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 2022 (prepared jointly with the Report on the activities of Bank Pekao S.A.)
Warsaw, February 2023
2
Report on the activities of Bank Pekao S.A. Group for the year 2022 year
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 ...................................................................................................................................................................... 12
5.1 Changes in the Group’s structure ........................................................................................................................................................................ 12
5.2 Changes in the Statutory Bodies of the Bank ...................................................................................................................................................... 12
5.3 Organizational changes ....................................................................................................................................................................................... 16
5.4 Awards and distinctions ....................................................................................................................................................................................... 17
6. Information for the Investors .................................................................................................................................................................................... 21
6.1 The Bank’s share capital and share ownership structure .................................................................................................................................... 21
6.2 Performance of market valuation of Bank Pekao S.A.’s stock ............................................................................................................................. 22
6.3 Dividend payment history .................................................................................................................................................................................... 23
6.4 Investor Relations ................................................................................................................................................................................................ 24
6.5 Financial credibility ratings ................................................................................................................................................................................... 25
7. Activity of Bank Pekao S.A. Group .......................................................................................................................................................................... 27
7.1 Important factors influencing the Group’s activities and results ........................................................................................................................... 27
7.2 Major sources of risk and threats ......................................................................................................................................................................... 30
7.3 Capital adequacy ................................................................................................................................................................................................. 33
7.4 Bank Pekao S.A. on the Polish banking market .................................................................................................................................................. 36
7.5 Major areas of activities of the Group’s subsidiaries ........................................................................................................................................... 50
7.5.1 Banking activity ..................................................................................................................................................................................... 50
7.5.2 Assets management ............................................................................................................................................................................. 50
7.5.3 Leasing activity ...................................................................................................................................................................................... 50
7.5.4 Factoring activity ................................................................................................................................................................................... 51
7.5.5 Transactional advisory .......................................................................................................................................................................... 51
7.5.6 Other financial services ......................................................................................................................................................................... 51
7.6 Investing in human capital ................................................................................................................................................................................... 53
7.7 Sponsorship and charity policy ............................................................................................................................................................................ 59
8. Statement of Financial Position and Financial Results ......................................................................................................................................... 60
8.1 The consolidated income statement – presentation form .................................................................................................................................... 62
8.2 Structure of the consolidated statement of financial position – short form .......................................................................................................... 66
8.2.1 Assets ................................................................................................................................................................................................... 66
8.2.2 Liabilities ............................................................................................................................................................................................... 68
8.3 Consolidated income statement .......................................................................................................................................................................... 71
8.4 Consolidated statement of comprehensive income ............................................................................................................................................. 73
8.5 Consolidated income statement – presentation form .......................................................................................................................................... 74
8.6 Reconciliation of income statement – presentation form and long form .............................................................................................................. 75
9. Separate Statement of Financial Position and Financial Results ......................................................................................................................... 77
9.1 The Separate income statement – presentation form .......................................................................................................................................... 79
9.2 Structure of the separate statement of financial position – short form ................................................................................................................. 83
9.2.1 Assets ................................................................................................................................................................................................... 84
9.2.2 Liabilities ............................................................................................................................................................................................... 85
9.3 Separate income statement ................................................................................................................................................................................. 88
9.4 Separate statement of comprehensive income ................................................................................................................................................... 90
9.5 Separate income statement – presentation form ................................................................................................................................................. 91
9.6 Reconciliation of income statement – presentation form and long form .............................................................................................................. 92
9.7 The structure of the net profit ............................................................................................................................................................................... 94
9.8 Off–balance sheet items ...................................................................................................................................................................................... 96
10. Other Information ...................................................................................................................................................................................................... 97
11. Prospects for Development .................................................................................................................................................................................... 102
11.1 Factors which will affect the results of the Group .............................................................................................................................................. 102
11.2 Strategic directions and business priorities ....................................................................................................................................................... 103
12. Representations of the Bank’s Management Board ............................................................................................................................................. 108
13. Statement of Bank Polska Kasa Opieki Spółka Akcyjna on application of Corporate Governance Standards in 2022 ................................ 109
14. Statement of Bank Pekao S.A. Group on Non-financial Data for 2022 ............................................................................................................... 133
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Report on the activities of Bank Pekao S.A. Group for the year 2022 year
Bank Pekao S.A.
1. Highlights of Bank Pekao S.A. Group
2022
2021
2020
2019
2018
2017
INCOME STATEMENT – SELECTED ITEMS
(in PLN million)
Operating income
10,761
8,522
7,796
8,282
7,830
7,350
Operating costs
(4,083)
(3,739)
(3,451)
(3,537)
(3,445)
(3,263)
Profit before income tax
2,883
3,002
1,725
3,002
3,047
3,153
Net profit for the period attributable to equity holders
of the Bank
1,718
2,175
1,102
2,165
2,287
2,475
PROFITABILITY RATIOS
Return on average equity (ROE) - nominally
7.6%
8.7%
4.5%
9.5%
10.2%
11.0%
Return on assets (ROA)
0.6%
0.9%
0.5%
1.1%
1.3%
1.4%
Net interest margin
3.3%
2.4%
2.5%
2.9%
2.8%
2.8%
Cost / income (including to contributions to the BFG cost and fee paid for the Protection Schemes )
44.9%
47.3%
49.2%
48.2%
47.4%
48.1%
Costs of risk
1.12%
0.45%
0.99%
0.46%
0.36%
0.40%
STATEMENT OF FINANCIAL POSITION – SELECTED ITEMS
(in PLN million)
Total assets
281,139
250,567
233,217
203,323
191,090
185,466
Customers’ financing (*)
167,510
169,073
151,684
151,384
140,032
132,300
Amounts due to customers (**)
209,596
194,804
177,745
157,203
149,143
145,398
Debt securities issued and subordinated liabilities
13,127
8,117
8,905
9,072
7,243
4,029
Equity
22,775
23,863
25,495
23,398
22,808
23,268
STATEMENT OF FINANCIAL POSITION STRUCTURE RATIOS
Customers’ financing (*) / total assets
59.6%
67.5%
65.0%
74.5%
73.3%
71.3%
Securities / total assets
25.3%
22.9%
26.7%
17.8%
15.0%
20.8%
Deposits (***) / total assets
79.2%
81.0%
80.0%
81.8%
81.8%
80.6%
Customers’ financing (*) / deposits (***)
75.2%
83.3%
81.3%
91.0%
89.5%
88.5%
Equity / total assets
8.1%
9.5%
10.9%
11.5%
11.9%
12.5%
Total capital ratio
17.4%
17.7%
19.2%
17.1%
17.4%
17.1%
EMPLOYEES AND NETWORK
Total number of employees (****)
14,642
14,702
14,994
15,678
16,714
17,339
Number of outlets
597
650
713
805
818
843
Number of ATMs
1,328
1,475
1,592
1,648
1,708
1,745
(*) 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 end of 2021 have been recalculated taking into account the retrospective recognition of part of the profit, in accordance with the EBA position expressed in Q&A 2018_3822 and Q&A 2018_4085.
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 2022 year
Bank Pekao S.A.
2. Highlights of Bank Pekao S.A.
2022
2021
2020
2019
2018
2017
INCOME STATEMENT – SELECTED ITEMS
(in PLN million)
Operating income
10,417
8,084
7,454
7,887
7,478
7,085
Operating costs
(3,756)
(3,438)
(3,169)
(3,204)
(3,119)
(3,025)
Profit before income tax
3,012
2,995
1,697
3,016
3,021
2,728
Net profit
1,898
2,237
1,126
2,247
2,311
2,088
PROFITABILITY RATIOS
Return on average equity (ROE) - nominally
8.7%
9.2%
4.8%
10.2%
10.7%
9.6%
Return on assets (ROA)
0.7%
0.9%
0.5%
1.2%
1.3%
1.2%
Net interest margin
3.3%
2.4%
2.5%
2.9%
2.8%
2.8%
Cost / income (including to contributions to the BFG cost and fee paid for the Protection Schemes )
43.2%
46.1%
47.6%
46.4%
45.3%
46.5%
Costs of risk
1.12%
0.41%
1.03%
0.43%
0.36%
0.40%
STATEMENT OF FINANCIAL POSITION – SELECTED ITEMS
(in PLN million )
Total assets
271,705
241,275
222,381
194,650
184,347
182,077
Customers’ financing (*)
155,477
157,783
139,926
142,146
133,085
128,873
Amounts due to customers (**)
209,802
195,064
178,276
157,750
149,784
146,110
Debt securities issued and subordinated liabilities
8,683
2,940
3,281
4,369
3,745
2,727
Equity
22,190
23,100
24,647
22,527
21,822
22,259
STATEMENT OF FINANCIAL POSITION STRUCTURE RATIOS
Customers’ financing (*) / total assets
57.2%
65.4%
62.9%
73.0%
72.2%
70.8%
Securities / total assets
26.8%
24.2%
28.2%
18.6%
15.5%
21.1%
Deposits (**) / total assets
80.4%
82.1%
81.6%
83.3%
83.3%
81.7%
Customers’ financing (*) / deposits (**)
71.2%
79.7%
77.1%
87.7%
86.7%
86.6%
Equity / total assets
8.2%
9.6%
11.1%
11.6%
11.8%
12.2%
Total capital ratio
19.5%
19.6%
21.3%
18.7%
18.7%
18.4%
EMPLOYEES AND NETWORK
Total number of employees (****)
12,435
12,661
12,870
13,779
14,569
15,316
Number of outlets
597
650
713
805
818
843
Number of ATMs
1,328
1,475
1,592
1,648
1,708
1,745
(*) 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 end of 2021 have been recalculated taking into account the retrospective recognition of part of the profit, in accordance with the EBA position expressed in Q&A 2018_3822 and Q&A 2018_4085.
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Report on the activities of Bank Pekao S.A. Group for the year 2022 year
Bank Pekao S.A.
3. Summary of Performance
In 2022, we generated the net profit of the Bank Pekao S.A. Group, attributable to the Bank's shareholders in the amount of PLN 1,717.6 million. This result is lower by PLN 457.3 million than the result achieved in 2021. The following events had a negative impact on the result in 2022:
- recognition of the cost related to the modification of PLN mortgage loan agreements granted to consumers due to the suspension of their loan repayments at the amount of PLN 1,958 million,
- creation of the provisions for legal risk regarding foreign currency mortgage loans in CHF, in the amount of PLN 1,598 million,
- recognition of fee paid for the Protection Scheme t he members of which are banks operating in the form of a joint-stock company at the amount of PLN 482 million,
- incurring the costs of additional contributions to the Borrowers Support Fund amounted to PLN 169 million,
- creation of the provisions for reimbursement customers of increased margins on mortgage loans before establishing a mortgage in the amount of PLN 112 million.
The ROE ratio was at the level of 7.6%.
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 have prepared a wide deposit offer for individual clients including interest rate of 8% per annum on savings accounts, a deposit with with an investment product for 8% per annum for a period of 12 months, deposits with "Żubr" in PeoPay with an interest rate of up to 7% per annum.
We supported the citizens of Ukraine in every possible way. We have prepared a special offer for individual and corporate clients. Bank Pekao S.A., Bank’s Foundation and the employees were involved in humanitarian aid and in supporting Ukraine and its citizens.
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 2022 year
Bank Pekao S.A.
Strategy and key financial indicators
„Responsible Bank. Modern banking ” is th strategy for the years 2021-2024, announced in March 2021.
According to the strategic plan, we:
• we are a universal bank, we want to be the bank of first choice for our clients,
• we develop a remote distribution and customer service model,
• we focus on cost and process efficiency,
• we are growing in the 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.
Support for Ukrainian citizens
Business activities supporting Ukrainian citizens
We supported the citizens of Ukraine in every possible way. We have prepared a special offer for individual and corporate clients. We have abolished fees for transfers from Poland to banks in Ukraine and from Ukraine to Poland - for transactions made by both individual and corporate clients.
Maintaing the Przekorzystne account for Ukrainian citizens is free, we have also abolished the fee for servicing the card to the account and for cash withdrawals made with it at ATMs in Poland and abroad. We also do not charge a margin or fees for currency exchange on transactions with the card abroad. We have simplified the procedure for opening an account for individual clients - all one needs is one document identifying a citizen of Ukraine, e.g. a passport.
We have prepared a wide offer for PLN 0 for Ukrainian entrepreneurs. We do not charge fees for company accounts, debit cards and we provide full and free cash service and electronic banking services. We have also introduced facilitations in the process of establishing business relations for companies from Ukraine.
For a long time, we have offered to individual clients the PeoPay mobile application and Pekao24 internet banking available in Ukrainian, as well as service in Ukrainian by consultants of the Bank's infoline.
Humanitarian aid activities for Ukrainian citizens
In connection with the Russian aggression against Ukraine, the Bank, Bank’s Fundation and the employees were involved in humanitarian aid and supporting Ukraine and its citizens.
Foundation of Bank Pekao S.A. made donation: PLN 500 thousand to a special account of the Polish Red Cross, intended for the most urgent needs of refugees and PLN 250 thousand to Caritas Polska account for the current needs of refugees under the care of this organization.
The Bank's employees financially supported the collections intended to help children and foster families from Ukraine staying under the care of the SOS Children's Villages Association in Poland and for children and mothers under the care of the Children's Hospital at Niekłańska street in Warsaw.
The bank also took direct care of group of refugees who lived in one of the premises provided by Bank Pekao S.A.. Ongoing support and assistance in adapting to new conditions are provided to refugees by our volunteers - employees of the Bank.
Moreover, many of the Bank's employees have helped and still help in a direct way, accepting refugees at their homes, providing material and material support or acting as volunteers.
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Report on the activities of Bank Pekao S.A. Group for the year 2022 year
Bank Pekao S.A.
4. External Activity Conditions
Economic growth
In 2022, the Polish economy grew by 4.9%, compared to an increase of 6.8% a year earlier. Domestic demand in 2022 increased by 5.5%, while net exports reduced growth by 0.6 pp. Economic growth was almost predominantly driven by a significant increase in capital formation (17.3% yoy) - here we can see both a slight recovery in investments (4.9% yoy) and a strong rebound of inventories (+2.7 pp. of contribution to GDP growth). To a lesser extent, the growth was supported by consumption, which increased by 2.1% yoy, of which private consumption grew by 3.0% yoy. The year 2022 can be summarized as a period of weaker consumer demand due to tightening monetary policy and rising inflation, increase in inventories due to persistent uncertainty and weak demand, and a slight rebound in investments.
We estimate that in 2023, the Polish economy will slow down to 0.8% yoy. According to our opinion, this will be a consequence of several factors. Firstly, the cumulative effects of monetary policy tightening will translate into weaker consumer sentiment, and consequently, weaker demand and consumption. Secondly, lower investment growth should be expected due to the weakness of private investments, which will be offset by public investments. Thirdly, net exports will boost economic growth, but mainly due to the drop in imports and the aforementioned weakness of consumption.
Labour market
In 2022, the domestic labor market fully made up for the losses caused by the pandemic crisis - in the second half of the year the unemployment rate recorded levels very close to the 20-year minimum, and employment in the enterprise sector reached its highest level in history.
The unemployment rate at the end of 2022 stood at 5.2% compared to 5.8% at the end of 2021. The rate of decline was mostly in line with the seasonal pattern of previous years or slightly faster and consequently the unemployment rate last year followed a clear downward trend. The labor market bwas becoming more and more limited - with the continued strong labor demand, enterprises had difficulty recruiting new employees, as evidenced by the high number of published job offers, although it was lower than in 2021. On the other hand, the average employment in the enterprise sector amounted to 6.5 million people in December 2022, i.e. 143 thousand more than in December 2021
Wage growth in the enterprise sector recorded a marked rebound in 2022 to 12.9% from 8.6% in 2021. The driving force behind such a strong wage growth last year was inflation, which remained substantially above the NBP inflation target. As a result, up to 80% of enterprises declared an increase or persistence of wage pressure according to the NBP data. The wage growth in 2022 was often boosted by the so-called inflation bonuses. At the same time, the rapid wage growth was supported by the depleting pool of available workers. With substantially increased inflation, the decline in real wages in 2022 amounted to 1.5% yoy.
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Report on the activities of Bank Pekao S.A. Group for the year 2022 year
Bank Pekao S.A.
We expect the unemployment rate in the first half of 2023 will enter an upward trend for a short time, and from June it should become stagnant. At the end of 2023, it will amount to 5.5% against 5.2% at the end of 2022. Along with the slowdown in economic activity, the situation on the labor market will deteriorate slightly. This will be mainly visible through weaker wage growth, which will follow the falling inflation and the worse economic situation. Wage growth in the enterprise sector will slow down to 10.7% yoy from 12.9% yoy in 2022. Employment will stabilize or increase slightly - employers in the face of the economic slowdown will not be willing to dismiss employees due to previous problems with finding them. The Bank forecasts a slowdown in employment growth in the enterprise sector to 1.0% in 2023 from 2.4% in 2022.
Inflation and monetary policy
The average annual consumer price index increased strongly in 2022 to 14.4% from 5.1% in 2021. Inflation in 2022 turned out to be much higher than market expectations. The consequences of Russia's invasion of Ukraine have turned macroeconomic scenarios, including those regarding inflation, upside down. Moreover, inflation was fueled by the post-pandemic rebound in global demand, however, it lost momentum during the year. The global risk aversion and remarkably lower supply of Russian energy resources strongly boosted prices of energy and fuels. Food prices also recorded a very strong increase (on average in 2022 by almost 16%), because of high gas and fertilizers prices, as well as a limited supply of food from the East.
Inflation spilled over a wide range of goods and services due to the pass-through of high energy prices by producers and sellers into the prices of final goods for consumers (the so-called second-round effects). This was possible due to the continued high demand in the economy, supported by expansionary fiscal policy and strong labour market. Core inflation excluding food and energy prices accelerated on average in 2022 to 9.1%.
At the end of 2022, the first disinflation signals have appeared, starting from falling prices of raw materials and industrial goods. At the beginning of 2023, we will still have a surge in inflation related to phasing out the anti-inflation shield (including the return to higher VAT rates on electricity and gas bills). On the other hand, inflation would be even higher if energy tariffs for households were not "freezed" at the beginning of the year. Inflation in this cycle will peak in February at the level of about 19% yoy. In the next months, inflation will decline rapidly. For most of the year, inflation will remain in double digits, but according to our forecasts, at the end of 2023 it may fall even below 8% yoy. The rapid disinflation of non-basic factors will strongly contribute to this. Core inflation will reflect previous increases in costs and expectations, and its decline over the year will be slow. Disinflation will be supported by economic downturn, both domestic and global, as well as the end of Europe’s energy crisis and a high reference base. We forecast a decrease in inflation in 2023 to about 12% on average annually.
In 2022 the NBP’s monetary tightening cycle first accelerated, then slowed down and finally was de facto ended (although the Monetary Policy Council (MPC) only declares that the cycle was merely suspended). All in all interest rates rose by 500 bps in 2022 as the NBP reference rate rose to 6.75 bps, reaching 18-year high. The entire 2021-22 tightening cycle will be go down in history as the fastest and most aggressive one. Its de facto end can be associated with shifting focus from combating inflation to protecting economic growth. Faced with the choice between bigger tightening (even higher interest rates) and keeping them at present levels for a longer period, the MPC chose the latter. In light of November inflation report, inflation will return to target at the turn of 2025 and 2026. In our view, in 2023 the MPC will not resume the tightening cycle and its next step will be a rate cut. The Bank believes that the cycle will start in the fourth quarter and will be a slow one.
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Report on the activities of Bank Pekao S.A. Group for the year 2022 year
Bank Pekao S.A.
Fiscal policy
Despite the energy crisis, which is costly for the budget, current Polish fiscal indicators are favourable. Public debt is low compared to other EU countries (around 50.3% of GDP) and last year's deficit of general government was moderate given the circumstances (probably around 3.5% of GDP). In addition, the cash reserves of the Ministry of Finance are still relatively high (PLN 99 billion at the end of January 2023) and the supply of treasury bonds at auctions is moderate. The costs of servicing public debt have so far remained low (around 1% of GDP) as a result of a decade (2011-2021) of low inflation, interest rates and yields on government bonds. It will take several years before the recent tightening of monetary policy and resulting higher bond yields will translate into an increase in the costs of servicing the entire public debt of the Polish.
This does not change the fact that the outlook for public finances has deteriorated markedly, as current statistics do not yet fully take into account:
‒ the costs of counteracting the energy crisis, primarily freezing or lowering electricity and gas prices for households as well as small and medium-sized enterprises, but also support for fertiliser producers and other energy-intensive industries. We estimate these costs at PLN 30-40 billion in 2023.
‒ an increase in military spending in connection with the war in Ukraine. The budget of the Ministry of National Defense will increase from 2.1 to 4.5% of GDP in 2023, which means an increase in military spending by PLN 65 billion. In the coming years, the financial needs for this purpose will also be high.
We believe these costs will prevent the consolidation of public finances in 2023 and the deficit will remain at a similar level to last year – we expect it to be 3.7% of GDP. Its financing will still be expensive for the budget, as the slowing economy will suppress the growth of tax revenues. Moreover, the possible reduction in interest rates will take place only at the end of the year and will be limited in scale.
Capital markets
2022 was not kind to equity holders – all major stock indices entered bear markets over the course of 2022, although the declines were not steady. Eventually, S&P500 lost 19.4%, German DAX dropped by 12.4%, French CAC40 declined by 9.5% and British FTSE250 declined by 19.7%. There were massive increases in bond yields over that period (as much as 400 bps). This means that standard stock-bond portfolios experienced large losses and 2022 might have been the worst such year in modern history. The main reason for this was the considerable monetary tightening by major central banks in response to inflation. The central banks’ strategy was not favorable to risk assets – interest rate paths were revised upward and upward, the extent of the hikes was considerable and central bank rhetoric emphasized the need to bear the costs of disinflation here and now.
In 2021 all equity indices on the Warsaw Stock Exchange dropped considerably, following foreign benchmarks. The rate of return on the broad WIG index amounted to -17.1%, WIG20 declined by 20,1% and midcap index mWIG40 lost 21.5%. Finally, the small cap benchmark sWIG80 declined by 12.8%. In 2022 the multi-year trend of net withdrawal from the stock market slowed down, but not ended – there were 22 withdrawals and 8 IPOs. Interest in the Warsaw Stock Exchange has decreased - the total value of turnover on the stock market amounted to PLN 286 billion in 2021 (in 2021, the value of turnover amounted to PLN 313 billion).
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Report on the activities of Bank Pekao S.A. Group for the year 2022 year
Bank Pekao S.A.
Banking sector
According to the data of the Polish Financial Supervision Authority (KNF), the aggregated net profit of the banking sector in 2022 amounted to PLN 12.5 billion and doubled (+108%) compared to the corresponding period of 2021. Its volatility was increased by provisions made by banks increasing the cost of risk (+45% compared to 2021). The operating result, which does not include such one-off events, increased by 59% in 2022 after an increase of 20% in 2021. Net interest income increased by 63%, which should be associated with the increase in interest rates that took place from the end of 2021. Although in the initial phase of the cycle of MPC rate hikes, a greater impact of higher rates was observed on the side of revenues than interest costs, but throughout 2022, interest costs increased almost 10 times with revenues increasing by 134%. At the same time, the sector's commission income grew (by 7.6%). Total operating revenues of the sector increased by 38% y/y. Banks' operating expenses increased significantly (by 24%), which resulted from higher general administrative expenses and higher staff costs.
According to KNF data, at the end of December 2022 the banking sector assets amounted to PLN 2.741 billion, an increase by 6.6% y/y.
According to National Bank of Poland (NBP) data, at the end of 2022 the following developments were noted in terms of main deposit categories:
 the volume of households’ deposits increased by 3.5% y/y. This was markedly lower than the growth rate recorded in 2021 (typically well above 5%) when it was supported by government transfers and precautionary savings. In 2022 household savings declined and at the same time funds were shifted from overnight into term deposits;
 corporate deposits rose by 11.6%, little changed from 2021 and high growth rate in the deposit base was facilitated by weak PLN and very strong corporate earnings (aggregate profit of the nonfinancial sector doubled compared to the pre- pandemic norm in nominal terms),
 other deposits grew by 2% y/y, in comparison to 28% y/y growth in 2021.
At the end of 2022 household deposits accounted for 61%, corporate deposits 25%, and other deposits - 14% of all deposits. Around 83% of them were covered by current deposits.
Household and corporate deposits
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Report on the activities of Bank Pekao S.A. Group for the year 2022 year
Bank Pekao S.A.
In terms of main receivables categories, at the end of 2022 the following developments were noted:
 in yearly terms, volume of receivables from households declined by 3.8% - a first full-year decline in history. While consumer credit contracted by 2.8% yoy, the main reason for this was the considerable decline in mortgage loans (by 2.8% yoy), In 2022 not only did new production of mortgages tumble (from 7-8 bn PLN per month during the late 2021 peak to 2-3 bn PLN) but also there was an uptick in prepayments.
 receivables from enterprises grew by 9.7% y/y, which amounts to an acceleration vis-à-vis the end of 2021 (4.3% yoy). Credit growth was boosted by entrepreneurs’ bigger needs to finance working capital expenses amid high inflation and on-going restocking.
 other receivables increased by 15.8% y/y
As of the end of 2022 loans to households accounted for 56%, corporate loans for 28% and other loans for 16% of all loans.
Loans to enterprises and households
Loan portfolio quality continued to improve in 2022 despite the extent of monetary tightening and the on-going slowdown of the real economy. In particular:
 NPL ratio for corporate loans after December 2022 amounted to 6.4%, down from 7.3% a year before. An improvement in loan quality concerned both large companies (decrease from 4.1% to 3.4%) as well as small and medium enterprises (decrease from 10.7% to 9.6%).
 the share of non-performing loans in the portfolio of loans to households reached 4.9%, in comparison to 5.0% after December 2021. The overall improvement was mainly due to significant decrease of the ratio for consumer loans (from 9.4% to 8.6%), while in case of mortgages it remained nearly flat (2.0% compared to 2.3% after December 2021).
Non-performing loans, % of portfolio
12
Report on the activities of Bank Pekao S.A. Group for the year 2022 year
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 2022.
Contribution of an organized part of the enterprise
On March 31, 2022, the Extraordinary Shareholders Meeting of Pekao Leasing Sp. z o.o. adopted a resolution approving the sale of the Organized Part of the Enterprise to PeUF Sp. z o.o. On April 1, 2022, the share capital of PeUF Sp. z o.o. was increased by the amount of PLN 12,491,900 by way of creating 249,838 shares with a nominal value of PLN 50 and a total nominal value of PLN 12,491,900. The new shares were acquired by Pekao Leasing Sp. z o.o. and covered by an in-kind contribution in the form of the Organized Part of the Enterprise Pekao Leasing Sp. z o.o. covering tangible and intangible assets used to conduct the business of an insurance agent providing insurance distribution services with a value of PLN 12,491,909.30. The value of the Organized Part of Pekao Leasing Sp. z o.o. in excess of the value of the shares taken up, was allocated to agio. On April 1, 2022, an in-kind agreement was also concluded between Pekao Leasing Sp. z o.o. and PeUF Sp. z o.o.
Increase of the share capital of Pekao Bank Hipoteczny S.A.
On July 15, 2022, the District Court for the Capital City of Warsaw, XIII Commercial Division of the National Court Register entered an increase in the share capital of Pekao Bank Hipoteczny S.A. by the amount of PLN 65,000,000 through the issue of 650 Shares Series J, with a nominal value of PLN 100,000 each and an issue price equal to the nominal price, 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). Following the increase, the share capital of Pekao Bank Hipoteczny S.A. at the end of September amounts to PLN 323,000,000.
On October 26, 2022, the District Court for the Capital City of Warsaw, XIII Commercial Division of the National Court Register entered an increase in the share capital of Pekao Bank Hipoteczny S.A. by the amount of PLN 100,000,000 through the issue of 1000 Shares Series K, with a nominal value of PLN 100,000 each and an issue price equal to the nominal price, in 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). Following the increase, the share capital of Pekao Bank Hipoteczny S.A. amounted to PLN 423,000,000.
5.2 Changes in the Statutory Bodies of the Bank
Changes in the Bank's Supervisory Board
The composition of the Supervisory Board of Bank Pekao S.A. has as follows:
AS AT THE DATE OF SUBMITTING
THE REPORT FOR 2022
31 DECEMBER 2022
AS AT THE DATE OF SUBMITTING
THE REPORT FOR THE THIRD QUARTER OF 2022
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
13
Report on the activities of Bank Pekao S.A. Group for the year 2022 year
Bank Pekao S.A.
Changes in the Bank's Management Board
The Supervisory Board of the Bank, acting pursuant to the Article 368 § 4 and in connection with the Article 369 § 1 of the Code of Commercial Companies and taking into account the assessment of compliance with the suitability requirements, unanimously appointed on 14 June 2022 members of the Bank's Management Board for the new three-year joint term of office, effective as of the day following holding of the Ordinary General Meeting approving the financial statements of Bank for the financial year 2021.
The following persons were appointed to the Management Board of the Bank for the next three-year joint term of the office starting on the date indicated above:
1) Leszek Skiba for the President of the Bank's Management Board,
2) Marcin Gadomski or the Vice-President of the Bank's Management Board supervising the risk management significant in the Bank's operation,
3) Jarosław Fuchs for the Vice-President of the Bank's Management Board,
4) Jerzy Kwieciński for the Vice-President of the Bank's Management Board,
5) Paweł Strączyński for the Vice-President of the Bank's Management Board,
6) Błażej Szczecki for the Vice-President of the Bank's Management Board,
7) Wojciech Werochowski for the Vice-President of the Bank's Management Board,
8) Piotr Zborowski for the Vice-President of the Bank's Management Board,
9) Magdalena Zmitrowicz for the Vice-President of the Bank's Management Board.
As a result of the assessments performed, the Supervisory Board of the Bank concluded that all members of the Bank's Management Board and the Bank's Management Board as a whole meet the requirements referred to in Art. 22aa The Act of 29 August 1997 - Banking Law and the suitability requirements referred to in the Policy of selecting candidates for the position of a Management Board member and the Key Function and assessment of the suitability of proposed and appointed members of the management board, supervisory board and key functions at the Bank.
According to the submitted statement, none of the persons appointed to the Management Board of the Bank, do not conduct any business competitive to that of the Bank and they are 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. None of these persons is entered 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 2022
31 DECEMBER 2022
AS AT THE DATE OF SUBMITTING
THE REPORT FOR THE
THIRD QUARTER OF 2022
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
Jerzy Kwieciński
Vice President of the Management Board
Paweł Strączyński
Vice President of the Management Board
Paweł Strączyński
Vice President of the Management Board
Paweł Strączyński
Vice President of the Management Board
Błażej Szczecki
Vice President of the Management Board
Błażej Szczecki
Vice President of the Management Board
Błażej Szczecki
Vice President of the Management Board
Wojciech Werochowski
Vice President of the Management Board
Wojciech Werochowski
Vice President of the Management Board
Wojciech Werochowski
Vice President of the Management Board
Piotr Zborowski
Vice President Of The Management Board
Piotr Zborowski
Vice President Of The Management Board
Piotr Zborowski
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
14
Report on the activities of Bank Pekao S.A. Group for the year 2022 year
Bank Pekao S.A.
Management Board of Bank Pekao S.A. at the date of submitting the report for the 2022 consists of nine members. Detailed profiles of Members of the Management Board are presented in point 13.
Members of the Management Board are appointed by the Supervisory Board for a joint three-year term of office.
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.
As of 31 December, 2022 the split of competences between the Members of the Management Board of the Bank was as follows:
LESZEK SKIBA, President of the Management Board,
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.
JAROSŁAW FUCHS, Vice President of the Management Board,
supervising the Private Banking and Investment Products Division.
MARCIN GADOMSKI, Vice President of the Management Board,
supervising the Risk Management Division also he’s responsible for overseeing the risk management process of bancassurance.
JERZY KWIECIŃSKI, Vice President of the Management Board,
supervising the Corporate Banking and MIB Division.
PAWEŁ STRĄCZYŃSKI , Vice President of the Management Board,
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.
15
Report on the activities of Bank Pekao S.A. Group for the year 2022 year
Bank Pekao S.A.
BŁAŻEJ SZCZECKI , Vice President of the Management Board,
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.
WOJCIECH WEROCHOWSKI, Vice President of the Management Board,
supervising the Retail Banking Division.
PIOTR ZBOROWSKI, Vice President of the Management Board,
supervising the Strategy Division.
MAGDALENA ZMITROWICZ , Vice President of the Management Board,
supervising the Banking Enterprise Division.
16
Report on the activities of Bank Pekao S.A. Group for the year 2022 year
Bank Pekao S.A.
5.3 Organizational changes
In 2022, we introduced a number of organizational changes in the Bank's Head Office as well as in the Bank's regional structure.
In structure of organizational units supervised directly by the President of the Management Board, activities carried out by Strategic Projects Office were incorporated into Legal Department and name of Communication Office was changed to Communication Department. The Shareholders Cooperation Office was established, responsible for the overall cooperation with the parent company and its ongoing coordination.
The structure of Analytics and Digital Transformation Center was extended, to which were transferred activities of the Group Development and Capital Transactions Department (currently carried out in Capital Investments Office), and the activities of Data Management and Big Data Office transferred from Financial Division. The Center also started to centralize the Know Your Customer process - as part of the Customer Verification Office (AML COE), which will finally support all segments of the Bank's customers.
In Strategy Division, the Quality Department was transformed into Quality Management Department responsible among others, for the methodology and research of customer satisfaction and loyalty, agreeing and monitoring progress in improvements, monitoring market trends. Activities of existing Quality Department in the area of e.g. management of the complaint handling process, the Customer Ombudsman or providing support for employees servicing customers, sales and service processes was transferred to Corporate Services and Operations Center, in particular to new Complaints Management Department located within the Center's structure. Moreover, in the Strategy Division, the name of the Data Protection Inspector's Office was changed to the Data Protection Inspector's Department
In Technology and Operations Division, the name of Operations Center was changed to Corporate Services and Operations Center and a new organizational structure of IT Center was implemented.
A new structure of retail banking sales network was implemented. Five new Retail Banking Macroregions were implemented in place of previous eight and a new territorial distribution was created for them.
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Report on the activities of Bank Pekao S.A. Group for the year 2022 year
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 2022.
The most relevant honors are presented below.
Best Quality Employer
For the second time, we have been awarded the title of Best Quality Employer, for exemplary respect for labor law, care for safety and working conditions, and implementation of innovative solutions in the area of HR.
The title of the friendly employer Friendly Workplace 2022
For the third time, we received the Friendly Workplace 2022 award. The aim of the competition is to promote employers who introduce the highest standards in the area of organizational culture and focus on building good relations between employees. This year, we were also awarded the Special Award for active actions for a friendly and engaging work environment, respect for the idea of work-life balance, and a comprehensive approach to protecting the health and well-being of our employees.
Top Employer 2022 Poland
For the twelfth time, we have obtained the Top Employer certificate, distinguishing ourselves in terms of the implemented personnel strategy. In addition, for the first time we found ourselves among the ten best-rated employers in Poland, showing at the same time the huge progress that we managed to develop together.
Highest Quality HR 2022
We have obtained the Highest Quality HR 2022 certificate awarded by the Polish Association of Human Resources Management. The award is given to organizations that set trends in human resource management and promote high standards of human resource management in Poland.
Recognition in the Bloomberg Gender-Equality Index
For the third time in a row, we have been included in the Bloomberg Gender-Equality Index (GEI), which distinguishes listed companies from around the world for respecting the principle of gender equality and actively supporting equal opportunities in the workplace. Our presence in the Bloomberg GEI index is the result of many years of internal policy in the field of gender equality and the implementation of the latest ESG Strategy.
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Report on the activities of Bank Pekao S.A. Group for the year 2022 year
Bank Pekao S.A.
CORPORATE AND INVESTMENT BANKING AWARDS AND DISTINCTIONS
The Best Investment Bank in Poland according to the Global Finance magazine
"The Best Investment Bank Award" is one of the most prestigious awards on the financial market. It is awarded on the basis of criteria such as: the number and size of transactions in the field of ECM, SCM and M&A, consulting and structuring possibilities, post-trade services (trading and valuation on the secondary market), product innovations and reputation on the market.
Best Sub-custodian Bank in Poland 2022 award
Once again, we received a distinction for the best Trust Bank. The ranking of the Global Finance magazine assesses, among others: the quality of relations with foreign institutional clients, the level of their service, knowledge of the market.
The Best provider of treasury, investment and currency exchange services in Poland
We have obtained the title of "Best Treasury and Cash Management Provider" and "Best Corporate FX Award" in Poland. The following were appreciated: innovation, effectiveness, competitive prices and minimization of risks while supporting the needs of corporations running global business.
The Best Bank in the field of trade finance in Poland
For the fourth time, we have received the "The Best Trade Finance Provider in Poland for 2022" award by the international Global Finance magazine. Among others, the following were appreciated: the value of the transaction portfolio, knowledge of local conditions, including adaptation to customer needs or innovations in the products and services offered.
The Best Bank supporting the real estate market
In the 12th edition of the CEE Investment Awards competition organized by EuropaProperty.com. We became the best bank in Central and Eastern Europe, financially supporting the real estate market. We were the only Polish bank among the nominees in this category to receive the award.
Market Leader in Poland 2022 and Best Services in Poland 2022
We have been awarded twice in the prestigious competition organized by the international Euromoney magazine in the "Best Trade Finance Survey 2021" and received the titles "Market Leader in Poland 2022" and "Best Services in Poland 2022".
19
Report on the activities of Bank Pekao S.A. Group for the year 2022 year
Bank Pekao S.A.
RETAIL AND PRIVATE BANKING AWARDS AND DISTINCTIONS
The Best Private Banking in Poland for 2023 according to the Global Finance magazine
In the World's Best Private Banks Awards competition organized by Global Finance, we were distinguished for innovation, a wide investment offer, the quality of services provided, as well as for financial results.
Innovative Company 2022 according to Gazeta Finansowa
Omnibank CRM is the first comprehensive implementation of analytical CRM in the public cloud in Polish banking. Thanks to advanced analytics and the use of cloud solutions, it directs personalized offers and messages to the user of the PeoPay application and the Pekao24 transaction service, ensuring the highest level of customer data security.
Best Private Bank Poland 2022 award
In the International Banker 2022 Banking Awards competition organized by the Finance Publishing magazine, we were distinguished for modernity and innovation, as well as a customer service model based on the best European standards certified by the European Financial Planning Association (EFPA).
“Złoty Bankier 2022” for the best personal account
For the second year in a row, Konto Przekorzystny took first place in the personal account category in the Golden Banker ranking. According to experts, Konto Przekorzystne responds best to the needs of various customer groups, both those using only traditional services and innovative mobile solutions
Customer's Golden Laurel 2022 for the highest quality of electronic banking services
In the 18th edition of the Customer's Laurel/Consumer's Laurel plebiscite, electronic banking was awarded by consumers with the Golden Customer's Laurel. Customers appreciated the highest quality of service on the Pekao24 website and the PeoPay application.
Banking Stars
In the Stars of Banking ranking organized by the editors of Dziennik Gazeta Prawna, we took first place in the "growth" category. What was affected by the increase in the dynamics of assets, revenues, net profit and the pace of customer acquisition. In the "stability" category, we took the second position and the structure of the balance sheet, the level of unpaid receivables and capital ratios were assessed.
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Report on the activities of Bank Pekao S.A. Group for the year 2022 year
Bank Pekao S.A.
AWARDS FOR BANK SUBSIDIARIES
Pekao TFI the winner of the Polish Promotional Emblem “Teraz Polska” in the category of services in the 32nd edition of the competition
The “Teraz Polska” emblem was awarded to specialized investment programs of Pekao TFI that support regular saving: PRO Capital Accumulation Program, Junior Capital Accumulation Program, Moja Perspektywa, Super Basket, as well as IKE and IKZE. So far, Pekao TFI has handled over half a million contracts in investment programs.
Pekao TFI S.A. the winner of the golden emblem in the national Customer’ s Laurel plebiscite in the category "Towarzystwo Funduszy Inwestycyjnych"
Pekao TFI ranked second in the prestigious ranking of investment fund companies
Pekao TFI was among the best investment fund companies on the market and took second place in the “Rzeczpospolita” ranking. The results of investment funds in individual groups were taken into account.
Pekao TFI bond funds in the TOP 10 debt funds on the market
Four Pekao TFI investment funds were among the 10 debt funds that earned the most this year: Pekao Obligacji Samorządowych, Pekao Conservative, Pekao Conservative Plus and Pekao Spokojna Inwestycja.
IKZE with Pekao TFI rated 5
In the ranking "Best IKZE with funds 2022 - Ranking IKZE 2022" prepared by Analizy.pl, once again IKZE Pekao TFI was included. The ranking assessed IKZE in three categories: effectiveness, costs and offer. In IKZE Pekao TFI, efficiency and offer were appreciated.
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Report on the activities of Bank Pekao S.A. Group for the year 2022 year
Bank Pekao S.A.
6. Information for the Investors
6.1 The Bank’s share capital and share ownership structure
As at 31 December, 2022, 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
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
2022
31 DECEMBER 2022
AS AT THE DATE OF SUBMITTING
THE REPORT
FOR THE THIRD QUARTER
OF 2022
Powszechny Zakład Ubezpieczeń S.A.
52,494,007
20.00%
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%
33,596,166
12.80%
Funds managed by Nationale- Nederlanden Powszechne Towarzystwo Emerytalne S.A.
16,800,000
6.40%
16,800,000
6.40%
16,800,000
6.40%
Funds managed by Powszechne Towarzystwo Emerytalne Allianz Polska S.A.
15,500,051
5.91%
15,500,051
5.91%
-
-
Subsidiares managed by BlackRock, Inc
13,231,421
5.04%
13,231,421
5.04%
13,231,421
5.04%
Aviva Otwarty Fundusz Emerytalny Aviva Santander
-
-
-
-
13,164,000
5.02%
Other shareholders (below 5%)
130,848,389
49.85%
130,848,389
49.85%
133,184,440
50.74%
Total
262,470,034
100.00%
262,470,034
100.00%
262,470,034
100.00%
On 29 September 2022 the Bank received a notification from BlackRock, Inc. regarding exceeding of the threshold of 5% of total number of votes in the Bank, taking into account contracts for difference (CFD).
On 5 January 2023, the Bank received a notification from Powszechne Towarzystwo Emerytalne Allianz Polska S.A. regarding exceeding of the threshold of 5% of total number of votes in the Bank, as a result of merger with Aviva Powszechne Towarzystwo Emerytalne Aviva Santander Spółka Akcyjna.
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.
22
Report on the activities of Bank Pekao S.A. Group for the year 2022 year
Bank Pekao S.A.
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 31 December, 2022 OFE’s held in aggregate 20.22% of the Bank’s shares.
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 2022
31 DECEMBER 2021
Nationale-Nederlanden OFE
16,884,004
6.43%
17,103,100
6.52%
Drugi Allianz OFE (*)
13,384,591
5.10%
13,164,591
5.02%
NNLife OFE (**)
5,252,062
2.00%
3,831,781
1.71%
Aegon OFE
4,543,495
1.73%
4,482,495
1.46%
Generali OFE
3,508,634
1.34%
3,072,614
1.20%
PKO BP Bankowy OFE
3,314,222
1.26%
3,079,825
1.17%
Uniqa OFE
3,153,684
1.20%
3,153,684
1.17%
Allianz Polska OFE
2,115,460
0.81%
2,115,460
0.81%
OFE Pocztylion
926,568
0.35%
796,568
0.30%
Total
53,082,720
20.22%
50,800,118
19.35%
Note : OFE Reports, annual structure of open-end pension funds assets.
(*) Former Aviva OFE Aviva Santander.
(**) Former MetLife OFE.
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.
The Bank’s market capitalization as of December 31, 2022 amounted to PLN 22.7 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 1 032 thousands of shares and the worth of trading at PLN 23.8 billion in 2022, the share of the Bank’s stock in trading on the WSE amounted to 8.3%.
Share price of Bank Pekao S.A. decreased by 29.1% y/y and reached PLN 86.50 as at the end of December 2022 compared to PLN 122.00 a year earlier. Total shareholder return for the Bank's shareholders (including dividend payment at PLN 4.30 per share) amounted to -25.6% and was higher than return for the WIG Banks index, which declined by 27.6% in 2022.
Share price performance of Polish banks in 2022 was primarily influenced by the outbreak of a full-scale war in Ukraine and its economic consequences. The country's geopolitical risk had a negative impact on the valuation of Polish shares (including the banking sector). Undoubtedly, results of the sector were positively influenced by interest rate hikes made by the NBP in response to the rapidly growing inflation. Regulatory changes aimed at helping mortgage borrowers (payment moratoria, Borrower Support Fund, institutional protection system for commercial banks) were a factor having a negative impact on the performance of the sector's shares.
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Report on the activities of Bank Pekao S.A. Group for the year 2022 year
Bank Pekao S.A.
Basic information about Bank Pekao S.A. shares
2022
2021
Share price at the end of the year (PLN)
86.50
122.00
Maximum share price (PLN)
138.90
131.75
Minimum share price (PLN)
58.42
61.10
Number of shares
262,470,034
262,470,034
Capitalization at the end of the year (PLN billion)
22.7
32.0
Average trading volume
1,032,138
737,242
Earnings per share (PLN) (*)
5.81
6.35
Book value per share (PLN) (**)
79.80
95.20
Dividend per share paid in a given year (PLN)
4.30
3.21
P/E (x) (***)
14.9
19.2
P/BV (x) (***)
1.08
1.28
Note: Data based on GPW statistics.
(*) 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.
(**) Book value per share calculated on the basis of financial data for the third quarter of a given year.
(***) 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 2022:
6.3 Dividend payment history
In 2022, the Bank paid a dividend for 2021 in the amount of PLN 4.30 per share. Dividend yield was 5.6%. In the years 2009- 2022, 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 2009-2021 amounted to almost PLN 22 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 2021 are presented below:
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
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
1 129
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
4.30
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 2022 and its allocation to the payment of dividends will be made by the General Meeting of Shareholders.
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Report on the activities of Bank Pekao S.A. Group for the year 2022 year
Bank Pekao S.A.
6.4 Investor Relations
The Bank's investor relations were recognized as the best among banks in Poland in the survey of the quality of investor relations carried out by the Institutional Investor Research Group. We were among the top ten distinguished companies, with the best score among the banks.
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 2022, the bank participated in 28 Investor conferences and roadshows meetings with institutional investors from key financial centers around the world. As part of the conference, the Bank held 350 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 2022, 19 analysts published reports and recommendations on the Bank.
Recommendation structure for Bank Pekao S.A. shares for 31 December 2022
Buy/Accumulate
14
Hold/Neutral
4
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”.
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Report on the activities of Bank Pekao S.A. Group for the year 2022 year
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 2022, Bank Pekao S.A. had assigned following financial credibility ratings:
FITCH RATINGS
BANK PEKAO S.A.
POLAND
Long-Term Default rating (IDR)
BBB
A-
Short-Term Default Rating
F2
F1
Viability Rating
bbb
-
Government Support Rating
No support
-
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
Stable
Stable
Long-term Counterparty Risk Rating (CRR)
A2
-
Short-term Counterparty Risk Rating (CRR)
Prime-1
-
On 27 January 2022 S&P rating agency informed the bank about maintaining the ratings of the bank at the current level with the stable outlook.
According to S&P, the bank's rating assessment reflects its strong business position as well as high customer confidence resulting from having strong state-related shareholders - PZU and PFR. According to the agency, the acquisition and integration of part of Idea Bank's assets and liabilities has no significant impact on the capital ratios and risk profile of Bank Pekao. Both the profitability and efficiency of the bank remain at the levels similar to that of other Polish banks and higher than that of many international institutions. According to S&P, the bank's exposure to CHF loans is not significant.
