa Solarz, ESG Manager at Bank Pekao S.A.
ewa.solarz@pekao.com.pl
Iwona Hlebko-Zwierz, ESG Expert at Bank Pekao S.A.
iwona.hlebko-zwierz@pekao.com.pl
196
Report on the activities of Bank Pekao S.A. Group for the year 2021 rok
Bank Pekao S.A.
Table of compliance with the Accounting Act
ACCOUNTING ACT REQUIREMENTS REGARDING THE DISCLOSURE OF NON- FINANCIAL DATA
HAS THE REQUIREMENT OF THE ACT BEEN FULFILLED
REFERENCE IN THE BODY OF THE REPORT
PAGE NO.
A description of the entity's business model and key performance indicators
Yes
1.1. Bank Pekao S.A. and Pekao S.A. Group
131
Description of management of risks identified as significant
Yes
1.1. Bank Pekao S.A. and Pekao S.A. Group
134-136
Description of the entity's due diligence policies and performance indicators related to anti-corruption
Yes
1.6. The third pillar of ESG strategy: Governance
163-165
Description of the entity's policies, due diligence procedures, and performance indicators related to respect for human rights
Yes
1.6. The third pillar of ESG strategy: Governance
161-163;
164
173
Description of policies, due diligence procedures and performance indicators related to topics relevant to consumer/customer relations, quality
Yes
1.7. Bank as a market participant and service recipient
184-186
Description of the entity's policies, due diligence procedures and performance indicators related to employee issues
Yes
1.6. The third pillar of ESG strategy: Governance
166-182
A description of the entity's policies, due diligence procedures, and performance indicators related to environmental performance
Yes
1.4. The first pillar of the ESG Strategy: The natural environment
142-147
A description of the entity's policies, due diligence procedures, and performance indicators related to social issues
Yes
1.5. The second pillar of the ESG Strategy: Commitment
153-159
GRI Content Index
102-55 GRI Content Index
Profile indicators
Indicator number
Indicator name
Section
Subsection
Page
GRI 101
Basic information 2016
101 Basic information
1.1 Bank Pekao S.A. and Pekao S.A. Group.
GRI 102
Profile indicators 2016
Organization profile
102-1
Organisation name
1.1 Bank Pekao S.A. and Pekao S.A. Group.
129
102-2
Description of the organisation's activities, main brands, products and/or services
1.1 Bank Pekao S.A. and Pekao S.A. Group.
129, 130
102-3
Location of the organisation's headquarters
1.1 Bank Pekao S.A. and Pekao S.A. Group.
129
102-4
Operating costs
1.1 Bank Pekao S.A. and Pekao S.A. Group.
129
102-5
Nature of ownership and legal form
1.1 Bank Pekao S.A. and Pekao S.A. Group.
129
102-6
Markets served
1.1 Bank Pekao S.A. and Pekao S.A. Group.
129
102-7
Scale of operations
1.1 Bank Pekao S.A. and Pekao S.A. Group.
1.1.2 Scale of operations
129, 131
102-8
Total number of employees by type of employment, type of employment contract and region, as well as gender
1.6 The third pillar of ESG strategy: Governance
1.6.2 An inclusive organization - growth, diversity and equality
167
102-10
Significant changes to the organization and its supply chain
1.1 Bank Pekao S.A. and Pekao S.A. Group.
130
102-11
Number and gender of members of the highest governance body and its committees
1.1 Bank Pekao S.A. and Pekao S.A. Group.
1.1.3 Organizational and management structure
131
102-12
External initiatives
1.3 Business Strategy and ESG Strategy
1.3.3 Social responsibility
140, 158
102-13
Membership in associations and organizations
1.8 Cooperation with the environment
1.8.2 Bank's cooperation with industry organizations
195
Strategies and analysis
102-14
A statement by top management on the importance of sustainability to the organization and its strategy
Letter from the President of the Management Board of Bank Pekao S.A. and the Letter from the President of the Supervisory Board of Bank Pekao S.A.
197
Report on the activities of Bank Pekao S.A. Group for the year 2021 rok
Bank Pekao S.A.