The bank's stable outlook reflects that of Pekao's largest investor - PZU.
On 14 September 2022 Fitch rating agency informed the Bank about lowering the Long-Term Issuer Default Rating (IDR) from "BBB+" to "BBB" with “Stable” outlook, National Long-Term Rating from "AA(pol)" to "AA-(pol) with “Stable” outlook and Viability Rating from "bbb+ to "bbb". Short-Term Issuer Default Rating (IDR) has been affirmed at "F2" and National Short-Term Rating at "F1+(pol)". Fitch assigned Government Support Rating of "no support".
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Report on the activities of Bank Pekao S.A. Group for the year 2022 year
Bank Pekao S.A.
According to Fitch, the downgrade of Pekao's VR, Long-Term IDR and National Rating primarily reflects the downgrade of the Polish operating environment score to “bbb” from “bbb+” and Fitch's view that it constrains Pekao's overall credit profile, given the bank's broad exposure to the operating environment in Poland.
Pekao's VR, IDRs and National Ratings reflect its strong domestic franchise, seasoned and stable business model. Combined with a moderate risk appetite, these allow it to generate relatively stable returns, as well as solid capital and strong funding and liquidity positions. At the same time, Pekao's overall credit profile is constrained by risks in the domestic operating environment, given the bank's broad exposure to a wide range of customer and business segments in Poland.
On 20 December 2022 Moody’s rating agency informed the bank about maintaining the ratings of the bank at the current level with the stable outlook.
According to Moody’s the affirmation of Bank Pekao's ratings reflects the agency's view that its capitalization and profitability provide sufficient risk absorption buffers. More specifically, the small exposure to Swiss-franc mortgages accounting for around 1% of loans net of provisions would allow the bank to provision its exposure to these loans even fully without a meaningful impact on its capitalisation. The BCA also considers the bank's high problem-loan coverage ratio of 96% as of 30 September 2022 excluding the portfolio assumed by Idea Bank which carries a guarantee by the Polish resolution authority. The affirmation also considers the bank's high capital buffers with a CET1 capital ratio of 15% as of September 2022, as well as the agency's expectation of a recovery in the bank's profitability.
Pekao Bank Hipoteczny S.A. financial credibility ratings
Pekao Bank Hipoteczny S.A. cooperates with the international rating agency Fitch Ratings.
Fitch points out that the rating of Pekao Bank Hipoteczny S.A. is associated with 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. is affected by the degree of integration with the subject.
At the end of December 2022, the long-term rating of Pekao Bank Hipoteczny S.A., assigned by the Fitch rating agency, was BBB with a "Stable" outlook. Mortgage bonds issued by Pekao Bank Hipoteczny S.A. had a “BBB+” rating. 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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Report on the activities of Bank Pekao S.A. Group for the year 2022 year
Bank Pekao S.A.
7. Activity of Bank Pekao S.A. Group
7.1 Important factors influencing the Group’s activities and results
Activities of the Bank Pekao S.A. Capital Group in 2022 was mainly determined by the macroeconomic situation in the country and abroad. The key factor affecting the economy last year was the outbreak of war in Ukraine, which brought a number of economic consequences: a sharp increase in the prices of energy and agricultural raw materials on global markets, a sharp increase in inflation, an increase in geopolitical risk in the region of Central and Eastern Europe, reaction to the crisis of key banks central banks, resulting in a strong increase in interest rates in Europe and the United States, and deterioration of the economic growth prospects for Poland and key Western economies. In the Polish economy, we observed a systematic decline in the GDP growth rate from quarter to quarter, accompanied by a very strong increase in the rate of inflation, which in the second half of the year reached high, double-digit levels. The unprecedented pace of price growth resulted in the reaction of the Monetary Policy Council, which in 2022 raised interest rates by 5 p.p (the reference rate increased from 1.75% to 6.75%).
The complex economic situation in 2022 translated to varying degrees into individual areas of the banking sector in Poland. Rising interest rates hit primarily the retail segment. The declining creditworthiness of households even caused a collapse on the mortgage loan market. The situation in the area of cash loans was more stable, but also in this segment the banking sector recorded negative dynamics. The situation in the corporate segment was much more favorable. Rising inflation translated into an increase in the demand for working capital on the part of enterprises. This resulted in a strong increase in the demand for loans, both in the segment of large corporations and in the banking sector of small and medium-sized enterprises. Deposits in the banking sector, both in the retail and corporate segments, grew at a moderate pace last year.
An extremely positive development for the banking sector in 2022 was the strong increase in NBP interest rates. This had a very clear impact on net interest income, which grew at a high two-digit rate last year. We observed the repricing of the loan portfolio, parallel to the increase in market interest rates, with a clearly slower pace of adjustment on the deposit side. Banks significantly made their deposit offer more attractive in the second quarter of 2022 and systematically improved it until the end of the year. Despite this, the flow of funds from current accounts to term accounts was at a moderate pace. This allowed the sector to record a very high interest margin due to the relatively low cost of financing.
Despite the quarter-on-quarter slowdown in the economy and, consequently, decreasing customer activity, the banks were able to improve their fee and commission income. This is mainly the effect of the relatively favorable economic situation in the first half of 2022. Most categories of bank commissions grew. The exception were commissions related to asset management and brokerage services, which fell last year due to the difficult situation on the capital market.
Strong inflationary pressure in the economy translated into a significant increase in the operating costs of banks. Wages and other operating costs of the banks were clearly on the rise. This factor was partly compensated by the banks by continuing employment restructuring programs and reducing the number of branches. Bank Pekao also continued to optimize its branch network and carried out another employment restructuring programme.
The significant increase in regulatory costs was of key importance for the results of the banking sector in 2022. In response to the economic crisis and inflation shock caused by the outbreak of a full-scale war in Ukraine, the Polish government introduced a program to support mortgage borrowers. The program included the "payment moratoria" and the Borrower Support Fund. The costs of these programs for Bank Pekao amounted to PLN 2.0 billion and PLN 169 million, respectively. In addition, an institutional protection system for commercial banks (IPS) was introduced, participation in which involved a cost of PLN 482 million for Bank Pekao. The funds obtained through the establishment of IPS by 8 key Polish banks were used in the process of forced restructuring of Getin Noble Bank, which allowed to reduce the systemic risk for the sector. In return for participation in the IPS programme, BFG reduced annual fees for banks participating in this programme. BFG contributions for Bank Pekao decreased in 2022 to PLN 267 million (-8% y/y).
The cost of risk in the banking sector increased in 2022, mainly due to the growing provisions related to mortgage loans in Swiss franc. In the past year, judicial decisions remained unfavorable for the sector, and the number of lawsuits by clients also increased significantly. No systematic solution to this problem has been found. Banks were forced to create additional provisions on this account, which significantly affected the profitability of the sector. It should be noted that the problem of CHF loans is marginal from the point of view of Bank Pekao. The gross value of the CHF portfolio is less than 2% of the bank's entire portfolio and is largely reserved. Other costs of risk remained at a stable, relatively low level for most of the year.
According to the data of the Polish Financial Supervision Authority (KNF), the aggregated net profit of the banking sector in 2022 amounted to PLN 12.5 billion and doubled (+108%) compared to the corresponding period of 2021. Its volatility was increased by provisions made by banks increasing the cost of risk (+45% compared to 2021). The operating result, which does not include such one-off events, increased by 59% in 2022 after an increase of 20% in 2021.
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Report on the activities of Bank Pekao S.A. Group for the year 2022 year
Bank Pekao S.A.
In 2022, banks continued processes related to operational and digital transformation. The importance of customer service in remote channels grew, and many banking processes were digitized. Many technical innovations were introduced and functionalities of banking applications were expanded, which allowed to reduce the number of bank branches.
In terms of capital requirements, in accordance with the law, Bank Pekao S.A. 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 Bank Pekao S.A. Capital Group has no additional capital requirement (P2R). This is related to the decision of the Polish Financial Supervision Authority stating the expiry of the previous decision of the supervisor, on the basis of which the Polish Financial Supervision Authority recommended compliance, at the consolidated level, with an additional requirement for own funds above the value resulting from the requirements calculated in accordance with the detailed rules set out in Regulation (EU) No. 575/2013 on prudential requirements for credit institutions. The above decision of Bank Pekao S.A. received on February 18, 2022.
The combined buffer requirement as of December 31, 2022 consists of the following buffers:
 conservation buffer at 2.5%,
 other systemically important institution buffer at 1.00%,
 countercyclical buffer at 0.00% 1 ,
 systemic risk buffer at 0.00% 2 .
For the Pekao Group, as at 31 December, 2022, the minimum total capital ratio was 11.51%, the Tier 1 capital ratio was 9.51% and the Common Equity Tier 1 capital ratio was 8.01%.
In December 2022, 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, BFG set target minimal level of MREL requirement at 15.36% of the total risk exposure amount (TREA), and 5.91% of the total exposure measure (TEM). Target minimal level of MREL which must be fulfilled with own funds and eligible liabilities meeting the subordination requirement at the abovementioned date is 13.98% in relation to TREA, and 5.55% 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 February 24, 2022, Bank Pekao S.A. received an individual recommendation from the Polish Financial Supervision Authority regarding the Bank's dividend policy. As at 31 December, 2021, Bank Pekao S.A. met the requirements for payment of up to 100% dividend from the Bank's profit earned in period from January 1, 2021 to December 31, 2021. In addition, the KNF recommended Bank Pekao S.A. not taking, without prior consultation with the supervisory authority, other actions, in particular those outside the scope of current business and operating activities, which may result in a decrease in own funds, including possible dividend payments from undistributed profit from previous years (i.e. from 2020 and earlier) and share buybacks. Based on the above recommendation and the resolution of the Ordinary General Meeting of Bank Pekao S.A. of June 15, 2022 on the distribution of profit of Bank Pekao S.A. for 2021, Bank Pekao S.A. paid a dividend of 50.5% of the net profit.
1 The countercyclical buffer calculated as at 31 December, 2022 was 0.0011% for the Bank Pekao S.A. Group.
2 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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Report on the activities of Bank Pekao S.A. Group for the year 2022 year
Bank Pekao S.A.
On December 27, 2022 Bank received a recommendation from the Polish Financial Supervision Authority in which the PFSA recommended the Bank to limit the risk occurring in the Bank's operations by maintaining own funds to cover the additional capital add-on in order to absorb potential losses resulting from the occurrence of stress conditions (P2G) at the level of 0.43 p.p. on standalone basis and 0.42 p.p. on consolidated basis above level of total capital ratio described in the article 92(1) letter c of the regulation (EU) No. 575/2013 of the European Parliament and of the Council on prudential requirements for credit institutions increased by the additional own funds requirement referred to in Article 138(2)(2) of the Banking Law and by the combined buffer requirement referred to in Article 55(4) of the Act on macro prudential oversight. The additional capital requirement should be made up of Tier 1 funds only.
On December 23, 2022, the Polish Financial Supervision Authority adopted a position on the dividend policy of commercial banks for 2023. The PFSA adopted the following rules for the dividend policy of commercial banks in 2023:
1. The dividend up to 50% of the profit from 2022 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 3 requirement + combined buffer requirement 4 ,
e) having Tier I (T1) capital ratio not lower than the required minimum: 6% + 75% * P2R requirement + combined buffer requirement 5 ,
f) having Total Capital Ratio (TCR) not lower than the required minimum: 8% + P2R requirement + combined buffer requirement 6 ,
2. The dividend up to 75% of the profit from 2022 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 (P2G buffer).
3. The amount up to 100% of the profit from 2022 may be paid out only by banks that meet the criteria for the payment of 75%, and at the same time those whose portfolio of receivables from the non-financial sector is characterized by good credit quality (share of NPL, including debt instruments, at a level not exceeding 5%).
The criteria set out in items 1-3, the bank should meet both on an individual and consolidated level.
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 p.p.
• banks with a share exceeding 10% - dividend rate adjustment by 40 p.p.
• banks with a share exceeding 20% - dividend rate adjustment by 60 p.p.
• banks with a share exceeding 30% - dividend rate adjustment by 100 p.p.
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 p.p.
• banks with a share exceeding 50% - dividend rate adjustment by 50 p.p.,
wherein the total value of the correction (maximum 100%) is the sum of the corrections resulting from both criteria.
3 Pillar II Requirement (P2R), which is an additional regulatory capital requirement.
4 For the purposes of the dividend policy, increased by 3 p.p. supervisory buffer.
5 For the purposes of the dividend policy, increased by 3 p.p. supervisory buffer.
6 For the purposes of the dividend policy, increased by 3 p.p. supervisory buffer.
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Report on the activities of Bank Pekao S.A. Group for the year 2022 year
Bank Pekao S.A.
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 Group’s risk appetite.
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 ESG risk defined as risk arising from environmental, social and governance factors that may have negative impact (directly or indirectly) on the Group. ESG risk is managed within the types of risk identified in the Group’s activity that are affected by ESG risk factors (mainly credit risk). The ESG Council supports the Management Board in decision making process concerning ESG issues.
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 46 to the Consolidated Financial Statements of Bank Pekao S.A. for the period ended on 31 December, 2022 and in the document “Information in respect to capital adequacy of Bank Pekao S.A Group as at 31 December 2022” 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.
OPERATIONAL EVENTS BY CATEGORIES
2022
2021
Internal frauds
0.09%
0.00%
External frauds
0.55%
4.98%
Employment practices and workplace safety
0.18%
1.42%
Clients, products and business practices
96.21%
57.20%
Damages to physical assets
0.09%
5.68%
Business disruption and system failures
0.50%
0.44%
Execution, delivery and process management
2.38%
30.28%
Total
100.00%
100.00%
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Report on the activities of Bank Pekao S.A. Group for the year 2022 year
Bank Pekao S.A.
Bank executes mitigation actions for all of the operational event categories, with particular emphasis on categories of the highest relevance.
OPERATIONAL EVENTS BY CATEGORIES
2022
2021
Internal frauds
0.10%
0.00%
External frauds
0.60%
5.08%
Employment practices and workplace safety
0.20%
1.44%
Clients, products and business practices
96.42%
56.04%
Damages to physical assets
0.10%
5.81%
Business disruption and system failures
0.13%
0.45%
Execution, delivery and process management
2.45%
31.18%
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 armed conflict in Ukraine and the related disturbances in the supply of raw materials 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 2022, 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 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.
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Report on the activities of Bank Pekao S.A. Group for the year 2022 year
Bank Pekao S.A.
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 is obliged to apply appropriate control mechanisms and to perform 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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Report on the activities of Bank Pekao S.A. Group for the year 2022 year
Bank Pekao S.A.
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 2022 consists of:
 Capital conservation buffer in amount of 2.50%,
 Countercyclical capital buffer in amount of 0.01% 7 ,
 Other systemically important institution buffer in amount of 1.00%,
 Systemic risk buffer in amount of 0.00% 8 .
On Pillar II, Pekao Group has no additional capital requirement (P2R). This is due to the KNF's decision stating the expiration of the KNF's decision based on which the KNF recommended compliance, at the consolidated level, with the additional own funds requirement above the value resulting from the requirements calculated in accordance with the rules set forth in Regulation (EU) No. 575/2013 of the European Parliament and of the Council on prudential requirements for credit institutions. Bank received the above mentioned decision on February 18, 2022.
Together, the Group and the Bank are obliged to maintain:
 Total capital ratio (TCR) in amount of 11.51%,
 Capital ratio Tier I (T1) in amount of 9.51%,
 Common Equity Tier (CET 1) in amount of 8.01%.
The capital ratios of the Group and the Bank were significantly above the minimum required by the law.
4 Countercyclical capital buffer was calculated as of December 31, 2022 at the level 0,0122% for Bank and 0,0112% for Group.
5 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.
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Report on the activities of Bank Pekao S.A. Group for the year 2022 year
Bank Pekao S.A.
Bank Pekao S.A. Group
As of December 31, 2022 Group total capital ratio amounted to 17.4% and common equity Tier I ratio amounted to 15.6%.
The table below presents the basic information concerning the Group capital adequacy as of 31 December1, 2022 and 31 December, 2021.
(in PLN thousand)
CAPITAL REQUIREMENT
31.12.2022
31.12.2021 (*)
Credit Risk
10,168,122
10,756,386
Market Risk
105,618
112,121
Counterparty credit risk including CVA
228,395
253,316
Operational risk
1,359,528
848,430
Total capital requirement
11,861,663
11,970,253
OWN FUNDS
Common Equity Tier I Capital
23,119,666
23,659,934
Tier II Capital
2,706,873
2,750,000
Own funds for total capital ratio
25,826,539
26,409,934
Common Equity Tier I Capital ratio (%)
15.6%
15.8%
Total capital ratio TCR (%)
17.4%
17.7%
(*) Data for December 31, 2021 have been recalculated taking into account the retrospective recognition of part of the profit for 2021 (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 2022 was lower by 0.3 p.p. compared to the end of December 2021, mainly due decrease of own funds by 2.2%. Common equity Tier I Capital Ratio of Pekao Group as at the end of December 2022 was lower by 0.2 p.p. compared to the end of December 2021.
Decrease of own funds for total capital ratio results mainly from decrease of HTC&S portfolio valuation.
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Report on the activities of Bank Pekao S.A. Group for the year 2022 year
Bank Pekao S.A.
Bank Pekao S.A.
As of 31 December, 2022 Bank total capital ratio amounted to 19.5% and common equity Tier I ratio amounted to 17.5%.
The table below presents the basic information concerning the Bank capital adequacy as of 31 December, 2022 and 31 December, 2021.
(in PLN thousand)
CAPITAL REQUIREMENT
31.12.2022
31.12.2021 (*)
Credit Risk
9,082,837
9,745,018
Market Risk
106,333
110,737
Counterparty credit risk including CVA
228,395
253,177
Operational risk
1,242,816
741,877
Total capital requirement
10,660,381
10,850,809
OWN FUNDS
Common Equity Tier I Capital
23,255,239
23,787,500
Tier II Capital
2,706,873
2,750,000
Own funds for total capital ratio
25,962,112
26,537,500
Common Equity Tier I Capital ratio (%)
17.5%
17.5%
Total capital ratio TCR (%)
19.5%
19.6%
(*) Data for December 31, 2021 have been recalculated taking into account the retrospective recognition of part of the profit for 2021 (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 2022 was lower by 0.1 p.p. compared to the end of December 2021, mainly due decrease of own funds by 2.2%. Common equity Tier 1 Capital Ratio of Bank as at the end of December 2022 was at the same level as at the end of December 2021.
Decrease of own funds for total capital ratio results mainly from decrease of HTC&S portfolio valuation.
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Report on the activities of Bank Pekao S.A. Group for the year 2022 year
Bank Pekao S.A.
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
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.
31.12.2022
31.12.2021
Total number of outlets
597
650
own outlets
515
563
partner branches
82
87
Total number of own ATMs
1,328
1,475
The number of accounts
At the end of December 2022, the Bank maintained 7,455.2 thousand PLN denominated current accounts, 371.9 thousand mortgage loan accounts and 582.5 thousand “Pożyczka Ekspresowa” ( Express Loan) accounts.
(in thousand)
31.12.2022
31.12.2021
Total number of PLN current accounts (*)
7,455.2
6,923.9
of which packages
5,330.5
4,933.8
Number of mortgage loans accounts (**)
371.9
405.0
of which PLN mortgage loans accounts
347.0
378.4
Number of Pożyczka Ekspresowa loan accounts (***)
582.5
626.8
(*) 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.
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Report on the activities of Bank Pekao S.A. Group for the year 2022 year
Bank Pekao S.A.
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.
Development of electronic and mobile banking
In 2022, the number of active mobile banking customers increased by 359 thousand - up to 2.76 million - and was 15% higher than a year ago and 35% higher than two years ago. The number of active mobile customers using the PeoPay application increased by 402 thousand - to 2.44 million - and was 20% higher than a year ago and 45% higher than two years ago.
Active mobile banking customers account for 82% of customers using electronic channels, which is an increase compared to the previous year by 4 p.p. and 6 p.p. compared to the 2020.
(*) 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 PeoPay application. who logged in to the system PeoPay at least once during the last quarter.
In 2022, electronic banking was actively used by 218 thousand companies. The number of active corporate mobile banking customers increased by 7.7 thousand – up to 87 thousand y/y.
PeoPay is one of the best-rated financial applications available in Google Play and AppStore.
In 2022, we introduced many new solutions and possibilities in electronic banking Pekao24, PeoPay and PeoPay Kids, including:
 opening an account using the mObywatel application for individuals and enterpreneures in the selfie process,
 remote service of credit cards - customers can change and assign a PIN to the card, temporarily restrict its use or block the card completely, and order a new one, change the additional card limit for the Żubr Credit Card, check the debit card details online,
 submitting new applications for social and assistance benefits (300+, 500+, RKO), including applications for Ukrainian citizens,
 making payments for parking lots in paid parking zones, purchase of a public transport ticket,
 as part of Open Banking, we have expanded the service (the so-called AIS) of access to information on payment accounts maintained by other banks, such as: balance and transaction history. Access to accounts from other banks makes it easier to apply for a loan, overdraft or credit card, allows you to track account balances and order transfers from accounts in other banks. The electronic journal records the most important activities performed within the Pekao24 and PeoPay systems related to Open Banking services. Launching the service requires the customer's consent, available on the Pekao24 website or the PeoPay application and then confirmed in the bank's online banking system (service consents are granted indefinitely).
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Report on the activities of Bank Pekao S.A. Group for the year 2022 year
Bank Pekao S.A.
 possibility of partial repayment of a housing loan and suspension of principal and interest installments of a housing loan, including the so-called "credit holidays",
 new notifications regarding standing orders, BLIK, statuses of orders and official applications as well as notifications about receipts,
 making it possible to purchase State Treasury Bonds,
 making it possible to purchase motor insurance,
 providing a number of new instructions/certificates for micro-enterprises and individual clients; for example, certificates about the limit in the account (total repayment and closing the limit and the amount of current debt), closing the savings account, reporting information about the death of the client and others,
 implementation of functionalities facilitating the customer's budget management: suggested payments, the ability to renew a transfer directly from the history of operations, presentation of the status of payments at risk, Direct Debit and Pekao Orders predictions,
 access to the PeoPay application for clients of the Brokerage House - clients who have the Pekao24Makler service and do not have an account at the Bank can already use PeoPay,
 implementation of the PeoPay demo, which presents the capabilities of the Bank's mobile application, the demo is used in sales processes as part of presenting the Bank's mobile offer,
 the BLIK service for the youngest customers in the PeoPay Kids application, and new options adapted to children: implementation of gaming skins in the PeoPay Kids application and gaming card images; providing a version of PeoPay for teenagers.
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. 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
2022 was a record year in terms of acquired accounts, we opened over 554,000 of them. new accounts (Konto Przekorzystne and Konto Świat Premium) an increase of +25% compared to 2021. The increase in sales of accounts for new customers is the result of i.a. an increase in the acquisition of selfie accounts, activities aimed at attracting young customers up to 26 years of age and setting up accounts for Ukrainian citizens.
In 2022, we doubled the sales of selfie accounts compared to 2021, already 35% of adult accounts are created in the selfie process.
Thanks to the implemented activities and attractive offer, we have a leading position on the market in terms of the increase in net accounts.
The high sales were driven by an attractive offer and promotions targeted at new and existing customers. We offered our clients a Savings Account with an 8% interest rate for the first 6 months, as well as attractive bonuses for setting up a selfie account up to PLN 200. We introduced a recommendation program, thanks to which we achieved an increase of +40% y/y in the number of customers enrolled in the program and opened accounts on recommendation in the PeoPay application and Pekao24 online banking.
In the affluent customer segment, we increased sales of new Świat Premium Accounts by almost 250% compared to 2021. We also acquired over 11 thousand new customers. The offer of Konto Świat Premium is available to customers who invest at least PLN 200 thousand of assets on any savings or investment products from the Bank's offer.
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Report on the activities of Bank Pekao S.A. Group for the year 2022 year
Bank Pekao S.A.
In 2022, we promoted accounts for children (up to 17 years old) and young people (18-26 years old), we encouraged parents to set up accounts in the on-line channel (Parent Panel in PeoPay and Pekao24 and selfies), we offered bonuses for the youngest which encouraged education in saving and using financial products. In December 2022, we introduced new account cards with 15 gaming images, gaming skins in the PeoPay KIDS application and a simplified PeoPay application for teenagers. By opening an account with a card, customers can earn points worth PLN 100 to be exchanged for bonuses for players in the Mastercard “Bezcenne Chwile” program and receive an additional PLN 200 for opening a selfie account and completing a transaction.
We participated in the educational fairs “Salon Maturzystów” organized in 14 largest academic cities, we continued cooperation with the Parliament of Students of the Republic of Poland. For students going abroad, e.g. on a scholarship, we have prepared a special Traveler's Package, which allows you to issue an ISIC student card with insurance free of charge. Thanks to the actions taken, over 40% of new accounts acquired in 2022 were opened for customers up to 26 years of age (an increase of +39% compared to 2021).
In 2022, we have prepared a special offer for Ukrainian citizens, we have simplified the account opening procedure, we have abolished the fees for account maintenance, handling cards and ATM withdrawals, and for transfers from Poland to banks in Ukraine and from Ukraine to Poland, both for transactions made by individual customers and and corporate. In 2022, we set up over 96,000 accounts for citizens of Ukraine.
We ran promotions as part of the Mastercard “Bezcenne Chwile” loyalty program, thanks to which customers gained additional bonus points that they could exchange for prizes.
In 2022, we acquired 33.9 thousand new customer accounts in the business segment, which is an increase of +5% compared to 2021.
Payment cards
In 2022, the number of supported cards exceeded 5 million cards for the first time, and the number of non-cash payments was nearly 24% higher than in the previous year. The market share in credit card sales increased from 6% in January 2022 to 14% in December 2022. Customers are increasingly willing to conclude a credit card agreement in Pekao24 internet banking and PeoPay mobile banking - in December 2022, 50% of cards sold were in the remote channel.
In 2022, we introduced the “Credit Card with Żubr” to our offer. It is the first credit card in Poland in the subscription model, available in three packages to choose from. At the moment of issuing the card, the customer selects the appropriate package: standard, gold or platinum. The card is free in the standard package. The package can be changed and adapted to your needs free of charge without having to replace the plastic card. The biggest advantages of the card include: the option of spreading the repayment into convenient 0% installments, a refund for purchases on the Internet and for payments on motorways, insurance of purchases and online transactions, travel insurance, access to free airport lounges and an exceptionally long interest-free period. The new card is made of 99% recycled material.
POS terminal
In 2022, we introduced a new, android type of terminal to our offer - MiniPOS, along with the service of delivering transaction confirmations and reports to the merchant electronically (e-Confirmation). The service also allows you to optionally send transaction confirmations to the cardholder by e-mail or txt message.
As the first on the market, we also introduced an android programmable pinpad to our offer. Business customers can order a terminal via Pekao24. At the end of 2022, we already supported several thousand android terminals.
In payment terminals, we have also added the multimerchant service, which allows several entities to execute cash transactions on one terminal.
CRM
In 2022, we implemented a new CRM (Omnibank CRM) customer relationship management system, which, thanks to advanced analytics and cloud solutions, will improve communication with customers so that they receive the most relevant and personalized offers and information.
Lending products
In 2022, we increased the growth of sales of key retail loans, taking a cautious approach and adapting the lending policy to the dynamically changing macroeconomic situation, taking into account the risk of inflation and interest rates.
The value of cash loans granted, measured by the net volume, amounted to PLN 4.45 billion in 2022 and was at a comparable level until 2021.
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Report on the activities of Bank Pekao S.A. Group for the year 2022 year
Bank Pekao S.A.
We launched new remote omnichannel processes, supporting the sale of cash loans, overdraft loans and credit cards, and we actively promoted the possibility of receiving loans on the Pekao24 website, in the Pekao mobile application. We also transferred post-sales processes to electronic channels.
Remote sale of cash loans in 2022 reached a record result of PLN 2.87 billion, increasing by +56% compared to 2021. In the fourth quarter of 2022, as much as 82% of loans were granted in remote processes. It was possible thanks to increasing the availability of "on-click" offers for customers and the introduction of new solutions, such as new remote omnichannel processes supporting the sale of loans by Pekao Direct consultants.
We have introduced loans with a fixed interest rate to our offer, which ensures stability of the loan installment and financial security of the household budget.
As the only company in Poland, we have launched a loan for medical studies with a repayment guarantee by BGK in cooperation with the Ministry of Health and Bank Gospodarstwa Krajowego. The loan offer is available to current students and candidates starting medical studies at Polish universities. We acquired over 1.7 thousand applications and disbursed PLN 52 million as part of the disbursement of the first tranches of such loans.
In 2022, we provided individual customers with the option of financing installment purchases of goods and services in online stores, with a loan period of up to 60 months and a loan amount of up to PLN 20,000. zloty. The entire loan granting process takes a few minutes and is 100% remote. We use open banking services and video verification to confirm identity. Installment loans are supported in online stores by Tpay.
In the area of loans in the account, we recorded a +36% increase in the number of newly concluded contracts compared to 2021.
Mortgage loans
In 2022, the sale of housing loans amounted to PLN 3.46 billion.
We adapted and updated the mortgage loan offer on an ongoing basis to the changing conditions and market needs. We have extended the offer, e.g. a housing mortgage loan and a construction and mortgage loan with a BGK guarantee, allowing customers to finance up to 100% of the value of the property, we extended the loan period to 35 years, the possibility of loans with interest based on a periodic, 5-year fixed interest rate, and a new attractive insurance offer for life.
In 2022, we consistently developed remote after-sales processes, we made new e-instructions available, thanks to which customers can submit most of the instructions to change credit accounts remotely.
In 2022, we transferred part of the mortgage loan receivables to Pekao Bank Hipoteczny. The total number of loans transferred so far is over 8.5 thousand worth PLN 1.6 billion.
Business clients loans
New sales of financing for business customers totaled nearly PLN 2 billion with a dynamics of +38% y/y. The dynamic growth of new sales of bank loans in the business segment by +34% y/y to the level of PLN 0.8 billion was supported by the implementation of a full risk assessment path, which allows for a quick calculation of the available limit and quick disbursement of a loan or revolving limit. Significant increase in sales of leasing products and microfactoring services in the business segment by a total of +40% y/y to PLN 1.2 billion.
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Report on the activities of Bank Pekao S.A. Group for the year 2022 year
Bank Pekao S.A.
Development in the area of insurance products
In 2022, we consistently developed bancassurance offers and cooperation within the PZU Group. We have extended the offer with new insurance tailored to the expectations of customers. In 2022, we introduced the following insurance products:
 "Świat Inwestycji Premium II" - voluntary life insurance with insurance capital funds,
 "Pewny Profit" - individual life and endowment insurance,
 insurance package for the new Żubr Credit Card, which provides protection or return of goods paid for with the card,
 life insurance for a mortgage loan - which can be purchased for both a new and current loan. Since the beginning of the sale, in just 2 months, nearly 1 thousand units have been sold. policy,
 motor insurance – available to customers in the omnichannel process, offered both in PZU and Link4.
The share of cash loans sold with insurance reached the average annual level of 38.7% (+2.3 p.p. compared to 2021), which is the highest level since the implementation of this product with PZU. The share of mortgage loans sold with insurance remains at a stable, high level of 93.6%.
In 2022, in-cooperation with PZU in the field of assurbanking developed using several distribution channels - including over 200 PZU own branches throughout Poland and the new PZU Cash company. During the year, we implemented a new, dedicated offer for PZU clients. As part of the cooperation, the number of clients acquired by PZU in 2022 was +20% higher than in 2021.
Deposit, brokering activity and sale of investment products
At the end of December 2022, the total value of deposits and certificates of deposit held by individual and business customers amounted to PLN 131 billion, an increase of PLN +1.6 billion (+1.2%) compared to the end of December 2021 and +6.2 PLN billion (+5.0%) compared to September 2022.
In 2022, cyclical promotions on savings accounts with an interest rate of up to 8% valid for 6 months enjoyed great interest among new customers. Customers have set up a total of over 80,000. savings accounts. Customers with free funds also willingly set up deposits with an interest rate of up to 8% for 1 year.
Customers actively using services via remote channels could open dedicated mobile deposits (“Lokata PeoPay” and “Lokata z Żubrem”) with an interest rate of up to 7% for 12 months, available for opening in the PeoPay application.
For customers interested in additional diversification of their savings, we offered deposits combined with Pekao TFI investment funds, the interest rate of which reached the level of 8%, available for 6 or 12 months.
At the beginning of the fourth quarter of 2022, we introduced State Treasury Bonds to our offer for retail clients. In 2022, sales realized only through remote channels (P24, PeoPay) exceeded PLN 600 million. At the beginning of 2023, Treasury Bonds also began to be offered in the Bank's outlets.
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Bank Pekao S.A.
In 2022, the Bank introduced the following investment products to its offer for individual and private customers:
• Bank Securities in the form of Certificates of Deposit Mocny Złoty EURPLN 6,7,8,9,10 and 11, Accumulator Plus EURPLN and USDPLN 2 and 3,
• PZU FIZ Legato series D and series I investment certificates,
• Structured products with full capital protection in PLN: Certificate with Capital Protection Linked to Nestlé S.A. Shares. issued by Goldman, Sachs & Co. Wertpapier GmbH and Worst Of Capital Protection Certificate Linked to L'Oreal S.A. Shares and The Procter & Gamble issued by Goldman, Sachs & Co. Wertpapier GmbH,
• Structured Products with Full Capital Protection in USD: Two-Year Worst Of Capital Protection Certificate Linked to Novartis AG and Roche Holding AG Shares in USD issued by Goldman, Sachs & Co. and a Two-Year Worst Of Capital Protection Certificate Linked to Unilever PLC and Johnson & Johnson Shares in USD issued by Goldman Sachs & Co. Wertpapier GmbH,
• HVB PLN structured product with capital guarantee based on a basket of shares of AMD Inc., BMW AG and Tesla Inc.,
• Structured products with conditional capital protection in USD: HVB USD Express Plus Certificate based on Intel Corp shares,
• Structured product with full capital protection in EUR: Two-year Worst Of Capital Protection Certificate Linked to Unilever PLC and Johnson & Johnson EUR Shares issued by Goldman, Sachs & Co. Wertpapier GmbH,
• Structured certificates with conditional capital protection in PLN: HVB PLN Barrier Reverse Convertible Protect based on shares of Allegro.eu S.A. and HVB PLN Express Plus Certificate based on the STOXX® Europe 600 Utilities (Price) Index (EUR), HVB PLN Express Plus Certificate based on shares of Schlumberger N.V. and HVB PLN Express Plus Certificate based on BASF SE shares,
• "Diversified Investment" 3-year Certificate in PLN linked to the EURO STOXX 50® Index (Price EUR) and the Pekao Obligacji Plus Fund,
• Bonus certificate on Allegro.eu S.A.,
• Annual Reverse Convertible Certificate Linked to Shares of PKO Bank Polski S.A., Shell PLC, and Unilever PLC,
• Annual Worst Of Capital Protection Certificate Linked to BP Plc and Chevron Corporation, Novartis AG and Roche Holding AG Shares.
We offer preferential pricing terms to clients who purchase investment products via remote channels. Over 50% of investment funds are sold via remote channels.
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Report on the activities of Bank Pekao S.A. Group for the year 2022 year
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ENTERPRISE BANKING
Enterprise Banking consists of two segments: Small and Medium Enterprises (SME) and Medium Enterprises (MID) segments.
In 2022 we focused on the automation and digitization of the credit process and the development of electronic banking functionalities enabling customer self-service.
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.
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,
In 2022, we maintained a record-high dynamics of the loan portfolio +16% y/y - an increase in value by PLN 4.8 billion. The growth dynamics in the segments amounted to:
 small and medium-sized enterprises: +23% y/y, PLN +1.7 billion,
 medium-sized corporations: +14% y/y, PLN +3.1 billion.
There was a dynamic increase in value both in loans and in leasing and factoring.
In the fourth quarter of 2022 the value of loans sold in SMEs exceeded the threshold of PLN 1.8 billion (without renewals), growing by +28% y/y. In the fourth quarter of 2022, in the segment of medium-sized corporations, we achieved the value of loans sold at the level of PLN 4.9 billion with a growth rate of +42% y/y. In total, since the beginning of 2022, we have granted PLN 22.2 billion of new loans (without renewals) to the customers of the Corporate Banking Division, with the dynamics of +37% y/y.
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Report on the activities of Bank Pekao S.A. Group for the year 2022 year
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Transactional banking
In 2022, we implemented a new mobile application for business PeoBIZ with a new interface and a wide range of functionalities, including:
- secure login using Touch ID / Face ID,
- quick check of the state of finances and account turnover,
- extended functionality of domestic transfers: transfers to the phone, Express Elixir,
- transfer to the phone - the ability to send a payment in the mobile application to the phone number of a natural person (e.g. contractor, customer, company employee).
The application is very popular - at the end of 2022, it was already used by almost 5,000. users with 24/7 access to over 9,000 finances companies.
We provided our customers with new functionalities in electronic banking, such as:
- changing or supplementing payment instructions for foreign exchange transfers,
- granting or modifying authorizations to the PekaoTrade service,
- presentation of data of the customer service team, with the current list of direct contacts to individual employees of the Bank.
- faster preview of transactions carried out with Bank Pekao cards.
In 2022, we promoted remote after-sales service, which resulted in a significant increase in the number of instructions ordered by customers, we processed 92.6 thousand customers' disposal, i.e. an increase of 33%.
In 2022, in the area of transactional banking, we recorded an increase in the value of domestic transfers by 21% to PLN 658 billion and foreign transfers by 33% to PLN 122.5 billion.
The total value of domestic transfers made by all the Bank's clients using PekaoBiznes24 increased in 2022 compared to 2021 by 33%, reaching PLN 2.49 billion, while the value of foreign transfers in the same period increased by 52%, reaching PLN 432 billion.
Customer acquisition
In 2022 we acquired 3.9 thousend SME and MID clients, maintaining the high level of acquisition from the previous year. Particularly noteworthy is the increase in the acquisition of SME clients with a turnover of over 5 million (+17% y/y). At the end of 2022, we handled over 57 thousand customers.
In the third quarter of 2022, we published the Report on the Situation of Micro, Small and Medium Enterprises for the years 2021-2022 for the 11th time. Almost 7 thousand entrepreneurs shared with us data and indicators, and above all - experiences. The report discussed key topics for the SME sector - economic growth, the prospects for growth in consumption and investment, the situation on the labor market, wages and inflation. In-depth interviews, consisting of open-ended questions, allowed us to better understand the situation of the SME sector in Poland.
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Report on the activities of Bank Pekao S.A. Group for the year 2022 year
Bank Pekao S.A.
CORPORATE AND INVESTMENT BANKING
The Corporate Banking includes corporate segments, significant capital groups (the so-called large corporations), public sector clients, financial institutions as well as commercial real estate and specialized financing. The Pekao Group is a leader in these segments. It has a competitive advantage resulting from experience, unique staff, specialized knowledge and processes and the potential to co-finance large projects based on a very strong liquidity and capital position. The Bank provides both the comprehensive services of a universal bank and the services in such areas as leasing, factoring, investment advisory services, advisory in M&A as well as highly advanced treasury, capital market products and custody services. A wide range of products and services, innovative solutions, customised approach and the comprehensive financial services for the largest enterprises, institutions and public sector units are appreciated by clients and decide about the strength of corporate banking of Bank Pekao S.A.
CLIENTS
At the end of the third quarter of 2022, we serviced over 6.6 thousand clients. We cooperate with the largest companies, we provide support in the field of substantive, operational and financial development of our clients both in everyday business and large strategic projects.
Strategy
Since 2021, we have been implementing a strategy providing for effective volume growth. using competitive advantages such as: in-depth sector expertise, specialist financing knowledge as well as the growing digitalization of processes. According to this Strategy, we want to maintain our leadership position and a high market share in revenues.
Plans and ambitions of Corporate Banking rest on 4 pillars:
Growth:
• increase of x-sell.
• high market share in the segment of large corporations.
Effectiveness:
• digitalisation and automation of processes.
• promotion of self-service in digital channels.
Clients:
• specialist, customised service of complex transactions.
• support in financing public sector projects.
Responsibility:
• responsible capital management.
• support of sustainable economic development.
An integral part of our business strategy is the adopted ESG strategy. Pursuing this strategy we want to engage in financing sustainable projects. support the energy transformation of our clients and their transition to a low-carbon economy. We want to achieve these goals. among other things. by financing the development of renewable energy sources (RES), entities operating in the sectors of new technologies, as well as by actively participating in the government and EU programs aimed at reconstruction and climate transformation. T he development and modernization of the Polish economy, supporting the service and use of state and EU programs.
Our approach to growth is focused on development of modern, digital tools supporting the work of our relationship managers. We pursue this aim by automating their work and providing them with market data, which increases their advisory competences and facilitates establishing long-term business relationships. We are significantly involved in projects related to a responsible approach to running business. We are also developing international banking and we actively support foreign expansion of our clients.
Strengthening the bank's effectiveness , we focus on increasing the level of robotization and automation of both internal processes and the solutions available to clients. We are continuously expanding the scope of self-service operations in digital channels and the number of products available for online purchase.
We are invariably building a customer-centric culture and we want to be the first choice bank for our clients. Therefore, we try to quickly and accurately recognize their needs. We provide advise based on our knowledge of client's profile, industry and segment. We try to increase the level of satisfaction of clients with their interaction with the Bank.
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Report on the activities of Bank Pekao S.A. Group for the year 2022 year
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Supporting sustainable economic development , we actively support the government and EU programs for economic recovery and climate transformation. We support and finance the energy transformation of our clients and the evolution towards green solutions. An important area of our activity is also the cooperation with public sector entities, where, in addition to green investments, we are involved in financing socially responsible projects.
In addition, we manage our capital in a responsible way by selecting better clients, products and transactions. We rely on sector expertise, flexible and specialized product offer and competences in structured finance. Our capabilities are additionally strengthened by a high level of competence in performing operations on the Polish and foreign financial markets.
Cooperation with financial institutions and custody services
The Bank holds a leadership position in servicing domestic financial institutions, focusing on providing the highest quality services to insurance companies, investment funds, brokerage houses, financial sector infrastructure entities, cooperative banks as well as savings and credit unions. The range of services includes modern transactional banking products, clearing products, treasury products, custody services and services of depository bank, as well as the access to the comprehensive offer of the Pekao Group entities addressed to this segment of clients.
Under the corresponding banking, as at 31 December 2022, the Bank maintained 75 nostro accounts with 45 banks in 26 countries; it ran 215 loro accounts for 195 foreign clients (banks and other financial institutions) from 46 countries and 43 current accounts for 37 foreign financial institutions. The Bank also intermediated in the execution of transactions for clients of other domestic banks, running 35 loro accounts for 12 Polish banks and maintaining 5 nostro accounts with 1 Polish bank.
In 2022, the Pekao Group, as part of the implementation of the strategy for the development of cooperation with small and medium-sized enterprises, together with Pekao Leasing Sp. z o.o., we obtained financing from leading development banks (European Investment Bank, Council of Europe Development Bank, Bank Gospodarstwa Krajowego) and completed the following transactions in this area:
- we signed a loan agreement with the Council of Europe Development Bank for the amount of EUR 200 million. The first tranche of the loan in the amount of EUR 100 million was disbursed in the third quarter of 2022.
- we launched a loan in the amount of EUR 132 million granted by the European Investment Bank,
Under these agreements, Pekao Leasing Sp. z o. o. committed to allocate a minimum of 20% of funds to investments supporting climate protection and sustainable development of the environment, and 20% of the amount of both loans to activities promoting gender equality and the development of women's entrepreneurship.
In addition, Pekao Leasing Sp. z o.o., Bank Gospodarstwa Krajowego granted a loan of PLN 300 million. It was the fifth loan agreement between a leasing company from the Pekao Group and BGK. The funds from this loan will be used to finance investments of micro and small enterprises in the field of vehicles, production lines, machinery and equipment.Bank Pekao S.A. was the arranger and underwriter in all the above-mentioned transactions.
Transactional banking
After four quarters of 2022 we recorded an increased number and volume of executed transactions:
- the number of Elixir domestic transfers increased by 7% y/y and the number of ExpressElixir instant transfers sent from PekaoBiznes24 rose by 270% y/y. (we maintain about 20% market share for domestic payments),
- we processed more than 1,5 million direct debit transactions (increase by 2%) in the total amount of almost PLN 485 million,
- the number of outgoing foreign transactions rose by 33% and their volume by 29,0%; the number of incoming foreign transactions increased by 33%,
- the volume of transactions processed under Pekao Collect service increased by 17% (we process more than 42 million transactions with a total volume of over PLN 74 billion) – (as compared to the data after four quarters of 2021),
We introduced new functionalities in the PekaoBiznes24 system:
- we made available a new application: "Change or supplementation of payment instructions for transfers in foreign exchange transactions”,
- for cards with a credit limit: real-time access to the information, i.e.: history of operations, card limit, available card limit (excluding the Visa Business Lider card) and the possibility to check blockades of performed transactions,
- possibility to download a duplicate for incoming domestic and foreign transfers.
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Bank Pekao S.A.
In addition, the key achievements in the area of transactional banking include:
- extending the range of foreign transfers executed in express mode by other currencies: Canadian dollars (CAD), Turkish lira (TRY), Romanian lei (RON), Bulgarian lev (BGN).
- extending cut-off times for transfers in currencies executed so far in express mode and TARGET-2 – one of the longest cut-off times on the market,
- implementing ExpressElixir SPLIT incoming domestic transfers for the whole Bank and outgoing transfers in the PekaoBiznes24 system,
- starting a pilot program of a new form of handling cash deposits via trezor-type devices. The devices are installed in the Bank's outlets and enable on-line booking of payments made by clients on the basis of QR codes,
- introducing the application of the NBP deposit rate for the product: Automatic Investment of Funds,
- extending the SWIFTNET FileAct service with the possibility to distribute statements in XML_CAMT format,
- implementing the following solutions as a result of the situation in Ukraine:
• special offer for the Ukrainian companies – simplified procedures, special pricing offer,
• support in Ukrainian language for business clients,
• translation of the Bank’s documents into Ukrainian,
• exemption of all clients from fees for transfers to and from Ukraine.
Trade finance
In 2022, the amount of the newly granted guarantees and sureties increased by 8%. The Bank also recorded a two-digit growth dynamics in the area of documentary products - the amount of new transactions was higher by over 38% in comparison with 2021. The Bank’s exposure resulting from active import letters of credit at the end of 2022 increased by 9% as compared the previous year.
In 2022, the Bank financed more than 62 thousand invoices under the Open Financing Platform (OFP) in total amount of PLN 2,8 billion, which marks an increase of by about PLN 1,5 billion as compared to 2021, while the number of bought out invoices increased by 30%.
Clients became increasingly interested in debt financing programs, and the Supplier Finance programs in particular. About 200 suppliers were added to the programs in 2022, including 100 foreign suppliers, mainly from Turkey, India and Bangladesh. The Supplier Finance programs are also used as tools for active acquisition (cross-selling and up-selling).
In 2022, clients applying for an eFinancing limit (a service consisting in purchase of short-term receivables) had the opportunity to secure the limit with guarantees of Bank Gospodarstwa Krajowego, i.e. the LGF-FGP guarantee (provided under the portfolio factoring guarantee line - Liquidity Guarantee Fund) and the LGF-FGK guarantee (granted under the portfolio factoring guarantee line - the Crisis Guarantee Fund).
In 2022, clients gained access to the new version of the PekaoTrade system which is used to manage L/C transactions and documentary collections. At the same time, a new version of the back office system - IMEX 8, which is used by Pekao's experts handling documentary transactions - was implemented.
Cooperation with international clients
The Bank granted loans and prepared comprehensive offers for short and long-term financing of international transactions and the offers for hedging risk of international transactions, supporting the expansion of Polish enterprises on both European markets and in developing countries. The Bank’s clients can take advantage of the package of the most beneficial financial solutions adjusted to the model of the conducted business activity.
We signed an agreement with the Export Credit Insurance Corporation (KUKE), which enables KUKE to guarantee repayment of up to 80% of the value of loans granted by the Bank to exporters for their investments in Poland. This means that the Bank can significantly increase the scale of financing offered to its clients with unchanged risk exposure indicators, as the collateral is guaranteed by the State Treasury. Entrepreneurs, on the other hand, can - on attractive terms - finance the investment aimed at increasing or creating production capacity for goods intended for export.
We also signed an agreement with KB Kookmin Bank (London branch), the largest bank in South Korea, providing for cooperation in rendering corporate banking services to companies operating in both countries. Pursuant to this agreement, the cooperation may include the activities in the case of corporate finance transactions of Korean companies operating in Poland or Polish companies operating in South Korea, development of transactions in the area of trade finance, including letters of
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Bank Pekao S.A.
credit and bank guarantees, and the acquisition of new corporate clients. The cooperation of both institutions broadens the possibility of providing appropriate services for Polish-Korean business.
Investment finance, structured finance and commercial real estate
The Bank supports 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 of the construction of warehouses.
The key projects financed by the Bank in 2022 include:
- syndicated financing for the construction of photovoltaic farms in the amount of PLN 779 million ,
- financing the construction of the largest photovoltaic farm in Poland with a target capacity of 285.6 MW, the amount of financing: PLN 763 million,
- financing the purchase and revitalization of warehouse parks, adaptation to ESG standards, in the amount of PLN 450 million,
- syndicated financing for the construction of over one hundred photovoltaic farms in the amount of PLN 428 million ,
- syndicated financing for the acquisition made in Polish fuel industry in the amount of PLN 360 million ,
- increasing the amount of reverse factoring up to PLN 550 million for one of the top groups operating in the chemical industry ,
- increasing the amount of full factoring up to PLN 330 million for one of the leading groups from the energy sector ,
- financing of a subsidiary company in cooperation with EBI in the amount of EUR 132 million ,
- a loan for the acquisition of a foreign company from the renewable economy sector. The financing amounted to EUR 131 million. The Bank acted as the MLA,
- financing provided to the leader of the Polish energy industry. The Bank acted as one of the original lenders. The loan amount was PLN 4 billion,
- a loan in the amount of EUR 47 million for the construction of warehouses in central Poland granted under continued cooperation with the largest developer of warehouse space on the Polish market,
- a term loan in the amount of PLN 550 million granted to a leading housing developer in Poland. The Bank acted as the MLA,
- syndicated investment loan financing for a leading producer and distributor of photovoltaic solutions. The loan amount: PLN 330 million,
- a syndicated refinancing loan granted for the portfolio of shopping centers. The loan amount: EUR 146 million,
Issuance of debt securities
In 2022, Bank Pekao S.A. participated in issuance of non-treasury debt securities (of corporate entities, banks and municipal units) for the total amount of nearly PLN 27,3 billion, of which the following transactions deserve special attention:
- issue of 7-year Eurobonds for a Polish Development Bank in the amount of EUR 500 million to be used for the development of road infrastructure, in which the Bank acted as a co-arranger,
- the issue of bonds for a company belonging to an international automobile concern for the amount of PLN 400 million, with maturity of 2 years, in which the Bank acted as the sole arranger and dealer,
- the issue of 6-year bonds for a leading company on the Polish market from debt collection industry for the total amount of PLN 350 million, in which the Bank acted as Dealer of the consortium,
- the issue of bonds for a leasing company belonging to an international financial group for the amount of PLN 200 million maturing in April 2024, for which the Bank performed the function of coordinator, arranger and dealer, and the short-term bonds for the amount of PLN 180 million, for which the Bank acted as the sole arranger and dealer,
- the issue of bonds for a company owned by an international developer group for the amount of PLN 135 million maturing in September 2025, in which the Bank acted as the co-arranger and dealer,
- issue of 3-year bonds for a leading Polish residential developer in the amount of PLN 110 million,
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- the issue of seven series of bonds denominated in EUR and PLN for a leasing company from the Group for the total amount being the equivalent of about PLN 3.8 billion and the issue of 27 series of bonds denominated in PLN and EUR for a factoring company from the Group for the total amount being the equivalent of about PLN 15.7 billion, in which the Bank acted as the sole arranger and dealer.
The Bank also signed 19 new bond issue agreements of which the following deserve special attention:
- agreement providing for issuance of sustainability linked bonds signed with a company from the multimedia industry for the amount of up to PLN 4 billion,
- agreement providing for issuance of green bonds signed with a company belonging to an international developer group for the amount of EUR 150 million.
Comprehensive service of public sector finances
Financing the public sector and municipal projects is part of our activities related to co-creation and development of Polish infrastructure, including support for sustainable development of the economy and environmental protection.
In 2022 we continued our activities supporting the development of public sector in Poland. We are committed to maintain our leadership position in this market segment and we are a leading bank in cooperation with and financing of public sector in Poland. We cooperate with 11 out of 12 Polish metropolises (92% market share) and we provide ongoing budget support for five of them. We cooperate with every fourth municipality in Poland (25% market share). We maintain business relationships with 92% of towns with county rights and we 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 a major bank for state universities – 70 of them use our services.
In the competition announced by the Polish Development Fund, we were selected to provide operational services to the National Reconstruction Plan. The agreement regulating the terms of cooperation was concluded in June 2022.
In cooperation with the Ministry of Finance, we implemented a retail treasury bond distribution project combined with granting working capital in the amount of PLN 200 million. Participation in the retail treasury bond sale project complements the deposit offer, providing the Bank's customers with even greater opportunities to deposit or invest their savings.
We also supported public sector entities in the implementation of ESG projects, we financed the following green projects: green transport for Gdańsk Buses and Trams - bond issue worth PLN 65 million, and the expansion of sports infrastructure in Zabrze - bond issue for PLN 103 million.
We signed a financing agreement for Przedsiębiorstwo Państwowe "Porty Lotnicze", increasing the financing to PLN 400 million under the current Bond Issue Programme. In this transaction, we acted as the Bond Issue Program Organizer, Security Agent, Calculation Agent, Issuance Agent, and Payment Agent.
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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.
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 (pekaobh.pl)
Pekao Bank Hipoteczny is a specialist bank, focusing on granting mortgage loans and issuing covered bonds. As part of the Group's cooperation, portfolios of mortgage loans previously granted by Bank Pekao S.A. are successively transferred to Pekao Bank Hipoteczny, and may constitute collateral for the issued covered bonds.
In 2022, 85% of the value of the transfer of mortgage receivables concerned retail loans in PLN, and 15% of receivables of local government units.
As at the end of December 2022, net value of loans portfolio amounted to PLN 2,960.2 million.Loans granted to corporates and local governments represents 15.5% and 9.2% respectively and loans granted to individual clients represents 75.3% of loan portfolio.
In 2022, Pekao Bank Hipoteczny completed nine issue of covered bonds in PLN. The total value of liabilities under mortgage bonds as at 31 December, 2022 was PLN 2,190.8 million (including EUR 50.0 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 Investment Mangament S.A - Pekao TFI
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 www:mojeppk.pl.
As at 31 December, 2022, the value of net assets of Pekao TFI investment funds (including PPK) amounted to PLN 19.2 billion and was lower by PLN 1.1 billion, i.e. 5.5% compared to the end of December 2021. The lower value of assets was negatively affected by the situation on the capital markets, including the one caused by the war in Ukraine. Funds from redemptions of funds were largely accumulated in bank accounts.
7.5.3 Leasing activity
Pekao Leasing Sp. z o.o. – Pekao Leasing
Pekao Leasing - Pekao Leasing Sp. z o.o
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 2022, the Company concluded 17.0 thousand new contracts. The value of leased assets was 16.1% higher than in 2021 and amounted to PLN 5.6 billion, including: 54.1% means of transport, 40.2% - plant and equipment, 4.5% - 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.
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Report on the activities of Bank Pekao S.A. Group for the year 2022 year
Bank Pekao S.A.
7.5.4 Factoring activity
Pekao Faktoring Sp. z o.o. - Pekao Faktoring
Pekao Faktoring Sp. z o.o.
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 20.3% of market share.
7.5.5 Transactional advisory
Pekao Investment Banking S.A. – Pekao IB
Pekao Investment Banking S.A. (pekaoib.pl)
Pekao IB specializes in high-quality advisory and brokerage services for large and medium-sized enterprises and financial institutions. The scope of services provided by Pekao IB includes, in particular, accepting and transferring orders to buy or sell financial instruments, offering financial instruments, as well as consulting for enterprises in the field of capital structure, enterprise strategy and other services in the field of mergers, divisions and acquisitions of enterprises.
In 2022, Pekao IB participated in a capital increase by one public company, advised on the issue of shares in one of the companies listed on the Warsaw Stock Exchange and provided bond issue services for ten entities, as well as handling tenders for offerings for shares in three companies listed on the Warsaw Stock Exchange in Warsaw, compulsory buyout of shares in one company and buyback of own shares by one of the entities listed on the Warsaw Stock Exchange. The company has also carried out a number of transactions on the private and public capital market. as well as debt counseling services, three of which were successfully completed in 2022.
7.5.6 Other financial services
Centrum Kart S.A. - CK S.A.
Centrum Kart S.A. - O nas
The company provides comprehensive services related to, among others with support for payment card management systems, transaction authorization and card personalization. The company mainly provides services to Bank Pekao S.A. and in cooperation with the Bank implements projects aimed at expanding the Bank's product offer.
In 2022, the most important projects completed include the implementation of e-commerce transaction support from the merchant side for the Bank's customers.
Krajowy Integrator Płatności S.A.– KIP
Szybkie przelewy i płatności online | Tpay
Since 31 March 2021, the Bank has been the owner of shares constituting 38.33% of shares in Krajowy Integrator Płatności S.A., the owner of the fast online payment system Tpay (formerly Transferuj.pl).
The company has the status of a national payment institution and is supervised by the Polish Financial Supervision Authority. KIP's activity is to mediate in the transfer of payments between the payer and the recipient. In 2022, the Company continued the process of increasing the scale of its operations in the area of online payments, service websites and looked for new areas to expand the possibilities of services provided by KIP, including in cooperation with Bank Pekao S.A.
Pekao Direct Sp. z o.o. – Pekao Direct
Strona główna - 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 2022 Pekao Direct handled 12.8 million calls, by 2.9% more than 2021. Pekao Direct participates in the innovative process of opening selfie accounts and in 2022 Pekao Direct verified 100.4 thousand accounts opened for selfie. In 2022, compared to 2021, chat services decreased by 18.1% and video calls (within the PeoPay application) by 2.4%, which is related to the record level of services in 2021, resulting from the pandemic situation and the use by customers with alternative forms of contact. The company, in cooperation with the Bank, conducts projects aimed at developing communication with customers, including the use of mobile banking.
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Bank Pekao S.A.
Pekao Financial Services Sp. o.o. – PFS
https://www.pekao-fs.com.pl
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.
PeUF Sp. z o. o. – PEUF
PeUF is a company 100% owned by Pekao Leasing Sp. z o. o. and acts as an insurance agent, providing insurance distribution services.
From 1 March 2022, PeUF took over the service of Pekao Leasing's portfolio in the field of newly concluded insurance contracts. PeUF's activities include agency services regarding insurance services for newly concluded leasing transactions, as well as servicing policy renewals. In addition to agency services, the activities concern: monitoring of policies, handling claims settlements, as well as insurance terminations. In 2022, PeUF provided intermediation services for five Insurance Companies, and the value of commissions from policies sold amounted to PLN 30.7 million.
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Report on the activities of Bank Pekao S.A. Group for the year 2022 year
Bank Pekao S.A.
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
We create learning opportunities and provide 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 2022, the main training priorities of the Bank were as follows:
 professional knowledge development of the Bank’s employees including a strong focus on the development of future competencies,
 leadership development - education for managers,
 realization of mandatory training programs required under internal and external regulations.
Professional knowledge development of the Bank’s employees including a strong focus on the development of future competencies
We continued to 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 2022 , we completed over 261 thousand of training hours (class room and virtual sessions), in which attended over 11 thousand of employees, his proves the effective implementation of products, methods, required regulations and customer care. E-learning courses and trainings were completed at a similar lever of over 293 thousand hours.
For many years we have been investing in the education and development of employees, offering very wide opportunities for development and improvement of competences, which in the long run affect the achievement of individual professional success of employees and the development of key competences of the future.
In 2022, we conducted the Academy of the Future - this comprehensive development project was prepared by an experienced staff of experts who have specialized in the competencies of the future for many years. Each of the webinars and workshops provided a powerful injection of knowledge related to the key competencies of the future. The webinars provided an overview of a concise compilation of key issues, while the workshops provided an opportunity to practice the skills. Additionally, the participants have at their disposal a Library of Inspirations with materials that will allow them to expand selected competences of the future.
We have started the Banking School of Sales Program - which includes such training courses as SPIN® Selling - Understanding the Customer, PREMIUM Relational Sales Model, Advanced Business Negotiations and Business Advisor Academy. The aim of the project is to support the implementation of proven and effective sales behaviour, improve competencies in the area of up-selling, reaching out to new customers, conducting meetings and dealing with difficult situations. Acquired knowledge and skills are improved during practical workshops. The following training companies are involved in the program: Move4ward Training and Development, ODiTK and Sandler Training Poland, as well as in-house experts.
The development of modern technologies is very important to us. In the Laboratory of Innovation at the bank, we look at new products on the market. We test new technological initiatives created at the bank, also cooperating with external partners. Thanks to this approach, we help our employees to fully use their potential.
In 2022, we continued the Robotization Academy 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 continued 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.
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Report on the activities of Bank Pekao S.A. Group for the year 2022 year
Bank Pekao S.A.
Leadership development - education for managers
2022 is another year in which we priority the continuous development and expansion of the competencies of our executives so that they can meet the challenges of the changing reality, both in business and social aspects. Therefore, we continue and develop extensive training and development programs.
The Leadership Academy and the Retail Manager Academy - training and development programs intended for the bank's management staff in the Network and at the Head Office. The objective of the programs is both to prepare managers to effectively implement the business challenges set out in the Bank Strategy, and to implement the Bank's values and carry out key changes. The programs have been developed in such a way that managers systematically acquire knowledge and translate it into specific skills on an ongoing basis. 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.
Leader of Change - is a continuation of the aforementioned programs and is dedicated to their participants. The objective of the programs is to introduce managers to what it is to build a position as an inspiring leader of change in the VUCA environment.
Realization of mandatory training programs required under internal and external regulations
In 2022, a large MOTO training project was implemented aimed at including motor insurance the bank's offer. In addition to the implementation of the PZU product, we started cooperation with LINK4. We offered numerous trainings to prepare for the sale of new products.
Recognizing the Authenticity of Money Marks - training aimed at Sales and Customer Service Specialists. During the training, employees have the opportunity to acquire, repeat or deepen their knowledge of the possibility of recognizing the authenticity of Polish and foreign currency signs (PLN, EUR, GBP, USD or UAH). Employees learn about methods of securing Polish and foreign currencies and current legal regulations on the circulation of means of payment.
Development programs and initiatives
In 2022, we implemented development programs and initiatives for employees aimed at providing support in the development of interpersonal and managerial competences.
The priority of development programs in the Bank is identification, review, verification and development of current and future leaders of the Bank.
The Bank performs the following processes related to this issue:
 Succession Plans, which have fundamental importance in ensuring continuous employment on strategic positions, continuity of long-term projects and minimizing operational risk,
 Annual Employee Appraisal System – process of evaluation of the Bank’s employees which comprises appraisal of competencies, potential, personal development planning and business goals appraisal,
 Assessment Centre/Development Centre session – a diagnostic tool designed to identify employee’s potential, used in recruitment, promotion and employee development processes.
The Bank also offers the development initiatives focused on supporting the employees in their professional career development and improvement of their skills, knowledge, and competencies as well as a number of initiatives strengthening the employees’ engagement.
"Without sugar" - program for Women.
An important initiative carried out at the Bank is the "Without sugar" program for women. Weekly meetings and webinars on the development of personal and professional competencies were very popular. As part of the Program, we organized 35 webinars attended by over 4 thousand employees. The "Without Sugar" program has been included in the development project "emPower Women" implemented by Microsoft together with its partner, Avanade. The main goal of "emPower Woman" is to strengthen women's technological competences with an emphasis on cloud solutions. The Program also addresses issues related to ecology and promoting ecological lifestyle.
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Report on the activities of Bank Pekao S.A. Group for the year 2022 year
Bank Pekao S.A.
Pro-Wellness activities
On the "Take your health by the horns!" website, we support and educate employees in 4 areas: healthy eating, physical activity, mental health and prevention.
Due to the political situation in February, we organized meetings aimed at dealing with the emotions that the war in Ukraine could have caused among employees. We have created opportunities to take advantage of individual psychological advice both in stationary form and in the form of an anonymous telephone conversation. For people involved in helping refugees, we held an online meeting with a crisis intervention officer who shared practical tips on how to help wisely and at the same time remember about your resources and needs.
We also organized series of meetings with psychologists, e.g. how to deal with stress, difficulties and adversities as well as unexpected events. During the meetings with experts, we addressed the topic of resilience, building real optimism, and there was also a program based on mindfulness enriched with breathing and relaxation techniques, as well as prevention of depression and professional burnout.
In 2022, we implemented four programs in the field of healthy eating. The first one was aimed at encouraging changes in the diet and introducing healthy eating habits, the others touched on topics related to civilization diseases and disseminated knowledge on the introduction of an appropriate diet and changes in the way of eating if we struggle with problems with maintaining a proper body weight, hypertension, insulin resistance or diabetes.
These activities were supported by a preventive campaign conducted with PZU Zdrowie doctors, the aim of which was to familiarize employees with the occurrence of the first symptoms of various diseases and to encourage further diagnostics in the event of their occurrence.
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,
 “ Corporate Banking Champions” Internship Program is a unique 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 area of Corporate and Investment Banking. The role of the Mentor is key, as he shares his knowledge and experience with the Students.
 IT Champions offers internships in the area of technology (IT and security). The program is addressed to students of the best IT universities in Poland who want to create innovative solutions in the Polish banking sector. The program offers development in position: Tester, Programmer, Data Architect, Data Analyst. The role of the Mentor is key, as he shares his knowledge and experience with the Students.
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 was approved by the Supervisory Board of the Bank by resolution of December 16, 2022. 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.
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Bank Pekao S.A.
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.. In 2022, 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.
The Bank also has a Remuneration Policy for Members of Supervisory Board of the Bank and the Management Board of Bank Polska Kasa Opieki Spółka Akcyjna, which sets out the framework principles and rules for determining, monitoring and controlling the remuneration rules and practices applied by the Bank in relation to the Members of its Supervisory Board and the Management Board of the Bank.
The Remuneration Policy for Members of the Supervisory Board of the Bank and the Management Board of Bank Polska Kasa Opieki Spółka Akcyjna supports proper and effective risk management and does not encourage taking excessive risks exceeding the acceptable general risk level approved by the Bank's Supervisory Board; implementation of the Bank's management strategy and risk management strategy; mechanisms for managing conflicts of interest occurring in the Bank's operations and limiting them; as well as ensuring that remuneration and any related terms and conditions of employment that affect remuneration, including those relating to conditions for granting and payment of remuneration, are gender neutral, i.e. they are not differentiated on the basis of gender.
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.
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 behaviour 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.
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Bank Pekao S.A.
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 2022, 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 2022, 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 additional functions performed by members of the Bank's governing bodies.
The subsidiaries have implemented the Suitability Assessment Policies in accordance with applicable law.
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 and in relation to Members of the Supervisory Board, by the General Meeting of Shareholders.
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.
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Bank Pekao S.A.
Relations with Trade Union Organizations
In 2022 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 2022, 29 meetings (both 1 and 2-day meetings) between the Bank and Trade Unions were taken place. The meetings and the agreements were mainly about:
1) Agreeing on the determination of the rate of the Collective Labour Agreement increases for 2022,
2) Agreeing on the plan of expenditure from the Company Social Benefits Fund for 2022, agreeing on the content of the regulations of the Company Social Benefits Fund,
3) Agreeing on the distribution of the incentive reward fund for 2021,
4) Agreeing on the rules for the distribution of the bonus fund in each quarter resulting from the Collective Labor Agreement’s records.
In September 2022, the Bank began talks with trade union organizations regarding changes to the bonus rules for sales network employees in the Retail Banking Division. A total of 10 two-day meetings were held and on 14 December 2022 the Additional Protocol no 2 was signed with 4 Trade Union Organizations (the Collective Labour Agreement sides), which was registered by the State Labour Inspectorate on January 2023.
During year 2022, 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. In April 2022, an Agreement ending the collective dispute initiated in July 2021 was signed.
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
In 2022, 4 meetings with Works Council took place. The main topics were as follows:
1) consultation on the Bank's intention to implement a Voluntary Departure Program in 2022,
2) organizational changes in Retail Banking Division (reducing the number of Macroregions and some areas),
3) changes in the organizational structure of Technology and Operations Division.
At the same time, in accordance with the provisions of the Law of April 7, 2006 on Informing and Consulting Employees, the Employer shall each time provide the Works Council with information on the status, structure and anticipated changes in employment, as well as activities that may cause significant changes in the organization of work or the basis of employment. At the same time, each time at the request of the Works' Council, the Employer consults the Council on the above issues.
Workforce in number
As at the end of December 2022, the Group employed 14,642 employees (in the Bank and the companies consolidated under full consolidation method) as compared to 14,702 employees as at the end of 2021.
As at the end of December 2022, the Bank employed 12,435 employees as compared to 12,661 employees as at the end of 2021.
The average age of the employees was 45.6 years, 75.5% of the employees are university graduates ( 74.3% in 2021), women represent 69.3% of the total workforce.
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Bank Pekao S.A.
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, 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 2022, the Bank was involved in a number of projects organized throughout the country, which significantly allowed to maintain the continuity of long-term initiatives and provided great support to the community in this challenging period related to the Russian invasion of Ukraine and the resulting social unrest. Bank Pekao S.A. Foundation joined in helping the victims of the war in Ukraine. In the first weeks of the war, we donated to the Polish Red Cross for the purchase of first aid kits, camp beds and food for people crossing the Polish border. In the following months, we provided financial support to organizations providing social assistance to emigrants.
The Bank Pekao S.A. Foundation also supported activities in the area of promotion and organization of employee volunteering. As part of the "We are close" campaign, volunteer leaders and teams implemented 93 projects for local communities in 65 towns. Financial support for the campaign was provided by the Foundation, thanks to which it was possible to equip schools, child and handicapped care facilities, local associations and shelters for homeless animals with equipment and necessary materials. Volunteers helped children from care and educational institutions, seniors, people with disabilities, took care of animals in shelters. They promoted young people's sports activity, culture, including classical music and theatrical projects, as well as the history of Poland. Volunteer leaders carried out a number of pro-health actions. They undertook actions aimed at counteracting social exclusion of various groups of people exposed to functioning outside the society.
We financially supported public benefit organizations, financial assistance was received by, among others: the SOS Children's Villages in Poland Association, the Polish Red Cross, the Warsaw Institute of Banking Foundation, the Apiterra Foundation, the Society for the Care of Animals in Poland, the UNEP/GRID-Warsaw Center - Department of the National Foundation Environmental Protection.
In 2022, the Bank was once again the title sponsor of one of the largest tennis tournaments in Poland - Pekao Szczecin Open. We continued cooperation with the Polish Basketball Association (PZKosz) and the Polish Basketball League S.A. (PLK), and we also supported the Polish National Team in the struggle during EuroBasket 2022.
We got involved in a new, large sponsorship project - Pekao S.A. "Warszawska Dycha", which was organized as part of the Warsaw Marathon and enjoyed great interest among runners.
In 2022, we supported initiatives of an economic nature and were present at the Congress 590, Corporate and Investment Banking Congress and the Economic Forum in Krynica.
For many years we have been involved in the protection of Polish bison, we care about the protection of the world's largest free-living herd of bison living in the Białowieża Forest. We co-finance scientific and educational projects, e.g. in the Białowieża National Park, the Foundation for the Development of the Warsaw Zoological Garden "Panda", the Agency for the Development and Promotion of the Pszczyna Land, or the Association of European Bison Lovers.
In 2022, we continued the digitization of works of art and prepared and published three publications related to the promotion of art. These are: "Żubr na Wall Street" - an album documenting the poster competition in connection with the celebration of the 25th anniversary of Private Banking of Bank Pekao, "Historical tenement houses of Bank Pekao S.A." – an item documenting the architectural monuments of which the Bank's branches are located, and the album "Between Art and Commercial" on the Bank's archival advertising materials, whose authors were outstanding Polish artists - visual artists.
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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, 2022 and 2021 respectively is presented in the Consolidated Financial Statements of Bank Pekao S.A. Group for the year ended on 31 December 2022.
The Report on activities of Bank Pekao S.A. Group for the year 2022, 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
In 2022, we generated the net profit of the Bank Pekao S.A. Group. attributable to the Bank's shareholders in the amount of PLN 1,717.6 million. This result is lower by PLN 457.3 million than the result achieved in 2021.
In 2022 , the Group’s operating income amounted to PLN 10,761.3 million and was higher by 26.3% in comparison with 2021 , thanks to both net interest income and net fee and commission income.
 Net interest income in 2022, amounted to PLN 8,243.8 million and was higher by PLN 2,583.0 million, i.e. 45.6% in comparison with 2021. The net interest result in 2022 includes the cost related to the modification of PLN mortgage loan agreements granted to consumers due to the suspension of their repayment in the amount of PLN 1,958.4 million.
 Net fee and commission income in 2022 , amounted to PLN 2,807.2 million and was higher by PLN 119.7 million i.e. 4.5% compared to 2021 , mainly due to customer activity including currency market and the adaptation of the offer to the changing market conditions.
 Net other operating income and expenses in 2022 amounted to PLN (minus) 504.6 million and were lower mainly due to creation of a provision for legal risk regarding foreign currency mortgage loans in CHF, in the amount of PLN 351.5 million, creation of the provisions for reimbursement customers of increased margins on mortgage loans before establishing a mortgage in the amount of PLN 111.9 million, revaluation of real estate in the amount of PLN 47.3 million.
In 2022 the Group’s operating costs amounted to PLN 4,083.0 million and were higher by PLN 343.9 million i.e. 9.2% compared to 2021, significantly below inflation.
Net allowances for expected credit losses excluding provisions for legal risk regarding foreign currency mortgage loans in CHF amounted to PLN 769.6 million in 2022 and was higher by PLN 143.7 million i.e. 23.0% as compared to 2021.
In 2022, the Group created provisions for the legal risk of foreign currency mortgage loans in CHF, in the amount of PLN 1,597.8 million, which charged the result on write-offs in the amount of PLN 1,246.3 million and other operating costs in the amount of PLN 351.5 million.
In 2022 the Contributions to the Bank Guarantee Fund amounted to PLN 267.2 million and were lower by PLN 22.1 million compared to 2021.
On June 7, 2022 the Management Board and Supervisory Board of the Bank adopted resolutions on consent to submitting an an application to the Polish Financial Supervision Authority for approval and recognition of the Protection Scheme the members of which are banks operating in the form of a joint-stock company with the draft agreement on the Protection Scheme referred to in Art. 4 sec. 1 point 9a of the Act of August 29. 1997 - Banking Law. In the three quarters of 2022, the Bank created a provision in the amount of PLN 482.1 million gross for payment to the above protection system.
On the basis of art. 89 sec. 1 of the Act of July 7, 2022 on crowdfunding of business ventures and assistance to borrowers, we created a provision in the amount of PLN 169.4 million for the Borrowers Support Fund.
Tax on certain financial institutions in 2022 amounted to PLN 866.2 million and was higher by PLN 147.3 million i.e. 20.5% as compared to 2021 , due to an increase in Group’s assets.
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Report on the activities of Bank Pekao S.A. Group for the year 2022 year
Bank Pekao S.A.
Volumes
As at the end of December 2022, loans and advances at nominal value amounted to PLN 175,846.6 million and were at a similar level compared to the end of December 2021. As at the end of December 2022 , the volume of retail loans amounted to PLN 76,844.1 million an decrease of PLN 5,933.7 million, i.e. 7.2%. As at the end of December 2022 corporate loans and non- treasury debt securities amounted to PLN 99,002.4 million an increase of PLN 6,031.5 million, i.e. 6.5% in comparison to the end of December 2021 , however with the growth in the segment of enterprises (16% y/y) and leasing receivables.
As at the end of December 2022 amounts due to the Group’s customers and debt securities issued amounted to PLN 222,722.4 million an increase of PLN 19,801.3 million, i.e. 9.8% in comparison to the end of December 2021 .
The value of net assets of investment funds managed by Pekao TFI S.A. amounted to PLN 19,171.8 million as at the end of December 2022 an decrease of PLN 1,113.5 million, i.e. 5.5% in comparison to the end of December 2021 . The lower value of assets was negatively affected by the situation on the capital markets, including the one caused by the war in Ukraine. Funds from redemptions of funds were largely accumulated in bank accounts.
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Report on the activities of Bank Pekao S.A. Group for the year 2022 year
Bank Pekao S.A.
8.1 The consolidated income statement – presentation form
In 2022, we generated the net profit of the Bank Pekao S.A. Group. attributable to the Bank's shareholders in the amount of PLN 1,717.6 million. This result is lower by PLN 457.3 million than the result achieved in 2021. The following events had a negative impact on the result in 2022:
- recognition of the cost related to the modification of PLN mortgage loan agreements granted to consumers due to the suspension of their loan repayments at the amount of PLN 1,958 million,
- creation of the provisions for legal risk regarding foreign currency mortgage loans in CHF, in the amount of PLN 1,598 million,
- recognition of fee paid for the Protection Scheme t he members of which are banks operating in the form of a joint-stock company at the amount of PLN 482 million,
- incurring the costs of additional contributions to the Borrowers Support Fund amounted to PLN 169 million,
- creation of the provisions for reimbursement customers of increased margins on mortgage loans before establishing a mortgage in the amount of PLN 112 million.
(in PLN million)
2022
2021
CHANGE
Net interest income
8,243.8
5,660.8
45.6%
Net fee and commission income
2,807.2
2,687.5
4.5%
Dividend income
27.9
26.7
4.5%
Trading result
187.0
163.4
14.4%
Net other operating income and expenses
(504.6)
(16.2)
> 100%
Net non-interest income
2,517.5
2,861.4
(12.0%)
Operating income
10,761.3
8,522.2
26.3%
Operating costs
(4,083.0)
(3,739.1)
9.2%
Gross operating profit
6,678.3
4,783.1
39.6%
Net allowances for expected credit losses
(2,015.9)
(778.2)
> 100%
including: legal risk regarding foreign currency mortgage loans
(1,246.3)
(152.3)
> 100%
Net operating profit
4,662.4
4,004.9
16.4%
Contributions to the Bank Guarantee Fund
(267.2)
(289.3)
(7.6%)
Fee paid for the Protection Schemes
(482.1)
-
x
Contributions to the Borrowers Support Fund
(169.4)
-
x
Tax on certain financial institutions
(866.2)
(718.9)
20.5%
Gains on associates and disposal of subsidiaries
5.0
4.9
2.0%
Profit before tax
2,882.5
3,001.6
(4.0%)
Income tax expense
(1,163.0)
(825.0)
41.0%
Net profit
1,719.5
2,176.6
(21.0%)
Attributable to equity holders of the Bank
1,717.6
2,174.9
(21.0%)
Attributable to non-controlling interest
1.9
1.7
11.8%
Operating income
In 2022 , the Group’s operating income amounted to PLN 10,761.3 million and was higher by 26.3% in comparison with 2021 , thanks to both net interest income and net fee and commission income.
Total net interest income
(in PLN million)
2022
2021
CHANGE
Interest income
11,115.3
5,870.4
89.3%
Interest expense
(2,871.5)
(209.6)
> 100%
Net interest income
8,243.8
5,660.8
45.6%
Net interest income in 2022, amounted to PLN 8,243.8 million and was higher by PLN 2,583.0 million, i.e. 45.6% in comparison with 2021. The net interest result in 2022 includes the cost related to the modification of PLN mortgage loan agreements granted to consumers due to the suspension of their repayment in the amount of PLN 1,958.4 million.
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Report on the activities of Bank Pekao S.A. Group for the year 2022 year
Bank Pekao S.A.
Interest income
In 2022 , the interest income amounted to PLN 11,115.3 million and was higher by PLN 5,244.9 million y/y, mainly due to the increase in market interest rates in 2022, despite the recognition of the cost of credit holidays.
Interest expense
In 2022, the interest expense amounted to PLN 2,871.5 million and was higher by PLN 2,661.9 million y/y, due to the adaptation of the Bank's product offer to market conditions and customer expectations.
Interest margin
The interest margin achieved in 2022 was 3.27% and was higher by 0.89 p.p. than the margin achieved in comparison with 2021. The interest margin, excluding cost related to the modification of PLN mortgage loan agreements granted to consumers due to the suspension of their loan repayments , amounted to 4.04% in 2022.
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Report on the activities of Bank Pekao S.A. Group for the year 2022 year
Bank Pekao S.A.
Net non-interest income
(in PLN million)
2022
2021
CHANGE
Fee and commission income
3,439.0
3,230.0
6.5%
Fee and commission expense
(631.8)
(542.5)
16.5%
Net fee and commission income
2,807.2
2,687.5
4.5%
Dividend income
27.9
26.7
4.5%
Trading result
187.0
163.4
14.4%
Net other operating income and expense
(504.6)
(16.2)
>100%
Net non-interest income
2,517.5
2,861.4
(12.0%)
The non-interest income in 2022 amounted to 2,517.5 and was lower by PLN 343.9 million i.e. 12.0% compared to the result achieved in the previous year, mainly due to creation of a provision for legal risk regarding foreign currency mortgage loans in CHF, in the amount of PLN 351.5 million, creation of the provisions for reimbursement customers of increased margins on mortgage loans before establishing a mortgage in the amount of PLN 111.9 million, revaluation of real estate in the amount of PLN 47.3 million.
The Group’s net fee and commission income in 2022 , amounted to PLN 2,807.2 million and was higher by PLN 119.7 million i.e. 4.5% compared to 2021 , mainly due to customer activity including currency market and the adaptation of the offer to the changing market conditions.
The table below presents the Group’s net fee and commission income divided according to the main areas of the activity.
(in PLN million)
2022
2021
CHANGE
Net fee and commission income
2,807.2
2,687.6
4.5%
on loans
561.8
521.4
7.7%
on cards
314.2
243.7
29.3%
on mutual funds
304.0
366.3
(17.0%)
on brokerage activate
120.6
132.3
(8.8%)
on margins on foreign exchange transactions with clients
742.7
596.4
24.5%
other
763.9
827.5
(7.8%)
Operating costs
In 2022 the Group’s operating costs amounted to PLN 4,083.0 million and were higher by PLN 343.9 million i.e. 9.2% compared to 2021, significantly below inflation.
(in PLN million)
2022
2021
CHANGE
Personnel expenses
(2,300.3)
(2,156.1)
6.7%
General administrative expenses and depreciation
(1,782.7)
(1,583.0)
12.6%
Operating costs
(4,083.0)
(3,739.1)
9.2%
In 2022 cost / income ratio amounted to 37.9% and was lower by 0.59 p.p. y/y.
As of 31 December 2022 the Group employed 14,642 employees (in the Bank and the companies consolidated under full consolidation method) as compared to 14,702 employees as at the end of December 2021.
Contributions to the Bank Guarantee Fund
In 2022 the Contributions to the Bank Guarantee Fund amounted to PLN 267.2 million and were lower by PLN 22.1 million compared to 2021.
Fee paid for the Protection Schemes
On June 7, 2022 the Management Board and Supervisory Board of the Bank adopted resolutions on consent to submitting an an application to the Polish Financial Supervision Authority for approval and recognition of the Protection Scheme the members of which are banks operating in the form of a joint-stock company with the draft agreement on the Protection Scheme referred to in Art. 4 sec. 1 point 9a of the Act of August 29. 1997 - Banking Law. In 2022, the Bank created a provision in the amount of PLN 482.1 million gross for payment to the above protection system.
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Report on the activities of Bank Pekao S.A. Group for the year 2022 year
Bank Pekao S.A.
Contributions to the Borrowers Support Fund
On the basis of art. 89 sec. 1 of the Act of July 7, 2022 on crowdfunding of business ventures and assistance to borrowers, we created a provision in the amount of PLN 169.4 million for the Borrowers Support Fund.
Tax on certain financial institutions
Tax on certain financial institutions in 2022 amounted to PLN 866.2 million and was higher by PLN 147.3 million i.e. 20.5% as compared to 2021 , due to an increase in Group’s assets.
Net allowances for expected credit losses
(in PLN million)
2022
2021
CHANGE
financial assets measured at amortized cost excluding provisions for legal risk regarding foreign currency mortgage loans in CHF
(752.2)
(689.0)
9.2%
financial assets measured at fair value through other comprehensive income
12.5
37.6
(66.8%)
financial liabilities measured at amortized cost
(29.8)
25.4
x
Net allowances for expected credit losses excluding provisions for legal risk regarding foreign currency mortgage loans in CHF
(769.6)
(625.9)
23.0%
financial assets measured at amortized cost - provisions for legal risk regarding foreign currency mortgage loans in CHF
(1,246.3)
(152.3)
>100%
Net allowances for expected credit losses
(2,015.9)
(778.2)
>100%
Net allowances for expected credit losses excluding provisions for legal risk regarding foreign currency mortgage loans in CHF amounted to PLN 769.6 million in 2022 and was higher by PLN 143.7 million i.e. 23.0% as compared to 2021.
In 2022, the Group created provisions for the legal risk of foreign currency mortgage loans in CHF, in the amount of PLN 1,597.8 million, which charged the result on write-offs in the amount of PLN 1,246.3 million and other operating costs in the amount of PLN 351.5 million.
Costs of risk
The costs of risk excluding provisions for legal risk regarding foreign currency mortgage loans in CHF i n 2022 amounted to 0.43% and is in line with the strategy.
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Report on the activities of Bank Pekao S.A. Group for the year 2022 year
Bank Pekao S.A.
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 2022, the total assets of Bank Pekao S.A. constitutes 96.6% of the total assets of the whole Group.
31.12.2022
31.12.2021
ASSETS
PLN MILLION
STRUCTURE
PLN MILLION
STRUCTURE
CHANGE
Cash and due from Central Bank
13,436.3
4.8%
4,696.6
1.9%
> 100%
Loans and advances to banks (*)
4,678.6
1.7%
3,328.1
1.3%
40.6%
Loans and advances to customers (**)
167,509.6
59.6%
169,073.0
67.5%
(0.9%)
Reverse repo transactions
1,337.8
0.5%
969.6
0.4%
38.0%
Securities (***)
71,120.5
25.3%
57,352.8
22.9%
24.0%
Investments in associates
48.5
0.0%
44.0
0.0%
10.2%
Property, plant and equipment and intangible assets
3,825.4
1.4%
4,130.6
1.6%
(7.4%)
Other assets
19,182.3
6.8%
10,971.9
4.4%
74.8%
Total assets
281,139.0
100.0%
250,566.6
100.0%
12.2%
(*) 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 .
31.12.2022
31.12.2021
EQUITY AND LIABILITIES
PLN MILLION
STRUCTURE
PLN MILLION
STRUCTURE
CHANGE
Amounts due to Central Bank
-
-
-
-
x
Amounts due to other banks
8,594.4
3.1%
8,575.5
3.4%
0.2%
Amounts due to customers
209,595.8
74.6%
194,804.0
77.7%
7.6%
Debt securities issued
10,337.5
3.7%
5,355.4
2.1%
93.0%
Subordinated liabilities
2,789.1
1.0%
2,761.5
1.1%
1.0%
Repo transactions
879.0
0.3%
-
-
x
Lease liabilities
272.2
0.1%
358.0
0.1%
(24.0%)
Other liabilities
25,896.0
9.2%
14,848.9
5.9%
74.4%
Total equity including
22,775.0
8.1%
23,863.3
9.5%
(4.6%)
non-controlling interests
12.1
0.0%
11.9
0.0%
1.7%
Total equity and liabilities
281,139.0
100.0%
250,566.6
100.0%
12.2%
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 2022, they accounted for 59.6% and 25.3% of the total assets respectively in comparison with 67.5% and 22.9% respectively as at the end of 2021.
Cash and due from Central Bank
(in PLN million)
31.12.2022
31.12.2021
CHANGE
Cash and due from Central Bank, including:
13,436.3
4,696.6
>100%
Cash
4,316.7
3,699.7
16.7%
Current account at Central Bank
9,119.5
996.9
>100%
Other
0.1
-
-
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Report on the activities of Bank Pekao S.A. Group for the year 2022 year
Bank Pekao S.A.
Customers’ Financing
Armed conflict in Ukraine
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 of customers from Russia, Belarus and Ukraine.
In terms of credit risk. the Group identifies the following threats:
- credit loss risk for exposures to entities from Russia, Belarus and Ukraine, with the Bank’s exposure in this regard mostly covered by KUKE policies,
- 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.).
As at 31 December 2022 the Group’s balance sheet net exposure to countries involved in the conflict amounted to 225 million (which represents 0.14% of the Group’s total exposure).
Customer structure of loans and advances
(in PLN million)
31.12.2022
31.12.2021
CHANGE
Loans and advances at nominal value (*)
175,846.6
175,748.7
0.1%
Loans and investments in financial leases
165,757.4
164,860.8
0.5%
Retail
76,844.1
82,777.8
(7.2%)
Corporate
88,913.2
82,083.0
8.3%
Non-treasury debt securities
10,089.2
10,887.9
(7.3%)
Other (**)
1,821.9
1,257.3
44.9%
Impairment allowances
(10,158.9)
(7,933.0)
28.1%
Total net receivables
167,509.6
169,073.0
(0.9%)
Reverse repo transactions
1,337.8
969.2
38.0%
Total Customers’ financing (***)
177,184.4
176,717.9
0.3%
(*) 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 2022, loans and advances at nominal value amounted to PLN 175,846.6 million and were at a similar level compared to the end of December 2021.
As at the end of December 2022 , the volume of retail loans amounted to PLN 76,844.1 million an decrease of PLN 5,933.7 million, i.e. 7.2%.
As at the end of December 2022 corporate loans and non-treasury debt securities amounted to PLN 99,002.4 million an increase of PLN 6,031.5 million, i.e. 6.5% in comparison to the end of December 2021 , however with the growth in the segment of enterprises (16% y/y) and leasing receivables.
Receivables and impairment losses (*)
(in PLN million)
31.12.2022
31.12.2021
CHANGE
Gross receivables
177,668.5
177,006.1
0.4%
Stage 1
146,797.1
142,212.0
3.2%
Stage 2
19,508.4
25,606.8
(23.8%)
Stage 3
11,363.0
9,187.3
23.7%
Impairment allowances
(10,158.9)
(7,933.1)
28.1%
Stage 1
(882.5)
(634.5)
39.1%
Stage 2
(1,288.3)
(1,092.2)
18.0%
Stage 3
(7,988.1)
(6,206.4)
28.7%
Total net receivables
167,509.6
169,073.0
(0.9%)
(*) 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 2022 the ratio of impaired receivables (stage 3) to the gross receivables amounted to 6.4%.
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Report on the activities of Bank Pekao S.A. Group for the year 2022 year
Bank Pekao S.A.
Loans and advances to customers by currency (*)
31.12.2022
31.12.2021
PLN MILLION
STRUCTURE
PLN MILLION
STRUCTURE
CHANGE
Denominated in PLN
142,038.8
79.9%
146,451.2
82.7%
(3.0%)
Denominated in foreign currencies (**)
35,629.7
20.1%
30,554.8
17.3%
16.6%
Total
177,668.5
100.0%
177,006.0
100.0%
0.4%
Impairment allowances
(10,158.9)
x
(7,933.0)
x
28.1%
Total net
167,509.6
x
169,073.0
x
(0.9%)
(*) 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 2022 their share was 79.9%. The largest portion of foreign currency loans and advances to customers were represented by those denominated in EUR (87.2%), CHF (7.2%) and USD (4.2%).
Loans and advances to customers by contractual maturities (*)
31.12.2022
31.12.2021
PLN MILLION
STRUCTURE
PLN MILLION
STRUCTURE
CHANGE
Current and up to 1 month
22,451.7
12.6%
17,759.2,
10.0%
26.4%
1 to 3 months
6,930.9
3.9%
6,066.4
3.4%
14.3%
3 months to 1 year
18,650.5
10.5%
20,421.2
11.5%
(8.7%)
1 to 5 years
56,182.3
31.6%
59,116.6
33.4%
(5.0%)
Over 5 years
66,525.8
37.4%
66,586.2
37.6%
(0.1%)
Past due
5,105.4
2.9%
5,799.1
3.3%
(12.0%)
Other
1,821.9
1.0%
1,257.3
0.7%
44.9%
Total
177,668.5
100.0%
177,006.0
100.0%
0.4%
Impairment allowances
(10,158.9)
x
(7,933.0)
x
28.1%
Total net
167,509.6
x
169,073.0
x
(0.9%)
(*) 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 2022 loans and advances with maturity over 5 years represents 37.4% 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 2022.
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 2022, amounts due to customers, debt securities issued and subordinated liabilities totaled PLN 222,722.4 million, and their share in the total assets was 79.2%, compared with 81.0% as at the end of 2021. The share of total shareholder’s equity in the total assets was 8.1% as at the end of 2022, compared with 9.5% as at the end of 2021.
External sources of financing
(in PLN million)
31.12.2022
31.12.2021
CHANGE
Amounts due to Central Bank
-
-
x
Amounts due to other banks
8,594.4
8,575.5
0.2%
Amounts due to customers
209,595.8
194,804.0
7.6%
Debt securities issued
10,337.5
5,355.4
93.0%
Subordinated liabilities
2,789.1
2,761.5
1.0%
Repo transactions
879.0
-
x
Total external sources of financing
232,195.8
211,496.4
9.8%
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.
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Report on the activities of Bank Pekao S.A. Group for the year 2022 year
Bank Pekao S.A.
Amounts due to customers and debt securities issued
(in PLN million)
31.12.2022
31.12.2021
CHANGE
Corporate deposits
90,502.0
78,135.7
15.8%
Non-financial entities
71,915.8
57,433.7
25.2%
Non-banking financial entities
4,831.1
4,281.6
12.8%
Budget entities
13,755.1
16,420.4
(16.2%)
Retail deposits
118,369.9
116,342.1
1.7%
Other (*)
723.9
326.2
>100%
Amounts due to customers (**)
209,595.8
194,804.0
7.6%
Debt securities issued. of which
13,126.6
8,116.9
61.7%
Structured Certificates of Deposit (SCD)
952.2
178.6
> 100%
Certificates of Deposit
4,908.8
-
x
Subordinated bonds
2,750.0
2,750.0
0.0%
Pekao Bank Hipoteczny S.A. covered bonds
943.1
1,086.8
(13.2%)
Pekao Bank Hipoteczny S.A. bonds
-
156.0
x
Pekao Leasing Sp. z o.o. bonds
1,527.3
1,366.9
11.7%
Pekao Faktoring Sp. z o.o. bonds
1,932.0
2,559.9
(24.5%)
Interest
113.2
18.7
> 100%
Amounts due to customers and debt securities issued (**)
222,722.4
202,920.9
9.8%
Lease liabilities
272.2
358.0
(24.0%)
Repo transactions
879.0
-
x
Amounts due to customers and debt securities issued total (***)
223,873.6
203,278.9
10.1%
Investment funds of Pekao TFI S.A. (ex. Pioneer Pekao TFI)
19,171.8
20,285.3
(5.5%)
Bond and money market funds
13,062.0
14,004.7
(6.7%)
Balanced funds
3,627.6
3,450.8
5.1%
Equity funds
1,887.6
2,500.1
(24.5%)
PPK
594.6
329.7
80.3%
including distributed through the Group’s network
16,657.9
19,328.5
(13.8%)
(*) 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 2022 amounts due to the Group’s customers and debt securities issued amounted to PLN 222,722.4 million an increase of PLN 19,801.3 million, i.e. 9.8% in comparison to the end of December 2021 .