Ethics and integrity
102-16
Values, principles, standards, and norms of behaviour
1.3. Business Strategy and ESG Strategy
1.3.2 Mission, vision and values - the evolution of organizational culture
139
102-17
Mechanisms for advice and concerns about ethics
1.6 The third pillar of ESG strategy: Governance
1.6.1. Corporate governance and ethical approach to business 1.6.2 Inclusive organization - development, diversity and equality
164, 173
Organizational order
102-18
Management structure
1.1 Bank Pekao S.A. and Pekao S.A. Group.
1.1.3 Organizational and management structure
131
102-22
Structure of the highest governance body and its committees
1.1 Bank Pekao S.A. and Pekao S.A. Group.
1.1.3 Organizational and management structure
131
Stakeholder involvement
102-40
List of stakeholder groups engaged by the organization
1.8 Cooperation with the environment
1.8.1 Communication with stakeholders
192-194
102-41
Percentage of all employees covered by collective bargaining agreements (partially)
1.6 The third pillar of ESG strategy: Governance
1.6.2 An inclusive organization - growth, diversity and equality
169
102-42
Basis for identification and selection of stakeholder groups involved
1.8 Cooperation with the environment
1.8.1 Communication with stakeholders
194
102-43
Approach to stakeholder engagement, including frequency of engagement by type and by stakeholder group
1.8 Cooperation with the environment
1.8.1 Communication with stakeholders
194
102-44
Key issues and questions raised by stakeholders in stakeholder engagement processes
1.8 Cooperation with the environment
1.8.1 Communication with stakeholders
198-199
102-45
All entities included in the consolidated financial statements or equivalent documents
1.9 Information about the Statement
196
102-46
Process for defining report content and boundaries for reporting material aspects
1.9 Information about the Statement
202
102-47
Important aspects identified in the process of defining the content of the report
1.9 Information about the Statement
196
102-48
Impact of any changes to information provided in previous reports and reasons for such changes
1.9 Information about the Statement
196
102-49
Significant changes from previous reporting periods in the scope and boundaries of aspects
1.9 Information about the Statement
196
Reporting practice
102-50
Reporting period
1.9 Information about the Statement
196
102-51
Date of publication of the last report
1.9 Information about the Statement
198
102-52
Reporting cycle
1.9 Information about the Statement
196
102-53
Contact person
1.9 Information about the Statement
198
102-54
Indication whether the report was prepared in accordance with Standard in the Core or Comprehensive option
1.9 Information about the Statement
196
102-55
Table indicating placement of indicators in the report
1.9 Information about the Statement
199
102-56
Policy and current practice on external report.
1.9 Information about the Statement
198
Detailed indicators
Indicator number
Indicator name
Section
Subsection
Page
Economic topics
Economic performance
GRI 201
Economic results: 2016
1.2. Macroeconomic environment
201-1
Direct economic value generated and distributed
1.2. Macroeconomic environment
1.2.3. Economic contribution to the environment
138
Anti-corruption policy
GRI 205
Anti-corruption policy: 2016
1.6. The third pillar of ESG strategy: Governance
205-1
Total number and percentage of establishments assessed for corruption risk and significant risks identified
1.6. The third pillar of ESG strategy: Governance
1.6.1. Corporate governance and an ethical approach to business
164
205-3
Confirmed cases of corruption and action taken
1.6. The third pillar of ESG strategy: Governance
1.6.1. Corporate governance and an ethical approach to business
164
Anti-competitive behaviour
GRI 206
Anti-competitive behaviour: 2016
1.6. The third pillar of ESG strategy: Governance
198
Report on the activities of Bank Pekao S.A. Group for the year 2021 rok
Bank Pekao S.A.