The total volume of retail deposits, Structured Certificates of Deposit and other amounted to PLN 119,946.1 million as at the end of December 2022 an decrease of PLN 3,171.9 million, i.e. 2.7% in comparison to the end of December 2021.
The total volume of corporate deposits, Certificates of Deposit, 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 102,776.3 million as at the end of December 2022 , an increase of PLN 16,629.7 million, i.e. 19.3% as compared to the end of December 2021 .
The value of net assets of investment funds managed by Pekao TFI S.A. amounted to PLN 19,171.8 million as at the end of December 2022 an decrease of PLN 1,113.5 million, i.e. 5.5% in comparison to the end of December 2021 . The lower value of assets was negatively affected by the situation on the capital markets, including the one caused by the war in Ukraine. Funds from redemptions of funds were largely accumulated in bank accounts.
Amounts due to customers by currency (*)
31.12.2022
31.12.2021
PLN MILLION
STRUCTURE
PLN MILLION
STRUCTURE
CHANGE
Denominated in PLN
170,876.4
81.5%
163,671.0
84.0%
4.4%
Denominated in foreign currencies
38,719.4
18.5%
31,133.0
16.0%
24.4%
Total
209,595.8
100.0%
194,804.0
100.0%
7.6%
(*) 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 December 2022 amounted to 81.5%. The majority of amounts due to customers denominated in foreign currencies were in EUR (62.3%) and USD (31.7%).
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Bank Pekao S.A.
Amounts due to customers by contractual maturities (*)
31.12.2022
31.12.2021
PLN MILLION
STRUCTURE
PLN MILLION
STRUCTURE
CHANGE
Current accounts and overnight deposits
157,682.9
75.5%
181,534.3
93.3%
(13.1%)
Term deposits
51,189.0
24.5%
12,943.6
6.7%
>100%
Total deposits
208,871.9
100.0%
194,477.8
100.0%
7.4%
Interest accrued
382.0
x
5.9
x
>100%
Funds in transit
342.0
x
320.3
x
6.8%
Total
209,595.8
x
194,804.0
x
7.6%
(*) Excluding repo transactions and lease liabilities.
Provisions. deferred tax assets and liabilities
(in PLN million)
31.12.2022
31.12.2021
CHANGE
Total provisions
1,402.2
883.1
58.8%
provisions for off-balance sheet commitments
396.9
360.1
10.2%
provisions for liabilities to employees
310.0
310.1
(0.0%)
other provisions
695.3
212.9
> 100%
Deferred tax liabilities
22.8
24.9
(8.4%)
Deferred tax assets
1,578.5
1,648.8
(4.3%)
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Report on the activities of Bank Pekao S.A. Group for the year 2022 year
Bank Pekao S.A.
8.3 Consolidated income statement
Consolidated income statement for 2022
(in PLN thousand)
Q4 2022
Q3 2022
Q2 2022
Q1 2022
Interest income
4,445,116
1,357,913
3,058,208
2,254,139
Interest income calculated using the effective interest method
4,711,451
1,512,453
3,090,641
2,183,403
Financial assets measured at amortised cost
4,413,148
1,352,082
2,967,493
2,073,383
Financial assets measured at fair value through other comprehensive income
298,303
160,371
123,148
110,020
Other interest income related to financial assets measured at fair value through profit or loss
(266,335)
(154,540)
(32,433)
70,736
Interest expense
(1,234,765)
(960,022)
(491,699)
(185,053)
Net interest income
3,210,351
397,891
2,566,509
2,069,086
Fee and commission income
863,087
872,750
866,981
836,184
Fee and commission expense
(191,085)
(158,431)
(151,121)
(131,190)
Net fee and commission income
672,002
714,319
715,860
704,994
Dividend income
1,084
440
26,074
276
Result on financial assets and liabilities measured at fair value through,profit or loss and foreign exchange result
153,057
20,509
(39,778)
53,425
Result on fair value hedge accounting
1,434
(404)
1,197
1,170
Result on derecognition of financial assets and liabilities not measured at fair value through profit or loss
6,382
1,357
(7,095)
(4,210)
Net allowances for expected credit losses
(1,091,035)
(259,850)
(530,575)
(134,444)
including: legal risk regarding foreign currency mortgage loans
(912,861)
(24,757)
(300,061)
(8,636)
Operating income
48,126
36,384
23,884
28,610
Operating expenses
(271,971)
(141,176)
(199,060)
(29,419)
General administrative expenses
and depreciation
(1,268,697)
(1,354,898)
(1,797,035)
(1,447,252)
Gains (losses) on associates
1,894
1,465
565
1,092
Profit / loss before income tax
1,462,627
(583,963)
760,546
1,243,328
Income tax expense
(576,653)
40,859
(291,813)
(335,440)
Net profit / loss
885,974
(543,104)
468,733
907,888
Attributable to equity holders of the Bank
886,063
(543,583)
467,925
907,165
Attributable to non-controlling interests
(89)
479
808
723
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Report on the activities of Bank Pekao S.A. Group for the year 2022 year
Bank Pekao S.A.
Consolidated income statement for 2021
(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)
including: legal risk regarding foreign currency mortgage loans
(104,986)
(41,853)
(3,993)
(1,424)
Operating income
46,019
28,846
27,944
18,737
Operating expenses
(69,134)
(25,146)
(28,495)
(14,971)
General administrative expenses
and depreciation
(1,091,843)
(1,099,275)
(1,139,277)
(1,416,865)
Gains (losses) on associates
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
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Report on the activities of Bank Pekao S.A. Group for the year 2022 year
Bank Pekao S.A.
8.4 Consolidated statement of comprehensive income
Consolidated statement of comprehensive income for 2022
(in PLN thousand)
Q4 2022
Q3 2022
Q2 2022
Q1 2022
Net profit / loss
885,974
(543,104)
468,733
907,888
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):
174,838
(61,235)
(297,356)
(454,162)
Profit or loss on fair value measurement
184,673
(57,938)
(295,037)
(449,834)
Profit or loss reclassification to income statement after derecognition
(9,835)
(3,297)
(2,319)
(4,328)
Impact of revaluation of derivative instruments hedging cash flows (net)
762,134
42,254
(987,309)
(800,343)
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)
25,253
(5,833)
(45,946)
(21,309)
Remeasurements of the defined benefit liabilities (net)
(22,402)
-
14,251
-
Other comprehensive income (net of tax)
939,823
(24,814)
(1,316,360)
(1,275,814)
Total comprehensive income
1,825,797
(567,918)
(847,627)
(367,926)
Attributable to equity holders of the Bank
1,825,874
(568,397)
(848,435)
(368,649)
Attributable to non-controlling interests
(77)
479
808
723
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
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Report on the activities of Bank Pekao S.A. Group for the year 2022 year
Bank Pekao S.A.
8.5 Consolidated income statement – presentation form
Consolidated income statement for 2022
(in PLN thousand)
Q4 2022
Q3 2022
Q2 2022
Q1 2022
Net interest income
3,210,351
397,891
2,566,509
2,069,086
Net fee and commission income
672,002
714,319
715,860
704,994
Dividend income
1,084
440
26,074
276
Trading result
160,873
21,462
(45,676)
50,385
Net other operating income and expenses
(223,845)
(104,792)
(175,176)
(809)
Net non-interest income
610,114
631,429
521,082
754,846
Operating income
3,820,465
1,029,320
3,087,591
2,823,932
Operating costs
(1,037,472)
(981,886)
(1,085,318)
(978,275)
Gross operating profit
2,782,993
47,434
2,002,273
1,845,657
Net allowances for expected credit losses
(1,091,035)
(259,850)
(530,575)
(134,444)
including: legal risk regarding foreign currency mortgage loans
(912,861)
(24,757)
(300,061)
(8,636)
Net operating profit
1,691,958
(212,416)
1,471,698
1,711,213
Contributions to the Bank Guarantee Fund
-
57,040
(57,040)
(267,219)
Fee paid for the Protection Schemes
-
(41,838)
(440,302)
Contributions to the Borrowers Support Fund
(3,547)
(165,835)
-
-
Tax on certain financial institutions
(227,678)
(222,379)
(214,375)
(201,758)
Gains (losses) on associates
1,894
1,465
565
1,092
Profit / loss before income tax
1,462,627
(583,963)
760,546
1,243,328
Income tax expense
(576,653)
40,859
(291,813)
(335,440)
Net profit / loss
885,974
(543,104)
468,733
907,888
Attributable to equity holders of the Bank
886,063
(543,583)
467,925
907,165
Attributable to non-controlling interest
(89)
479
808
723
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)
3,700
(551)
3,766
Net non-interest income
675,273
738,868
786,400
660,848
Operating income
2,275,925
2,125,926
2,125,852
1,994,447
Operating costs
(875,464)
(892,798)
(932,720)
(1,038,048)
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)
including: legal risk regarding foreign currency mortgage loans
(104,986)
(41,853)
(3,993)
(1,424)
Net operating profit
1,168,334
1,054,990
1,001,232
780,366
Contributions to the Bank Guarantee Fund
(29,969)
(27,120)
(28,861)
(203,357)
Fee paid for the Protection Schemes
-
-
-
-
Contributions to the Borrowers Support Fund
-
-
-
-
Tax on certain financial institutions
(186,410)
(179,357)
(177,696)
(175,460)
Gains (losses) on associates
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
75
Report on the activities of Bank Pekao S.A. Group for the year 2022 year
Bank Pekao S.A.
8.6 Reconciliation of income statement – presentation form and long form
Consolidated income statement for 2022
INCOME STATEMENT – PRESENTATION
FORM'S ITEMS
LONG FORM'S ITEMS RECLASSIFFIED
TO PRESENTATION FORM
2022
Net interest income
Net interest income
8,243,837
Net fee and commission income
Net fee and commission income
2,807,175
Dividend income
Dividend income
27,874
Trading result
-
187,044
Net result on other financial instruments at fair value through profit and loss
187,213
Result on fair value hedge accounting
3,397
(Gains) losses on derecognition of financial assets and liabilities not measured at fair value through profit or loss
(3,566)
Net other operating income and expenses
Net other operating income and expenses
(504,622)
Operating income
137,004
Operating expenses
(641,626)
Net non-interest income
-
2,517,471
Operating income
-
10,761,308
Operating costs
-
(4,082,951)
General administrative expenses depreciation
(5,867,882)
less - Contributions to the Bank Guarantee Fund
267,219
less - Fee paid for the Protection Schemes
482,140
less - Contributions to the Borrowers Support Fund
169,382
less – Tax on certain financial institutions
866,190
Gross operating profit
-
6,678,357
Net allowances for expected credit losses
Net allowances for expected credit losses
(2,015,904)
Net operating profit
-
4,662,453
Contributions to the Bank Guarantee Fund
Contributions to the Bank Guarantee Fund
(267,219)
Fee paid for the Protection Schemes
Fee paid for the Protection Schemes
(482,140)
Contributions to the Borrowers Support Fund
Contributions to the Borrowers Support Fund
(169,382)
Tax on certain financial institutions
Tax on certain financial institutions
(866,190)
Gains (losses) on associates
Gains (losses) on associates
5,016
Profit before income tax
Profit before income tax
2,882,538
Income tax expense
Income tax expense
(1,163,047)
Net profit for the period
Net profit for the period
1,719,491
Attributable to equity holders of the Bank
Attributable to equity holders of the Bank
1,717,570
Attributable to non-controlling interest
Attributable to non-controlling interest
1,921
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Bank Pekao S.A.
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)
General administrative expenses depreciation
(4,747,260)
less - Contributions to the Bank Guarantee Fund
289,307
less – Tax on certain financial institutions
718,923
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
Contributions to the Bank Guarantee Fund
Contributions to the Bank Guarantee Fund
(289,307)
Tax on certain financial institutions
Tax on certain financial institutions
(718,923)
Gains (losses) on associates
Gains (losses) on associates
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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Report on the activities of Bank Pekao S.A. Group for the year 2022 year
Bank Pekao S.A.
9. Separate Statement of Financial Position and Financial Results
Separate income statement containing cumulated items for the period from 1 January to 31 December, 2022 and 2021 respectively is presented in the Separate Financial Statements of Bank Pekao S.A. for the period ended on 31 December 2022 .
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
In 2022, Net profit of the Bank Pekao S.A , we generated in the amount of PLN 1,898.3 million. This result is lower by PLN 338.5 million than the result achieved in 2021.
In 2022, the operating income amounted to PLN 10,417.0 million and was higher by 28.9% in comparison with 2021 , thanks to both net interest income and net fee and commission income.
 Net interest income in 2022, amounted to PLN 8,009.5 million and was higher by PLN 2,596.4 million, i.e. 48.0% in comparison with 2021. The net interest result in 2022 includes the cost related to the modification of PLN mortgage loan agreements granted to consumers due to the suspension of their repayment in the amount of PLN 1.883 million.
 Net fee and commission income in 2022, amounted to PLN 2,455.5 million and was higher by PLN 154.0 million, i.e. 6.7% as compared to 2021, mainly due to customer activity including on currency market and the adaptation of the offer to the changing market conditions.
 Net other operating income and expenses in 2022 amounted to PLN (minus) 475.6 million and were lower mainly due to creation of a provision for legal risk regarding foreign currency mortgage loans in CHF, in the amount of PLN 319.2 million, creation of the provisions for reimbursement customers of increased margins on mortgage loans before establishing a mortgage in the amount of PLN 111.9 million, revaluation of real estate in the amount of PLN 47.3 million.
In 2022, operating costs amounted to PLN 3,755.6 million and were higher by PLN 317.4 million i.e. 9.2% compared to 2021, significantly below inflation.
Net allowances for expected credit losses excluding provisions for legal risk regarding foreign currency mortgage loans in CHF amounted to PLN 693.7 million in 2022 and was higher by PLN 93.7 million i.e. 15.6% as compared to 2021.
In 2022, the Bank created provisions for the legal risk of foreign currency mortgage loans in CHF, in the amount of PLN 1,504.0 million, which charged the result on write-offs in the amount of PLN 1,184.8 million and other operating costs in the amount of PLN 319.2 million.
Bank Guarantee Fund fee in the 2022, amounted to PLN 264.7 million, an decrease of PLN 22.8 million, i.e. in comparison with of 2021.
On 7 June 2022 the Management Board and Supervisory Board of the Bank adopted resolutions on consent to submitting an an application to the Polish Financial Supervision Authority for approval and recognition of the Protection Scheme the members of which are banks operating in the form of a joint-stock company with the draft agreement on the Protection Scheme referred to in Art. 4 sec. 1 point 9a of the Act of August 29. 1997 - Banking Law. In 2022, the Bank created a provision in the amount of PLN 482.1 million gross for payment to the above protection system.
On the basis of art. 89 sec. 1 of the Act of July 7, 2022 on crowdfunding of business ventures and assistance to borrowers, we created a provision in the amount of PLN 157.7 million for the Borrowers Support Fund.
Tax on certain financial institutions in 2022 amounted to PLN 866.2 million and was higher by PLN 147.3 million, i.e. 20.5% compared to 2021 , due to an increase in Bank’s assets.
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Bank Pekao S.A.
Volumes
As at the end of December 2022, loans and advances at nominal value amounted to PLN 163,401.8 million, an decrease of PLN 694,4 million, i.e. 0,4% in comparison to the end of December 2021. As at the end of December 2022 , the volume of retail loans amounted to PLN 74,469.7 million, an decrease of PLN 5,546.8 million, i.e. 6.9% in comparison to the end of December 2021 . As at the end of December 2022, corporate loans and non-treasury debt securities amounted to PLN 88,932.1 million, an increase of PLN 4,852.4 million, i.e. 5,8% in comparison to the end of December 2021.
As at the end of December 2022, amounts due to the Group’s customers and debt securities issued amounted to PLN 218,485.4 million, an increase of PLN 20,481.8 million, i.e. 10.3% in comparison to the end of December 2021.
The value of net assets of investment funds managed by Pekao TFI S.A. amounted to PLN 19,171.8 million as at the end of December 2022, an increase of PLN 1,113.5 million, i.e. 5.5% in comparison to the end of December 2021. The lower value of assets was negatively affected by the situation on the capital markets, including the one caused by the war in Ukraine. Funds from redemptions of funds were largely accumulated in bank accounts.
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Report on the activities of Bank Pekao S.A. Group for the year 2022 year
Bank Pekao S.A.
9.1 The Separate income statement – presentation form
In 2022, Net profit of the Bank Pekao S.A , we generated in the amount of PLN 1,898.3 million. This result is lower by PLN 338.5 million than the result achieved in 2021. The following events had a negative impact on the result in 2022:
- recognition of the cost related to the modification of PLN mortgage loan agreements granted to consumers due to the suspension of their loan repayments at the amount of PLN 1,883 million,
- creation of the provisions for legal risk regarding foreign currency mortgage loans in CHF, in the amount of PLN 1,504 million,
- recognition of fee paid for the Protection Scheme t he members of which are banks operating in the form of a joint-stock company at the amount of PLN 482 million,
- incurring the costs of additional contributions to the Borrowers Support Fund amounted to PLN 158 million,
- creation of the provisions for reimbursement customers of increased margins on mortgage loans before establishing a mortgage in the amount of PLN 112 million.
(in PLN million)
2022
2021
CHANGE
Net interest income
8,009.5
5,413.1
48.0%
Net fee and commission income
2,455.5
2,301.5
6.7%
Dividend income
257.3
219.7
17.1%
Trading result
170.3
158.5
7.4%
Net other operating income and expenses (*)
(475.6)
(9.2)
> 100%
Net non-interest income (*)
2,407.5
2,670.5
(9.8%)
Operating income (*)
10,417.0
8,083.6
28.9%
Operating costs
(3,755.6)
(3,438.2)
9.2%
Gross operating profit (*)
6,661.4
4,645.5
43.4%
Net allowances for expected credit losses
(1,878.5)
(663.9)
> 100%
including: legal risk regarding foreign currency mortgage loans
(1,184.8)
(63.9)
> 100%
Net operating profit
4,782.9
3,981.5
20.1%
Contributions to the Bank Guarantee Fund
(264.7)
(287.5)
(7.9%)
Fee paid for the Protection Schemes
(482.1)
-
x
Contributions to the Borrowers Support Fund
(157.7)
-
x
Tax on certain financial institutions
(866.2)
(718.9)
20.5%
Net result on investment activities
-
20.1
x
Profit before tax
3,012.1
2,995.2
0.6%
Income tax expense
(1,113.8)
(758.3)
46.9%
Net profit
1,898.3
2,236.8
(15.1%)
Operating income
In 2022, the operating income amounted to PLN 10,417.0 million and was higher by 28.9% in comparison with 2021 , thanks to both net interest income and net fee and commission income.
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Report on the activities of Bank Pekao S.A. Group for the year 2022 year
Bank Pekao S.A.
Total net interest income
(in PLN million)
2022
2021
CHANGE
Interest income
10,523.3
5,551.2
89.6%
Interest expense
(2,513.8)
(138.1)
>100%
Net interest income
8,009.5
5,413.1
48.0%
Net interest income in 2022, amounted to PLN 8,009.5 million and was higher by PLN 2,596.4 million, i.e. 48.0% in comparison with 2021. The net interest result in 2022 includes the cost related to the modification of PLN mortgage loan agreements granted to consumers due to the suspension of their repayment in the amount of PLN 1.883 million.
Interest income
I n 2022 , the interest income amounted to PLN 10,523.3 million and was higher by PLN 4,972.1 million y/y, mainly due to the increase in market interest rates in 2022, despite the recognition of the cost of credit holidays.
Interest expense
I n 2022 , the interest expense amounted to PLN 2,513.8 million and was higher by PLN 2,375.7 million y/y, due to the adaptation of the Bank's product offer to market conditions and customer expectations.
Net interest margin
The interest margin achieved in 2022 was 3.31% and was higher by 0.92 p.p. than the margin achieved in comparison with 2021. The interest margin, excluding cost related to the modification of PLN mortgage loan agreements granted to consumers due to the suspension of their loan repayments , amounted to 4.07% in 2022.
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Report on the activities of Bank Pekao S.A. Group for the year 2022 year
Bank Pekao S.A.
Net non-interest income
(in PLN million)
2022
2021
CHANGE
Fee and commission income
3,115.9
2.835.0
9.9%
Fee and commission expense
(660.4)
(533.5)
23.8%
Net fee and commission income
2,455.5
2,301.5
6.7%
Dividend income
257.3
219.7
17.1%
Trading result
170.3
158.5
7.4%
Net other operating income and expense
(475.6)
(9.2)
>100%
Net non-interest income
2,407.5
2,670.5
(9.8%)
The non-interest income in 2022 amounted to 2,407.5 and was lower by PLN 263.0 million i.e. 9.8% compared to the result achieved in the previous year, mainly due to creation of a provision for legal risk regarding foreign currency mortgage loans in CHF, in the amount of PLN 319.2 million, creation of the provisions for reimbursement customers of increased margins on mortgage loans before establishing a mortgage in the amount of PLN 111.9 million, revaluation of real estate in the amount of PLN 47.3 million.
Net fee and commission income in 2022, amounted to PLN 2,455.5 million and was higher by PLN 154.0 million, i.e. 6.7% as compared to 2021 , mainly due to customer activity including on currency market and the adaptation of the offer to the changing market conditions.
The table below presents the Bank’s net fee and commission income divided according to the main areas of the activity.
(in PLN million)
2022
2021
CHANGE
Net fee and commission income
2,455.5
2,301.5
6.7%
on loans
465.0
441.0
5.4%
on cards
314.2
243.7
29.3%
on mutual funds
108.1
121.8
(11.2%)
on brokerage activate
98.5
98.2
0.3%
on margins on foreign exchange transactions with clients
742.7
596.4
24.5%
other
727.0
800.4
(9.3%)
Operating costs
In 2022, operating costs amounted to PLN 3,755.6 million and were higher by PLN 317.4 million i.e. 9.2% compared to 2021, significantly below inflation.
(in PLN million)
2022
2021
CHANGE
Personnel expenses
(2,018.9)
(1,903.1)
6.1%
General administrative expenses and depreciation
(1,736.8)
(1,535.0)
(13.1%)
Operating costs
(3,755.6)
(3,438.2)
9.2%
In 2022 , cost / income ratio excluding restructuring provision amounted to 36.1% and was lower by 64 pbs as in 2021.
As of 31 December 2022, the Bank employed 12,435 employees as compared to 12,661 employees as at the end of December 2021 an was lower y/y.
Contributions to the Bank Guarantee Fund
Bank Guarantee Fund fee in the 2022, amounted to PLN 264.7 million, an decrease of PLN 22.8 million, i.e. in comparison with of 2021.
Fee paid for the Protection Schemes
On 7 June 2022 the Management Board and Supervisory Board of the Bank adopted resolutions on consent to submitting an an application to the Polish Financial Supervision Authority for approval and recognition of the Protection Scheme the members of which are banks operating in the form of a joint-stock company with the draft agreement on the Protection Scheme referred to in Art. 4 sec. 1 point 9a of the Act of August 29. 1997 - Banking Law. In 2022, the Bank created a provision in the amount of PLN 482.1 million gross for payment to the above protection system.
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Report on the activities of Bank Pekao S.A. Group for the year 2022 year
Bank Pekao S.A.
Contributions to the Borrowers Support Fund
On the basis of art. 89 sec. 1 of the Act of 7 July 2022 on crowdfunding of business ventures and assistance to borrowers, we created a provision in the amount of PLN 157.7 million for the Borrowers Support Fund.
Tax on certain financial institutions
Tax on certain financial institutions in 2022 amounted to PLN 866.2 million and was higher by PLN 147.3 million, i.e. 20.5% compared to 2021 , due to an increase in Bank’s assets.
Net allowances for expected credit losses
(in PLN million)
2022
2020
CHANGE
financial assets measured at amortized cost excluding provisions for legal risk regarding foreign currency mortgage loans in CHF
(711.0)
(641.0)
10.9%
financial assets measured at fair value through other comprehensive income
18.6
11.6
60.3%
financial liabilities measured at amortized cost
(1.4)
29.4
x
Net allowances for expected credit losses excluding provisions for legal risk regarding foreign currency mortgage loans in CHF
(693.7)
(600.0)
15.6%
financial assets measured at amortized cost - provisions for legal risk regarding foreign currency mortgage loans in CHF
(1,184.8)
(63.9)
>100%
Net allowances for expected credit losses
(1,878.5)
(663.9)
> 100%
Net allowances for expected credit losses excluding provisions for legal risk regarding foreign currency mortgage loans in CHF amounted to PLN 693.7 million in 2022 and was higher by PLN 93.7 million i.e. 15.6% as compared to 2021.
In 2022, the Bank created provisions for the legal risk of foreign currency mortgage loans in CHF, in the amount of PLN 1,504.0 million, which charged the result on write-offs in the amount of PLN 1,184.8 million and other operating costs in the amount of PLN 319.2 million.
Costs of risk
The costs of risk excluding provisions for legal risk regarding foreign currency mortgage loans in CHF in 2022 amounted to 0.41%, and is in line with the strategy.
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Report on the activities of Bank Pekao S.A. Group for the year 2022 year
Bank Pekao S.A.
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.
31.12.2022
31.12.2021
ASSETS
PLN MILLION
STRUCTURE
PLN MILLION
STRUCTURE
CHANGE
Cash and due from Central Bank
13,434.9
4.9%
4,696.6
1.9%
> 100%
Loans and advances to banks
5,401.7
2.0%
3,998.6
1.7%
35.1%
Loans and advances to customers (*)
155,477.1
57.2%
157,783.0
65.4%
(1.5%)
Reverse repo transactions
1,337.8
0.5%
969.6
0.4%
38.0%
Securities (**)
72,691.4
26.8%
58,443.2
24.2%
24.4%
Investments in subsidiaries
1,742.4
0.6%
1,577.4
0.7%
10.5%
Investments in associates
42.2
0.0%
42.2
0.0%
0.0%
Property. plant and equipment and intangible assets
2,908.8
1.1%
3,191.0
1.3%
(8.8%)
Other assets
18,668.2
6.9%
10,573.6
4.4%
76.6%
Total assets
271,704.5
100.0%
241,275.2
100.0%
12.6%
(*) 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 .
31.12.2022
31.12.2021
EQUITY AND LIABILITIES
PLN MILLION
STRUCTURE
PLN MILLION
STRUCTURE
CHANGE
Amounts due to Central Bank
-
-
-
-
x
Amounts due to other banks
4,134.6
1.5%
5,069.3
2.1%
(18.4%)
Amounts due to customers
209,802.3
77.2%
195,063.5
80.8%
7.6%
Debt securities issued
5,893.9
2.2%
178.6
0.1%
>100%
Subordinated liabilities
2,789.1
1.0%
2,761.5
1.1%
1.0%
Repo transactions
879.0
0.3%
-
-
x
Lease liabilities
307.2
0.1%
387.6
0.2%
(20.7%)
Other liabilities
25,708.9
9.5%
14,714.9
6.1%
74.7%
Equity
22,189.5
8.2%
23,099.8
9.6%
(3.9%)
Total equity and liabilities
271,704.5
100.0%
241,275.2
100.0%
12.6%
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Report on the activities of Bank Pekao S.A. Group for the year 2022 year
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 2022, they accounted for 57.2% and 26.8% of the total assets respectively in comparison with 65.4% and 24.2% respectively as at the end of 2021.
Cash and due from Central Bank
(in PLN million)
31.12.2022
31.12.2021
CHANGE
Cash and due from Central Bank, including:
13,434.9
4,696.7
>100%
Cash
4,316.7
3,699.7
16.7%
Current account at Central Bank
9,118.1
996.9
>100%
Other
0.1
-
x
Customers’ Financing
Customer structure of loans and advances
(in PLN million)
31.12.2022
31.12.2021
CHANGE
Loans and advances at nominal value (*)
163,401.8
164,096.2
(0.4%)
Loans and investments in financial leases
149,054.4
148,697.8
0.2%
Retail
74,469.7
80,016.5
(6.9%)
Corporate
74,584.7
68,681.3
8.6%
Non-treasury debt securities
14,347.4
15,398.4
(6.8%)
Other (**)
1,732.2
1,208.6
43.3%
Impairment allowances
(9,656.8)
(7,521.8)
28.4%
Total net receivables
155,477.1
157,783.0
(1.5%)
Reverse repo transactions
1,337.8
969.6
38.0%
Total Customers’ financing (***)
164,739.6
165,065.8
(0.2%)
(*) 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 2022, loans and advances at nominal value amounted to PLN 163,401.8 million, an decrease of PLN 694,4 million, i.e. 0.4% in comparison to the end of December 2021.
As at the end of December 2022 , the volume of retail loans amounted to PLN 74,469.7 million, an decrease of PLN 5,546.8 million, i.e. 6.9% in comparison to the end of December 2021 .
As at the end of December 2022, corporate loans and non-treasury debt securities amounted to PLN 88,932.1 million, an increase of PLN 4,852.4 million, i.e. 5.8% in comparison to the end of December 2021.
Receivables and impairment losses (*)
(in PLN million)
31.12.2022
31.12.2021
CHANGE
Gross receivables
165,133.9
165,304.8
(0.1%)
Stage 1
136,299.5
132,359.9
3.0%
Stage 2
18,618.6
24,443.8
(23.8%)
Stage 3
10,215.8
8,501.1
20.2%
Impairment allowances
(9,656.8)
(7,521.8)
28.4%
Stage 1
(868.9)
(625.9)
38.8%
Stage 2
(1,211.6)
(1,027.8)
17.9%
Stage 3
(7,576.3)
(5,868.1)
29.1%
Total net receivables
155,477.1
157,783.0
(1.5%)
(*) Including non-treasury debt securities , interest and receivables in transit and excluding reverse repo transactions.
As at the end of December 2022 the ratio of impaired receivables (stage 3) to the gross receivables amounted to 6.2%.
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Report on the activities of Bank Pekao S.A. Group for the year 2022 year
Bank Pekao S.A.
Loans and advances to customers by currency (*)
31.12.2022
31.12.2021
PLN MILLION
STRUCTURE
PLN MILLION
STRUCTURE
CHANGE
Denominated in PLN
132,813.3
80.4%
138,076.4
83.5%
(3.8%)
Denominated in foreign currencies (**)
32,320.6
19.6%
27,228.4
16.5%
18.7%
Total
165,133.9
100.0%
165,304.8
100.0%
(0.1%)
Impairment allowances
(9,656.8)
x
(7,521.8)
x
28.4%
Total net receivables
155,477.1
x
157,783.0
x
(1.5%)
(*) 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 2022, their share was 80.4%. The largest portion of foreign currency loans and advances to customers were represented by those denominated in EUR (75.1%), CHF (7.6%) and USD (4.2%).
Loans and advances to customers by contractual maturities (*)
31.12.2022
31.12.2021
PLN MILLION
STRUCTURE
PLN MILLION
STRUCTURE
CHANGE
Current and up to 1 month
21,128.2
12.8%
15,802.8
9.6%
33.7%
1 to 3 months
7,064.8
4.3%
5,598.4
3.4%
26.2%
3 months to 1 year
17,009.4
10.3%
19,868.0
12.0%
(14.4%)
1 to 5 years
50,078.0
30.3%
53,861.3
32.6%
(7.0%)
Over 5 years
63,640.1
38.5%
63,593.4
38.5%
0.1%
Past due
4,481.3
2.7%
5,372.4
3.2%
(16.6%)
Other
1,732.3
1.0%
1,208.5
0.7%
43.3%
Total
165,133.9
100.0%
165,304.8
100.0%
(0.1%)
Impairment allowances
(9,656.8)
x
(7,521.8)
x
28.4%
Total net receivables
155,477.1
x
157,783.0
x
(1.5%)
(*) Including non-treasury debt securities , interest and receivables in transit and excluding reverse repo transactions.
As at the end of December 2022, 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 2022.
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 2022, amounts due to customers, debt securities issued and subordinated liabilities totaled PLN 218,485.4 million, and their share in the total assets was 80.4%, compared with 82.1% as at the end of 2021. The share of total shareholder’s equity in the total assets was 8.2% as at the end of 2022, compared with 9.6% as at the end of 2021.
External sources of financing
(in PLN million)
31.12.2022
31.12.2021
CHANGE
Amounts due to Central Bank
-
-
x
Amounts due to other banks
4,134.6
5,069.3
(18.4%)
Amounts due to customers
209,802.3
195,063.5
7.6%
Debt securities issued
5,893.9
178.6
> 100%
Subordinated liabilities
2,789.1
2,761.5
1.0%
Repo transactions
879.0
-
x
Total external sources of financing
223,498.9
203,072.9
10.1%
Amounts due to customers amounted to PLN 209,802.3 million, an increase by 9.4% thanks to the dynamic growth of retail and corporate deposits.
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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Report on the activities of Bank Pekao S.A. Group for the year 2022 year
Bank Pekao S.A.
Amounts due to customers and debt securities issued
(in PLN million)
31.12.2022
31.12.2021
CHANGE
Corporate deposits
90,708.4
78,395.6
15.7%
Non-financial entities
71,874.6
57,422.0
25.2%
Non-banking financial entities
5,078.8
4,553.2
11.5%
Budget entities
13,755.0
16,420.4
(16.2%)
Retail deposits
118,369.8
116,342.0
1.7%
Other (*)
724.1
325.9
> 100%
Amounts due to customers (**)
209,802.3
195,063.5
7.6%
Debt securities issued of which
8,683.0
2,940.1
> 100%
Structured Certificates of Deposit (SCD)
952.2
178.6
> 100%
Certificates of Deposit (CD)
4,908.8
-
x
Subordinated bonds
2,750.0
2,750.0
0.0%
Interest
72.0
11.5
> 100%
Amounts due to customers and debt securities issued (**)
218,485.4
198,003.6
10.3%
Repo transactions
879.0
-
x
Lease liabilities
307.2
387.6
(20.7%)
Amounts due to customers and debt securities issued, total (***)
219,671.6
198,391.2
10.7%
Investment funds of Pekao TFI S.A. (ex. Pioneer Pekao TFI)
19,171.8
20,285.3
(5.5%)
including distributed through the Bank’s network
15,999.9
18,540.6
(13.7%)
(*) 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 2022, amounts due to the Group’s customers and debt securities issued amounted to PLN 218,485.4 million, an increase of PLN 20,481.8 million, i.e. 10.3% in comparison to the end of December 2021.
The total volume of retail deposits, Structured Certificates of Deposit and other amounted to PLN 119,946.1 million as at the end of December 2022, an increase of PLN 3,172.0 million, i.e. 2.7% in comparison to the end of December 2021.
The total volume of corporate deposits, Certificates of Deposit, subordinated bonds, interest and other amounted to PLN 98 539,3 million as at the end December 2022, an increase of PLN 17,309.8 million, i.e. 21.3% as compared to the end of December 2021.
The value of net assets of investment funds managed by Pekao TFI S.A. amounted to PLN 19,171.8 million as at the end of December 2022, an increase of PLN 1,113.5 million, i.e. 5.5% in comparison to the end of December 2021. The lower value of assets was negatively affected by the situation on the capital markets, including the one caused by the war in Ukraine. Funds from redemptions of funds were largely accumulated in bank accounts.
Amounts due to customers by currency (*)
31.12.2022
31.12.2021
PLN MILLION
STRUCTURE
PLN MILLION
STRUCTURE
CHANGE
Denominated in PLN
171,122.4
81.6%
163,970.0
84.1%
4.4%
Denominated in foreign currencies
38,679.9
18.4%
31,093.6
15.9%
24.4%
Total
209,802.3
100.0%
195,063.5
100.0%
7.6%
(*) 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 December 2022 amounted to 81.6%. The majority of amounts due to customers denominated in foreign currencies were in EUR (62.2%) and USD (31.7%).
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Report on the activities of Bank Pekao S.A. Group for the year 2022 year
Bank Pekao S.A.
Amounts due to customers by contractual maturities (*)
31.12.2022
31.12.2021
PLN MILLION
STRUCTURE
PLN MILLION
STRUCTURE
CHANGE
Current accounts and overnight deposits
157,873.1
75.5%
181,857.5
93.4%
(13.2%)
Term deposits
51,205.0
24.5%
12,880.0
6.6%
> 100%
Total deposits
209,078.3
100.0%
194,737.7
100.0%
7.4%
Interest accrued
382.1
x
5.5
x
> 100%
Funds in transit
342.0
x
320.3
x
6.8%
Total
209,802.3
x
195,063.5
x
7.6%
(*) Excluding repo transactions and lease liabilities.
Provisions, deferred tax assets and liabilities
(mln zł)
31.12.2022
31.12.2021
CHANGE
Total provisions
1,394.1
936.0
48.9%
provisions for off-balance sheet commitments
449.4
440.8
2.0%
provisions for liabilities to employees
301.1
300.9
0.1%
other provisions
643.6
194.2
> 100%
Deferred tax liabilities
-
-
x
Deferred tax assets
1,280.2
1 364.7
(6.2%)
88
Report on the activities of Bank Pekao S.A. Group for the year 2022 year
Bank Pekao S.A.
9.3 Separate income statement
Separate income statement for 2022
(in PLN thousand)
Q4 2022
Q3 2022
Q2 2022
Q1 2022
Interest income
4,220,291
1,264,710
2,904,262
2,133,985
Interest income calculated using the effective interest method
4,484,815
1,417,803
2,935,647
2,062,081
Financial assets measured at amortised cost
4,143,057
1,210,913
2,762,334
1,925,359
Financial assets measured at fair value through other comprehensive income
341,758
206,890
173,313
136,722
Other interest income related to financial assets measured at fair value through profit or loss
(264,524)
(153,093)
(31,385)
71,904
Interest expense
(1,099,550)
(846,765)
(424,208)
(143,245)
Net interest income
3,120,741
417,945
2,480,054
1,990,740
Fee and commission income
778,968
790,904
790,219
755,801
Fee and commission expense
(203,633)
(164,463)
(156,401)
(135,846)
Net fee and commission income
575,335
626,441
633,818
619,955
Dividend income
45,652
439
210,942
276
Result on financial assets and liabilities measured at fair value through profit or loss and foreign exchange result
146,525
17,771
(42,088)
48,215
Result on fair value hedge accounting
1,434
(404)
1,197
1,170
Result on derecognition of financial assets and liabilities not measured at fair value through profit or loss
6,382
1,357
(7,095)
(4,210)
Net allowances for expected credit losses
(1,012,647)
(250,804)
(471,566)
(143,511)
including: legal risk regarding foreign currency mortgage loans
(851,815)
(25,049)
(298,366)
(9,590)
Operating income
46,692
33,843
21,565
27,396
Operating expenses
(238,700)
(141,265)
(197,017)
(28,092)
General administrative expenses and depreciation
(1,175,078)
(1,261,312)
(1,719,731)
(1,370,253)
Gains (losses) on subsidiaries and associates
-
-
-
-
Profit / loss before tax
1,516,336
(555,989)
910,079
1,141,686
Income tax expense
(559,343)
36,804
(281,421)
(309,832)
Net Profit / loss
956,993
(519,185)
628,658
831,854
89
Report on the activities of Bank Pekao S.A. Group for the year 2022 year
Bank Pekao S.A.
Separate income statement for 2021
(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)
including: legal risk regarding foreign currency mortgage loans
(19,942)
(41,899)
(517)
(1,567)
Operating income
46,994
28,710
25,461
17,882
Operating expenses
(58,776)
(25,641)
(29,696)
(14,090)
General administrative expenses
and depreciation
(1,012,331)
(1,024,609)
(1,064,873)
(1,342,813)
Gains (losses) on subsidiaries and associates
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
90
Report on the activities of Bank Pekao S.A. Group for the year 2022 year
Bank Pekao S.A.
9.4 Separate statement of comprehensive income
Separate statement of comprehensive income for 2022
(in PLN thousand)
Q4 2022
Q3 2022
Q2 2022
Q1 2022
Net profit
956,993
(519,185)
628,658
831,854
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):
171,425
(58,323)
(293,039)
(460,411)
profit or loss on fair value measurement
181,260
(55,026)
(290,720)
(456,083)
profit or loss reclassification to income statement after derecognition
(9,835)
(3,297)
(2,319)
(4,328)
Impact of revaluation of derivative instruments hedging cash flows (net)
762,134
42,254
(987,309)
(800,343)
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)
25,253
(5,833)
(45,946)
(21,309)
Remeasurements of the defined benefit liabilities (net)
(22,787)
-
14,251
-
Other comprehensive income (net of tax)
936,025
(21,902)
(1,312,043)
(1,282,063)
Total comprehensive income
1,893,018
(541,087)
(683,385)
(450,209)
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)
91
Report on the activities of Bank Pekao S.A. Group for the year 2022 year
Bank Pekao S.A.
9.5 Separate income statement – presentation form
Separate income statement for 2022
(in PLN thousand)
Q4 2022
Q3 2022
Q2 2022
Q1 2022
Net interest income
3,120,741
417,945
2,480,054
1,990,740
Net fee and commission income
575,335
626,441
633,818
619,955
Dividend income
45,652
439
210,942
276
Trading result
154,341
18,724
(47,986)
45,175
Net other operating income and expenses
(192,008)
(107,422)
(175,452)
(696)
Net non-interest income
583,320
538,182
621,322
664,710
Operating income
3,704,061
956,127
3,101,376
2,655,450
Operating costs
(943,130)
(900,662)
(1,008,014)
(903,828)
Gross operating profit
2,760,931
55,465
2,093,362
1,751,622
Net allowances for expected credit losses
(1,012,647)
(250,804)
(471,566)
(143,511)
including: legal risk regarding foreign currency mortgage loans
(851,815)
(25,049)
(298,366)
(9,590)
Net operating profit
1,748,284
(195,339)
1,621,796
1,608,111
Contributions to the Bank Guarantee Fund
-
57,040
(57,040)
(264,667)
Fee paid for the Protection Schemes
-
(41,838)
(440,302)
-
Contributions to the Borrowers Support Fund
(4,270)
(153,473)
-
-
Tax on certain financial institutions
(227,678)
(222,379)
(214,375)
(201,758)
Net result on investment activities
-
-
-
-
Profit / loss before tax
1,516,336
(555,989)
910,079
1,141,686
Income tax expense
(559,343)
36,804
(281,421)
(309,832)
Net profit / loss
956,993
(519,185)
628,658
831,854
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)
including: legal risk regarding foreign currency mortgage loans
(19,942)
(41,899)
(517)
(1,567)
Net operating profit
1,235,339
957,023
1,109,746
679,436
Contributions to the Bank Guarantee Fund
(29,969)
(27,120)
(28,861)
(201,595)
Fee paid for the Protection Schemes
-
Contributions to the Borrowers Support Fund
-
-
-
-
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
92
Report on the activities of Bank Pekao S.A. Group for the year 2022 year
Bank Pekao S.A.
9.6 Reconciliation of income statement – presentation form and long form
Separate income statement for 2022
(in PLN thousand)
INCOME STATEMENT – PRESENTATION FORM'S ITEMS
LONG FORM'S ITEMS RECLASSIFFIED TO PRESENTATION FORM
2022
Net interest income
Net interest income
8,009,480
Net fee and commission income
Net fee and commission income
2,455,549
Dividend income
Dividend income
257,309
Trading result
170,254
Net result on other financial instruments at fair value through profit and loss
170,423
Result on fair value hedge accounting
3,397
(Gains) losses on derecognition of financial assets and liabilities not measured at fair value through profit or loss
(3,566)
Net other operating income and expenses
(475,578)
Operating income
129,496
Operating expenses
(605,074)
Net non-interest income
2,407,534
Operating income
10,417,014
Operating costs
(3,755,634)
General administrative expenses depreciation
(5,526,374)
less - Contributions to the Bank Guarantee Fund
264,667
less - Fee paid for the Protection Schemes
482,140
less - Contributions to the Borrowers Support Fund
157,743
less – Tax on certain financial institutions
866,190
Gross operating profit
6,661,380
Net allowances for expected credit losses
Net allowances for expected credit losses
(1,878,528)
Net operating profit
4,782,852
Contributions to the Bank Guarantee Fund
Contributions to the Bank Guarantee Fund
(264,667)
Tax on certain financial institutions
Fee paid for the Protection Schemes
(482,140)
Contributions to the Borrowers Support Fund
(157,743)
Tax on certain financial institutions
(866,190)
Net result on investment activities
Net result on investment activities
-
Profit before tax
Profit before tax
3,012,112
Income tax expense
Income tax expense
(1,113,792)
Net profit
Net profit
1,898,320
93
Report on the activities of Bank Pekao S.A. Group for the year 2022 year
Bank Pekao S.A.
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)
General administrative expenses depreciation
(4,444,626)
less - Contributions to the Bank Guarantee Fund
287,545
less – Tax on certain financial institutions
718,923
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
Contributions to the Bank Guarantee Fund
Contributions to the Bank Guarantee Fund
(287,545)
Tax on certain financial institutions
Tax on certain financial institutions
(718,923)
Net result on investment activities
Net result on investment activities
20,092
Profit before tax
Profit before tax
2,995,168
Income tax expense
Income tax expense
(758,339)
Net profit
Net profit
2,236,829
94
Report on the activities of Bank Pekao S.A. Group for the year 2022 year
Bank Pekao S.A.
9.7 The structure of the net profit
(in PLN million)
2022
2021
CHANGE
Net profit of Bank Pekao S.A.
1 898,3
2 236,8
(15,1%)
Entities consolidated under full method
Pekao Leasing Sp. z o.o.
100.5
74.8
34.4%
Pekao Investment Management S.A.
62.0
88.4
(29.9%)
Pekao Faktoring Sp. z o.o.
44.7
39.9
12.0%
Pekao Investment Banking S.A.
9.7
13.4
(27.6%)
Centrum Kart S.A.
8.5
8.8
(3.4%)
Pekao Financial Services Sp. z o.o.
5.7
5.0
14.0%
PeUF Sp. z o.o. (*)
4.0
(0.1)
x
Pekao Direct Sp. z o.o.
2.5
2.3
8.7%
Pekao Fundusz Kapitałowy Sp. z o.o. w likwidacji
0.8
(0.3)
x
FPB "MEDIA" Sp. z o.o. w upadłości
-
-
x
Pekao Property S.A. w likwidacji
0.1
(0.4)
x
Pekao Bank Hipoteczny S.A.
(164.0)
(90.3)
81.6%
Dom Inwestycyjny Xelion Sp. z o.o. (**)
-
1.1
x
Entities valued under the equity method
Krajowy Integrator Płatności S.A. (***)
5.0
1.8
>100%
Exclusions and consolidation adjustments (****)
(260.2)
(206.3)
26.1%
Net profit of the Group attributable to equity holders of the Bank
1,717.6
2,174.9
(21.0%)
(*) In 2021 Pekao Leasing Sp. z o. o.. a company of the Bank. acquired 100% of Metsi Sp. Z o.o. with its seat in Warsaw. which then changed its name to PeUF Sp. z o.o. in Warsaw, which constitutes 100% of the votes at the shareholders' meeting of PeUF Sp. z o.o. and deals with the distribution of the distribution.
(**) On October 29, 2021, a promised agreement was signed for the sale of 100% of shares in Dom Inwestycyjny Xelion Sp. z o.o. - the Company's result for 10 months of 2021 is included in the Group's results.
(***) 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.
95
Report on the activities of Bank Pekao S.A. Group for the year 2022 year
Bank Pekao S.A.
Results of the Bank’s major related entities
Pekao Leasing Sp. z o.o. - Pekao Leasing
In 2022 Pekao Leasing generated a net profit of PLN 100.5 million , compared to a profit of PLN 74.8 million in 2021. The result was achieved thanks to an increase in revenues by 19.6% y/y, while maintaining strict control of operating costs and risk costs.
Pekao Investment Management S.A. - Pekao IM
Consolidated net profit of Pekao IM in 2022 amounted to PLN 62.0 million, compared to PLN 88.4 million in 2021. The decrease in the result was due to the situation on the capital market, which translated into a decrease in the value of Pekao TFI assets and another statutory limitation of remuneration rates for management from 1 January 2022.
Pekao Faktoring Sp. z o.o. - Pekao Faktoring
In 2022, Pekao Faktoring generated a net profit of PLN 44.7 million compared to a profit of PLN 39.9 million in 2021. Despite the dynamic increase in factoring turnover (25.2% y/y), the lower result was influenced by the implementation by the Company of the new methodology of write-offs according to the NDD (New Default Default), in accordance with the EBA guidelines specified in the regulation of the European Parliament and of the Council (EU). Pekao Faktoring ranks first in the turnover on the Polish factoring market.
Pekao Investment Banking S.A. - Pekao IB
In 2022, Pekao IB achieved a net profit of PLN 9.7 million , compared to a profit of PLN 13.4 million in 2021. The profit was influenced by a smaller number of finalized transactions in the area of advisory services on the private and public capital market and debt advisory services compared to the same period last year.
Centrum Kart S.A. – Centrum Kart
In 2022, Centrum Kart achieved a comparable net profit to the 2021 of PLN 8.5 million.
Pekao Financial Services Sp. z o.o. - PFS
In 2022, PFS generated a net profit of PLN 5.7 million (including the Bank's share of PLN 3.8 million ), compared to a profit of PLN 5.0 million in 2021. The net result was higher mainly due to the effects of strict cost control, with an increase in revenues achieved among others from servicing the PPK program.
Krajowy Integrator Płatności S.A.- KIP
In 2022, KIP generated a net profit of PLN 12.3 million (including the Bank's share of PLN 5.0 million ), compared to a profit of PLN 8.3 million achieved in 2021. The increase in the result was due to the increase in the scale of KIP's operations in the area of online payments, service websites, extending the possibilities of services provided by KIP, including in cooperation with Bank Pekao S.A.
PeUF Sp. z o. o. – PEUF
In 2022, PeUF generated a net profit of PLN 4.0 million . The company started its business operations in the first quarter of 2022.
Pekao Direct Sp. z o.o. - Pekao Direct
In 2022, Pekao Direct reported a net profit of PLN 2.5 million, close to the profit achieved in 2021. The results were influenced by higher income obtained thanks to the growth of the customer base and increased sales activity for the Bank.
Pekao Bank Hipoteczny S.A. - Pekao Bank Hipoteczny
In 2022, Pekao Bank Hipoteczny reported a net loss of PLN 164.0 million compared to a loss of PLN 90.3 million in 2021. The loss results mainly from the recognition of costs related to the modification of PLN mortgage loan agreements granted to consumers due to the suspension of their loan and costs of additional contributions to the Borrowers Support Fund. In 2022, the Bank increased the provision for legal risk related to its portfolio of loans denominated in CHF by the amount of 93.8 million against the provision of PLN 94.9 million created in the 2021.
96
Report on the activities of Bank Pekao S.A. Group for the year 2022 year
Bank Pekao S.A.
9.8 Off–balance sheet items
Bank Pekao S.A. Group - Statement of Off-balance sheet items
(in PLN million)
31.12.2022
31.12.2021
CHANGE
Contingent liabilities granted and received
111,497.4
81,980.2
36.0%
Liabilities granted:
69,289.2
57,673.3
20.1%
financial
57,208.8
43,225.4
32.3%
guarantees
12,080.4
14,447.9
(16.4%)
Liabilities received:
42,208.2
24,306.9
73.6%
financial
2,088.9
1,127.5
85.3%
guarantees
40,119.3
23,179.4
73.1%
Derivative financial instruments
491,490.4
446,208.7
10.1%
interest rate transactions
354,431.6
293,802.1
20.6%
transactions in foreign currency and in gold
131,291.1
146,470.2
(10.4%)
transactions based on commodities and equity securities
5,767.8
5,936.4
(2.8%)
Total off-balance sheet items
602,987.8
528,188.9
14.2%
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 2.
Bank Pekao S.A - Statement of Off-balance sheet items
(in PLN million)
31.12.2022
31.12.2021
CHANGE
Contingent liabilities granted and received
129,480.5
100,047.0
29.4%
Liabilities granted:
87,941.3
76,876.1
14.4%
financial
59,069.6
44,785.0
31.9%
guarantees
28,871.7
32,091.1
(10.0%)
Liabilities received:
41,539.2
23,170.9
79.3%
financial
1,419.9
520.4
>100%
guarantees
40,119.3
22,650.5
77.1%
Derivative financial instruments
494,738.0
449,621.0
10.0%
interest rate transactions
354,763.3
293,871.0
20.7%
transactions in foreign currency and in gold
134,207.0
149,813.7
(10.4%)
transactions based on commodities and equity securities
5,767.7
5,936.3
(2.8%)
Total off-balance sheet items
624,218.5
549,668.0
13.6%
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 2022.
97
Report on the activities of Bank Pekao S.A. Group for the year 2022 year
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 2022, the number of full-time jobs in the Group was 14,220 compared to 14,188 as at the end of 2021. As at the end of December 2022, the number of full-time jobs in the Bank was 12,143 compared to 12,308 as at the end of 2021.
In 2022, the Group’s operating income amounted to PLN 10,761.3 million, and was higher by PLN 2,239.1 million, i.e. 26.3% in comparison 2021.
In 2022, the Bank’s operating income amounted to PLN 10,417.0 million, and was higher by PLN 2,333.4 million, i.e. 28.9% in comparison 2021.
Profit before tax of Bank Pekao S.A. Group in 2022 amounted to PLN 2,882.5 million and was lower by PLN 119.1 million, i.e. 4.0% in comparison to 2021. Income tax expense in 2022 amounted to PLN 1,163.0 million vs. PLN 825.0 million in 2021 and was higher by 41.0%.
Profit before tax of Bank Pekao S.A. in 2022 amounted to PLN 3,012.1 million and was higher by PLN 16.9 million, i.e. 0.6% in comparison to 2021. Income tax expense in 2022 amounted to PLN 1,113.8 million vs. PLN 758.3 million in 2021 and was higher by 46.9%.
As at the end of December 2022, the return on assets (ROA) of the Group was 0.6% vs. 0.9% at the end of December 2021.
As at the end of December 2022, the return on assets (ROA) of the Bank was 0.7% vs. 0.9% at the end of December 2021.
In 2022, the Bank do not conclude any agreements according to article 141t, section 1 of the Banking Law Act.
Information on significant agreements
In 2022, 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.
Management Board position regarding the possibility of achieving previously published forecasts
The Bank has not published the forecast of the financial results for 2022.
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 2022.
( in PLN thousand )
NAME
PERIOD
BASE SALARY
VARIABLE REMUNERATION (*)
OTHER BENEFITS (**)
Leszek Skiba
01.01.2022 - 31.12.2022
1,120
760
21
Jarosław Fuchs
01.01.2022 - 31.12.2022
1,082
843
220
Marcin Gadomski
01.01.2022 - 31.12.2022
1,082
799
31
Jerzy Kwieciński
01.01.2022 - 31.12.2022
1,082
271
102
Paweł Strączyński
01.01.2022 - 31.12.2022
1,082
121
115
Błażej Szczecki
01.01.2022 - 31.12.2022
1,082
285
70
Wojciech Werochowski
01.01.2022 - 31.12.2022
1,082
285
56
Piotr Zborowski
01.01.2022 - 31.12.2022
1,082
46
57
Magdalena Zmitrowicz
01.01.2022 - 31.12.2022
1,082
1,132
190
(*) The variable remuneration includes the cash bonuses paid in 2022 for 2018-2021 and phantom shares for 2018-2020 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 2022 year
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 2022 and the remainder of the variable remuneration in phantom shares is 24,586 shares. The value of this part of the variable remuneration as at 31 December, 2022 is PLN 2,127 thousand at the Bank Pekao share price as at 30 December 2022 amounting to PLN 86.5
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 2022, 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
The value of variable remuneration and other benefits (compensation for compliance with the non-competition clause) paid to former Members of the Bank's Management Board who ceased to perform their functions in the Bank's Management Board before 1 January 2022 amounted to PLN 10,528 thousand in 2022.
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, 2022, amount to phantom 65,879 shares.The value of this part of the variable remuneration as at 31 December 2022 is PLN 5,699 thousand at the Bank Pekao share price as at 30 December 2022 amounting to PLN 86.5.
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 2022:
( in PLN thousand )
PERIOD
TOTAL
Sabina Bigos-Jaworowska
01.01.2022 - 31.12.2022
205
Joanna Dynysiuk
01.01.2022 - 31.12.2022
224
Justyna Głębikowska-Michalak
01.01.2022 - 31.12.2022
224
Stanisław Kaczoruk
01.01.2022 - 31.12.2022
224
Michał Kaszyński
01.01.2022 - 31.12.2022
205
Marian Majcher
01.01.2022 - 31.12.2022
205
Marcin Izdebski
01.01.2022 - 31.12.2022
205
Beata Kozłowska-Chyła
01.01.2022 - 31.12.2022
-
Małgorzata Sadurska
01.01.2022 - 31.12.2022
-
In 2022, 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 2022 and as at the date of submitting of Report on the activities of Bank Pekao S.A. Group for the third quarter of 2022 the Members of the Bank’s management and supervisory bodies did not held shares of 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 2022, 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.
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Report on the activities of Bank Pekao S.A. Group for the year 2022 year
Bank Pekao S.A.
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)
2022
2021
Fee for the audit of annual financial statements
2,759
2,523
Fee for other attestation services, including review of financial statements
1,539
1,972
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)
2022
2021
Fee for the audit of annual financial statements
2,025
1,789
Fee for other attestation services, including review of financial statements
1,025
1,457
The amounts above do not include value added tax (VAT).
Average interest rates in Bank Pekao S.A. in 2022
The average nominal interest rates for the basic types of PLN deposits for non-financial sector residents:
PLN retail deposits
0.7% p.a
PLN corporate clients deposits
1.3% p.a
The average nominal interest rates for the PLN loans for non-financial sector residents:
Total retail loans
6.4% p.a.
Mortgage
5.3% p.a.
Consumption
11.2% p.a.
Other
9.5% p.a.
Corporate loans
7.1% 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.
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, 2022 amounted to PLN 1,518.2 million. For retail clients, the total value of the collateral for impaired transactions as at 31 December, 2022 amounted to PLN 1,145.3 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 41 to the Consolidated Financial Statements of Bank Pekao S.A. Group for the year ended on 31 December 2022.
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Report on the activities of Bank Pekao S.A. Group for the year 2022 year
Bank Pekao S.A.
Information on derivative financial instruments and hedge accounting
Information on derivative financial instruments and hedge accounting is included in Note 21 to the Consolidated Financial Statements of Bank Pekao S.A. Group for the year ended on 31 December 2022.
Related party transactions
In 2022, 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 2022, 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 45 to the Consolidated Financial Statements of Bank Pekao S.A. Group for the year ended on 31 December 2022.
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 2022.
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. Activities of other companies of the Bank Pekao S.A. Capital Group also does not show significant seasonal or cyclical characteristics.
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 952.2 (principal value) as at the end of December 2022. There are 8 issuance of Structured Certificates of Deposit open in PLN with the maximum maturity date on 20 December 2023.
Certificates of Deposit
Certificates of Deposit are investment products denominated in PLN that guarantee 100% protection of invested funds also in case of termination before redemption date. The total value of the Bank’s liabilities under these products amounted to PLN 4,908.8 million (principal value) as at the end of December 2022. There are 8 issuances of Certificates of Deposit, with the maximum maturity date on 15 June 2023.
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.
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.
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Report on the activities of Bank Pekao S.A. Group for the year 2022 year
Bank Pekao S.A.
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 943.1 million (principal value) as at the end of December 2022. Liabilities from covered bonds with maturity up to 3 months account for 4.0%, up to 1 year account for 6.0%, up to 2 years account for 25.7%, up to 5 years account for 29.6%, up to 10 years account for 34.8% 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 1,527.3 million (principal value) as at the end of December 2022 with maturity date up to 3 months account for 64.2%, up to 6 months account for 13.2%, and up to 2 years account for 22.4% 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 3 months amounted to PLN 1,932.0 million (principal value) as at the end of December 2022.
Subsequent events
Opinion of the Advocate General of the CJEU of 16 February 2023
As indicated in detail in Note 46.3, on 16 February 2023, the Advocate General of the CJEU (the "Advocate") issued an opinion relating to whether, where a loan agreement between a bank and a consumer is invalid from the outset because it contains unfair contractual terms, the parties can claim any other benefits in addition to the reimbursement of the money paid in the performance of that agreement (the bank - the principal of the credit, the consumer - installments, fees, commissions and insurance premiums) and statutory interest for delay from the time of the demand for payment.
In the Advocate's above opinion, under Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts ("the Directive"):
• claims by a consumer for other consideration - are not incompatible with its provisions, it being for the national court to determine, in the light of national law, whether consumers are entitled to pursue such claims and, if so, to rule on their merits;
• claims by banks to demand additional performance from the consumer (so-called remuneration for the use of capital) - preclude a judicial interpretation of national law that would grant banks such claims.
The above opinion is non-binding and the CJEU judgment relating to the above area is not expected until mid-2023 at the earliest.
The Group has estimated the provision for legal risk relating to CHF foreign currency mortgage loans in accordance with the assumptions set out in Note 46.3, assuming a significant increase in the number of litigation cases in the future and the negative nature of the court decisions.
The Group assesses that the possible sharing of the Advocate's position expressed in the opinion by the CJEU in its ruling may, in the future, affect the need to revise the assumptions related to the calculation of the provision and the Group's estimates of the expected number of lawsuits and claims (remuneration) for the borrower, which are not possible to quantify at present.
Changes to the applicable transitional arrangements from 1 January 2023
The change in the applicable transitional arrangements for IFRS 9, as set out in Article 473a of Regulation 575/2013, and unrealized gains and losses at fair value through other comprehensive income, as set out in Article 468 of Regulation 575/2013, on the Bank's and the Group's total capital ratio is estimated to be approximately - 0.5 pp.
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Report on the activities of Bank Pekao S.A. Group for the year 2022 year
Bank Pekao S.A.
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 2022 was a time of economic uncertainty, but at the same time the continuation of post-pandemic rebound. Polish GDP eventually grew by 4.9% yoy, reflecting the strong economic activity at the beginning of the year, but later in 2022, economic sentiment deteriorated due to rapidly rising prices and simultaneous tightening of monetary policy. For 2023, we forecast a clear decline in economic growth to 0.8% yoy due to the slowdown in the global economy and the consequences of cooling demand through the channel of monetary policy. The reasons for the slowdown should be sought in weaker private consumption (due to the declining, but still high price growth and the materialization of the effects of interest rate hikes), poor prospects for private investments and further uncertainty related to the 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 the results of banks. The economic situation and very high inflation prompted the Monetary Policy Council to continue the cycle of interest rate increases initiated in October 2021. Since then, the reference rate has been raised from 0.10% to 6.75% and, according to the Bank, it will remain at this level until Q4 2023. The environment of historically high interest rates is a favorable situation for banks, which will translate into an improvement in their net interest income, which is a major part of the sector's operating income. Nevertheless, the end of the year may bring the first interest rate cuts, which may negatively affect the results of the banking 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. 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. Nevertheless, a factor having a positive impact on the banking sector's result will be the lack of BFG contribution in 2023 - banks will only be charged a contribution to the bank resolution fund, which is expected to be lower than in the previous year.
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 results in the last three years. 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.
A relevant factor affecting the results of the banking sector in 2022 and 2023 will be the so-called credit holidays and a 2% credit loan. The burden in the form of the first of these solutions was observed in the third quarter of 2022, when credit holidays reduced the net result of 9 listed banks by almost PLN 13 billion. During the first 2.5 months of the credit holiday program, 1 million borrowers decided to take advantage of them. This factor will also be present in 2023 - borrowers will be entitled to one month of credit holidays for each quarter of this year.
A 2% credit loan is a solution offered to people up to 45 years of age who do not have and have not had an apartment, house or a cooperative right to a flat or a house. The maximum value of such a loan is up to PLN 500 thousand for one person and PLN 600 thousand in the case of a married couple or parents with a child. Over the 10 years of loan repayment, the government will pay extra to the loan installment, and the subsidy will cover the differences between the real and 2% interest rate. The programme, just as all interventions aimed at supporting the housing market, will be scrutinized closely.
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Report on the activities of Bank Pekao S.A. Group for the year 2022 year
Bank Pekao S.A.
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.
In line with strategic plans:
• we will remain a universal bank ,
• we will strive to be the bank of first choice for an increasing number of our customers,
• we will continue to develop remote distribution and customer service model ,
• we will focus on cost and process efficiency ,
• we 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),
• 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
• digitization rate at the target level of ~100% 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 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 2 years, we want to acquire over 400 thousands individual customers every year and increase our market share in cash loans. Moreover, we will seek to rejuvenate the demographic structure of the retail customer base. Our goal is to acquire a total of 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 through development of the payment offer - deferred payments and installment loans available on-line. We will also offer solutions for e-stores and e-commerce platforms enabling sale in installments.
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Report on the activities of Bank Pekao S.A. Group for the year 2022 year
Bank Pekao S.A.
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 focuses on technological transformation and improvement of efficiency of operations, accelerates digitization and migration of processes to remote channels and optimizes 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.
Due to the challenges in technological transformation, we 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 2022
Key strategic goals:
Strategy of Bank Pekao S.A. for 2021-2024 was developed in an environment of historically low interest rates. A series of interest rate increases that have taken place since then (increase in the reference rate from 0.1% at the beginning of 2021 to 6.75% in 2022) has had a significant impact on the growth trajectory of the Bank's net interest income in 2022. in relation to strategic assumptions. The Bank's financial results in 2022 were also affected by a number of one-off events, i.e.:
• recognition of the cost related to the modification of PLN mortgage loan agreements granted to consumers due to the suspension of their loan repayments at the amount of PLN 1.958 million,
• creation of the provisions for legal risk regarding foreign currency mortgage loans in CHF, in the amount of PLN 1.598 million,
• recognition of fee paid for the Protection Scheme the members of which are banks operating in the form of a joint- stock company at the amount of PLN 482 million,
• incurring the costs of additional contributions to the Borrowers Support Fund amounted to PLN 169 million,
• creation of the provisions for reimbursement customers of increased margins on mortgage loans before establishing a mortgage in the amount of PLN 112 million.
In 2022, the number of active mobile banking users was steadily growing. At the end of the year it amounted to 2,8 million compared to 2.0 million at the beginning of the Strategy horizon. The ongoing digitization of services translated into an increase in the total digitization rate from ~50% at the beginning of the Strategy horizon to 69% in 2022.
KEY STRATEGIC GOALS:
ACHIEVED
IN 2022
ACHIEVED
IN 2021
2024 GOAL
ROE (%)
7,6%
8,7%
~10%
C/I (%, (including to contributions to the BFG cost and fee paid for the Protection Schemes )
44,9%
47,3%
42%
Number of mobile banking customers (in million)
2,8
2,4
3,2
Total digitalization ratio (%)
69%
57%
~100%
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Report on the activities of Bank Pekao S.A. Group for the year 2022 year
Bank Pekao S.A.
The „Customer” Pillar
Bearing in mind the priorities defined in the strategic pillar "Customer", we carried out intensive work on the development of the functionality of digital service channels, with particular emphasis on mobile banking for retail customers. In 2022, we introduced a number of new solutions in electronic banking Pekao24, PeoPay and PeoPay Kids. On the Pekao24 website and the PeoPay application implementations included:
• payments for car parks in paid parking zones,
• purchase of a public transport ticket,
• shortcuts widget - personalized look of the website,
• suggested payment options, execution of transfers with a future date, the possibility of renewing the transfer directly from the history of operations, presentation of the status of impaired payments,
• notifications about receipts - the ability to enable PUSH notifications in PeoPay or SMS,
• a new widget on the PeoPay desktop that shows investment products
• access to the PeoPay application for clients of the Brokerage House who have the Pekao24Makler service and do not have an account at the Bank.
• an updated application for the 300+ benefit adjusted to the new requirements,
• applications for the 300+ benefit and Family Care Capital for Ukrainian citizens,
• application for government loan holidays - suspension of mortgage repayments,
As part of Open Banking, we have expanded the service (the so-called AIS) of access to information on payment accounts maintained by other banks, such as: balance and transaction history. Access to accounts from other banks makes it easier to apply for a loan, overdraft or credit card, allows you to track account balances and order transfers from accounts in other banks.
The number of active mobile customers in relation to the current accounts number was 57% at the end of 2022 (+2,9 p.p. compared to December 2021), 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 2022 amounted to 78% compared to 61% in the previous year. Bank Pekao has also started to implement a new CRM system, which is the first such comprehensive CRM implementation in the public cloud in Polish banking sector. With the support of a real-time data processing platform, advanced analytics and cloud solutions, Omnibank CRM will provide customers with the most relevant offers and messages.
The „Growth” pillar
In 2022, 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 2022, 554 thousand CAs were opened (+111 thousands more than the year before). Implementing our strategic assumptions, we increased the acquisition of young customers ( below 26 years of age) by 38% y/y, which was possible thanks to new solutions in the offer (e.g. the first loan in Poland for medical studies with a repayment guarantee by BGK, Traveller's Package for students studying abroad , an account with a gaming package), as well as the development of PeoPay Kids functionality. In 2022, despite challenges related to the economic environment, we recorded a positive dynamics of sales of cash loans by +56% as compared to 2021. The growth dynamics in terms of credit sales for micro-enterprises reached +38% y/y. In line with the Strategy, the Bank leveraged business synergies with the PZU Group, developing its product offer (including a new insurance and savings product: Pewny Profit and an insurance package for the new credit card) and digitizing subsequent processes.
Thanks to effective business activities aimed at strengthening the existing and building new competitive advantages in the SME segment, we have consistently strengthened the Bank's position on this market. 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. We systematically expand our offer with new solutions. In 2022, among others:
• As the only commercial bank in Poland, we have signed a portfolio guarantee agreement with the Pan-European Guarantee Fund (PFG), which enables loans to be granted on exceptionally favorable terms.
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• under the Open Funding Platforms (OPF) program, we made financing programs available to entities from other countries (such as Turkey, Bangladesh, China)
• we signed an agreement with the Export Credit Insurance Corporation (KUKE), which enables KUKE to guarantee the repayment of up to 80% of the value of loans granted by the Bank to exporters for their investments in Poland.
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. At the end of 2022, the value of the loan portfolio in the SME segment was higher by +23% y/y, while in the MID segment it was higher by +14% y/y. From the strategic perspective, an important parameter is also the generated revenue per customer. In 2022, 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.
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 continued to develop the self-service zone for corporate clients in the PekaoBiznes24 electronic banking, providing clients with new processes, including submitting applications in the field of Treasury. We also introduced PeoBIZ - a new mobile application for companies with access to the PekaoBiznes24 electronic banking system. PeoBIZ works on both tablets and mobile phones and uses biometric technology.
The development of remote distribution channels was accompanied by improvement in the effectiveness of the Bank's branch network. In 2022, the Bank reduced its branch network by 53 units. At the end of the year, the branch network consisted of 515 own branches and 82 partner branches.
We have raised the level of robotization and automation in the area of the bank's operations. The number of operations performed by robots, which increased by over 59% y/y.
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. In 2022, there was a decrease in a significant ratio in this respect, i.e. the time to credit decision. For example, in the case of mortgage loans, the improvement was 5 business days compared to 2021, while MID financing is provided for 60% of applications in 2 business days less.
The „Responsibility” pillar
We care about maintaining a safe risk profile in a changing market environment. Throughout 2022, the cost of risk amounted to 1.12 bps, while maintaining a high level of NPL coverage. At the same time, a significant capital surplus above the regulatory minimum was maintained, i.e. the Tier 1 ratio reached 17.4%.
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 its implementation were presented in the non-financial report for 2022. 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).
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Business priorities for 2023
Prospects for economic development (including, among others, potential weakening of private consumption due to very high inflation, development of monetary policy, possible delays in public investments, risk of a prolonged energy crisis) will affect the demand for banking products and possible changes in the cost of risk. We monitor the development of the situation in the Bank's environment on an ongoing basis, including the direct and indirect effects of the war in Ukraine, and we adapt our activities to the observed challenges. 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 line with the adopted strategy, in 2023 we will consistently implement a number of projects and strategic initiatives aimed primarily at:
• improving the quality of services offered and increasing the level of customer satisfaction,
• dynamic business growth in profitable market segments (consumer finance, Micro, SME, MID),
• digital channels development and migration of processes to remote channels,
• optimization and digitalization of credit processes,
• strengthening the market position among young customers,
• achieving the goals defined in the ESG Strategy,
• ensuring the highest standards in the area of cybersecurity,
• 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
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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 2022 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,
• SeparateFinancial Statements of Bank Pekao S.A. for the year ended on 31 December 2022 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 2022 (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 separate 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 2022 and Separate Financial Statements of Bank Pekao S.A. for the year ended on 31 December 2022 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 10 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 2022
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 9 (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. 10
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 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 2022 , the Bank applied corporate governance rules laid down in the Code of Best Practice for WSE Listed Companies 2021 11 (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 detailed principles: 2.1; 2.2; 2.4, of "Best Practice 2021" concerning the diversity policy and the openness of voting of the Management Board and the Supervisory Board. Until June 14, 2022 the Bank also did not apply detailed principle 6.4 of “Best Practice 2021” regarding 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%.
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" (hereinafter referred as “Policy”) 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 “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%.
Until June 14, 2022, the Bank did not apply detailed principle 2.1 in part regarding the approval of the “Policy”, with regard to the Supervisory Board, by the General Meeting. Resolution no 34, of June 15, 2022, General Shareholders’ Meeting adopted the “Policy ” as regards to the members of the Supervisory Board.
9 Journal of Laws 2018.757
10 Par. 70.6.5.a and b of the ordinance of the Minister of Finance of March 29, 2018
11 The document is publicly available on the WSE website: https://www.gpw.pl/dobre-praktyki
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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, until June 14, 2022, 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 did 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 General Meeting on June 15, 2022 adopted Resolution No. 32 on the amendment of Resolution No. 41 of the Ordinary Shareholder General Meeting of Bank Polska Kasa Opieki Spółka Akcyjna on remuneration formation of the members of the Supervisory Board of Bank Polska Kasa Opieki Spółka Akcyjna of June 21, 2018, according to which the remuneration of the members of the Supervisory Board who are members of committees operating within the Supervisory Board includes the additional workload related to the work of these committees. The Resolution does not apply to members who perform the functions of Chairman of the Supervisory Board, Vice-Chairman of the Supervisory Board, Secretary of the Supervisory Board and the chairmen of committees operating within the Supervisory Board, because their remuneration already takes into account the above expenditures pursuant to the Resolution No 41 of the Ordinary Shareholder General Meeting of Bank Polska Kasa Opieki Spółka Akcyjna on remuneration formation of the members of the Supervisory Board of Bank Polska Kasa Opieki Spółka Akcyjna of June 21, 2018. Bearing the above in mind, detailed rule 6.4 from June 15, 2022is applied by the Bank.
By Report No. 1/2022 of 15 June 2022 The Bank updated the information on the state of application of the "Best Practices 2021" taking into account the resolutions No. 32 and 34 adopted by the Ordinary General Meeting of the Bank.
In 2022, the Bank also applied Corporate Governance Rules for the Supervised Institutions issued by the Polish Financial Supervision Authority on July 22, 2014 12 , 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.
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.
12 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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In 2022, the Bank applied corporate governance rules laid down in the Code of Banking Ethics of Polish Bank Association 13 .
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 14
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 15
[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.
[B] On September 30, 2022, Bank Pekao S.A. informed that on September 29, 2022 it received a notification from BlackRock, Inc. on exceeding the threshold of 5% of the total number of votes in the Bank, including contracts for difference (CFDs) ("Notification").
13 The document is publicly accessible on the Polish Bank Association website: https://zbp.pl/Dla-Bankow/Prawo-i-legislacja/Komisja-Etyki-Bankowej
14 Par. 70.6.5.c of the ordinance of the Minister of Finance of March 29, 2018
15 Par. 70.6.5.d of the ordinance of the Minister of Finance of March 29, 2018
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The Notification included the following information:
1. The date and the nature of the event giving rise to the change in the share to which the notification relates:
September 28, 2022 – acquisition of shares.
2. The number of shares held before the change in the share and their percentage share in the Bank's share capital and the number of votes attached to these shares and their percentage share in the total number of votes:
The shares held before the change represented less than 5% of the Bank's share capital and the total number of votes in the Bank.
3. The number of currently held shares and their percentage share in the Bank's share capital and the number of votes attached to these shares and their percentage share in the total number of votes:
Following the change in shareholding, subsidiaries of BlackRock, Inc. hold 12,791,687 shares and votes in the Bank, representing 4.87% of the Bank's share capital and the total number of votes in the Bank.
4. The subsidiaries of the notifying shareholder holding the Bank's shares or financial instruments indicated in item 5 below:
BlackRock Japan Co., Ltd.; BlackRock Investment Management, LLC; BlackRock Investment Management (UK) Limited; BlackRock Investment Management (Australia) Limited; BlackRock Institutional Trust Company, National Association; BlackRock Fund Advisors; BlackRock Financial Management, Inc.; BlackRock Asset Management Deutschland AG; BlackRock Asset Management Canada Limited; BlackRock Advisors, LLC; BlackRock Advisors (UK) Limited; BlackRock (Singapore) Limited.
Information on how Black Rock, Inc. controls the above-mentioned entities is presented in the appendix to this report.
5. Number of votes attached to shares, calculated in the manner specified in Article 69b Section 3 of the Public Offering Act, to which financial instruments referred to in Article 69b Section 1 Item 2 of the Public Offering Act directly or indirectly refer, the type or name of these financial instruments and the expiry date of these financial instruments:
439,734 votes from shares, representing 0.17% of the Bank's share capital and the total number of votes in the Bank related to contracts for difference (CFDs) with cash settlement. According to the Notice, there is no expiry date for the above-mentioned instruments, no execution period or no conversion period.
6. The total sum of the number of votes indicated pursuant to items (3) and (5) and its percentage share in the total number of votes:
13,231,421 votes from shares representing 5.04 % of the Bank's share capital and the total number of votes in the Bank.
[C] On 10 January 2023, Bank Pekao S.A. informed that on 5 January 2023 it received a notification from Powszechne Towarzystwo Emerytalne Allianz Polska Spółka Akcyjna regarding exceeding the threshold of 5% of the total number of votes in the Bank ("Notification").
Powszechne Towarzystwo Emerytalne Allianz Polska Spółka Akcyjna ("PTE Allianz Polska S.A."), the manager of Allianz Polska Otwarty Fundusz Emerytalny ("Allianz OFE") and the manager of Allianz Polska Dobrowolny Fundusz Emerytalny ("Allianz DFE"), informed that as a result of the merger pursuant to Article 67 of the Act of 28 August 1997 on the Organization and Operation of Pension Funds and Article 492 § 1(1) of the Commercial Companies Code, on 30 December 2022 with Aviva Powszechne Towarzystwo Emerytalne Aviva Santander Spółka Akcyjna managing the Second Allianz Polska Otwarty Fundusz Emerytalny ("Second Allianz OFE"), the share in the share capital and total number of votes of the Bank in the accounts of Allianz OFE, Allianz DFE and Second Allianz OFE increased above 5%.
Prior to the merger, a total of 2,115,460 shares were registered on the accounts of Allianz OFE and Allianz DFE, representing 0.81% of the Bank's share capital, which gave the right to exercise 2,115,460 votes from shares representing 0.81% of the total number of votes at the Bank's General Meeting (“GM”). In the account of the Second Allianz Open Pension Fund 13,384,591 shares were registered, representing a 5.10% share in the Bank's share capital, which gave the right to exercise 13,384,591 votes from shares representing a 5.10% share in the total number of votes at the Bank's GM.
After the merger, the total balance in the accounts of Allianz OFE, Allianz DFE and Second Allianz OFE increased to 15,500,051 shares, representing 5.91% of the Bank's share capital, which gives the right to exercise 15,500,051 votes from shares representing 5.91% of the total number of votes at the Bank's GM.
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At the same time, PTE Allianz Polska S.A., managing jointly Allianz OFE, Allianz DFE and Second Allianz OFE, informed that:
• it has no subsidiaries holding shares in the Bank,
• does not have a situation described in Article 69 section 4 item 6 of the Act of 29 July 2005 on Public Offering, Conditions Governing the Introduction of Financial Instruments to Organized Trading, and Public Companies (“Act on Public Offering”),
• it also does not have the financial instruments referred to in Article 69b Section 1 item 1 and 2 of the aforementioned Act on Public Offering.
According to the information provided in the notification, the total share of Allianz OFE, Allianz DFE and Second Allianz OFE, managed by PTE Allianz Polska S.A., in the Bank's share capital and the total number of votes is 5.91%.
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:
SHAREHOLDER NAME
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
31 DECEMBER 2022
31 DECEMBER 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%
Funds managed by Nationale-Nederlanden Powszechne Towarzystwo Emerytalne S.A.
16 800 000
6,40%
13 201 655
5,03%
Funds managed by Powszechne Towarzystwo Emerytalne Allianz Polska S.A.
15 500 051
5,91%
-
-
Subsidiares managed by BlackRock, Inc
13 231 421
5,04%
-
-
Aviva Otwarty Fundusz Emerytalny Aviva Santander
-
-
13 281 544
5,06%
Other shareholders (below 5%)
130 848 389
49,85%
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 16
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 17
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 18
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).
16 Par. 70.6.5.e of the ordinance of the Minister of Finance of March 29, 2018
17 Par. 70.6.5.f of the ordinance of the Minister of Finance of March 29, 2018
18 Par. 70.6.5.g of the ordinance of the Minister of Finance of March 29, 2018
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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 19
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, 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.
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 20
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 21 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 22
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 23 .
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:
19 Par. 70.6.5.h of the ordinance of the Minister of Finance of March 29, 2018
20 Par. 70.6.5.i of the ordinance of the Minister of Finance of March 29, 2018
21 Introduced by Resolution of the General Meeting No. 19 of April 8, 2003, as amended
22 Par. 70.6.5.j of the ordinance of the Minister of Finance of March 29, 2018
23 https://www.pekao.com.pl/o-banku/lad-korporacyjny.html
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 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,
 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.
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.
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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 24
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 by Resolution No. 92/III/20 of March 12, 2020, Resolution No. 153/IV/20 of April 17, 2020 Resolution No. 328/VII/20 of July 24, 2020 and Resolution No. 3/I/22 of January 5, 2022.
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 25 . 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.
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.
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. The Bank's Management Board determines the principles and manner of implementation, for example, investment policy, asset and liability management policy, credit policy, HR, remuneration and social policy in the Bank and interest rate policy.
24 Par. 70.6.5.k and l of the ordinance of the Minister of Finance of March 29, 2018
25 https://www.pekao.com.pl/o-banku/lad-korporacyjny.html
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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 2022 were effective.
As at January 1, 2022 , the Management Board of the Bank was composed of the following persons:
Leszek Skiba 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.
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Magdalena Zmitrowicz Vice President of the Management Board. 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.
Marcin Gadomski Vice President of the Management Board supervising the management of risks significant for the Bank’s activity. 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
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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.
Marcin Gadomski meets suitability requirements determined in art. 22aa of the Banking Law Act.
Jarosław Fuchs Vice President of the Management Board. 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. 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 meets suitability requirements determined in art. 22aa of the Banking Law Act.
Jerzy Kwieciński Vice President of the Management Board. 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
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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.
Paweł Strączyński Vice President of the Management Board. 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 is also a Member of the Supervisory Board of Krajowa Izba Rozliczeniowa S.A. as well as a Member of the Board of Directors KGHM International LTD in Canada and a Member of the Team of Economic Advisors at the Ministry of State Assets.
Paweł Strączyński fulfills suitability requirements determined in art. 22aa of Banking Law Act.
Błażej Szczecki Vice President of the Management Board. 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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Wojciech Werochowski Vice President of the Management Board. 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.From April 2022, member of the Supervisory Board of Pekao Bank Hipoteczny S.A.
Wojciech Werochowski fulfills suitability requirements determined in art. 22aa of Banking Law Act.
Piotr Zborowski Vice President of the Management Board. 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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As at 31 December 2022, the composition of the Bank's Management Board had not changed. Members of the Bank's Management Board coordinate and supervise the Bank's operations in accordance with the division of competences adopted by the Bank's Management Board and approved by the Supervisory Board.
As at 31 December 2022, the division of competences among the members of the Bank's Management Board was as follows:
The President of the Bank's Management Board Mr. Leszek Skiba convenes and chairs meetings of the Bank's Management Board, presents the position of the Bank's Management Board towards the Bank's bodies and in external relations, in particular towards the State authorities. President of the Management Board Mr. Leszek Skiba coordinates the work of the members of the Bank's Management Board and issues orders in accordance with the provisions of the Bank's internal regulations.
The President of the Bank's Management Board 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, macroeconomic analysis and digital transformation.
The President of the Bank's Management Board was appointed as a Member of the Management Board responsible for the implementation of duties specified in the Act on Counteracting Money Laundering and Terrorist Financing.
Mr. Marcin Gadomski Vice President of the Management Board supervising the Risk Management Division and is responsible for supervising the risk management process of bancassurance activities.
Mr. Paweł Strączyński Vice President of the Management Board supervises the activities of the Financial Division and has been appointed as a member of the Management Board to whom infringements will be reported and who will be responsible for the day-to-day operation of the whistleblowing procedure.
Mr. Jerzy Kwieciński Vice President of the Management Board supervising the Corporate Banking and MIB Division.
Mr. Wojciech Werochowski Vice President of the Management Board supervising the Retail Banking Division.
Mrs. Magdalena Zmitrowicz Vice President of the Management Board supervising the Banking Enterprise Division.
Mr. Jarosław Fuchs Vice President of the Management Board supervising the Private Banking and Investment Products Division.
Mr. Piotr Zborowski Vice President of the Management Board supervising the Strategy Division.
Mr. Błażej Szczecki Vice President of the Management Board supervising Banking Operations and IT Division and coordinates activities aimed at appropriate risk management related to the security of the ICT environment.
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, and then 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 and Resolution No. 10/22 of January 24, 2022.
The Rules of the Supervisory Board are available on the Bank's website 26
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.
26 https://www.pekao.com.pl/o-banku/lad-korporacyjny.html
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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.
In 2022, the Supervisory Board held 15 meetings.
As at January 1, 2022, the composition of the Supervisory Board was as follows:
Beata Kozłowska-Chyła Chairwoman of the Supervisory Board. Beata Kozłowska–Chyła, Ph.D. graduated from the Faculty of Law and Administration at the University of Warsaw.
She received the Ph.D. in law, and subsequently the scientific degree of habilitated doctor of law. She is a lecturer in the Faculty of Law and Administration at the University of Warsaw in the Department of Commercial Law. She performs the profession of legal advisor, and is the recommended arbitrator at the Arbitration Court at the Polish Chamber of Commerce in Warsaw. Currently she is an acting President of the Management Board of PZU S.A. She served as a member of the Supervisory Board of PZU S.A., member of the Supervisory Boards of TFI PZU S.A. and PTE PZU S.A. and she was twice a member of the Management Board of PZU S.A. She was also a member of PZU Życie S.A. Currently she serves also as the Chairman of the Supervisory Board of PZU Życie Spółka Akcyjna, as well as the Chairwoman of the Lotos S.A Group Supervisory Board. She worked as a deputy director of the Legal and Licensing Department in the Pension Fund Regulatory Authority and served as the President of the Management Board of Polskie Wydawnictwo Ekonomiczne SA. Beata Kozłowska-Chyła is a member of the Legislative Council under the President of the Council of Ministers, a member of the Entrepreneurship Council under the President of the Republic of Poland and a member of the task force in the Corporate Governance Reform Commission under the Minister of State Assets. She also holds the position of member of the Board of the Polish Olympic Committee and in the Social Supervisory Board of Sport under the Minister of Sport.
She is the author of many scientific publications on company law, securities law and insurance law that have been published in reputable Polish and foreign magazines, as long as an author of articles for the purpose of popularization.
Joanna Dynysiuk Deputy Chairwoman of the Supervisory Board of Bank Pekao S.A. Joanna Dynysiuk is a graduate of the Faculty of Law and Administration at the University of Warsaw. In 2010 she completed her legal advisor training and obtained the title of legal advisor. She began her professional career in 2005 at K&L Gates (former Hogan & Hartson), and then continued career at CMS Cameron McKenna. From August 2016, she was employed at Polski Fundusz Rozwoju S.A., where she started working as Deputy Director of the Legal Department, and currently she is the Director of the Legal Department. She has participated in a number of M&A transactions, financing and issue of securities. She was responsible for legal advice in the implementation by Polski Fund Rozwoju S.A. Financial Shield for micro, small and medium companies and for large companies. From 2017, the Vice- President of the Supervisory Board of Bank Pekao S.A.
Małgorzata Sadurska Deputy Chairwoman of the Supervisory Board of Bank Pekao S.A . Małgorzata Sadurska is a member of the Management Board in PZU SA from June 13, 2017 and PZU Życie SA from June 19, 2017. Graduate of the Law and Administration Faculty of the Maria Curie- Skłodowska University in Lublin and a post-graduate course in Organization and Management at the Lublin School of Business. She completed her Master of Business Administration degree at the Faculty of Management at the Lublin University of Technology. This program in management was run in cooperation with the University of Minnesota in Minneapolis. Under the program run by this university she also gained a certificate in human resource management and marketing. In the Management Boards of PZU SA and PZU Życie SA, she is responsible for the Cooperation with Banks Division, including bancassurance and strategic partnership programs, and the Corporate Customer Division. She also supervises foreign companies of the PZU Group. She is also a member of key Committees operating in PZU SA and PZU Życie SA, including: Investment Committee, PZU Group Risk Committee, Investment Risk Committee. Until 2017 she was the head of the Chancellery of the President of Poland. She was responsible for cooperation with the
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Council of Ministers, the Parliament and public administration authorities. Deputy Chairwoman of the Commission on Amendments to Codification in the Sejm of the Republic of Poland from 2012 to 2015. She participated in work on bills concerning civil and criminal law and the Commercial Company Code. She was the Chairwoman of the Supervisory Board of the ZUS Social Insurance Institution in 2007. As a secretary of state in the Cancelary of the Prime Minister she participated in meetings of the social insurance task force. She was involved in analyzing the legal, social and financial consequences of solutions in this field.
Stanisław Ryszard Kaczoruk Secretary of the Supervisory Board of Bank Pekao S.A. Stanisław Ryszard Kaczoruk, Ph.D. is a member of the following Supervisory Boards of companies listed on the WSE: MCI Capital Towarzystwo Funduszy Inwestycyjnych S.A. (2009-2011), Eficom-Sinersio S.A (2015-2016), Alior Bank (2016-2017), Bank Pekao S.A. (Vice Chairman of the Supervisory Board, from 2017), Qumak S.A. (2017-2019), PKP PLK S.A. (from 2018). He participated in projects related to the creation of strategies for strategic companies, and also cooperated with leading consulting companies in the area of capital takeovers and restructuring of the companies (including PKP Energetyka, Elester PKP). He also cooperated in the organization of TFI KGHM. Expert of the Ministry of Development on the use of EU subsidies. He was also an advisor to the Aplikacje Krytyczne (VAT analysis) company acting for the Ministry of Finance. In the years 1998–2016 he worked as directors and in the management of companies operating on the IT market and legal and consulting services market, at the same time conducting business activity in the field of building business models, developing market analyzes, segmentation, analysis of organizational structures and processes, financial engineering, debt collection and restructuring of the companies and strategy building. He carried out conceptual, coordination, promotional and educational activities in the field of cyber security in Poland. He has extensive knowledge and practical and managerial experience. From 1978 to 1992 he conducted teaching and research activities at universities in Wrocław and Szczecin. In the years 1991–93 the head of the IT department at KGHM-Metraco sp.z o.o., in 1993 the head of the IT department of the Management Board Office of KGHM S.A., in 1994 the commercial and regional director at InterAms sp.z o.o.; 1994-95 commercial director at NetCom sp.z o.o.; 1995-97 managing director at Kaczmarski Burgel Inkasso sp.z o.o.; 1997-2002 commercial director at Winue S.A. (Emax); 2002-2005 cooperated with ComputerLand S.A. and 2005-2006 with SPIN S.A. in the scope of defining and implementing product development strategies, market research, customer acquisition; 2004-2012 member of the board of Value BasedAdvisors sp.z o.o., from 1999 president and co-owner of the International Court of Arbitration sp.z o.o. (2013-2018 president of the International Arbitration Court S.A.); 2015-2016 commercial proxy in Eficom-Sinersio S.A. Mathematician. A graduate of the Faculty of Mathematics, Physics and Chemistry of the University of Wrocław. In the years 1979-1991 didactic and scientific work at universities. In 1986 he obtained a doctorate in technical sciences, additionally completed in 1986 postgraduate pedagogical study, IFG training, in 1993 Postgraduate Polish-American College of Social Communication, Wrocław University of Technology & Univ. of Connecticut, USA; dozens of training in marketing and management, economics, finance, IT, NLP, health and safety. Participation in many scientific and research works, cooperation with several universities and research centers in Poland (among others from 2016 - CEZAMAT - member of the Program Council), several publications in the field of theoretical analyzes and applications of mathematics (including mathematical statistics) and computer science, among others in economics and environmental protection, published in numerous Polish and foreign scientific journals. He was awarded the Bronze Cross of Merit (2005), the Knight's Cross of the Order of Polonia Restituta (2012) and numerous awards and distinctions of social organizations and associations.
Marcin Izdebski Member of the Supervisory Board of Bank Pekao S.A. Marcin Izdebski graduated from the Warsaw University of Technology and the Warsaw School of Economics. He has gained work experience in the private sector, non-governmental organisations and government administration, with which he has been continuously associated since 2016. During this period, he has held responsibility for supervision over companies with Treasury shareholding. He has been responsible for executing equity transactions involving acquisitions, mergers, and divisions of assets or companies. He has experience based on
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working for the supervisory authorities of capital companies, including PKO Bank Polski S.A. Currently, he is the Director of the Department of Fuel and Energy Companies at the Ministry of State Assets. Since 2018, he has acted as the Chairman of the Supervisory Board of Polska Grupa Lotnicza S.A.