206-1
Legal steps taken against organizations for violations of free competition rules and monopolistic practices
1.6. The third pillar of ESG strategy: Governance
1.7.1 Customer Relationships
188
Environmental topics
Materials
GRI 301
Materials: 2016
1.4. The first pillar of the ESG Strategy: The natural environment
301-1
Materials/raw materials used by weight or volume
1.4. The first pillar of the ESG Strategy: The natural environment
1.4.1. Climate neutrality in business operations
145
Energy
GRI 302
Energy: 2016
1.4. The first pillar of the ESG Strategy: The natural environment
302-1
Energy consumption in the organization
1.4. The first pillar of the ESG Strategy: The natural environment
1.4.1. Climate neutrality in business operations
144
Emissions
GRI 305
Emissions: 2016
1.4. The first pillar of the ESG Strategy: The natural environment
305-1
Direct greenhouse gas emissions (Scope 1)
1.4. The first pillar of the ESG Strategy: The natural environment
1.4.2. Pekao Group carbon footprint calculation
146
305-2
Indirect GHG emissions (Scope 2) - market-based*
1.4. The first pillar of the ESG Strategy: The natural environment
1.4.2. Pekao Group carbon footprint calculation
147
Indirect GHG emissions (Scope 2) - location-based*
1.4. The first pillar of the ESG Strategy: The natural environment
1.4.2. Pekao Group carbon footprint calculation
150
Waste
GRI 306
Waste: 2016
306-3
Waste generated
1.4. The first pillar of the ESG Strategy: The natural environment
1.4.1. Climate neutrality in business operations
Social topics
GRI 401
Employment: 2016
1.6. The third pillar of ESG strategy: Governance
401-1
Total number and rates of hiring new employees and employee turnover by age group, gender and region
1.6. The third pillar of ESG strategy: Governance
1.6.2 An inclusive organization - growth, diversity and equality
168
401-2
Benefits provided to full-time employees not eligible for temporary or part-time employees
1.6. The third pillar of ESG strategy: Governance
1.6. 2 An inclusive organization - growth, diversity and equality
169
Health and safety at work
403
Safety and working conditions, health promotion: 2018
1.6. The third pillar of ESG strategy: Governance
403-2
Hazard identification, risk assessment and incident investigation
1.6. The third pillar of ESG strategy: Governance
1.6.3 Health and safety at work
174
403-6
Employee health promotion
1.6. The third pillar of ESG strategy: Governance
1.6.4 Health-promoting activities
175
403-9
Work-related injuries
1.6. The third pillar of ESG strategy: Governance
1.6.3 Health and safety at work
174
405-1
Composition of supervisory bodies and staff by gender, age and other indicators of diversity
1.6. The third pillar of ESG strategy: Governance
1.6.9 Diversity and equality
179
405-2
Ratio of basic salary and remuneration of women to men broken down by categories of employees
1.6. The third pillar of ESG strategy: Governance
1.6.2 An inclusive organization - growth, diversity and equality
172
Training and Education
GRI 404
Training and Education: 2016
1.6. The third pillar of ESG strategy: Governance
404-1
Average number of hours of training per employee by gender and category
1.6. The third pillar of ESG strategy: Governance
1.6.6 Training and professional development
176
Diversity and equal opportunities
GRI 406
Counteracting discrimination
1.6. The third pillar of ESG strategy: Governance
406-1
Total number of cases of discrimination and corrective action taken
1.6. The third pillar of ESG strategy: Governance
1.6. 2 An inclusive organization - growth, diversity and equality
173
Right to freedom of association
199
Report on the activities of Bank Pekao S.A. Group for the year 2021 rok
Bank Pekao S.A.