Sabina Bigos-Jaworowska Member of the Supervisory Board of Bank Pekao S.A. Sabina Bigos-Jaworowska is a graduate of the Faculty of Economics at the University of Economics in Katowice. She completed Postgraduate Studies in Health Care Management at the same university. He holds a diploma of the Minister of the Treasury entitling her to sit on the supervisory boards of state-owned companies. Since 1994, she has been associated with the Health Care sector, in 2000 she took the position of the Director of the Health Care Team in Oświęcim. In 2016, she was a member of the Supervisory Board of PL 2012+, the operator of the National Stadium in Warsaw. In April 2017, she was again appointed for the next term of office as Vice-President. In addition, he is the Vice President of the Association of Hospitals of Małopolska, Member of the Board of the National Association of Employers of Poviat Hospitals and Representative of Employers of the Convention of the Higher Vocational School in Oświęcim.
Justyna Głębikowska-Michalak Member of the Supervisory Board of Bank Pekao S.A.
Justyna Głębikowska-Michalak graduated from the Faculty of Economics of the Maria Curie-Skłodowska University in Lublin, in the field of "Management and Marketing" (1997) and from post-graduate studies in "Accounting" at the University of Economics in Poznań. In 2001, she obtained the authorization of the Minister of Finance to provide bookkeeping services (No. 25706/01). Since 2003, she runs her own Accounting Office "Vademecum", specializing in providing services for business entities obliged to keep full accounting. She has the authorization for being an auditor. She is also extensively experienced in accounting services for numerous business entities from all over the country, including management accounting. She is interested in finance and business psychology.
Michał Kaszyński Member of the Supervisory Board of Bank Pekao S.A. Michał Kaszyński is a graduate from the Faculty of Law at the Jagiellonian University in Cracow and postgraduate studies in Personnel Management at the AGH University of Science and Technology in Cracow. In 1992 he completed an internship under the Tempus program at the Instituto Formazione Operatori Aziendali in Italy in the field of management and marketing. In 2005 he completed legal advisor training and is included on the list of legal advisors at the District Chamber of Legal Advisors in Katowice. Between 1988 and 2011 he was associated with the company SAOL Distribution, engaged in distribution of alcoholic beverages, which since 2004 belonged to the CEDC S.A. group. In that company he held a position of the Director for Human Resources Management and then the Director for Administrative and Legal Affairs and HR. Since 2005, he has been running his own business under which he provides legal assistance to entrepreneurs and local government units in the field of investment, production, housing resource management, sales and medical activities. Member of the Supervisory Boards of: Miejski Zakład Energetyki Cieplnej, Firma Handlowa SAOL, Przedsiębiorstwo Handlu Spożywczy, KBO Oświęcim, and Gliwice Zakłady Usług Górniczych. Presently, he is a member of the Krynica Uzdrowisko-Żegiestów SA Supervisory Board.
Marian Majcher Member of the Supervisory Board of Bank Pekao S.A. Marian Majcher is a graduate of the University of Silesia in Katowice at the Faculty of Social Sciences and Postgraduate Studies in Business Management at the Institute of Organization and Management in Industry with headquarters in Warsaw. He started his professional career as a researcher at the University of Silesia in Katowice. In the years 1990–1999 he devoted himself to building free media in Poland, as a co-owner of the press publishing companies 'Word' in Chorzów and 'Free Word' in Katowice. He began his professional career in industry in 1999, being until 2016 associated with the CTL Maczki-Bór S.A. Group and its wide activity in the Upper Silesian Industrial District. He held the position of the Managing Director and the Vice President of the Management Board of CTL, playing a key role in the privatization of this enterprise (then Kopalnia Piasku Maczki-Bór) and adding it to the CTL Logistics Group - one of the largest independent and private rail carrier in Europe. From May 2010 to May 2016 he was the President of the Management Board of CTL Maczki – Bór S.A. Since
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2003, he has been the President of the Management Board of CTL Haldex S.A., a company dealing with the technological recovery of hard coal from waste gangue. At the same time, it is one of the largest completed and pro-ecological development projects of the CTL Maczki-Bór Group in cooperation with Haldex S.A. He is a qualified member of Supervisory Boards in State Treasury companies. He expanded his banking knowledge at the Boston Consulting Group workshops in market analysis, risk management and the economic environment. He is also a specialist in the field of obtaining financing sources for modernization and restructuring of enterprises as well as conducting negotiations. He served on the Supervisory Boards of, among others: Agencja Rozwoju Regionalnego in Żory (Vice Chairman of the Supervisory Board), Wojewódzkie Przedsiębiorstwo Energetyki Cieplnej in Legnica (member of Supervisory Board), Tauron Czech Energy s.r.o. in Ostrava, Kopalni Piasku Maczki-Bór Spółka z o.o. (Chairman of the Supervisory Board), Centralny Ośrodek Informatyki Górnictwa S.A. in Katowice (member of the Supervisory Board), EIB S.A. in Toruń (member of the Supervisory Board), MB EKO S.A. in Sosnowiec, Metanel S.A. in Warsaw, and Centrala Zaopatrzenia Hutnictwa S.A. in Katowice. Since 2017, he has been a member of the Supervisory Board of Bank Pekao S.A., including a member of the Risks Committee of the Supervisory Board. Winner of many management awards, including: (i) "Success in Silesia. People and companies" in the Manager category in Silesia 2012 awarded by the Silesian Association of Managers in Katowice, (ii) “Business Gazelle” for the achieved development and growth of the company awarded by Puls Biznesu, (iii) "Well seen company" awarded by the Business Center Club. He was awarded the Medal of Merit for the Katowice Province (1999) and the Medal of Merit for Culture (1999). In 2010, President of the Republic of Poland Lech Kaczyński honored Mr. Marian Majcher with the Knight's Cross of the Order of Polonia Restituta for shaping free media in the 1980s.
As at 31 December 2022, the composition of the Supervisory Board has not changed.
Five members of the Supervisory Board - Sabina Bigos-Jaworowska, Justyna Głębikowska-Michalak, Stanisław Ryszard Kaczoruk, Michał Kaszyński, Marian Majcher meet the independence criteria set out in the Act of 11 May 2017 on statutory auditors, audit firms and public supervision and have no real and significant relations with a shareholder holding at least 5% of the total number of votes in the company.
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". On 24 January 2022, the Bank's Supervisory Board amended by Resolution no. 11/22 the Rules of the Audit Committee of the Supervisory Board of Bank Polska Kasa Opieki Spółka Akcyjna and has adopted a consolidated text.
The purpose of the Audit Committee is to support the Bank”s Supervisory Board in fulfilling its duties concerning in particular :
1) monitoring the financial reporting process,
2) monitoring the effectiveness of internal control and risk management systems and internal audit including financial reporting
3) monitoring the performance of financial audit activities, in particular the audit carried out by the audit firm, taking into account the conclusions and findings of the Polish Audit Supervision Agency resulting from the audit carried out in the audit company,
4) control and monitor the independence of the statutory auditor and the audit firm which carries out the audit of financial statements, in particular where the audit firm provides services other than audit to the Group;
5) informing the Bank's Supervisory Board about the results of the audit and explaining how the audit contributed to the reliability of financial reporting, as well as the role of the Audit Committee in the audit process,
6) assessing the independence of the statutory auditor and granting consent to the provision of permitted non-audit services,
7) developing a policy for selecting an audit firm to carry out the audit,
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8) developing a policy for the provision of permitted non-audit services by the audit firm that conducts the audit, entities related to that audit firm and a member of the audit firm's network,
9) determining the procedure for selecting an audit firm to audit financial statements,
10) presenting to the Bank's Supervisory Board recommendations for the selection of an audit firm to audit financial statements,
11) submitting recommendations to the Bank's Supervisory Board aimed at ensuring the reliability of the financial reporting process.
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 of 11 May 2017 on statutory auditors, audit firms and public supervision (hereinafter referred to as the "Act").
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. 27
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 2022 there were 14 meetings of the Audit Committee.
As at January 1, 2022, 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).
and until December 31, 2022, it has not changed.
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 i.e.:
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 (hereinafter referred to as "Choice Policy"),
2. Procedure for selecting an audit firm to carry out a statutory audit of the financial statements of Bank Pekao S.A. (hereinafter referred to as the "Selection Procedure"),
3. The audit firm's audit performance policy by the audit firm carrying out the audit, by entities affiliated to that audit firm and by a member of the audit firm's network (hereinafter referred to as “Service Provision Policy”).
27 https://www.pekao.com.pl/o-banku/wladze-banku.html
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The selection policy sets out the following rules for the mandatory rotation and grace period of the audit firm and the key statutory auditor:
• 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.
• The first contract for the audit of financial statements is concluded with an audit firm for a period of not less than 2 years with the possibility of extension for another period of at least two years.
• 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.
• The key auditor may not carry out a statutory audit of financial statements for a period longer than 5 years.
In accordance with the Selection Procedure, the procurement procedure aimed at selecting an audit firm is carried out in the form of a tender. Following the selection procedure organised by the Bank, the Audit Committee submits to the Supervisory Board a recommendation on the selection of an audit firm. This recommendation, unless it concerns the renewal of the audit engagement, shall contain no less than two options for selecting the audit firm with justification and an indication of a justified preference for one of them. However, in the event of an extension of the contract with an audit firm, the Audit Committee recommends that the Supervisory Board present to the General Meeting a proposal for the selection of the current audit firm. The Supervisory Board, after reviewing the recommendation and (in the event of non-renewal of the order) the preference of the Audit Committee, presents to the General Meeting a proposal on the appointment of an audit firm. The selection of an audit firm is made by the General Meeting, specifying the years for which the Bank's financial statements and consolidated financial statements of the Bank's Group will be subject to statutory audit by the selected audit firm.
On 11 June 2021, the Ordinary General Meeting of the Bank, after reviewing the proposal of the Supervisory Board, elected KPMG limited liability company (hereinafter referred to as "KPMG") as an audit firm to audit the Bank's financial statements and consolidated financial statements of the Bank's Group for the years 2021-2023, which resulted in the extension of the financial statements audit agreement with KPMG.
The service provision policy specifies that the provision of permitted non-audit services by the audit firm conducting the audit , by entities related to this audit firm and by any member of the audit firm network for the benefit of the Bank, it requires the consent of the Audit Committee. In addition, the Audit Committee agrees to the provision of permitted services not being an audit for the Bank's subsidiaries on the basis of the Company's application. An indispensable element of such a request is the consent of the audit committee of the Bank's subsidiary applying for consent. Entities belonging to the Bank's Group they are also required to obtain the approval of the Parent Entity's Audit Committee (PZU S.A.) for the purchase of a permitted non- research service. In 2022, the company KPMG provided a permitted non-audit service to the Bank and its subsidiaries. Before concluding a contract for the provision of permitted services that are not testing, The Audit Committee, the Audit Committee of the subsidiary being a public-interest entity and the Audit Committee of the parent company of the Bank assessed the independence Audit Committee and have consented to the provision of those services.
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. 2 November 2022, The Bank's Supervisory Board of Bank Polska Kasa Opieki Spółka Akcyjna by Resolution No. 161/22, it amended the Regulations of the Nomination and Remuneration Committee of the Supervisory Board of Bank Polska Kasa Opieki Spółka Akcyjna and adopted its consolidated text.
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.
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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;
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
In 2022, the Nomination and Remuneration Committee held 9 meetings.
As at January 1, 2022, 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.
In connection with the amendment of the Rules of Procedure of the Nomination and Remuneration Committee of the Supervisory Board of Bank Polska Kasa Opieki Spółka Akcyjna, as of 2 November 2022, including the number of members of the Nomination and Remuneration Committee, as of the same date, the following were additionally appointed members of the Committee: Mr. Michał Kaszyński and Mr. Stanisław Ryszard Kaczoruk.
As at 2 November, 2022 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,
Stanisław Ryszard Kaczoruk Member of the Committee,
Michał Kaszyński Member of the Committee,
and has not changed until December 31, 2022.
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 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, 166/20 of 10 November 2020 and 12/22 of 24 January 2022.
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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.
In addition, the Risk Committee supports the Supervisory Board in supervising the implementation of the risk management strategy in the Bank's operations and verifies whether the overall level of prices of liabilities and assets offered to customers fully takes into account the Bank's business and risk strategy.
In 2022, the Risk Committee held 14 meetings.
As at January 1, 2021, the composition of the Risk Committee was as follows:
Stanisław Ryszard Kaczoruk President of the Committee,
Marcin Izdebski Secretary of the Committee,
Michał Kaszyński Member of the Committee,
Marian Majcher Member of the Committee,
Małgorzata Sadurska Member of the Committee.
and has not changed until December 31, 2022.
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 28
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"). By Resolution No. 34, the Ordinary General Meeting of the Bank on June 15, 2022 adopted the Policy to the extent that it applies to members of the Supervisory Board of Bank Polska Kasa Opieki Spółka Akcyjna, with the exception of § 8 of the Policy. The Resolution of the Ordinary General Meeting referred to above in § 2 states that: "In order to ensure sufficient diversity in the Supervisory Board in terms of gender, the Bank will strive to achieve the 30% ratio as the target minimum value of the share of representatives of each of both sexes in the Supervisory Board. The Bank will always strive to achieve this ratio as soon as possible, but not earlier than the expiry of the term of office of the Supervisory Board."
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.
28 Par. 70.6.5.m of the ordinance of the Minister of Finance of March 29, 2018
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The current share of women in managerial positions in the Bank is > 54,9% and in senior management positions > 34,8%.
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 2020-2022, the share of women and men in the Bank's Management Board was following:
31.12.2020
31.12.2021
31.12.2022
No. of persons
%
No. of persons
%
No. of persons
%
Women
1
12.5%
1
11%
1
11%
Men
7
87.5%
8
89%
8
89%
TOTAL
8
100%
9
100%
9
100%
In 2020-2022, the share of women and men in the Supervisory Board was following:
31.12.2020
31.12.2021
31.12.2022
No of persons
%
No of persons
%
No of persons
%
Women
5
55.5%
5
55.5%
5
55.5%
Men
4
44.5%
4
44.5%
4
44.5%
TOTAL
9
100%
9
100%
9
100%
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14. Statement of Bank Pekao S.A. Group on Non-financial Data for 2022
Statement on non-financial information of the Bank Pekao S.A. Group for 2022 ( prepared jointly with the statement on non-financial information of Bank Pekao S.A.)
Warsaw, February 2023
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1.1. About Bank Pekao ................................................................................................................................................................................................... 137
1.1.1. General information ............................................................................................................................................................................. 137
1.1.2. Business model ................................................................................................................................................................................... 138
1.1.3. Financial results .................................................................................................................................................................................. 138
1.1.4. Bank Pekao S.A. Capital Group .......................................................................................................................................................... 139
1.1.5. Business profile ................................................................................................................................................................................... 139
1.1.6. Organizational and management structure ......................................................................................................................................... 140
1.1.7. Strategic approach to ESG issues ...................................................................................................................................................... 142
1.1.8. Sustainable development strategy ...................................................................................................................................................... 144
1.1.9. Changes in the regulatory environment for sustainable finance ......................................................................................................... 145
1.2. Climate and environment ................................................................................................................................................................................... 146
1.2.1. Green and sustainable products ......................................................................................................................................................... 147
1.2.2. Climate risks and opportunities ........................................................................................................................................................... 148
1.2.3. ESG risks in the credit business ......................................................................................................................................................... 148
1.2.4. Reduction of the consumption of raw materials and resources .......................................................................................................... 149
1.2.5. Pekao Group carbon footprint calculation ........................................................................................................................................... 150
1.3. Social commitment ............................................................................................................................................................................................ 152
1.3.1. Mission, values and corporate culture ................................................................................................................................................. 152
1.3.2. Bank’s response to armed conflict in Ukraine ..................................................................................................................................... 152
1.3.3. Employee Volunteer Work Program .................................................................................................................................................... 154
1.3.4. Community service, charity and sponsorship ...................................................................................................................................... 156
1.4. Responsible sales, quality management ........................................................................................................................................................... 160
1.4.1. Caring for good customer experience ................................................................................................................................................. 160
1.4.2. Complaint process .............................................................................................................................................................................. 161
1.4.3. Principles for the fair design and sale of financial products and services ........................................................................................... 163
1.4.4. Responsible marketing ........................................................................................................................................................................ 163
1.4.5. Bank’s image ....................................................................................................................................................................................... 164
1.4.6. Consumer protection ........................................................................................................................................................................... 166
1.4.7. Customer safe online .......................................................................................................................................................................... 166
1.4.8. Development of innovation in business operations ............................................................................................................................. 168
1.5. Human capital .................................................................................................................................................................................................... 169
1.5.1. Information on employment structure .................................................................................................................................................. 169
1.5.2. Core employment regulations ............................................................................................................................................................. 171
1.5.3. Bank as an employer .......................................................................................................................................................................... 176
1.5.4. Recruitment, internship and apprenticeship programs ........................................................................................................................ 179
1.5.5. Employer branding activities ............................................................................................................................................................... 180
1.5.6. Inclusive organization .......................................................................................................................................................................... 180
1.6. Health and safety ............................................................................................................................................................................................... 185
1.6.1. OHS issues ......................................................................................................................................................................................... 185
1.6.2. Medical care and health-promoting activities ...................................................................................................................................... 186
1.7. Business ethics and corporate governance ....................................................................................................................................................... 188
1.7.1. Preventing corruption .......................................................................................................................................................................... 190
1.7.2. Whistleblowing Policy .......................................................................................................................................................................... 192
1.7.3. Conflict of Interest Management ......................................................................................................................................................... 193
1.7.4. Counteracting crime and countering money laundering and terrorist financing .................................................................................. 194
1.7.5. Control and repair mechanisms .......................................................................................................................................................... 194
1.7.6. Compliance culture ............................................................................................................................................................................. 196
1.7.7. Approach to risk management ............................................................................................................................................................ 196
1.8. Observance of human and worker rights, responsibility in the supply chain ..................................................................................................... 197
1.8.1. Regulations reflecting 10 Principles of the UN Global Compact ......................................................................................................... 197
1.8.2. Prevention of mobbing and discrimination .......................................................................................................................................... 198
1.8.3. Relations with the public ..................................................................................................................................................................... 199
1.8.4. Responsible procurement process ...................................................................................................................................................... 200
1.9. Mandatory disclosures under the Taxonomy Regulation .................................................................................................................................. 201
1.10. Disclosure of information to the extent specified by the Principle Adverse Impacts in accordance with the SFDR for the Pekao Group as an investee ...................................................................................................................................................................................................................... 205
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1.11. Non-financial reporting process ......................................................................................................................................................................... 209
1.11.1.Communication with stakeholders ...................................................................................................................................................... 209
1.11.2.Information about the report ................................................................................................................................................................ 211
1.11.3.Materiality of topics ............................................................................................................................................................................. 212
1.12. Bank’s position in ESG ratings and indices ....................................................................................................................................................... 213
Reporting indicators index ...................................................................................................................................................................................... 214
Table of compliance with the Accounting Act ............................................................................................................................................................. 218
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1.1. About Bank Pekao
1.1.1. General information
GRI 2-1 Organizational details
Bank Polska Kasa Opieki Spółka Akcyjna (hereinafter: the “Bank”, “Bank Pekao”) is a bank organized in the form of a joint stock company, operating on the basis of applicable laws, in particular the Banking Law and the provisions of the Commercial Companies Code and the provisions of the Articles of Association of Bank Polska Opieki Pekao Spółka Akcyjna (hereinafter: “Articles of Association of Bank Pekao” - consolidated text available at https://www.pekao.com.pl / About Bank / Corporate Governance).
The Bank operates in the territory of the Republic of Poland. The registered office is located in Warsaw, at ul. Grzybowska 53/57 (postal code 00-950). The additional registered office is located at ul. Żwirki i Wigury 31 in Warsaw (postal code 02-091). The Bank’s offices are scheduled to move to a new location in Warsaw at ul. Burakowska 14 (postal code 01-066) in 2023.
The activities of Bank Pekao are supervised by the Polish Financial Supervision Authority (hereinafter: “PFSA”). Since 1998, Bank Pekao is listed on the Warsaw Stock Exchange. Since 2017, Bank Pekao S.A. has been a member of the PZU S.A. Capital Group (hereinafter: “PZU Group”), the largest financial institution in Central and Eastern Europe.
Shareholding structure as of the date of the 2022 Report
SHAREHOLDER’S 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%
Funds managed by Nationale - Nederlanden Powszechne Towarzystwo Emerytalne S.A.
16,800,000
6.40%
Funds managed by Powszechne Towarzystwo Emerytalne Allianz Polska S.A.
15,500,051
5.91%
Subsidiaries managed by BlackRock, Inc.
13,231,421
5.04%
Other shareholders (under 5%)
130,848,389
49.85%
Total
262,470,034
100.00%
The Bank offers customers a wide network of branches and ATMs with convenient access throughout the country, as well as a professional call center and an online and mobile banking platform for individual, corporate, and small and micro business customers. In 2022, Bank Pekao had 597 establishments (515 branches of its own retail network and 82 partner branches), as well as 1,328 ATMs located in all voivodeships.
PEKAO GROUP
BANK PEKAO
SCALE OF OPERATIONS (31.12.2022)
PLN MILLION
PLN MILLION
Net interest income :
8,244
8,010
Net fee and commission income
2,807
2,456
Balance sheet total
281,139
209,802
Equity
22,754
22,168
Amounts due to customers
209,596
209,802
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1.1.2. Business model
The Bank’s business model is based on customer segmentation where the following areas are distinguished:
RETAIL AND PRIVATE BANKING – servicing individual customers, including affluent private banking customers and micro- enterprises. Private banking customers are offered investment advice through private banking centers and remote channels, whereas all individual customers and micro-enterprises are serviced by means of a wide own network of branches and partner establishments supported by leading remote service channels on the market, including digital channels,
BUSINESS BANKING – providing financial services to customers in the small and medium-sized business sector, who are serviced by advisors with the support of product specialists. The 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 adjusted to the enterprise segment,
CORPORATE AND INVESTMENT BANKING – providing financial services to large corporate customers, public sector entities, financial institutions, and entities from the commercial real estate funding sector. Corporate and investment banking customers are serviced by consultants with the support of product specialists.
For more information on the business model and sales network, see “Bank Pekao S.A. Group Management Report 2022” in subchapter 7.4.
1.1.3. Financial results
GRI 201-1 Direct economic value generated and distributed
DIRECT ECONOMIC VALUE GENERATED AND DISTRIBUTED
(in PLN million)
PEKAO GROUP
PEKAO BANK
Operating revenues
10,761
10,417
Operating cost ( including to contributions to the BFG cost and fee paid for the Protection Schemes)
(4,832)
(4,502)
Cost / income (including to contributions to the BFG cost and fee paid for the Protection Schemes)
44.9%
43.2%
Net allowances for expected credit losses
(2,016)
(1,879)
Tax on certain financial institutions
(866)
(866)
Corporate income tax
(1,163)
(1,114)
Customer financing
167,510
155,477
Amounts due to customers
209,596
209,802
Net result
1,720
1,898
Dividend
1,129
(*) 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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1.1.4. Bank Pekao S.A. Capital Group
The Bank Pekao S.A. Capital Group (hereinafter: “Pekao Group”) comprises Bank Pekao as the parent company as well as subsidiaries and indirect subsidiaries: financial institutions operating in the banking, asset management, brokerage services, transaction consulting, leasing and factoring markets. In addition, the Bank holds shares in affiliates, as well as minority interests.
In 2022, the Pekao Group included Bank Pekao and the following subsidiaries:
NAME
REGISTERED OFFICE
SCOPE OF ACTIVITY
Pekao Bank Hipoteczny S.A.
Warsaw
Banking
Centrum Kart S.A.
Warsaw
Auxiliary financial services
Pekao Direct Sp. z o.o.
Kraków
Call center 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 services
Pekao Investment Management S.A., including:
Warsaw
Holding activity
Pekao TFI S.A.
Warsaw
Asset management
Pekao Leasing Sp. z o.o., including:
Warsaw
Lease services
PEUF Sp. z o.o.
Warsaw
Insurance services
1.1.5. Business profile
GRI 2-6 Activities, value chain and other business relationships
GRI 2-28 Membership associations
Bank Polska Kasa Opieki S.A., established in 1929, is one of the largest financial institutions in the Central and Eastern European region and the second largest universal bank in Poland with over PLN 200 billion in assets. The Bank conducts operations both in Polish zlotys and foreign currencies and actively participates in trading on domestic and foreign financial markets. It offers a full range of banking services to retail and institutional customers. As a corporate bank, Bank Pekao services every second corporation in Poland. The Bank is well established as a market leader in private banking, asset management and brokerage activities. The diversified business profile of Bank Pekao is supported by a strong capital and liquidity position, while maintaining the highest risk management standards. The Bank offers products and services that are highly competitive on the Polish market. It also guarantees a high level of customer service and owns a well-developed distribution. The Bank’s broad product portfolio, innovative solutions and individual customer approach ensure comprehensive financial services, while its integrated service model provides top-quality services to customers and ensures optimal adaptation to changing needs. The Bank is steadily strengthening its market position in strategic business areas. A detailed list of activities performed in domestic and foreign trade is included in section 6 of the Bank’s Articles of Association.
Bank Pekao is active in trade associations and organizations. The Bank’s involvement in this area can be broken down into four main fields:
• Polish Bank Association along with Committees and Councils, including: the Banking Cybersecurity Centre Committee, Real Estate Funding Committee, Payment Card Processor Committee, Bank Card Issuer Council, Electronic Banking Council,
• International associations and organizations, including: International Swaps and Derivatives Association (ISDA), International Project Finance Association (IPFA), United Nations Global Compact,
• Nationwide associations and organizations, including: Stowarzyszenie Emitentów Giełdowych [Exchange Issuer Association], Izba Domów Maklerskich [Brokerage House Chamber], Polskie Stowarzyszenie Zarządzania Kadrami [Polish Staff Management Association], Stowarzyszenie Dealerów Bankowych ACI Polska [ACI Poland Bank Dealer Association], Polskie Stowarzyszenie Inwestorów Kapitałowych [Polish Capital Investor Association],
• Local associations and organizations: Lublin Business Club, Podkarpacie Business Club.
ACTIVITY OF THE BANK IN TRADE ASSOCIATIONS AND ORGANIZATIONS
IN THE RELEVANT YEAR (NUMBER OF MEMBERSHIPS)
2022
2021
2020
Polish Bank Association as well as Committees and Councils associated therewith
14
14
14
International associations and organizations
14
14
14
Nationwide associations and organizations
6
6
6
Local associations and organizations
2
2
2
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1.1.6. Organizational and management structure
GRI 2-9 Governance structure and composition
GRI 2-10 Nomination and selection of the highest governance body
GRI 2-11 Chair of the highest governance body
Bank Pekao and entities of the Pekao Group have an organizational structure adapted to the size and specificity of their activities. The scope of powers of the companies’ bodies is defined in the provisions of law, and in particular the Commercial Companies Code, the Banking Law Act, in supervisory recommendations of the supervisory bodies and in the Articles of Association of Bank Pekao, and in the Articles of Association/Partnership of companies and partnerships and internal regulations of entities of the Pekao Group.
General Meeting of Shareholders
The highest authority of Bank Pekao is the General Meeting which operates on the basis of the Commercial Companies Code and the Articles of Association of Bank Pekao. The scope of powers of the General Meeting is specified by the provisions of law, in particular the Commercial Companies Code and the Banking Law Act, in supervisory recommendations of the supervisory bodies and in the Articles of Association of Bank Pekao. Resolutions are adopted by an absolute majority of votes, subject to the provisions of the Commercial Companies Code and the Articles of Association of Bank Pekao.
Supervisory Board
The Supervisory Board exercises continuous supervision over the Bank’s activities. The Supervisory Board consists of between seven and nine members appointed by the General Meeting for a common term of office of 3 years. The organization and operation of the Supervisory Board are defined in the Rules of Procedure of the Supervisory Board of Bank Polska Kasa Opieki Pekao Spółka Akcyjna.
The composition of the Bank’s Supervisory Board was as follows:
The Supervisory Board performs its collective duties, however, in order to perform specific activities or to streamline the work, it may appoint committees and teams from among its members. In addition, the Supervisory Board may delegate one or more of its members to independently perform supervision within the scope specified thereby. The following Committees operate within the structures of the Supervisory Board of Bank Pekao: Audit Committee, Nomination and Remuneration Committee, and Risk Committee. The committees appointed by the Supervisory Board submit annual reports on their activities to the Supervisory Board.
Management Board of the Bank
The Management Board of Bank Pekao manages the Bank’s affairs and represents the Bank. Any issues that are not reserved – under legal regulations or the Articles of Association of Bank Pekao – for other governing bodies of the Bank, fall under the purview of the Bank’s Management Board. The Management Board is composed of between five and nine members appointed for a common term of office of three years.
Changes in the Bank's Management Board
The Supervisory Board of the Bank, acting pursuant to the Article 368 § 4 and in connection with the Article 369 § 1 of the Code of Commercial Companies and taking into account the assessment of compliance with the suitability requirements, unanimously appointed on 14 June 2022 members of the Bank's Management Board for the new three-year joint term of office, effective as of the day following holding of the Ordinary General Meeting approving the financial statements of Bank for the financial year 2021.
AS OF THE DATE OF THE 2022 REPORT
31.12.2022
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 (independent member)
Sabina Bigos-Jaworowska
Member of the Supervisory Board (independent member)
Sabina Bigos-Jaworowska
Member of the Supervisory Board (independent member)
Justyna Głębikowska-Michalak
Member of the Supervisory Board (independent member)
Justyna Głębikowska-Michalak
Member of the Supervisory Board(independent member)
Michał Kaszyński
Member of the Supervisory Board (independent member)
Michał Kaszyński
Member of the Supervisory Board (independent member)
Marian Majcher
Member of the Supervisory Board (independent member)
Marian Majcher
Member of the Supervisory Board (independent member)
Marcin Izdebski
Member of the Supervisory Board
Marcin Izdebski
Member of the Supervisory Board
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The following persons were appointed to the Management Board of the Bank for the next three-year joint term of the office starting on the date indicated above:
1) Leszek Skiba for the President of the Bank's Management Board,
2) Marcin Gadomski or the Vice-President of the Bank's Management Board supervising the risk management significant in the Bank's operation,
3) Jarosław Fuchs for the Vice-President of the Bank's Management Board,
4) Jerzy Kwieciński for the Vice-President of the Bank's Management Board,
5) Paweł Strączyński for the Vice-President of the Bank's Management Board,
6) Błażej Szczecki for the Vice-President of the Bank's Management Board,
7) Wojciech Werochowski for the Vice-President of the Bank's Management Board,
8) Piotr Zborowski for the Vice-President of the Bank's Management Board,
9) Magdalena Zmitrowicz for the Vice-President of the Bank's Management Board.
As a result of the assessments performed, the Supervisory Board of the Bank concluded that all members of the Bank's Management Board and the Bank's Management Board as a whole meet the requirements referred to in Art. 22aa The Act of 29 August 1997 - Banking Law and the suitability requirements referred to in the Policy of selecting candidates for the position of a Management Board member and the Key Function and assessment of the suitability of proposed and appointed members of the management board, supervisory board and key functions at the Bank.
According to the submitted statement, none of the persons appointed to the Management Board of the Bank, do not conduct any business competitive to that of the Bank and they are 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. None of these persons is entered 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 Bank’s Supervisory Board was as follows:
As at December 31, 2022, the division of competencies between members of the Management Board of the Bank looked as follows:
• President of the Management Board of the Bank Mr. Leszek Skiba convenes and chairs the meetings of the Management Board of the Bank, presents the position of the Management Board of the Bank to the Bank’s bodies and in external relations, in particular to public authorities. President of the Management Board of the Bank coordinates the work of Members of the Management Board of the Bank, issues dispositions in accordance with the provisions laid down in internal regulations in force at the Bank. President of the Management Board of the Bank oversees the following areas of the Bank’s operations: internal audit, compliance risk, corporate communications, investor relations, security, legal risk, strategic projects, human resources management, and macroeconomic analysis and digital transformation. President of the Management Board of the Bank is appointed as the Member of the Management Board responsible for implementing the obligations set forth in the Law on Prevention of Money Laundering and Financing of Terrorism.
AS OF THE DATE OF THE 2022 REPORT
31.12.2022
Leszek Skiba
President of the Management Board of the Bank
Leszek Skiba
President of the Management Board of the Bank
Jarosław Fuchs
Vice President of the Management Board of the Bank
Jarosław Fuchs
Vice President of the Management Board of the Bank
Marcin Gadomski
Vice President of the Management Board of the Bank
Marcin Gadomski
Vice President of the Management Board of the Bank
Jerzy Kwieciński
Vice President of the Management Board of the Bank
Jerzy Kwieciński
Vice President of the Management Board of the Bank
Paweł Strączyński
Vice President of the Management Board of the Bank
Paweł Strączyński
Vice President of the Management Board of the Bank
Błażej Szczecki
Vice President of the Management Board of the Bank
Błażej Szczecki
Vice President of the Management Board of the Bank
Wojciech Werochowski
Vice President of the Management Board of the Bank
Wojciech Werochowski
Vice President of the Management Board of the Bank
Piotr Zborowski
Vice President of the Management Board of the Bank
Piotr Zborowski
Vice President of the Management Board of the Bank
Magdalena Zmitrowicz
Vice President of the Management Board of the Bank
Magdalena Zmitrowicz
Vice President of the Management Board of the Bank
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• Vice President of the Management Board of the Bank Marcin Gadomski supervises the activities of the Risk Management Division and is responsible for overseeing the risk management process of the bancassurance business.
• Mr. Paweł Strączyński, Vice President of the Management Board of the Bank, supervises the operations of the Financial Division and was appointed as a Member of the Management Board to whom infringements will be reported and who will be responsible for the on-going functioning of the Whistleblowing procedure.
• Mr. Jerzy Kwieciński, Vice President of the Management Board of the Bank, supervises the operations of the Corporate Banking, Markets and Investment Banking Division.
• Mr. Wojciech Werochowski, Vice President of the Management Board of the Bank, supervises the operations of the Retail Banking Division.
• Mrs. Magdalena Zmitrowicz, Vice President of the Management Board of the Bank, supervises the operations of the Business Banking Division.
• Mr. Jarosław Fuchs, Vice President of the Management Board of the Bank, supervises the operations of the Private Banking and Investment Products Division.
• Mr. Piotr Zborowski, Vice President of the Management Board of the Bank, supervises the operations of the Strategy Division.
• Mr. 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 proper management of the risk related to the security of the ICT environment.
For more information on the Bank’s organizational and management structure, see “Bank Pekao S.A. Group Management Report 2022” in subchapter 5.2.
GRI 2-18 Evaluation of the performance of the highest governance body
The Bank applies the Policy of Selecting Candidates for the Function of a Member of the Management Board and Key Functions and Assessing the Suitability of Proposed and Appointed Members of the Management Board, the Supervisory Board, and Persons Performing Key Functions at Bank Polska Kasa Opieki Spółka Akcyjna approved by the Supervisory Board of the Bank on December 30, 2020, the aim of which is to ensure the optimal and uniform process of selecting candidates for the function of a member of the Management Board and Key Functions at the Bank, so as to ensure the performance of tasks related to the implementation of the Bank’s business plans and strategy by persons with the necessary knowledge, experience and skills, as well as with good reputation.
The Selection and Suitability Assessment Policy also specifies the criteria for assessing the individual and collective suitability of candidates and members of the Management Board, the Supervisory Board, and key function Holders at the stage of appointment and in the course of performance of the function, as well as events resulting in the need to assess the suitability, the course of the suitability assessment process, including roles and tasks in the process and the effects of the assessment, including corrective measures applicable to ensure compliance with the suitability requirements.
In 2022, a re-assessment of the individual and collective suitability of the members of the Supervisory Board of the Bank and a re-assessment of the individual and collective suitability of the members of the Management Board of the Bank were carried out, as well as suitability assessments resulting from changes in the additional functions performed by members of the Bank’s governing bodies.
Subsidiaries have implemented Suitability Assessment Policies in accordance with applicable laws and regulations.
1.1.7. Strategic approach to ESG issues
GRI 2-12 Role of the highest governance body in overseeing the management of impacts
The Bank defines the issue of responsibility for the environment, social environment and principles within the organization in the ESG Strategy “Responsible Bank supporting sustainable development”, which is an extension of the fourth pillar of the Bank’s Business Strategy called “Responsibility”. The ESG Strategy announced on June 25, 2021 was adopted by a resolution of the Management Board of the Bank and was presented to the Supervisory Board of the Bank for approval.
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GRI 2-13 Delegation of responsibility for managing impacts
In the process of managing the topics of environment, society and corporate governance, it is crucial that ESG is properly positioned 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 Management Board of the Bank that meets at least quarterly. The main task of the Council is to recommend to the Management Board of the Bank the necessary activities in the field of ESG. At the same time, the Council is to consult on a broad range of strategic topics relating to ESG, taking into account the commercial perspective. The Council included members of the Management Board and representatives of the Bank’s key units (both business and support) for ESG topics. With their input, and the full support of the Management Board of the Bank and the Supervisory Board of the Bank, the ESG Strategy 2021-2024 “Responsible Bank Supporting Sustainable Development” was developed. During the development of the Strategy’s assumptions, a top-down approach was adopted using workshops and consultations with the units involved in the process. The Bank’s ESG Team, which combines expertise in environmental, social and corporate governance topics, is responsible for ongoing monitoring of the strategy. The ESG Strategy monitoring process includes:
• periodic monitoring of the realization of the achieved levels of KPIs of individual business areas and the progress of the implementation of Initiatives, conducted on a semi-annual basis,
• ongoing monitoring in terms of regulatory developments, trends and market practices in the ESG area.
In 2022, the ESG Council consisted of four members of the Bank's Management Board and 14 high-level directors representing key units of the Bank (with voting rights).
The Bank aims to integrate ESG into all key processes of Pekao’s operations, including lending, investment and advisory, purchasing, 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 in terms of, among other things, reporting of greenhouse gas emissions or labeling of industries and customer transactions in terms of sustainable investments consistent with the so-called Taxonomy Regulation. The integration of ESG goals at the Bank is fostered by the regular participation of Bank representatives in sustainable development initiatives, including the United Nations Global Compact Poland, the work of committees and working groups of the Polish Bank Association and other industry organizations.
Objectives connected to the ESG Strategy have been included in the incentive systems of all members of the Management Board and all material risk takers 1 . Moreover, 163 managers covered by the MBO system had ESG issues addressed for qualitative purposes.
GRI 2-17 Collective knowledge of the highest governing body
In its daily communication with employees, the Management Board of Bank Pekao emphasizes the role of ESG in building a sustainable organization by maintaining high standards of corporate governance, ethical approach to business, social and environmental activities, support and involvement and development of human capital. Official statements by key Bank representatives emphasize the role of financial institutions in the energy transition and financing of green projects. Similarly, the Bank views its role in expanding its ESG-linked product and service offerings, as well as ecology education. The Bank’s strategy includes responsibility to customers and counterparties. In addition to numerous statements to the media, appearances in expert debates and activity on social media profiles in 2022, management representatives took part in important events thematically related to environmental, social and corporate aspects of the organization. These included: World Economic Forum in Davos, European Economic Congress in Katowice, Economic Forum in Karpacz, All-Poland Economic Summit Lublin, Idea - Business - Climate conference, Euro POWER & RES POWER; Congress 590, or Corporate and Investment Banking Congress.
1 Material risk takers (MRT) – employees whose professional activities have a significant impact on the risk profile of investment institutions or the assets they manage.
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1.1.8. Sustainable development strategy
GRI 2-22 Statement on sustainable development strategy
Bank Pekao’s goals and ambitions related to the environment, social engagement and corporate governance are defined by the ESG Strategy “Responsible Bank supporting sustainable development.” The Strategy’s first pillar - “Environment” is about increasing funding for sustainable projects, supporting the energy transition and the transition to a low-carbon economy, and striving to achieve our own climate neutrality by 2030. The second one - “Commitment” - focuses on helping, equalizing opportunities and preventing social exclusion, including through charitable activities and employee volunteering. The third pillar - “Corporate Governance” - refers to an ethical approach to business that takes into account ESG issues, as well as to the development, diversity and equality of employees.
Bank’s efforts to implement the Sustainable Development Agenda
Bank Pekao actively supports the implementation of the 2030 Agenda for Sustainable Development. The activities included in the ESG Strategy undertaken by the Bank are in line with most of the 17 Goals of the initiative.
UN GOAL
ACTIONS TAKEN BY THE BANK
• Activities for the benefit of local communities within the framework of employee Volunteering aimed at helping the needy, equalizing opportunities, preventing exclusion and education, health promotion
• Cooperation with non-governmental organizations, including the Polish Red Cross, Noble Parcel (Szlachetna Paczka), SOS Children Villages Association
• Loans for medical studies
• Bank Pekao S.A. Foundation activities.
• Voluntary blood donation campaigns
• Health promotion campaigns among Bank employees and externally, among others “MiLOVE running with Bison - helping by running”, “Take Health by the Horns”.
ESG Strategy - Pillar 2.
• Bank Pekao S.A. Foundation activities.
• Financial Education for Youth “BAKCYL - Bankers for Youth Financial Education.”
• Financial education for the elderly “SeniorON”
• Employee volunteering - educational campaigns
• PeoPay Kids – education about finances for the youngest
ESG Strategy - Pillar 3.
• Equality and diversity policy
• Reduction of Gender Pay Gap
• Maintaining equal number of men and women in managerial positions, succession plans
• “Sugar-Free” program for women
ESG Strategy - Pillar 1.
• Supporting the transformation of Poland’s energy and coal regions; offering green products, supporting the development of a low-carbon economy
• Purchase of green energy to reduce carbon footprint (guarantees of origin)
The Bank’s Business Strategy: Pillar of Responsibility - Supporting Economic Development
• Commercial and operational activities even more based on sustainability factors
• Effective human resources management
• Developing employees’ competencies, aspiring to be an employer of first choice
The Bank’s Business Strategy: Pillar of Responsibility - Supporting Economic Development
• Support for the development of innovation of Polish companies
• Digitization and digitalization
• A wide range of corporate loans to support real economy entities, including industry and construction
ESG Strategy - Pillar 3.
• Employee volunteer work program
• charity policy, Bank Pekao S.A. Foundation activities
• Pekao without Barriers program
• Activities in the area of respect for human rights, high standards of ethics and corporate governance
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The Bank’s Business Strategy: Pillar of Responsibility - Supporting Economic Development
• Comprehensive services for the public finance sector
• Financing of public sector and municipal projects
• Public-Private Partnership Activities
• Supporting the issuance of customer social bonds
ESG Strategy - Pillar 1.
• Reduction of the consumption of raw and other materials
• Modernization of vehicle fleet, energy conservation, reduction of paper consumption,
• Calculating own emissions and aiming for reductions of CO 2
ESG Strategy - Pillar 1.
• Supporting the development of a low-carbon economy
• Financing of sustainable projects
• Supporting the issuance of customer ESG bonds
• Systematic reduction of balance sheet exposure to high-carbon activities
• Calculation of financed emissions and reduction targets
ESG Strategy - Pillar 2.
• Environmental education of employees
• Bee and bison conservation programs
• Employee volunteer work program
• “Ekologia na BANK” (Ecology at the Bank) program
• Support for citizens and companies from Ukraine - special solutions for individual and corporate customers, including free account maintenance, free transfers to and from Ukrainian banks
• Policy not to fund controversial weapons
• Membership in the United Nations Global Compact
• Membership in the “Climate Positive” United Nations Global Compact Poland program
• Cooperation with the UNEP/GRID Center - Warsaw, Poland
• Membership in the Polish Bank Association - active participation in the creation of good market practices for sustainable development in the banking sector
1.1.9. Changes in the regulatory environment for sustainable finance
In response to the rapidly changing regulatory and business environment in the areas of sustainable development and sustainable finance, the Bank has established a comprehensive “Bank Green Transformation Program” (hereinafter: the “Program”). As of October 2022, a project team has been established within the Bank’s structures, operating in nine work streams and involving some 40 departments from divisions:
• Corporate Banking, Markets and Investment Banking,
• Business Banking,
• Retail Banking,
• Finance,
• Risk Management,
• Human Resources,
• Technology and Operations,
• and from outside the Bank’s functional divisions.
The project team aims to develop a target process-system architecture for data collection and analysis methods and further use in processes and reporting based on the following regulations and guidelines:
• EP and Council Regulation EU 2020/852 on Taxonomy,
• EBA/ITS/2022/01 guidelines,
• PCAF (2022). The Global GHG Accounting and Reporting Standard Part A: Financed Emissions (Scope 3, Subcategory 15),
• Corporate Sustainability Reporting Directive (CSRD),
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• EBA/REP/2021/18 guidelines,
• EP and Council Regulation (EU) 2019/2088 on sustainability ‐ related disclosures in the financial services sector (SFDR).
In addition, project work is focused in the area of the ESG consulting model for the Bank’s customers. A Transformation Management Office has also been established as part of the project, which is responsible for change management and support in changes to the competency model.
The decision-making body of the Project is the Steering Committee and the Sponsors, i.e., five members of the Bank’s Management Board and four high-level directors.
1.2. Climate and environment
In line with its 2021 strategic statement, the Bank continues to pursue sustainable financing activities including green and social projects and supports the issuance of ESG bonds of its customers. The Bank’s main intention is to significantly reduce the financing of carbon-intensive projects in its loan portfolio. Individual goals from the first Pillar of the ESG Strategy are systematically monitored and reported to the Bank’s ESG Council.
GRI 3-3 Management of material topics
GRI 2-23 Policy commitments
Own indicators in the “Environment” area
1. PILLAR - ENVIRONMENT
IMPLEMENTATION 2020
IMPLEMENTATION 2021
IMPLEMENTATION
2022
TARGET FOR 2024
(PLN million )
Financing sustainable projects
n/a
929
4,278
> 8,000
Supporting the issuance of customer ESG bonds
n/a
5,934
7,970
> 22,000
Share of green financing
3.2%
4.1%
4.6%
> 4.0%
Share of high-carbon financing
1.3%
1.2%
1.4%
< 1.0%
In 2022, within the realization of the Bank’s ESG Strategy, the share of green financing of the balance sheet portfolio reached 4.6%, exceeding the target set for 2024.
In light of the energy crisis in Poland and Europe, there was a temporary change in the Bank’s Credit Policy to allow financing of coal trade. The change was a response to customer expectations and the Polish economy . With regard to the ESG Strategy, the Bank has not changed its approach to financing carbon trading, which is permitted under the Strategy as high-carbon financing. The Bank aims to achieve less than 1 percent exposure in carbon-intensive sectors as a proportion of its total financing portfolio by the end of 2024.
The energy crisis resulting from Russian aggression in Ukraine, including the ban on imports of coal and coking coal from Russia and Belarus to Poland , caused concerns among the Bank's clients regarding energy resources, their availability and high prices. Many of them were making requests to provide short-term financing for coal. The decision to allow financing of coal trading has ensured the supply of energy and heat in the Polish economy during the current heating season. Its purpose was to secure district heating companies, combined heat and power (CHP) plants, heating plants in connection with the need to purchase coal.
Entities that had been provided with the financing for coal, are both large companies and small, local heating plants, for which the lack of financing could mean limiting or discontinuing operations.
Regarding to supporting the issuance of customer ESG bonds, the Bank arranged nearly PLN 8 billion of bond issues in 2021 and 2022. The increase by approx. PLN 2.0 billion between 2022 and 2021 resulted from the additional qualification of some agreements from 2021 to 2022 (in the amount of PLN 1.6 billion), and new contracts from 2022 (in the amount of PLN 400 million). The low value of new agreements for arranging the issuance resulted from the limited activity of the debt market (as a result of warfare, increased risk and interest rates).
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The methodology of disclosure of ESG indicators in the 1st pillar of the ESG Strategy was based on the following assumptions:
1. Financing sustainable projects means financing in the form of loans and green or social leases 2 on the basis of contracts concluded in a given reporting year (cumulative indicator),
2. Supporting the issuance of customer ESG bonds are funded green bonds and social bonds for new contracts entered into during the reporting year (cumulative indicator),
3. The share of green financing is the share of green loans, leasing and covered bond issues as at 31/12/2022 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 (31/12/2022) in the Bank's gross financing,
1.2.1. Green and sustainable products
In 2022, Bank Pekao’s Express Loan was available to Bank Pekao’s customers for the purchase or installation of: renewable energy sources (solar panels, photovoltaic panels/cells); central heating boilers (excluding coal and eco-pea boilers), heat pumps and the use of geothermal heating. eco-pea), heat pumps and geothermal heating; roofs, windows, doors and home insulation materials; electric or hybrid cars, electric motorcycles and scooters, electric bicycles; domestic bio-treatment plants; ventilation with heat recovery, domestic water treatment plants from own intakes; rainwater recovery system.
Supportive for the environmentally friendly solutions was the ECO Housing Loan. Under its framework, credit was available for a property from the primary or secondary market, which must be equipped with solar panels, panels or photovoltaic cells or heat pumps.
Pekao TFI offers the Pekao Green sub-fund, aimed at supporting sustainable investments. Companies from environmentally friendly and pro-environmental sectors (renewable energy, electromobility, energy efficiency, recycling and waste management) were selected for its portfolio. In analyzing their selection, in addition to financial factors, ESG issues, i.e. environmental, social and corporate governance aspects, were equally important.
Under the National Fund of Environmental Protection and Water Management’s (NFOŚiGW) “My Electric” program, which supports the leasing of new zero-emission vehicles, Pekao Leasing is offering the purchase of an electric car with lease financing with a subsidized initial payment. Subsidies for leasing zero-emission cars (including electric cars) are provided by Bank Ochrony Środowiska S.A. with funds entrusted by the National Fund of Environmental Protection and Water Management, thanks to an agreement concluded on September 8, 2021.
In 2022, Bank Pekao was involved in a number of projects aimed at improving the energy efficiency of business customers, implementing green projects, financing renewable energy sources (such as wind farms, photovoltaic installations or low- emission urban transportation) and social projects.
Major projects financed by the Bank in this area in 2022 include:
• consortium financing for the construction of photovoltaic farms in the amount of PLN 779 million,
• financing of the construction of the largest photovoltaic farm in Poland with a target capacity of 285.6 MW, financing amount of PLN 763 million,
• financing of transactions for the acquisition and revitalization of warehouse parks in the amount of PLN 450 million,
• consortium financing for the construction of more than a hundred photovoltaic farms in the amount of PLN 428 million,
• financing of the Bank Pekao Group company, in cooperation with the European Investment Bank (hereinafter: EIB) in the amount of EUR 132 million and the Council of Europe Development Bank in the amount of EUR 200 million. In both transactions, Bank Pekao acts as arranger and guarantor of the financing,
• financing of the acquisition of a foreign company in the renewable economy sector, financing amount of EUR 131 million. The Bank acted as a bridge lender (MLA),
• financing of the leader of the Polish energy industry, as one of the original lenders. The amount of the loan was PLN 4 billion,
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• financing, as part of a syndicated investment loan, for a leading manufacturer and distributor of photovoltaic solutions in the amount of PLN 330 million,
Moreover:
• The Bank was the arranger and agent for a PLN 65 million bond issue for Gdańsk Buses and Trams,
• The Bank was the arranger and agent for a PLN 34 million bond issue for the Łódź Agglomeration Railway,
• The Bank was the arranger and agent for a PLN 65 million bond issue for the Kraków Development Agency,
• The Bank was the agent for a PLN 103 million bond issuance program for Stadion w Zabrzu Sp. z o.o., for the expansion of sports infrastructure.
The Bank also signed 19 new issuance agreements, of which the most noteworthy are:
• an agreement to issue sustainability linked bonds with a multimedia company for up to PLN 4 billion;
• an agreement on a green bond issuance program with a company belonging to an international development group for EUR 150 million.
1.2.2. Climate risks and opportunities
Bank Pekao has identified climate risk as part of its identification of environmental, social and corporate governance risks (ESG risk). In 2022, for the first time, the Bank analyzed its financing portfolio to identify exposures exposed to physical risk. The analysis considered climate-related risks by chronic (drought) and acute (flood, heat waves, landslides) risks and used ThinkHazard database data 3. Disclosure in this regard is available in the Bank Pekao S.A. Group’s Capital Adequacy Information as of December 31, 2022. In terms of transformational risks, the Bank has identified sectors that are particularly vulnerable to the transition to a low-carbon economy.
In 2022, the Bank also introduced a climate stress testing methodology for market risk and reports on a monthly basis the change in the result in the Bank’s portion of the book to the Asset Liability and Market Risk Committee (ALCO). The analysis scenario assumes a change in credit spreads for individual sectors of debt issuers as a result of the materialization of climate risk (physical and transition risk).
In addition to the risks, the Bank conducted an analysis of business opportunities related to climate change in 2022, determining the potential of the lending market for green and transformational projects in the run up to 2030 in Poland. In order to determine the potential, the costs of the energy transition in Poland were estimated by energy-intensive industry, power generation and households, as well as the amount of potential public funding (including revenue from the European Emissions Trading System, ETS).
1.2.3. ESG risks in the credit business
Bank Pekao supports environmentally-friendly projects and takes into consideration ESG issues in the process of analyzing credit risk connected with transactions being executed and in the process of monitoring those transactions.
The Bank supports customers and green projects aimed at mitigating climate change, reducing environmental pollution and projects supporting sustainable social development. In view of the above, the Bank supports a gradual and orderly transition to a low-carbon economy, by reducing the financing of coal mining and fossil fuel energy production, in order to increase the financing of energy from renewable sources. The Bank considers infrastructure investments that are characterized by low CO 2 emissions and resistant to climate change and disasters to be desirable.
The Bank, together with the assessment of creditworthiness and credit risk in the strict sense, carefully assesses the specific risk of transactions, in particular legal, reputation, political, environmental risks, the risk of customer’s failure to comply with the principles of corporate social responsibility, money laundering and terrorist financing (e.g. conflict of interest, transparency, companies operating in tax havens).
In the ESG risk assessment, the Bank takes into account climate, environmental and social risks. It takes particular care of the risks arising, i.a., from the transition to an economy that is low-carbon and “resilient” to climate change, and threats arising from the so-called risks of physical climate change.
In its day-to-day operations, Bank Pekao has a special commitment to environmental protection issues. The assessment of the ESG risks is one of the integral elements of the assessment of credit transactions made with business entities. Its aim is to promote informed credit decision-making and appropriate relationship management with customers who operate in areas
3 https://thinkhazard.org
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that significantly affect the environment in which we live. Wherever possible, negative environmental, social and climate impacts should be avoided. If avoidance is not possible, negative impacts should be reduced, mitigated or compensated accordingly. Should environmental hazards connected with the type of business activities carried out by borrowers occur, the Bank cooperates with customers in order to mitigate potential consequences of environmental risks. The purpose of such cooperation is to identify, assess and mitigate environmental, social, and climate risk and takes place during the assessment of credit risk and is based on methodologies and relevant trade guidelines of the European Bank for Reconstruction and Development and the European Banking Authority (hereinafter: EBA).
If the customer is found incapable of mitigating the ESG risks, the Bank defines conditions for particular environmental actions during the transaction and may activate environmental clauses in the credit facility agreement, among other possible solutions.
As regards environmental issues, the Bank does not finance some types of activities, i.e., inter alia:
• new coal and lignite mining projects, and new energy projects based on coal and lignite, excluding projects supporting the transformation of the Polish energy sector
• activities generating a material threat to the natural environment, i.e., inter alia:
- activities declared illegal, phased out, or prohibited (e.g. production or trade of products containing polychlorinated biphenyls (PCBs), hazardous chemicals, psychoactive substances, ozone-depleting substances, persistent organic pollutants, wildlife and products thereof),
- cross-border shipments of waste,
- keeping animals for the primary purpose of fur production or any fur production activity,
- the manufacture, placing on the market, and use of asbestos fibers, articles and mixtures containing these fibers intentionally added,
- export of mercury and mercury compounds and the production, export, and import of a wide range of products containing mercury,
- activities prohibited by the legislation of the host country or international conventions on the conservation of biological diversity resources or cultural heritage,
- sea drift fishing with the use of nets exceeding 2.5 km in length,
- forced evictions.
The Bank is in the process of analyzing options for supporting the nuclear energy transition.
1.2.4. Reduction of the consumption of raw materials and resources
GRI 3-3 Management of material topics
In its day-to-day operations, Bank Pekao is guided by a desire to reduce its negative impact on the climate and a pro- environmental attitude. This is served by technical solutions that are being introduced successively in the network of establishments and HQ facilities. In 2022, the Bank entered into a one-year contract for the purchase of 35 GWh of electricity with the simultaneous purchase of guarantees of origin (100% of the volume of green energy). The Bank thus achieved a carbon reduction effect of 26,000 t CO 2 e in Scope 2 (purchased energy) according to the methodology of the international Greenhouse Gas Protocol (hereinafter: GHG Protocol) standard. This means that in 2022, a 34% reduction in own CO 2 emissions was achieved relative to the previous 12 months. In addition, also for 2023, a contract for the purchase of guarantees of origin has been concluded, according to the period in which the energy was generated, in the amount of: 16.5 GWh.
In 2022, implementation of green solutions continued with special attention to those reducing electricity consumption and reducing negative environmental impacts. These included, inter alia:
• implementation of LED technologies;
• optimization of power consumption (reduction of so-called ordered capacity),
• replacement of technologically obsolete UPS devices (auxiliary power supplies) with new ones with higher maximum efficiency,
• liquidation of unnecessary backup power supplies,
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• installation of air-conditioning systems with increasingly better indicators, with particular emphasis on solutions in the highest energy efficiency classes,
• replacement of air-conditioning equipment using environmentally harmful refrigerants with equipment based on the blending of organic gases,
• analyses aimed at installing reactive power compensation devices 4 (and consequently eliminating unnecessary energy expenditure),
• switching electrical devices at night to “standby mode”;
The comprehensive modernization of the properties owned by the Bank used modern solutions, e.g. energy-saving LED lighting systems or sanitary faucets with aerators, which reduce water consumption.
Car fleet
The Bank’s fleet is successively replaced with models characterized by lower emissions. In 2022, the Bank replaced part of its fleet with new cars that meet the Euro 6DG emissions standard (as of December 31, 2022, 87% of the cars out of 1,271 total in service had been replaced), and purchased its first electric and hybrid cars. In addition to the introduction of 1,020 new low- emission cars with convenient consumption configurations, the Bank also purchased 4 new electric cars and 50 electric cars. This is the result of ongoing conceptual work on the possibility of replacing conventionally powered (internal combustion) cars with electric cars.
GRI 302-1 Energy consumption in the organization
PEKAO GROUP
BANK
Companies
ENERGY CONSUMPTION GIGAWATT HOUR [GWH]
2022
2021
2022
2021
2022
2021
Electricity purchased for consumption purposes
55.23
54.80
54.18
53.50
1.05
1.40
Electricity purchased while working remotely
0.84
1.20
0.59
0.80
0.25
0.40
Thermal energy generated by the organization (natural gas)
12.14
13.80
12.11
13.80
0.04
0.04
Thermal energy purchased for consumption purposes
60.21
78.90
59.95
77.80
0.26
1.10
Total energy consumption within the organization
128.42
148.70
126.82
145.90
1.60
2.90
1.2.5. Pekao Group carbon footprint calculation
GRI 3-3 Management of material topics
In 2022, Bank Pekao Group’s greenhouse gas emissions were calculated for the second year in a row. Calculations were performed in accordance with the GHG Protocol methodology for Scope 1, i.e., direct emissions generated at facilities owned or supervised by the Group, and Scope 2, i.e., indirect emissions from purchased electricity, steam, heat and cooling from third-party suppliers. The calculation of emissions in the value chain (GHG Protocol Scope 3) is planned to be carried out in 2023 in terms of the financing portfolio (subcategory 15). In the coming years, the Bank intends to carry out emission reduction activities - the goal by 2024 is to reduce its own emissions compared to 2020, including by rationalizing business travel, environmental improvements at the Bank’s locations (reducing face-to-face visits to customers in favor of remote contact, gradually replacing the vehicle fleet with models that emit less exhaust fumes into the atmosphere; changing the heating method of its facilities, optimizing processes to use less paper). The Bank will monitor the consumption of raw materials and materials and conduct activities to promote less waste. It also plans to engage in offset activities in the future.
4 Effective elimination of uncompensated reactive power of electricity consumers allows financial savings (from the reduction of charges for excessive reactive power consumption), and also contributes to the rational operation of electrical equipment.
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GRI 305-1 Direct greenhouse gas emissions (Scope 1.)
PEKAO GROUP
BANK
Companies
EMISSION SOURCE CATEGORY
[T CO 2 E]
2022
2021
2022
2021
2022
2021
VEHICLES
Gasoline
5,321
4,211
4,229
3,586
1,092
625
Diesel
232
360
165
270
67
90
Liquefied Petroleum Gas (LPG)
6
1
0
0
6
1
TOTAL
5,558
4,572
4,394
3,856
1,164
715
% IN SCOPE 1
64%
56%
58%
52%
99%
99%
REAL ESTATE
Natural gas for central heating and hot water
2,419
2,760
2,412
2,751
7
9
Heating oil for central heating and hot water
555
672
555
672
0
0
Diesel for emergency power
1
0
1
0
0
0
Refilling of refrigerants in own installations
155
101
155
101
0
0
TOTAL
3,129
3,533
3,122
3,524
0
9
% IN SCOPE 1
36%
44%
42%
48%
1%
1%
TOTAL SCOPE 1
8,687
8,104
7,515
7,380
1,172
724
% IN TOTAL SCOPE 1+2
18%
11%
17%
11%
51%
32%
GRI 305-2 Indirect greenhouse gas emissions (Scope 2.)
PEKAO GROUP
BANK
Companies
EMISSION SOURCE CATEGORY
[T CO 2 E]
2022
2021
2022
2021
2022
2021
Total electricity consumption for real estate (*)
13,188
35,750
12,503
34,853
685
898
Total electricity consumption for powering vehicles
2
0
2
0
0
0
Total thermal energy consumption
24,951
27,407
24,654
27,024
297
384
Remote work
547
766
384
534
163
232
Replenishment of fuel used for emergency power supply of the generator
19
1
19
1
0
0
Replenishment of refrigerants in leased facilities
56
229
56
223
0
6
TOTAL SCOPE 2
38,762
64,153
37,617
62,634
1,144
1,520
% IN TOTAL SCOPE 1+2
82%
89%
83%
89%
49%
68%
TOTAL SCOPE 1+2
47,449
72,257
45,133
70,014
2,316
2,244
* 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.
New location of the Bank’s headquarters
The Bank’s headquarters are scheduled to move to a new location in Warsaw in 2023 - a state-of-the-art building designed to consume as little energy and raw materials as possible (including the ability to recycle rainwater). The building is covered with solar control glass, and the floor-to-ceiling tall windows are equipped with a special triple silver coating to guarantee employees a clear view and optimal thermal comfort. Lower energy consumption will be ensured by the building’s facade, which guarantees above-standard access of daylight to the interiors, while providing a barrier to the sun’s overly intense rays. This will reduce the building’s energy consumption required for heating in winter and air conditioning in summer, and for artificial lighting. The building has the relevant environmental and energy efficiency certificates: BREEAM on Excellent level, as well as the WELL certificate.
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1.3. Social commitment
As part of the second Pillar of the ESG Strategy, the Bank’s goal is to engage in social activities to bring relief, equalize opportunities and prevent exclusion. The Strategy assumes that the amount allocated by the Bank for socio-environmental purposes will increase from year to year. In addition, the Bank increases employee involvement in social and environmental activities. It also focuses on educating and raising public awareness of environmental issues through partnerships with community organizations and providing digital tools to customers. Green, easy and convenient access to banking services for customers is also an important intention. In addition, the Bank intends to participate even more extensively in programs that support the development and innovation of companies.
1.3.1. Mission, values and corporate culture
Bank Pekao, in adopting its Business Strategy for 2021-2024, has reformulated its mission statement, which reads “A simple and secure world of banking.” The Bank thus wants to set standards in the market, while being a responsible partner in the daily lives of millions of Poles. It understands its activities as positively influencing the development of the economy, building strong relationships with entrepreneurs and providing security for customers. The Bank’s vision, encapsulated in the slogan “Let’s be the best together”, is the 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 domestic brands, as well as be an inspiring place to work.
Bank Pekao’s organizational culture is a more than 90-year tradition of forming strong relationships among employees, employees with customers, and the Bank with local communities. The Bank is seen in the market as a responsible partner and a reliable financial institution. The Bank’s organizational culture is shaped by values defined by the words #straightforward, #together, #boldly and #responsibly , which set the standards of conduct for the Bank’s employees while building commitment around common goals in daily operations.
In 2022, initiatives have been implemented to better understand values and promote a work style based on the values adopted - so that they become the prevailing standard. An e-learning training course “Our Values” was made available to employees, with the aim of introducing defined values in practical terms, using examples of situations that may occur during the performance of daily duties.
The values have also become an integral part of the Pekao Group Code of Conduct and are included in the Customer Service Standards. There was also another edition of the “Stars of Cooperation” competition to promote open-minded attitudes toward cooperation, and another “Let’s Do It Easily Together” workshop on simplifying business processes was held. In addition, employees had the opportunity to co-create the banking edition of “INNaczej” magazine, whose theme was values in innovation.
The Bank aims to set a framework for a corporate culture that focuses on interpersonal relationships, understanding and fosters engagement. For this reason, in 2022, under the idea of “Together we create an engaging culture”, the Bank launched a strategic initiative to find out what employees think about their work environment and monitor their level of engagement.
1.3.2. Bank’s response to armed conflict in Ukraine
In the wake of Russian aggression against Ukraine, Bank Pekao has supported the Ukrainian people in every possible way. A special offer has been prepared for individual and corporate customers. Changes have been made to the rules of cooperation with entities that maintain business relations with sanctioned countries in connection with the aggression against Ukraine. The assistance provided by the Bank’s volunteers to the victims of the aggression in Ukraine is discussed in chapter “Employee volunteer work program”
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Business relations
In July 2022, in accordance with the Order of the Bank’s President “Principles of Cooperation between Bank Polska Kasa Opieki Spółka Akcyjna and Entities Maintaining Business Relations with Sanctioned Countries in Connection with the Aggression against Ukraine”, the “List of Sanctioned Countries in Connection with the Aggression against Ukraine” (hereinafter: “List of Countries”), which is updated monthly, was created. Within its framework, the Bank’s units verify the entities invited to participate in the Bank’s purchasing procedures, based on their classification (categories A, B, C, D, F) on the basis of the list of entities published and updated by the Yale School of Management University (hereinafter: “List of Entities”) 5 . The Yale list currently includes 1,389 entities. The Bank has taken steps to terminate or reduce cooperation with the 2.19% of entities on the Yale List with which cooperation was established, but due to the ongoing aggression in Ukraine, it cannot be continued. Entities that do not withdraw their business relations from countries on the “List of Countries” (Category F) are not allowed to participate in purchasing procedures. In addition, the Bank’s units are taking steps to terminate or suspend cooperation with entities with which the Bank has entered into current agreements, and which are not withdrawing their business relations with entities on the “List of Entities” - Category F.
A similar analysis was carried out in the credit process.
Offer for customers
In 2022, meeting the needs of customers from Ukraine, the Bank simplified to the maximum the procedure for opening an Advantage Account for citizens of that country - a single identifying document, such as a passport, was sufficient. The Helpful Account, on the other hand, was an option for those who did not have the documents needed to open an Advantage Account, namely an international passport or ID Cards. When opening it, the procedure was even simpler - documents other than a passport were also accepted, including, among others, an internal passport - a Grazhdan Ukrainian passport, a certificate of confirmation of legal residence in Ukraine for a citizen of another country, a Polish identity document for a foreigner or a temporary Polish travel document for a foreigner, a certificate issued by the Consulate, confirmation of the assignment of a PESEL number or the mCitizen application. Both accounts allow for the efficient execution of financial needs - receipts from aid benefits received, making ongoing payments by cards or through electronic banking. It is important to note that Bank Pekao does not charge fees for operating them. The Bank has abolished - for Ukrainian citizens - both the fee for operating the account card and making cash withdrawals with it at ATMs in Poland and abroad. With an Advantage account there is also an additional possibility to have a sub-account in 4 different currencies (USD, EUR, CHF, GBP) and exchange currencies at favorable rates. The Bank also does not charge a foreign exchange commission/margin on account card transactions abroad. In addition, in conjunction with the Social Insurance Institution, the Bank made it possible to apply for 500+ and 300+ benefits using the PeoPay app and Pekao24 online banking. Both the PeoPay mobile application and Pekao24 online banking are available in Ukrainian. In addition, the Bank has provided service in Ukrainian by hotline consultants.
A wide-ranging offer for PLN 0 has been prepared for Ukrainian entrepreneurs. The Bank decided not to charge fees for business accounts, debit cards, and provided full and free cash service, as well as e-banking service. Facilitations have also been introduced in the process of establishing business relations for Ukrainian companies.
In the first days of January 2023, Bank Pekao extended a special offer aimed at citizens from across the Ukrainian border waiving fees for account maintenance, card processing, and withdrawals from all ATMs in Poland and abroad, including Ukraine, for another year. In addition, the Bank has extended in time the possibility of making free transfers from and to Ukraine for all individual customers of the Bank, including citizens of that country.
Helping Ukraine rebuild
In a 2022 report, “The Greatest Reconstruction in Modern Europe”, Bank Pekao analysts estimated that for Poland, the total benefit to the economy from the reconstruction of Ukraine could be 3.6-3.8 percent. GDP and will be spread over at least a decade. According to the Bank’s macroeconomists, Poland could count on one hand on direct benefits from the participation of domestic entities in the reconstruction of its eastern neighbor, and on the other hand on much greater indirect benefits related to Ukraine’s return to its pre-war economic trajectory and the process of its integration into the European Union. Rebuilding Ukraine will require not only the restoration of damaged buildings, factories and infrastructure, but also the stabilization of the country’s macroeconomic foundations and its reintegration into global supply chains, as well as the restoration of access to services. Representatives of Bank Pekao’s Management Board, at official events and conferences, declared their readiness to act, arguing that Poland is a trustworthy partner for Ukraine, able to offer real help in bringing Ukraine back on the path of sustainable growth.
5 The list is available at the address: https://som.yale.edu/story/2022/over-1000-companies-have-curtailed-operations-russia-some-remain .
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1.3.3. Employee Volunteer Work Program
GRI 3-3 Management of material topics
GRI 2-23 Policy commitments
GRI 413-1 Operations with local community engagement, impact assessments, and development programs
Own indicator in the “Commitment” area: Systematic increase in volunteer hours worked
Other non-financial indicators on volunteering and partnerships
The idea of helping those in need, involvement in numerous charitable, educational, sports or health-oriented campaigns has become a permanent part of Bank Pekao’s organizational culture. A comprehensive employee volunteer program is implemented in accordance with the Bank’s Strategy 2021-2024, where volunteer activities are in line with the 4th pillar of the Bank’s Strategy: “Responsibility”, including primarily the area of “Society”, and in accordance with the ESG Strategy, based on the goals indicated in the 2nd pillar of the ESG Strategy “Commitment”
2. PILLAR – COMMITMENT
IMPLEMENTATION 2020
IMPLEMENTATION 2021
IMPLEMENTATION
2022
TARGET FOR 2024
(number of hours)
Systematic increase in volunteer hours worked.
4,400
6,531
8,432
>5,500
Participation of Bank Pekao employees in volunteering is governed by the Rules for Participation of Bank Pekao S.A. Employees in the Employee Volunteer Program . An employee of any unit (facility) of the Bank throughout the country, regardless of location and size, can participate in employee volunteer program. He/she has 16 hours available per year. The Office of Volunteer Services and Corporate Culture is responsible for managing volunteer activities at the central level. In each action, a volunteer action leader is appointed - responsible for the course and implementation of a particular action. Each volunteer action is documented - volunteer action leaders are required to provide the Bank with a factual report including, among other things, photos, video footage of the course and information on the number of members of the volunteer action team, the number of beneficiaries of the action, the number of hours spent by the team on the volunteer project. The Bank’s intranet features a “Volunteering” portal with information on relief actions and a calendar of actions. Volunteer leaders attend meetings to prepare for the role. They share their experience in an internal publication titled “Volunteer Aces” and in brochures summarizing volunteering for the year. Volunteer actions were promoted consecutively at all Bank locations in 2022 and were popular with employees
Volunteer activities in 2022 were aimed at education, relief, equalizing opportunities and preventing exclusion. In response to the emergency situation caused by the outbreak of war in Ukraine, employees engaged in nationwide and local crisis volunteering for refugees. An important element of the program were educational activities aimed at children, teenagers and seniors. The main forms of volunteering organized at the Bank are: volunteering with community partners, the “We are Close” grant competition and donation collections. Members of the Bank’s Management Board are also involved in volunteer actions. Information on key initiatives and profiles of volunteer leaders are presented in volunteer brochures available at the Bank’s official website.
Bank Pekao is eager to engage in partnerships in volunteer actions. The opportunity to learn about the knowledge and experience of experts from foundations, associations or NGOs is an additional motivation for volunteer workers, while at the same time guaranteeing the comprehensiveness, timeliness and relevance of the program to be implemented. In 2022, the Bank’s volunteer partners included the UNEP/GRID-Warsaw Center - Department of the National Foundation for Environmental Protection, the Apiterra Foundation, the Warsaw Institute of Banking Foundation, the Polish Red Cross, the SOS Children Villages Association, and the Polish Animal Welfare Society.
To express gratitude for the care and attention that volunteers give to those in need, an event was held to mark the International Volunteer Day. The community of volunteer leaders from across the country integrated during a day full of activities. A tour of Warsaw in the footsteps of volunteering, workshops on photography or beekeeping were activities prepared for the volunteers, who on this special day were able to get to know one another better and share the experience gained during the relief effort. The volunteers were thanked by representatives of the Bank’s Management Board.
BANK PEKAO
2020
2021
2022
Number of volunteer partner organizations
5
6
6
Number of employees involved in volunteer initiatives
826
1,170
1,230
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Humanitarian aid for Ukraine
In response to the emergency situation of Ukraine and its citizens seeking safe haven in our country, the Bank enabled its employees to participate in nationwide and local volunteer work for Ukrainian refugees. In the first instance, assistance was provided to those who fled Ukraine, providing financial, material and non-material assistance (help with child and dependents’ care, assistance with job search, assistance with finding a place to live). Donation collections were organized, and employees helped at reception points. With support from the Bank Pekao S.A. Foundation (“We are close” grant competition) in Olkusz, volunteers organized a celebration of Ukrainian Mother’s Day, in Puszczykowo they equipped Ukrainian children with school kits and in Koszalin they organized a concert integrating refugees and the local community. 477 employees were involved in helping Ukraine, using 3,456 volunteer hours for this purpose 6 .
“We Are Close” Grant Competition
One of the forms of employee volunteering is the “We are close” competition, targeted at employees working for the benefit of local communities in their area, recognizing their needs. A distinguishing feature of this form of employee involvement in social activity is the variety of volunteer areas and ideas for helping. Direct beneficiaries of the competition are members of recipient organizations, wards of care and educational institutions, participants in workshops and thematic classes, patients in medical institutions, members of sports clubs, music centers, animals in shelters. In 2022, local support efforts were implemented in 65 localities. The beneficiaries of volunteering were 11,981 people, including: children and young people (1,125), people with disabilities (1,056), refugees from Ukraine (3,238), and people involved in sports (1,132). Measures in the area of health and life protection targeted 4,720 recipients.
Voluntary blood donations
In addition to the “We are close” grant competition, Bank Pekao has successfully engaged in numerous actions based on the idea of employee volunteering. An example is the long-running action of voluntary blood donation with the participation of employees. In 2022, 7 blood donation events were organized at the Bank’s facilities, with adequate preparation of the venue to accommodate non-employee blood donors. The events took place in Katowice, Opole, Elbląg and Warsaw. It was possible to collect 77 liters of blood from 175 blood donors.
Financial education
Volunteers from the Bank conducted classes for schoolchildren as part of the BAKCYL financial education program. A pilot project for younger children “ABC of Economics”, implemented in cooperation with the Czepczyński Family Foundation, was launched. Volunteers also participated in the jury of a nationwide competition for high school students running businesses - Youth Mini-enterprise Produkcik.
The Bank is also committed to activating the elderly - they are the main partner of the SeniorON program which started in 2018. The goal of the program is to activate the elderly affiliated with PCK clubs. In 2022, 882 seniors participated in the program. Volunteers conducted activities titled “Safe Seniors in a Digital World” on using electronic banking, online shopping and the Trusted Profile. The meeting began with an anti-fraud lecture by representatives of the City Police Department. A partner in the initiative was the SeniorAPP Foundation, whose experts conducted a workshop under the theme “Get fond of your phone”. The classes were attended by 180 seniors from Kraśnik, Sandomierz and Radzyń Podlaski.
As the main patron of the “EduActive” educational program, implemented by the Warsaw Institute of Banking Foundation, the Bank became involved in a project aimed at expanding the financial knowledge of young people. The goal of the initiative was to equip children and teachers with inspiring materials - based on the ideas in Janusz Korczak’s book “Bankruptcy of Little Jack”. Its author introduced children to basic commercial and economic concepts and showed them what skills and qualities are needed in entrepreneurial activity. The project was inaugurated with an online lesson “Where does money come from and why is it worth saving?” on October 13, 2022, with the participation of Leszek Skiba - President of the Bank’s Management Board, Waldemar Zbytek - President of the Warsaw Institute of Banking - and the Director of Macroregion South at Bank Pekao S.A. Attendance was 5,400 students and teachers from all over Poland.
6 Video report from the finale of the bank-wide donation collection: https://www.youtube.com/watch?v=a-uF-ELHqlI .
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There is also an entire section on the Bank’s website with interestingly designed and age-appropriate materials to introduce children to the world of finance. There are downloadable videos, coloring pages, games and activities, as well as materials for parents on how to encourage their child to save money, teach entrepreneurship and resourcefulness 7 .
For those planning to take out a loan, a “Credit Guide” has been prepared on the Bank’s website, which explains step-by-step the procedures involved in obtaining and holding a mortgage loan 8 .
Environmental education
The Bank has launched an environmental education project for employees EKOlogia na bank (ECOlogy at the bank). Cyclical publications prepared by experts of the UNEP/GRID-Warsaw Center - Department of the National Environmental Foundation addressed issues of responsible consumption. Educational events on the topic of biodiversity and beekeeping were organized in conjunction with the Apiterra Foundation. Thanks to the support of the Bank Foundation, two eco-days were organized with the participation of volunteers, in Zator and in the Poleski National Park. During the rallies, Bank volunteers installed birdhouses and provided care and protection for mud turtles.
Helping kids
Children’s aid campaigns are one of the most popular forms of volunteering chosen by employees. Renovations in care facilities, organization of cultural events or promotion of sports among young people are examples of local volunteer initiatives. In 2022, two campaigns were organized to prepare gifts for children under the care of the SOS Children’s Villages Association. In this way, volunteers joined in Children’s Day 9 and Operation Santa Claus.
The Bank has taken patronage of the nationwide charity collection of 1, 2 and 5 penny coins titled “Gold Rush” conducted by the Polish Red Cross. Professional coin counters cooperating with the Bank helped count the coins, and the Bank Foundation made a donation to purchase additional coin counters.
Christmas aid for veterans
Volunteers from the Bank joined the campaign to help Polish veterans - former Home Army soldiers, insurgents and political prisoners of the Stalinist period. Packages with Christmas products for nearly 500 veterans from Mazovia were being prepared. The gifts were prepared by Bank volunteers, students from Elementary School No. 2 in Karczew, local shooting teams and volunteers from the Oder - Niemen Association and the Don’t Forget About Us Foundation. The purchase of the products was financed by the Bank Pekao S.A. Foundation, among others.
Helping animals
Volunteers also helped man’s four-legged friends, animals under the care of shelters and animal havens. They participated in cleaning and caring for animals at facilities of the Company for the Care of Animals in Poland in Bydgoszcz, Wrocław and Zabrze. The donation from the Bank Foundation supported a campaign to help animals evacuated from areas of Ukraine, which was run by the TOZ shelter in Celestynów, near Warsaw.
1.3.4. Community service, charity and sponsorship
GRI 3-3 Management of material topics
GRI 415-1 Political contributions
Recommendation 1.5 GPW DPSN 2021
Bank Pekao S.A. Foundation
Bank Pekao S.A.’s charitable activities are carried out mainly through the Bank Pekao S.A. Foundation. In addition to the activities carried out through it, the Bank directly cooperates with selected public benefit organizations, to which it makes donations to support their statutory activities. The key internal regulation of the Bank defining guidelines in this area are the Rules for Donation and Sponsorship by Bank Polska Kasa Opieki Spółka Akcyjna . The regulation included, among other things, the establishment of a Sponsorship and Donations Committee to support the Bank’s Management Board in its decision-making process regarding the Bank’s involvement in sponsorship projects or in the Bank’s allocation of donations. In accordance with the Policy of Counteracting Corruption in the Pekao Group , a risk analysis (due diligence) is carried out before the donation or conclusion of the sponsorship agreement, which allows to minimize the risk of corruption and reputation risk.
Bank Pekao S.A. Foundation (hereinafter: “Foundation”) was established by Bank Polska Kasa Opieki S.A. in 1997. Its activities are governed by the contents of the Articles of Association adopted in the same year. The Foundation’s mission is to provide assistance to the needy in difficult situations, and its goal is to carry out public and socially useful activities for the benefit of:
• science, higher education, education, schooling and upbringing, especially in the field of economic education,
7 https://www.pekao.com.pl/info/edukids
8 https://www.pekao.com.pl/poradnik-kredytowy.html
9 A video report on the “Children’s Day” event at the SOS Village in Biłgoraj: https://www.youtube.com/watch?v=LwqF0pV5yfM .
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• economic development, including the development of entrepreneurship,
• the development of technology, invention and innovation, and the dissemination and implementation of new solutions in economic practice,
• culture, art, protection of cultural property and national heritage,
• sustaining and disseminating national tradition, cultivating Polishness and developing national, civic and cultural awareness,
• activities for veterans and repressed persons,
• charity and social welfare activities,
• promoting and organizing volunteer work,
• health protection and promotion,
• assisting victims of catastrophes, natural disasters, armed conflicts and wars at home and abroad,
• supporting and disseminating physical culture and sports,
• ecology and animal protection and protection of natural heritage.
The Management Board of the Pekao Foundation monitors incoming applications for funding and decides whether to support specific aid initiatives. In 2022, the Foundation implemented 93 donations. The areas covered by the requested projects were consistent with the Foundation’s statutory goals.
In response to the outbreak of war in Ukraine, the Bank Pekao Foundation joined in providing immediate aid to Poland’s neighbors across the Ukrainian border. The focus was mainly on supporting initiatives related to providing aid to refugees from Ukraine and saving lives and health. Among other things, the donation was made to the Polish Red Cross for the purchase of dressing materials, first aid kits, food for border crossers, field beds, sleeping bags and other equipment for the injured. Support was also given to Caritas Poland for the ongoing needs of refugees under the organization’s care.
The Foundation also provided support related to the maintenance and dissemination of national tradition, cultivation of Polishness and development of national, civic and cultural awareness. Book publications on historical topics were financed, in cooperation with the Warsaw Uprising Museum, among others. Dedicated donations were also made to associations and organizations carrying out activities for veterans and repressed persons.
Support was also given to projects in the area of health protection and promotion by retrofitting hospitals with specialized medical equipment.
The Bank Pekao Foundation also financially supports projects in the grant competition “We are close” which involve local communities and serve to promote education, culture, historical heritage, among others. As a result, it was possible to provide equipment and necessary materials to schools, childcare facilities and people with disabilities, local associations and homeless animal shelters. Volunteers helped children from childcare centers, senior citizens, and people with disabilities. They also supported animals under the care of shelters. They promoted reading, youth sports activities, as well as culture, including classical music and theatrical ventures, and Polish history. In addition, volunteer leaders carried out a number of pro-health campaigns and undertook activities to counteract the social exclusion of various groups of people at risk of functioning outside society.
The Bank Pekao Foundation also focuses on areas of activity: financial education and the promotion of volunteer work. To promote the idea of volunteering, the Foundation prepares brochures summarizing activities in bank volunteering. The publication presents good practices in the area of volunteering in the bank in connection with the values of #straightforward, #together, #boldly and #responsibly , as well as profiles of volunteer leaders.
The Foundation also provided financial support to non-profit organizations that invited volunteers from the Bank in 2022 to undertake volunteer work in the areas of economic education, charity and social welfare, ecology and environmental protection, animals and protection of natural heritage. Financial assistance was received from, among others: SOS Children’s Villages Association of Poland, the Polish Red Cross, the Warsaw Institute of Banking Foundation, the Apiterra Foundation, the Company for the Care of Animals in Poland, the UNEP/GRID-Warsaw Center - Department of the National Foundation for Environmental Protection.
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Sponsorship activities
The policy implemented by the Bank and the Pekao Group in the area of sponsorship and charitable activities is aimed at strengthening the image of the Bank and entities of the Pekao Group as open and modern institutions close to customers and communities in which the Bank and the Pekao Group operate. There is no single policy at the level of the Pekao Group in the charity and sponsoring area.
When selecting initiatives, the Bank departs from activities based on one-off donations and a reactive response to requests for support to the benefit of long-term social involvement based on partnership with respectful organizations with social trust. In particular, the Bank gets involved in projects in such areas like: responsible economic development, promotion of national brand and Polish values, support for culture, sport, aid to children in need, or environmental protection. The Bank provides its support at two levels: nation-wide, where the Bank sponsors events having a material impact on Polish culture, and locally to support initiatives dedicated to local communities.
In 2022 the Bank was engaged in a number of projects organized on a country-wide basis which have significantly maintained the continuity of multi-annual initiatives and have provided important support to the community during this full period of challenges related to Russia’s invasion of Ukrainian territory and the resulting social unrest.
The Bank was once again the title sponsor of one of the largest tennis tournaments in Poland - the Pekao Szczecin Open. Cooperation with the Polish Basketball Association (PZKosz) and the Polish Basketball League S.A. (PLK) was also continued. Thanks to the cooperation, the Bank, as an official sponsor of Polish basketball, is present at all levels of games supervised by PZKosz and PLK. In addition, the Bank supported the Polish national team in its struggles during EuroBasket 2022. In addition, Bank Pekao S.A. has become involved in a major new sponsorship project - Pekao S.A. “Warszawska Dycha”, which was organized in September 2022 on the occasion of the Warsaw Marathon, the largest running event in Poland, and was very popular among the running community in and around Warsaw.
Supporting significant economic initiatives was an important element of the Bank’s activity as well. In 2022, the Bank was present at the 590 Congress, the Corporate and Investment Banking Congress, and the Economic Forum in Krynica, among others.
Virtual art gallery
Bank Pekao S.A., which since the beginning of its history not only cares about the finances of Poles, but also aims to promote Polish cultural heritage at home and abroad, made its art collection available to the general public in November 2021 through the virtual Art Gallery of Bank Pekao S.A.
The Bank’s collection, which includes nearly 1,200 valuable artifacts, includes works by early artists such as Jan Matejko, Stanisław Wyspiański, Wojciech Kossak, Julian Fałat, Józef Mehoffer and Zygmunt Waliszewski, as well as works by contemporary artists, including Tadeusz Dominik, Jerzy Nowosielski, Jerzy Duda-Gracz, Franciszek Starowieyski and Bożena Biskupska. The Bank’s collection also includes sculptures and furniture, lamps and clocks - from the 19th and 20th centuries.
The first stage of digitizing the artworks covered about 170 exhibits. In 2022, work continued in this area, so that another 350 works of art were recorded electronically so that they could be publicly accessible on the Gallery’s virtual website the following year.
In addition, three publications related to the promotion of art were prepared and published in 2022. These are: “Bison on Wall Street” - an album documenting the poster competition in connection with the 25th anniversary of Bank Pekao’s Private Banking, “Historic Tenements of Bank Pekao S.A.” - an item documenting the architectural monuments where the Bank’s branches are located, and an album “Between Art and Commercialism” on the Bank’s archival advertising materials, whose authors were prominent Polish visual artists.
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Bison protection
For many years Bank Pekao S.A. has also been involved in the protection of Polish bisons. The financial support provided by the Bank is earmarked, inter alia, for the diversification and development of the population, caring for herds and subsidizing scientific and educational undertakings promoting the protection of this exceptional and unique endangered species. Bank Pekao has supported the implementation of the statutory tasks of the Białowieża National Park for two decades, as a sponsor and partner of the park. The funds donated by the Bank cover part of the park’s expenses for monitoring bisons in the wilderness, buying food for the winter and winter inventory. Thanks to Bank Pekao S.A.’s support, it was possible to modernize the Bison Show Reserve - the most visited tourist site in the Białowieża National Park - and retrofit the educational pavilion that is part of it. The Bank also supports the activities of other facilities that provide care for bison, including, among others, the Pszczyna Demonstration Bison Enclosure. Nature lessons are held at the facility, and there is a chance to learn about the bison family and other animal species during a walk. Another place where the Bank directs financial assistance is the Warsaw Zoo. Pekao donates funds to the Panda Foundation, which operates at the facility and helps care for the Warsaw bison herd, which numbers nine individuals. Another entity supported by the Bank is the Bison Lovers Association, which promotes knowledge about the bison species and carries out a number of initiatives in this regard. In 2022, the Bank began cooperation with the VARIA Foundation for the Humanities of the University of Warsaw to support the foundation’s publication titled “Protection of the European bison in Poland in the interwar period. Role of the National Natural History Museum”. The purpose of the study is to collect scientific, popular science information and documents that contributed to the establishment of institutional protection of the bison in Poland and Europe. The book is also a contribution to the discussion of the need for a National Natural History Museum in Poland.
Bank Pekao and entities of the Pekao Group, as responsible organizations and active participants in social life, also comply with the guidelines included in “The Best Practice for GPW Listed Companies 2021” issued by the Warsaw Stock Exchange in 2021, including principle 1.5 to the extent of undertaken charitable and sponsorship activities. In 2022 Bank Pekao and entities from the Pekao Group implemented a number of initiatives to support culture, sports, charitable institutions, media and social organizations. As a general rule, Bank Pekao and entities from the Pekao Group do not provide support in the form of sponsorship or charitable activity to trade unions and political parties. The list below shows expenditures borne in this respect in 2022 and mentions key initiatives.
The expenditures of the Bank by areas included in recommendation 1.5 of the Best Practice for GPW Listed Companies in 2021 (gross):
- Cultural support: PLN 1,092 thousand, including, among others
• sponsorship of the Royal Castle
• sponsoring of ASP Warsaw
• sponsoring of ASP Cracow
 Support for sports: PLN 5,031 thousand, including
• Sponsoring of the Polish Basketball League
• Sponsoring the Polish Basketball Association
• Sponsoring the Pekao Szczecin Open tennis tournament
• Sponsoring of Pekao S.A. “Warszawska Dycha”
• Sponsoring of volleyball, chess and handball tournaments
- Support for charitable institutions
- Support for public benefit organizations
- Support for community organizations: PLN 411 thousand, including, among others
• Support for the protection of the species of European bison
- Media support: PLN 760 thousand, including:
• A number of activities related to galas, contests and economic discussions, such as Gala ISBNews, Polska 200-tka WPROST
- Support for trade unions – PLN 0.
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As a general rule, Bank Pekao does not provide support in the form of sponsorship or charitable activity political parties, politicians and similar institutions. The provisions of the Principles for granting donations and sponsoring by Bank Polska Kasa Opieki Spółka Akcyjna do not provide for involvement in events that raise ethical questions, are contrary to applicable law, harm human rights or are not consistent with the activities carried out to enhance the Bank’s image. The Bank does not make donations, or provide any funding, to political parties, does not sponsor their activities, and is not involved in any lobbying activities.
Total value of support for political parties, lobbying activities - 0 PLN.
1.4. Responsible sales, quality management
1.4.1. Caring for good customer experience
GRI 3-3 Management of material topics
Own indicator: NPS index calculated by internal survey method
Having due regard to the high quality of relations with customers, their satisfaction and loyalty are key to building lasting value for all Stakeholders of the Bank. Bank Pekao is open to all information from customers. Their insights and comments help develop solutions that improve the quality of service. Information from customers is reliably analyzed to find a solution to the problem as soon as possible. This approach responds to customer expectations and has a significant impact on customer satisfaction.
Customer service standards
In 2022, the Bank updated its guidelines for applying the highest standards of service to the retail customer segment, including people with special needs due to disabilities. The set of guidelines has been expanded to include the Bank’s new values: #straightforward, #together, #boldly, #responsibly . Changing market conditions, regulations and customer expectations were taken into account. More than 5,000 branch network employees participated in training workshops related to building positive customer experiences and gained ongoing access to important information on the topic. The efforts to improve service standards were complemented by an educational campaign, including e-learning, newsletter mailings, and gamification on customer service best practices. The Bank’s advisors benefit from ongoing support aimed at developing their skills in sales and information calls at the establishments.
The result of intensive work to improve the business customer experience, in turn, is an increase of two positions in the “Forbes” ranking (from 5th place in 2021 - to 3rd in 2022). The Bank also advanced to 6th place in the Golden Banker ranking.
Effectiveness of performance
The Bank strives to always have up-to-date information about the quality of its services. For this reason, the customer satisfaction survey is conducted on a continuous basis. The survey aims to:
• determine how satisfied customers are with the service, and how they rate the products offered,
• identify positive and negative factors that affect customer satisfaction and loyalty.
• get feedback - whether changes made to offerings and service standards increase customer satisfaction.
In 2022, as part of the satisfaction survey, customers who used the Bank’s services in branches and remote channels were interviewed. In addition, the consultants conducted a series of interviews as part of a relational survey with premium, business, SME and corporate customers. In addition to the quantitative survey, qualitative research was conducted on business-relevant customer service processes in various segments.
A “mystery shopper” service quality survey took place at Bank Pekao Direct branches and the company. Auditors conducting the survey visited Pekao’s own branches, franchise branches and contacted the hotline to assess compliance with service quality standards.
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The Bank’s most important internal measure of customer satisfaction is the Net Promoter Score (NPS), which shows how much (on a scale of 1 to 10) customers are willing to recommend Bank Pekao.
NON-FINANCIAL PERFORMANCE RATIOS (BANK)
2020
2021
2022
NPS(*)
42
38
35
(*) Calculated according to an internal survey method based on a single question posed to customers over the phone, which reads: “Given your past cooperation with Bank Pekao, 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, while 10 means you would definitely recommend this bank.” The percentage of promoters was subtracted from the percentage of critics.
Culture of plain language
The Bank strives to make the language in which it communicates on a daily basis friendly and fully understandable to all customers. The main idea behind these measures is to reduce to a minimum the customer’s time required to understand the professional jargon.
In 2022 the Bank:
• introduced new simplified sample regulations and contracts. New simplified definitions of the terms of representative services have been implemented in communications with customers,
• appointed a special team of more than 40 plain language consultants to support employees daily in simplifying documents, letters, handouts and communications,
• trained 1,500 employees on the key principles of creating simple and correct texts,
• conducted dozens of outreach activities for all employees as part of its “Plain Polish” program.