GRI 407
Right to freedom of association and collective bargaining: 2016
1.6. The third pillar of ESG strategy: Governance
GRI 407-1
Operations and suppliers in which the right to freedom of association and collective bargaining may be at risk
1.6. The third pillar of ESG strategy: Governance
1.6. 2 An inclusive organization - growth, diversity and equality
173
Local communities
GRI 413
Local communities: 2016
1.5 The second pillar of the ESG Strategy: Commitment
413-1
Operations with local community engagement, impact assessments, and development programmes
1.5 The second pillar of the ESG Strategy: Commitment
1.5.1 Actions aimed at providing aid, equal opportunities and preventing exclusion
153
Supplier Social Assessment
GRI 414
Supplier Social Assessment: 2016
1.7. Bank as a market participant and service recipient
414-1
New suppliers that were screened using social criteria
1.7. Bank as a market participant and service recipient
1.7.2 Responsible purchasing process
189
Marketing and labelling of products and services
GRI 417
Marketing and labelling of products and services: 2016
1.7. Bank as a market participant and service recipient
417-2
Incidents of non-compliance concerning product and service information and labelling
1.7. Bank as a market participant and service recipient
1.7.1 Customer Relationships
186
417-3
Cases of non-compliance with regulations and voluntary codes concerning the labelling of products and services and information on them
1.7. Bank as a market participant and service recipient
1.7.1 Customer Relationships
187
Customer privacy protection
GRI 418
Customer privacy protection: 2016
1.7. Bank as a market participant and service recipient
418-1
Substantiated complaints concerning breaches of customer privacy and losses of customer data
1.7. Bank as a market participant and service recipient
1.7.3. Personal data protection
191
Disclosures Regarding the 10 Principles of the United Nations Global Compact
THE UNITED NATIONS GLOBAL COMPACT PRINCIPLE
PLACE IN THE STATEMENT
1. Promotion and observance of human rights adopted by the international community
1.1 Bank Pekao S.A. and Pekao S.A. Group. 1.3 Business Strategy and ESG Strategy 1.5 Second pillar of the ESG Strategy: Commitment 1.6 The third pillar of the ESG Strategy: Governance 1.7 The Bank as a market participant and recipient of services 1.8 Cooperation with the environment
2. Elimination of all human rights violations by the company
1.1 Bank Pekao S.A. and Pekao S.A. Group. 1.3 Business Strategy and ESG Strategy 1.5 Second pillar of the ESG Strategy: Commitment 1.6 The third pillar of the ESG Strategy: Governance 1.7 Bank as a market participant and service recipient
3. Respecting the freedom of association
1.3 Business Strategy and ESG Strategy 1.6 Third pillar of the ESG Strategy: Governance
4. Eliminating all forms of forced labour
1.3 Business Strategy and ESG Strategy
5. Prohibition of child labour
1.3 Business Strategy and ESG Strategy
6. Effective counteracting of discrimination in the area of employment
1.3 Business Strategy and ESG Strategy 1.6 Third pillar of the ESG Strategy: Governance
7. A preventive approach to the natural environment
1.4 The first pillar of the ESG Strategy: The natural environment
8. Undertaking initiatives aimed at promoting an attitude of ecological responsibility
1.5 The second pillar of the ESG Strategy: Commitment
9. Use and dissemination of environmentally friendly technologies
1.5 The second pillar of the ESG Strategy: Commitment
10. Counteracting corruption in all its forms,
including extortion and bribery
1.6 The third pillar of the ESG Strategy: Governance
200
Report on the activities of Bank Pekao S.A. Group for the year 2021 rok
Bank Pekao S.A.
02.03.2022
Leszek Skiba
President of the Management Board
The original Polish document is signed with a qualified electronic signature
Date
Name/Surname
Position/Function
Signature
02.03.2022
Jarosław Fuchs
Vice President of the Management Board
The original Polish document is signed with a qualified electronic signature
Date
Name/Surname
Position/Function
Signature
02.03.2022
Marcin Gadomski
Vice President of the Management Board
The original Polish document is signed with a qualified electronic signature
Date
Name/Surname
Position/Function
Signature
02.03.2022
Jerzy Kwieciński
Vice President of the Management Board
The original Polish document is signed with a qualified electronic signature
Date
Name/Surname
Position/Function
Signature
02.03.2022
Paweł Strączyński
Vice President of the Management Board
The original Polish document is signed with a qualified electronic signature
Date
Name/Surname
Position/Function
Signature
02.03.2022
Błażej Szczecki
Vice President of the Management Board
The original Polish document is signed with a qualified electronic signature
Date
Name/Surname
Position/Function
Signature
02.03.2022
Wojciech Werochowski
Vice President of the Management Board
The original Polish document is signed with a qualified electronic signature
Date
Name/Surname
Position/Function
Signature
02.03.2022
Piotr Zborowski
Vice President of the Management Board
The original Polish document is signed with a qualified electronic signature
Date
Name/Surname
Position/Function
Signature
02.03.2022
Magdalena Zmitrowicz
Vice President of the Management Board
The original Polish document is signed with a qualified electronic signature
Date
Name/Surname
Position/Function
Signature