In addition, the Bank’s representatives are active participants in the work of the working group on simple communication at the Polish Bank Association.
1.4.2. Complaint process
GRI 3-3 Management of material topics
GRI 2-16 Communication of critical concerns
GRI 2-25 Processes to remediate negative impacts
Own indicator: complaints handling
Pekao Group companies are systematically improving procedures and taking the necessary measures to respond to customer complaints promptly and handle them in a manner that takes maximum account of customers’ legitimate interests . Complaints are handled in a reliable 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 law and concluded agreements. The main regulation in this regard is the Order Process of handling customer complaints of Bank Polska Kasa Opieki Spółka Akcyjna. Pekao Group companies handle complaints in-house on the basis of implemented and executed procedures for receiving and handling customer complaints. These procedures have been defined in the form of internal regulations, included in the rules and regulations and contracts concluded with customers, or result from generally applicable laws.
Customers, in the course of resolving disputes that may arise in connection with the services offered, may seek the assistance of a Customer Ombudsman. The Ombudsman deals with the most difficult and non-standard matters that require an individual approach and additional legal opinions. Each Customer may contact the Ombudsman if they do not agree with the decision concerning the submitted complaint, they believe that the case is complicated and requires an individual approach or if they want to submit remarks as to the operation of the Bank. In addition, the Customer who is a consumer of the Bank may apply for out-of-court proceedings before the Bank Arbitrator operating at the Polish Bank Association or before the Financial Ombudsman.
As part of the structure responsible for handling complaints, a special unit has been set up to optimize complaints processes:
• proactive implementation of changes and improvements to the process and tools for managing and processing complaints,
• strengthening of analytical and optimization activities in the complaint management unit and other Bank units,
• updating and implementing necessary changes to internal regulations, including rules and regulations for customers, regarding the handling and management of complaints at the Bank.
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The Bank’s units responsible for macro operational and product processes in quarterly cycles receive reports with summaries of the actions taken during the period and workshops to prevent complaints. Experts from the Complaints Management Department mandatorily participate in the review of the Bank’s internal regulations for implemented products and processes. This is intended to safeguard and mitigate the risk of complaints even before the product or service is implemented.
In 2022, the Bank continued its integrated customer satisfaction and loyalty survey program, which covered key processes and points of contact. The complaint process is included in this group.
The following elements are subject to examination:
• the effort the customer puts into the complaint process,
• satisfaction with the service channels,
• evaluation of the branch and hotline employee,
• waiting time for processing of complaints,
• legibility and clarity of the response received.
According to a survey conducted in Q2 2022, nearly 75% of customers who file a complaint through a branch or hotline rate the employee well. Compared to Q1 2022, satisfaction with the easy-to-understand way of providing information when filing a complaint has increased.
The results of the surveys are used to systematically improve the Bank’s services.
The Bank’s Management Board receives analyses of customer complaints at least once a year. The last material was submitted in February 2022 and included information and data for 2021.
The main aim of the Bank’s complaint handling and management process is to:
• inform existing and potential customers in a transparent way about procedures for filing complaints as well as terms and conditions and time limits applicable to complaint handling,
• review complaints in an unbiased, diligent, objective, and timely manner,
• take improvement or remedial actions if any irregularities resulting in the complaint having been filed by the customer are identified.
The main causes of complaints include systemic irregularities, unclear contractual provisions, incorrect operations at the Bank’s ATMs or incomprehensible rules of bank promotions. The Bank carefully analyzes each complaint and in the case of irregularities takes appropriate remedial actions. Systematic analysis of complaints makes it possible to take appropriate measures to improve the processes and procedures applied at Bank Pekao or their elements, in order to:
• take action to eliminate irregularities,
• improve processes that generate customer complaints - including unfounded complaints
Own indicators regarding the claims process in 2022:
• 136.4 thousand complaints were registered (a year-on-year increase of 33.6 thousand - 32.7%), of which 8 thousand were submissions relating to Idea Bank acquired on 3.01.2021.
• The average complaint processing time was 21.9 days.
• 98.9% of the complaints were processed according to the deadlines set by regulators and lawmakers.
• 53% of the submissions were fully or partially acknowledged in favor of the customer.
• The total amount of complaints was PLN 247.5 million, of which recognitions in favor of customers totaled PLN 28.5 million - 2.8 million were deductions from income or expenses. The remaining amount was recovered through the complaints process.
• Number of interventions: Financial Ombudsman - 524, Bank Arbitrator - 53, PFSA - 58, Consumer Ombudsman - 40, Office of Competition and Consumer Protection - 1.
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1.4.3. Principles for the fair design and sale of financial products and services
GRI 3-3 Management of material topics
GRI 417-2 Requirements for product and service information and labeling
In accordance with generally applicable laws and regulations, both Bank Pekao and the Bank Pekao Group companies engaged in the business of offering financial products and services have a number of regulations that define the standard of their operations, as well as establish rules of conduct to protect the interests of customers, minimize compliance and reputation risks in the sale of products and services to consumers. At Bank Pekao, this area is comprehensively regulated by the New Product Implementation Process Policy at Bank Pekao S.A. (hereinafter: New Product Implementation Policy) and the Principles for Creating Marketing Communication of Bank Polska Kasa Opieki Spółka Akcyjna (hereinafter: Principles for Creating Marketing Communication). The standards for offering and selling are further defined by: Rules for the sale of credit and payment products to consumers at Bank Polska Kasa Opieki Spółka Akcyjna and Policy for the 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 reviewing marketing materials by the Compliance Department, among others.
The process of reviewing marketing materials and business instructions is covered by the Bank’s Internal Control System.
In 2022, the Bank had no cases of non-compliance with regulations on information and labelling of products and services, or cases of non-compliance resulting in a warning.
1.4.4. Responsible marketing
GRI 3-3 Management of material topics
GRI 417-3 Incidents of non-compliance concerning product and service information and labeling
In accordance with the applicable internal regulations, marketing and advertising activities conducted at the Bank and the Pekao Group take into account the generally applicable laws and guidelines of supervisory authorities, the principles of fair financial market trading, good practices and statements of intent of the customer concerning these activities. In addition, they are carried out in compliance with the Bank’s communication strategy, the Bank’s visual identity and image, adopted internal regulations and in a way that maintains the intelligibility of the message being communicated. Bank Pekao complies with the principles of the Code of 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 Code of Conduct, meanwhile, emphasizes that each employee is an ambassador of products and services offered by both the Bank and 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.
Responsible promotion of the Bank is based on reliable and transparent knowledge of products, including possible risks arising from changing macroeconomic conditions or the activities of regulators. Marketing and advertising activities conducted in the Pekao Group take into account generally applicable laws and guidelines of supervisory authorities, principles of fair trading on the financial market, good practices and are conducted with respect for the customer’s will concerning said actions. The key regulations relating to this area of compliance risk assessment are: the New Product Implementation Policy and the Principles for Creating Marketing Communication , which were drawn up in connection with the decision of the Management Board of the Bank to adopt the Principles of Corporate Governance for Supervised Institutions, issued by the Polish Financial Supervision Authority. This regulation takes into account, i.a., basic requirements applicable to the content of marketing and advertising materials, including the nature and specification of the relevant product, including: consumer loans, mortgage loans, bank accounts (in particular savings accounts, savings and settlement accounts, or term deposit accounts), insurance products, as well as investment products.
Bank Pekao also has an Order Principles of communication of Bank Polska Kasa Opieki Spółka Akcyjna in social media relating comprehensively to communication, as well as promotional activities conducted 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 makes every effort to ensure that advertising messages do not undermine public confidence in advertising activities, do not contain content or images that offend generally applicable customs, do not abuse customer confidence by taking advantage of their lack of experience or knowledge, do not take advantage of a sense of fear, do not contain elements that could lead to or encourage acts of violence, and finally do not accept discrimination, in particular on grounds of race, religion or gender.
In 2022, in line with previous years covered by non-financial reporting at the Bank, there were no cases of non-compliance with regulations or non-compliance in the area of marketing communications.
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Promotion through art
In 2022, Pekao, in a new project under the slogan “When art creates business”, decided to return to the model of promoting the brand through art (art branding), including in the virtual space. The idea refers to a decades-old tradition, when promotional materials for the Bank were prepared by artists associated with the Polish School of Posters, including Waldemar Świerzy and Wiktor Górka. This approach became key to the creation of new compositions for advertising prints - a collage figure of a cyclist and the accompanying slogan “Have an easy ride downhill” appeared on display windows, flyers and in the online space. The new graphic line draws on the Bank’s style from years ago in a modern way. At the same time, the reference to the poster and, above all, to the work of Wojciech Fangor makes the Bank move away from communication in which stock photos are the dominant image. In addition, in 2022 Bank Pekao became the first universal financial institution in the world to tokenize art. NFTs with elements of Rafał Bujnowski’s painting composition are linked to 440 Unique payment cards introduced jointly with MasterCard. Each card will have a fragment of the “Studio Wall” painting printed on the front, with a non-exchangeable token associated with it. In the same year, Pekao unveiled the NFT project in the metaverse . Tokens with works by Kai Renkas, made for the 25th anniversary of Pekao S.A. Private Banking, will be on display in the PeoPay Gallery - a virtual space located in ESKA World - Poland’s first metaverse environment. In addition to NFT, there will be animations and an interactive game there.
CYBERczujni (CYBERalert together)
Pekao S.A. also decided to show the dangers that exist online in an unconventional way and make customers aware of what to do to safeguard themselves from them and not lose money. As a result of these assumptions, the educational campaign “What’s on the Net” was launched, which interestingly and creatively shows the methods of Internet thieves and teaches recipients safe behavior on the Internet. Shot out of the box, the informative material shows the real dangers of the following illegal procedures: fraud, phishing, scam, vishing, fake investments, “cop” scams and malware. Each description includes characteristics of criminal activity and practical tips on how to protect oneself against it 10 .
1.4.5. Bank’s image
Reputational risk is understood as the current or anticipated risk to revenue and capital resulting from a negative perception of a financial institution’s image by customers, counterparties, shareholders/investors or regulatory authorities. Protection of reputation is crucial for the Bank due to the potential impact of this risk on the Bank’s financial results and capital, but also due to the role of the Bank as a public trust institution.
In accordance with the guidelines of the ICAAP Policy , which identifies reputation risk as material, Bank Pekao implemented a separate regulation addressing this type of risk ( Principles of Reputation Risk Management at Bank Polska Kasa Opieki Spółka Akcyjna ), which was updated in December 2022, due to the need to adapt to changing standards and guidelines from regulators, as well as to account for new material risks affecting reputation, such as ESG issues.
Reputation is an assessment of the Bank’s image, i.e. the perception of the Bank at any given time by the environment, which is the Stakeholders. The image is not only a marketing, but also a business issue. The acceptance of the Bank by market participants and resulting support for the sale of the Bank’s products and services is dependent on the image. This consequently translates into the ability to earn adequate margins and supports the potential to expand our offerings to new markets and customer groups. Reputation is widely recognized as a fundamental asset of any financial institution, on which financial performance depends.
The reputation risk is strictly connected with other types of risk connected with the Bank’s everyday activities, like credit, operational, market, liquidity, compliance risks, ESG. Actions with a potential impact on reputational risk have been defined for each of these risks. The most important of these actions include:
1. In terms of credit risk:
• financing enterprises in sensitive sectors of the economy,
• financing political organizations,
• financing activities generating a material threat to the natural environment,
• financing authoritarian states, states that violate international regulations, states with inadequate protection of human rights or states subject to embargo,
• financing sports clubs (companies or associations),
2. In terms of operational risk:
• internal and external frauds,
10 https://www.pekao.com.pl/cyberczujni.html
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• non-compliance with employment and workplace safety rules,
• incidents connected with unequal treatment, discrimination, mobbing or employee disputes,
• irregularities in customer service, product construction and unfair operating practices,
• incorrect settlement of transactions, supplies and incorrect operating process management,
• occurrence of a cyber security incident that may lead to a breach of confidentiality, integrity and availability of information and information systems, including data leakage,
• disturbances in the activity and failures of systems that influence customer service.
3. In terms of compliance risk:
• applying business practices prohibited or inconsistent with the principles of good practices,
• Bank’s operation that does not comply with legal regulations,
• incorrect implementation or failure to implement recommendations of control and supervision bodies,
• conflicts of interest,
• market abuse.
4. In terms of market risks:
• dominant positions and monopolistic practices,
• improper risk management resulting in significant losses for the Bank.
Given its nature, the reputation risk is classified as difficult to measure. In accordance with the ICAAP Policy , it is not subject to quantitative measurement. Ongoing management of the Bank’s reputational risk is limited to the management of original types of risk, supported by qualitative assessment, monitoring, reporting, and reduction of reputational risk by the Bank.
Bank Pekao consistently reduces the risk of reputation loss, including by:
• applying an appropriate credit policy (including those sectors of the economy which the Bank does not involve itself in,
• implementing and applying best practices and ethical principles, among others, Principles of Best Practices in Banking of the Polish Banks Association, Charter of Best Practices in the Financial Market, The Best Practice for GPW Listed Companies 2021 , Principles of Corporate Governance for Supervised Institutions issued by the Polish Financial Supervision Authority and the Code of Conduct of the Pekao Group , which provides for a set of key values and standards of conduct for the Bank’s employees to ensure top standards of service and reputation protection,
• disseminating knowledge about regulations, ethical and corporate governance rules, as well as principles for their appropriate application among the Bank’s employees, holding training on compliance risk,
• managing conflicts of interest,
• preventing corruption,
• counteracting the use of the Bank’s operations for purposes connected with money laundering or terrorism financing,
• managing frauds (including in particular internal frauds) by preventing, discovering and fighting frauds, minimizing fraud consequences and taking actions aimed at discovering perpetrators, as well as, if justified, notifying law enforcement authorities,
• ensuring a relevant level of information security, in particular including personal data of customers, as well as providing access to such information solely to authorized entities,
• taking actions and initiatives aimed at increasing customer satisfaction level;
• managing the customer complaint handling process,
• managing through objectives (defining objectives for the Bank’s employees in sales and managerial positions regarding the quality of service and customer satisfaction),
• analyzing new products and services, as well as marketing campaigns in terms of the reputation risk,
• managing the business continuity of critical processes carried out in the Bank, taking into account the reputational factor in assessing their criticality,
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• managing processes,
• undertaking activities and initiatives to implement and disseminate the Bank’s ESG Strategy, as well as monitoring and analyzing regulations in the ESG area,
• consulting actions that are important for the Bank’s reputation with the Management Board of the Bank and the Supervisory Board.
The management of the Bank’s reputation is a continuous process which is actively attended by all business units and employees. A special role in this process is played by statutory bodies of the Bank and organizational units directly responsible for the original types of risk, in accordance with competences arising from separate internal regulations of the Bank. Regular observation of Bank Pekao’s brand indicators and the company’s image profile, carried out on behalf of the Bank since 2020, indicates a stable position against the competition. Bank Pekao is among the top banking brands with the best spontaneous awareness; and its image profile defines it as a traditional, Polish and trust-inspiring bank. A study of the Bank’s reputation was conducted in December 2022, with the participation of an external research institute, the results of which will be compiled and presented in Q1 2023.
1.4.6. Consumer protection
GRI 3-3 Management of material topics
GRI 206-1 Legal actions for anti-competitive behavior, anti-trust, and monopoly practices
The Bank and its subsidiaries are bound by the Bank Pekao S.A. Group Policy on Counteracting Practices Restricting Competition and Practices Violating the Collective Interest of Consumers. The policy defines the basic rules for the Bank’s employees to act in accordance with antitrust and unfair market practice regulations and the main tasks of the Bank’s organizational units in this regard. In 2022, the Bank did not pay penalties for violation of collective consumer rights and violation of free competition rules.
The companies that are part of the Pekao S.A. Group in 2022 also had their own regulations in this area, including: Pekao Direct’s policy against restrictive practices and practices that violate the collective interests of consumers, Pekao Bank Hipoteczny S.A.’s policy against restrictive practices and practices that violate the collective interests of consumers, Antitrust Procedure. Counteracting practices restricting competition and violating the collective interests of consumers (Pekao Leasing).
Legal risk issues related to CHF foreign currency mortgage loans are included in Bank Pekao S.A. Group’s Consolidated Financial Statements for the year ended December 31, 2022, subchapter 5.5.2.
1.4.7. Customer safe online
GRI 3-3 Management of material topics
GRI 418-1 Substantiated complaints concerning breaches of customer privacy and losses of customer data
The Bank and entities of the Pekao Group comply with generally applicable laws and principles specified in Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 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: GDPR).
Personal data are processed at Bank Pekao in accordance with the provisions of law and with due diligence in order to protect the interests of data subjects.
Bank Pekao is both a data controller and a processor within the meaning of the GDPR and bears full responsibility for compliance with personal data protection regulations, in particular taking into account the principles concerning the processing of personal data specified in GDPR, such as:
• The principle of lawfulness, fairness, transparency and accuracy of personal data processing in accordance with the law and reliably, fairly and in a transparent manner in relation to the data subject (Art. 5.1 (a) and (d) of the GDPR),
• The principle of purpose limitation by ensuring that the data is collected for specified, explicit, and legitimate purposes (Art. 5.1 (b) of the GDPR),
• The principle of data minimization by ensuring that the data are adequate, relevant, and limited to what is necessary in relation to the purposes for which they are processed (Art. 5.1 (c) of the GDPR),
• The principle of integrity and confidentiality by ensuring that the data controller uses appropriate technical and organizational measures to ensure the appropriate security of the data (Art. 5.1 (f) of the GDPR),
To warrant comprehensive actions in relation to personal data protection, the Bank implemented a project to prepare the organization to meeting the GDPR requirements. As a result of the project, the Bank’s operations were analyzed in terms of
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their compliance with the GDPR requirements for IT systems, processes, internal regulations, operations and specimens of documents.
As a result of the analysis, the scope of actions that must be carried out by the Bank was defined and a number of internal regulations applicable to particular areas of the Bank’s activities were adopted. These regulations include:
• Information Security Policy with the Information Security Policy Documents,
• Methodology for managing the risk of violation of rights and freedoms of natural persons at Bank Pekao S.A. (PIA Methodology),
• The Principles for personal data protection and obtaining consents to take actions for direct marketing purposes at Bank Polska Kasa Opieki Spółka Akcyjna,
• The Register of processing activities and the Register of categories of processing activities kept by Bank Polska Kasa Opieki Spółka Akcyjna,
• The Principles for authorizing persons employed by the Bank to process personal data and access the Bank’s information,
• The Procedure for handling requests made by data subjects under the GDPR at Bank Polska Kasa Opieki Spółka Akcyjna,
• The Personal data retention policy of Bank Polska Kasa Opieki Spółka Akcyjna,
• The Procedure for managing personal data breaches at Bank Pekao S.A.,
• The Principles and procedures to be adopted by Bank Polska Kasa Opieki Spółka Akcyjna in connection with the outsourcing of services involving the processing of personal data,
• Application security policy of Bank Polska Kasa Opieki Spółka Akcyjna,
• Principles for information protection and management at Bank Polska Kasa Opieki Spółka Akcyjna,
• Electronic Information Protection at Bank Polska Kasa Opieki S.A.
The heads of the Bank’s business units and information owners are fully liable for the organization, security, and processing of personal data in their reporting units. In turn employees must process personal data in accordance with their authorization arising from their job description. To this end, Bank Pekao develops and implements mandatory training programs for employees on personal data protection, systematically monitoring the progress of completed training.
The personal data protection aspect is also taken into account in the current activities of the Data Protection Officer’s Department (hereinafter: “DPO”) when issuing opinions on new processes, designs and initiatives, as well as analyzing internal regulations or agreements concluded by the Bank in terms of personal data. The Data Protection Officer, the Data Protection Officer’s Department, and the Bank Security Department verify new technological solutions in order to ensure compliance with requirements and principles set out in the GDPR and the highest possible level of security of processed personal data.
In addition, the Bank has decided to implement data protection principles for the application of technical and organizational measures to ensure the protection of processed data. An Operational Security Center (OSC) has been established, a unit watching over unauthorized access to data (including personal data), and (through systems in place at the Bank) preventing the leakage of such data.
BANK PEKAO
2022
2021
Complaints received from external parties and supported by the organization
0
0
Complaints from regulatory bodies in 2022
47 new complaints (without continuation)
61 new complaints (without continuation)
Total number of identified leaks, theft or loss of customer data
17
20
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Bank Pekao S.A.
1.4.8. Development of innovation in business operations
GRI 3-3 Management of material topics
Own indicator: digitization rate
The number of initiatives related to the digitization of organizations requires continuous monitoring of the innovation market, cooperation with fintechs and testing of solutions that are in the implementation phase. Bank Pekao’s Innovation Laboratory (hereinafter: Laboratory, LAB), established for these tasks, focuses on four areas:
• designing innovations,
• partnership in innovation,
• building an innovation culture,
• research and development.
The Innovation Lab also plays a key role in the manufacturing process of new features planned for implementation as part of the Bank’s mobile application development strategy - PeoPay 3.0. In addition, the Innovation Lab will also cover the Business Banking Division and the Corporate Banking Division.
The community of banking innovators centered around the internal crowdsourcing platform IdeaCrowd grew in activity and size in 2022. On the Intranet platform implemented by the Innovation Lab, a total of 5,520 ideas and submissions have been collected since May 2021, including those developing projects and supporting innovative initiatives. In 2022, employees took part in 10 challenges with 1,836 ideas. The IdeaCrowd community grew by 965 employees - thus the ranking of active innovators was 3,863 people from various units of the Bank. Commitment can be seen among both the employees of the sales network and support units.
The process of implementing trends in the organization also continued. Within its framework, ideas and solutions are inspired by trends and based on thinking about how the future of banking will evolve. The Innovation Lab has a team that studies trends and signals of change. Trends, signals of change and inspiration are used in the processes of generating solutions as well as diagnosing and identifying challenges facing the Bank in specific business areas. The goal of the project is to build competitive advantages in areas that are not obvious in the financial sector, such as by creating new business models or customer segments, including in the ESG sector.
In 2022, the LAB launched tests of 15 startups in the Bank, including Sharebee, Alphamoon, nuDelta, and GetPin. The Lab collaborated with two accelerators: Space3ac and MIT EF CEE as part of the Poland Prize program, organized by the Polish Agency for Enterprise Development. An important activity for the LAB was to support Ukrainian startups in starting their expansion on the Polish market. A decision was made to pilot five projects from that region.
Additionally, in 2022, the Innovation Lab:
• implemented a system for managing startup submissions - SRM (Startup Relationship Manager),
• after accelerating and piloting Sharebee (a platform that engages company employees as brand ambassadors to increase sales), decided to commercially implement the solution,
• as a result of piloting startup Getpin (a platform that collects customer experience data in a single tool), increased traffic to the Bank’s website,
• as a result of the implementation of an ESG study and scouting commissioned by the Bank’s ESG Council, decided to implement pilots with two technology companies offering carbon footprint measurement technology,
• significantly increased the Bank’s presence and visibility in the startup ecosystem, participating in key industry events and publishing press materials in the media,
• established a community of innovators in the Bank (business owners) and held regular meetings of Innovation Champions to share knowledge and experience in working with startups and implementing new technologies.
BANK PEKAO
2022
2021
Financial outlays for innovation projects at Bank Pekao [PLN million]
2,352
2,231
Digitization index (%)
69
57
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Bank Pekao S.A.
1.5. Human capital
Nurturing the development of employees with respect for diversity and creating an attractive workplace will remain the cornerstone of Pekao Group’s operations. In April 2021, in parallel with the new business strategy, the Bank adopted the values developed jointly with employees: #straightforward, #together, #boldly, #responsibly . They are the pillars of the 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 behaviors assigned to them, 10 principles for managers - the Value Principles of Team Management - were also created. They are guideposts for executives on how to work with their teams based on new values.
1.5.1. Information on employment structure
GRI 2-7 Employees
GRI 2-8 Workers who are not employees
GRI 3-3 Management of material topics
GRI 401-1 New employee hires and employee turnover
2022
PEKAO GROUP
BANK
Total number of employees
Full-time positions
14,310
12,199
Persons
14,462
12,234
*FTPs/persons classified as active and inactive and employed for more than 0.1 full-time equivalent, excluding management boards.
PEKAO GROUP
BANK
2022
HEAD OFFICE
ESTABLISHMENTS
TOTAL
HEAD OFFICE
ESTABLISHMENTS
TOTAL
Number of contracted employees by place of employment
Full-time positions
8,339
5,965
14,304
6,398
5,834
12,199
Persons
8,484
5,969
14,453
6,398
5,836
12,234
PEKAO GROUP
BANK
2022
WOMEN
MEN
TOTAL
WOMEN
MEN
TOTAL
Number of contracted employees (per person) by FTPs and gender
Full-time
9,575
4,302
13,877
8,476
3,646
12,122
Part-time
375
210
585
70
42
112
Total
9,950
4,512
14,462
8,546
3,688
12,234
PEKAO GROUP
BANK
2022
WOMEN
MEN
TOTAL
WOMEN
MEN
TOTAL
Number of contracted employees (per FTP) by duration of employment and gender
Fixed period
1,171
690
1,861
779
445
1,224
Indefinite period
8,682
3,761
12,443
7,746
3,228
10,975
Total
9,853
4,451
14,304
8,525
3,673
12,199
PEKAO GROUP
BANK
2022
WOMEN
MEN
TOTAL
WOMEN
MEN
TOTAL
Number of associates* (per person) by contract type and gender
Employed on the basis of civil law contracts (contract for work and commission)
78
62
140
22
19
41
Employed on the basis of a trainee contract
0
0
0
0
0
0
Self-employed**
34
66
100
0
0
0
Total
121
124
232
22
19
41
* Associates persons employed on the basis of contracts other than employment contracts
** Self-employed are cooperators (with an active contract at the end of the reported year) who run their own business.
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PEKAO GROUP
BANK
2022
WOMEN
MEN
TOTAL
WOMEN
MEN
TOTAL
Number of employees at the end of the reporting period by employment area and gender
at the company’s headquarters
4,953
3,386
8,339
3,689
2,675
6,364
at the company’s establishments
4,909
1,056
5,965
4,836
998
5,834
Total
9,862
4,442
14,304
8,525
3,673
12,199
PEKAO GROUP
BANK
2022
WOMEN
MEN
TOTAL
WOMEN
MEN
TOTAL
Number of employees at the end of the reporting period by age and gender
<30
700
515
1,215
372
299
672
30-50
5,653
2,843
8,496
4,817
2,397
7,215
>50
3,507
1,085
4,592
3,336
977
4,312
Total
9,861
4,443
14,304
8,525
3,673
12,199
PEKAO GROUP
BANK
2022
WOMEN
MEN
TOTAL
WOMEN
MEN
TOTAL
Number of employees newly hired in the reporting period by employment area and gender
at the company’s headquarters
911
791
1,702
422
458
880
at the company’s establishments
354
169
523
343
156
499
Total
1,265
960
2,225
765
614
1,379
PERCENTAGE (%) OF NEWLY HIRED EMPLOYEES
at the company’s headquarters
18%
23%
20%
11%
17%
14%
at the company’s establishments
7%
16%
9%
7%
16%
9%
PEKAO GROUP
BANK
2022
WOMEN
MEN
TOTAL
WOMEN
MEN
TOTAL
Number of employees newly hired in the reporting period by age and gender
<30
455
422
876
187
202
390
30-50
725
498
1,223
528
386
914
>50
85
41
126
50
26
76
Total
1,265
960
2,225
765
614
1,379
PERCENTAGE (%) OF NEWLY HIRED EMPLOYEES
<30
65%
82%
72%
50%
68%
58%
30-50
13%
17%
14%
11%
16%
13%
>50
2%
4%
3%
1%
3%
2%
PEKAO GROUP
BANK
2022
WOMEN
MEN
TOTAL
WOMEN
MEN
TOTAL
Number of employees who terminated their relationship with the organization during the reporting period by employment area and gender*
at the company’s headquarters
682
608
1,290
300
319
619
at the company’s establishments
778
175
953
771
169
940
Total
1,460
783
2,243
1,072
488
1,560
PERCENTAGE (%) OF EMPLOYEE DEPARTURES
at the company’s headquarters
14%
18%
15%
8%
12%
10%
at the company’s establishments
16%
17%
16%
16%
17%
16%
* As a result of own resignation or termination by the employer as a result of planned layoffs, budget cuts, elimination of a position or non-renewal of a contract
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PEKAO GROUP
BANK
2022
WOMEN
MEN
TOTAL
WOMEN
MEN
TOTAL
Number of employees who terminated their relationship with the organization during the reporting period by age and gender*
<30
292
257
549
94
96
191
30-50
709
422
1,131
553
302
854
>50
460
103
563
425
90
515
Total
1,460
783
2,243
1,072
488
1,560
PERCENTAGE (%) OF EMPLOYEE DEPARTURES
<30
42%
50%
45%
25%
32%
28%
30-50
13%
15%
13%
11%
13%
12%
>50
13%
10%
12%
13%
9%
12%
*As a result of own resignation or termination by the employer as a result of planned layoffs, budget cuts, elimination of a position or non-renewal of a contract
PEKAO GROUP
BANK
SP3 - WSE’s employment turnover rate
WOMEN
MEN
TOTAL
WOMEN
MEN
TOTAL
Number of voluntary departures during the reporting period
1,045
574
1,618
725
330
1,054
Number of forced departures (*)
415
208
624
725
330
1,054
Total voluntary and forced departures
1,460
783
2,243
1,072
488
1,560
Voluntary employment turnover rate
11%
13%
11%
9%
9%
9%
Forced employment turnover rate
4%
5%
4%
4%
4%
4%
Total employment turnover rate
15%
18%
16%
13%
13%
13%
*In case of termination of the contract by the employer as a result of planned layoffs, budget cuts, elimination of a position or non-renewal of a contract.
An average age of employees is 45.6. 75.5% of employees have university education (74.3% in 2021). Women constituted 69.3% of all employees.
1.5.2. Core employment regulations
Work Regulations
Work Regulations of Bank Polska Kasa Opieki Spółka Akcyjna (hereinafter: “Work Regulations”) set out the organization and structure of work at Bank Pekao as well as rights and obligations of the Bank and its employees. The Work Regulations apply to all employees of Bank Pekao S.A., regardless of the nature of their work, position or basis of employment relationship. In particular, the Work Regulations:
• precisely define basic obligations of employees and the Bank,
• describe the Bank’s work time systems and work start and end time,
• set out principles for recording work time, monthly working schedules for settlement periods,
• establish the rules for the use of remote work by employees (immediately after the introduction of universal regulations on remote work, the Bank will enter into discussions with trade union organizations to agree on amendments to the Work Regulations in this regard),
• regulate the issue of OHS training, medical examination to be undergone by employees, informing employees about work hazards, rules for the allocation of workwear and personal protective equipment.
The Bank informs employees of the amount of annual leave to which they are entitled in their employment contracts and, with regard to parental leave, this information is provided to employees on an ongoing basis in accordance with current common law.
The Bank applies notice periods arising from the Labor Code or employment contracts, provided that they are not less favorable than those arising from labor law. Consultation concerning the termination of employment contracts are conducted at the Bank in accordance with Polish legal regulations. In 2022, the Bank mostly used one- or three-month notice periods.
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In line with applicable regulations, the Pekao Group and the Bank must prevent discrimination in the process of entering into and terminating employment contracts, terms of employment, promotion and access to training to improve professional qualifications, including in particular discrimination against gender, age, disability, race, religion, nationality, political opinions, membership to trade unions, ethnic origin, faith, sexual orientation and employment for an unlimited, or limited time or full-time or part-time employment.
Collective Labor Agreement
GRI 2-30 Collective bargaining agreements
The Collective Labor Agreement (hereinafter: “CA”) sets out terms and conditions of the Bank’s HR and remuneration policy, including remuneration for the Bank’s employees and principles for awarding other work-related benefits, in, inter alia:
• principles of the HR policy,
• working time,
• principles of the remuneration policy,
• principles for basic pay,
• bonus fund,
• incentive award fund,
• bonuses,
• pension and annuity severance fees,
• gratuities connected with termination of employment for reasons independent of employees.
The CA currently in force was concluded on December 15, 2005 between Bank Polska Kasa Opieki S.A. and company trade unions operating at the Bank. Amendments to the CA in the form of an Additional Protocol were concluded successively in 2007 and 2022. The amendment to the CA in 2022 concerned the agreement of new bonus rules for sales network employees in the Retail Banking Division. The protocol was registered by the State Labor Inspectorate on January 13, 2023. Thus, the said bonus rules became an integral part of the CA.
Bank Pekao does not use any additional pension schemes, apart from the universal ones. As an employer, the Bank fulfils all its obligations arising in relation to the universal pension scheme and is not in arrears with any contributions payable from employees’ remuneration and the employer’s contributions. On the basis of the CA, the Bank makes additional pension and retirement severance payments for employees entitled to such benefits under the universal pension and retirement insurance scheme.
In 2022 at Bank Pekao, similar to the previous 12 months, the percentage of employees covered by a collective labor agreement was at 77%. There are no collective labor agreements in Pekao Group companies.
In relation to employees excluded from the regulations of the CA, all provisions of the CA are applied with regard to remuneration and the granting of other work-related benefits, with the exception of bonus rules. Bonus rules for this group of employees derive directly from provisions of individual employment contracts (management contracts). The Bank plans to start negotiations with trade unions to include this group of employees in the CA.
Employment restructuring and group layoffs
The Bank, in the event of a decision to conduct collective layoffs, acts in accordance with the applicable provisions of generally applicable law and the Collective Labor Agreement. The Bank’s decision is communicated to all employees, as well as to trade union organizations. In accordance with the law, the Bank consults its intention to carry out group layoffs with trade unions in accordance with the Act of March 13, 2003 on special rules for termination of employment relations with employees for reasons not related to employees. The Bank seeks to ensure that consultations of its intention to carry out group layoffs with the trade unions are concluded with the conclusion of a group layoff agreement. The following, among other things, are established in the concluded agreement:
• the number of employees with whom the employment contract will be terminated,
• criteria for selecting employees for dismissal, whose employment contracts will be terminated and whose terms and conditions of employment will be changed,
• the terms of severance payments and additional benefits, e.g., extended medical care, social assistance rules,
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• the scope of the program to help laid-off workers, including financial assistance to acquire new skills or professional training opportunities if they find work in another area.
Pursuant to the CA, in the event of termination of employment contracts for reasons not related to employees, employees are entitled to cash severance payments of three times the amount to which they are entitled under generally applicable laws. The amount of severance pay may not exceed 36 times the minimum salary in effect on the date of termination of employment.
In addition, the Bank seeks to conclude an agreement with the Labor Office on labor activation of laid-off employees in each case.
In 2022, the Bank launched a Voluntary Redundancy Program (hereinafter: “VRP”). The employer established the VRP Regulations, communicating their provisions to employees. Employees volunteered for the VRP, and after the Bank accepted the application, the employee’s employment contract was terminated and the employee received the severance payment specified in the VRP Regulations.
Benefits from the Company Social Benefits Fund
GRI 3-3 Management of material topics
GRI 401-2 Benefits provided to full-time employees that are not provided to temporary or parttime employees
The Bank’s social activities are organized in accordance with generally applicable laws and ensure the social security of its employees. The Regulations of the Company Social Benefits Fund set out the rules and conditions for the use of services and benefits financed from the Fund, as well as the rules for the allocation of the Fund’s resources for various purposes and types of social activities.
According to Polish legislation, the amount of the basic allowance per employee is 37.5% 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 of that period was a higher amount. The Bank’s Company Social Benefits Fund is created from an annual basic allowance, in accordance with the provisions of the Collective Labor Agreement - per employee the allowance is 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 of that period was a higher amount. The Bank does not charge the deduction for pensioners or retirees, however, it does take care of them.
Bank Pekao’s social fund is earmarked for:
• subsidies for holiday leave of employees, children of employees under 17 years of age, as well as the Bank’s pensioners and retirees,
• individual financial and material aid,
• housing loans,
• cultural, educational, sports, and recreational activities.
The expenditure plan of the Fund is agreed on an annual basis by trade unions under terms and conditions set out in the Regulations. Subsidies from the Company Social Benefits Fund cover the Bank’s employees who are employed exclusively under an employment contract regardless of their full-time position. People with a minimum of two years of service with the Bank can apply for the housing loan benefit.
Most Pekao Group companies offer employees a variety of social benefits, including sports card and vacation leave subsidies, Christmas vouchers, financial support in difficult life situations, and a wide range of insurance. The companies, with few exceptions, provided the same access to benefits to all employees, regardless of the duration of employment.
Issues related to remuneration
GRI 2-19 Remuneration policies
GRI 2-20 Process to determine remuneration
The remuneration strategy developed in accordance with operating standards and values constituting the basis of the Bank’s mission is reflected in internal regulations and makes it possible to develop and protect the Bank’s reputation and create permanent values for all stakeholders. The Remuneration Policy of Bank Polska Kasa Opieki Spółka Akcyjna is a key regulation in this area. The policy reflects the Bank’s mission and values in its approach to remuneration systems, in particular, it:
• defines remuneration pillars, the management of the Bank’s structure as well as corporate and organizational processes;
• confirms requirements related to the compliance of remuneration systems with generally applicable laws,
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• defines principles for monitoring market practices and the Bank’s approach to remuneration systems ensuring the continuity of the Bank’s operations.
In the remuneration structure, remuneration is directly connected with performance, which guarantees financial stability and variable remuneration adjusted to the Bank’s financial capacity. The policy also provides for incentive systems including the minimum performance of the Bank below which a bonus is not paid. Variable remuneration includes all remuneration components which are dependent on performance and the payment of such remuneration is directly dependent on individual achievements and the Bank’s results adjusted by risk.
Sustainable results contributing to long-term value creation for stakeholders refer to the actual results achieved and the way in which they are achieved, with a view to measuring results consistent with shareholders’ interests and profitability principles based on a safe level of risk, sustainable risk management practices and multidimensional analysis of results and quality of activity.
To ensure that the remuneration structures are competitive and transparent and the remuneration system is effective and fair, the Bank monitors market trends in relation to remuneration forms and levels. Decisions concerning the remuneration system at the Bank are made taking into account the data on market trends in the area of fixed remuneration, as well as incentive systems. Such data are obtained from consultancy firms offering analyses of the financial sector. At the level of the Bank’s organizational units, a comparative analysis is performed in order to ensure consistency of remuneration in individual areas. In 2022, the analysis of consistency in salaries between men and women in identical positions continued, in order to make efforts to equalize the pay gap that exists in the Bank.
The Bank also has a Remuneration Policy for Members of the Bank’s Supervisory Board and the Management Board of Bank Polska Kasa Opieki Spółka Akcyjna, which sets forth framework principles and rules for establishing, monitoring and controlling the Bank’s remuneration principles and practices for members of its Supervisory Board and Management Board.
The Remuneration Policy for Members of the Supervisory Board and the Management Board of Bank Polska Kasa Opieki Spółka Akcyjna supports proper and effective risk management and does not encourage excessive risk taking beyond the acceptable overall risk level approved by the Bank’s Supervisory Board; implementation of the Bank management strategy and risk management strategy; mechanisms for managing and mitigating conflicts of interest in the Bank’s activities; ensuring that remuneration and any associated terms and conditions of employment that affect remuneration, including conditions for awarding and paying remuneration, are gender-neutral, i.e. not differentiated in terms of gender.
Solutions adopted in this Policy contribute to the implementation of the business strategy, long-term interests and stability of the Bank as well as aim to support the sustainable growth of the Bank, including to ensure that the Policy is consistent with the strategy for the introduction of risks to sustainable growth in the investment decision-making process into the Bank’s operations.
Due to the special function and generally applicable regulations governing relations between members of corporate bodies and the company, the Bank does not conclude employment contracts with Members of the Supervisory Board of the Bank and Members of the Management Board of the Bank, whereas it concludes Contracts for management services with Members of its Management.
Members of the Supervisory Board are entitled to remuneration in a fixed monthly amount and are not entitled to any variable remuneration.
The total remuneration of a Member of the Management Board consists of a fixed part constituting the basic monthly remuneration and a variable part, representing supplementary remuneration for the Bank’s fiscal year. The variable remuneration of a Member of the Bank’s Management Board depends on the level of achievement of the established management objectives (among other things, growth in the Bank’s value and improvement of economic and financial indicators) and may not exceed 100% of the fixed remuneration of that Member of the Bank’s Management Board in the previous fiscal year for which the calculation of the amount of the variable remuneration to be paid is made. Should the contract be dissolved or terminated by the Bank for reasons other than a breach of basic obligations, a Member of the Management Board may be awarded a severance pay in the amount not higher than three times the fixed remuneration, provided that they have discharged the office for at least twelve months prior to the termination of the contract. It is also possible to conclude a non-compete agreement with a member of the Bank’s Management Board that is effective after the termination of his or her position.
Members of the Supervisory Board and members of the Bank’s Management Board have the right to join Employee Capital Plans (ECPs) on the terms and conditions in force at the Bank.
Based on the remuneration system, employees are offered non-financial benefits that ensure just treatment and consistency of the remuneration system.
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Every year, a report on the functioning of the remuneration policy of the Bank is prepared, while the Bank’s Supervisory Board, taking into account the opinion of the Nomination and Remuneration Committee of the Bank’s Supervisory Board, provides an assessment of the functioning of the Remuneration Policy at the General Meeting of Shareholders to assess whether the Bank’s remuneration policy favors the development and safety of the Bank’s operations.
Companies of the Capital Group of the Bank have remuneration policies adapted to the size and specificity of their activities and remuneration principles.
Incentive systems
The Bank has three main incentive systems in place: Variable Remuneration System for Management Staff, Management by Objective (MBO) System, and a system based on the Collective Agreement providing, in particular, for a quarterly bonus and an incentive award.
Top management is subject to the variable remuneration system dedicated to persons having a significant impact on the Bank’s risk profile. The aim of the system is to support the implementation of the Bank’s strategy and to reduce excessive risk and conflicts of interest. In this system, a participant may obtain variable remuneration based on the bonus pool concept. The system provides for a comprehensive measurement of performance by individuals, business units and the whole Bank, including the evaluation of the participant’s compliance with law and the Bank’s standards and risk assessment. In order to strengthen care for the construction of a durable value of the Bank in the long term under the system, at least 50% of the bonus is implemented 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 entitled.
The variable remuneration system is prepared by the HR Division with involvement and participation of other organizational units of the Bank. This is to ensure that the system complies with the Bank’s regulations, articles of association, and ethical standards or other standards of conduct that apply to the Bank in a way that legal, compliance and reputation risks that are mostly connected with customer relationships are duly monitored and managed.
Variable remuneration systems implemented in the Bank’s subsidiaries have similar schemes for the division of remuneration into cash and financial instruments, taking into account general provisions and guidelines of market regulators concerning sectors in which companies operate.
The MBO system is addressed to employees hired on the basis of a management contract, including in particular sales functions and management functions having a significant impact on the achievement of the Bank’s planned commercial objectives. As part of the MBO system, employees receive individual objectives that result from the Bank’s financial plan and key objectives adopted for a given year. 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 periodically, each quarter, can receive an advance on their annual bonus when they meet targets.
The system based on the Collective Agreement applies to all employees subject to the Agreement. Pursuant to the Collective Agreement, the system is based on a quarterly discretionary bonus the amount of which is conditioned on the evaluation of an employee’s performance and commitment and the Bank’s results in a given year. It also provides for an incentive award which is granted for special professional achievements. In 2022, there were guidelines for variable compensation, i.e., quarterly bonuses for sales network employees covered by the CA, which take into account both performance targets and quality targets.
GRI 2-21 Annual total compensation ratio
2022
BANK PEKAO
The ratio of the annual total compensation for the organization’s highest-paid individual to the median annual total compensation for all employees (excluding the highest-paid individual)
21,4
The ratio of the percentage increase in annual total compensation for the organization’s highest-paid individual to the median percentage increase in annual total compensation for all employees (excluding the highest-paid individual)
2,59
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1.5.3. Bank as an employer
Pekao Group is an employer of first choice. It acquires the best candidates and provides working conditions that favor the growth of employees’ motivation, satisfaction and commitment. An important goal of the Bank’s HR policy is to invest in the development of skills of all its employees. The priority of the Bank’s development program is to identify, review, verify and develop present and future leaders. The Pekao Group and the Bank create opportunities for individual professional development of employees by investing in training and improving competences and skills of employees. In creating a friendly working environment, the Bank conducts employee satisfaction and opinion surveys in order to continuously improve working conditions, communication, and employee relations. The Pekao Group and the Bank provide employees with equal treatment, personal and professional development, respect and deference for civil liberties.
Training and professional development
GRI 3-3 Management of material topics
GRI 404-1 Average hours of training per year per employee
The Pekao Group and the Bank create educational opportunities and provide access to various forms of training for their employees. The Bank’s educational programs include local training and general development webinars, international training and programs, mentoring, internal and external coaching, certification training (CFA/ ACCA/ CIA). The main internal regulation in this area is the Policy on the Training and Raising of Professional Qualifications of Employees of Bank Polska Kasa Opieki Spółka Akcyjna adopted by the Bank’s Management Board which also provides for procedures applicable to processes connected with employee participation in particular forms of raising professional qualifications, such as:
• procedure for group classroom-based training,
• procedure for domestic individual training,
• procedure for individual language courses,
• training needs survey,
• post-graduate education and MBA,
• e-learning group training procedure.
PEKAO GROUP
BANK
2022
WOMEN
MEN
TOTAL
WOMEN
MEN
TOTAL
Number of training hours per employee
Total number of training hours by gender
339,702
145,655
485,356
280,610
105,298
385,908
Average number of training hours per employee by gender
25
11
34
23
9
32
2022
PEKAO GROUP
BANK
Total number of training hours by category of employees
Members of the Management Board
936
526
Managers
71,828
68,180
Others
324,677
317,201
Total
397,442
385,908
2022
PEKAO GROUP
BANK
Average number of training hours per employee by job level
Members of the Management Board
33
58
Managers
44
48
Others
28
29
Total
34
32
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Report on the activities of Bank Pekao S.A. Group for the year 2022 year
Bank Pekao S.A.
Formation of competencies and skills
In 2022, the Bank’s major training priorities were as follows:
• dissemination of specialist knowledge among the Bank’s employees, including a strong emphasis on the development of future competencies,
• leadership development - training for managers,
• implementation of mandatory training programs arising from internal and external regulations.
The Bank thus continued to implement training projects connected with the enforcement of its business strategies. Training targeted at high-potential employees and induction training for new employees was held. In 2022, the Bank implemented more than 261,000 hours of synchronous training (classroom and virtual classrooms), in which nearly 11,000 employees participated. The courses and training in the e-learning formula were provided at the level of 293 thousand hours.
Key initiatives
The Bank has been investing in the development and education of its employees for years, enabling them to improve their competencies by offering participation in a wide range of educational programs. Key initiatives launched in 2022 include:
1. Academy of the Future - a comprehensive development project prepared by an experienced staff of experts who have specialized in the competencies of the future for many years. Each of the webinars and workshops provided a powerful injection of knowledge related to the key competencies of the future. The webinars provided insight into a concise compilation of key issues, and the workshops allowed for practical skills training. In addition, an Inspiration Library with materials to expand selected future competencies was prepared for the participants.
2. Banking School of Sales - including such training courses as SPIN® Selling - Understanding the Customer, PREMIUM Relational Selling Model, Advanced Business Negotiations, and Business Advisor Academy. The aim of the project is to support the implementation of proven and effective sales behaviors, improve competencies in the area of up-selling, reaching new customers, conducting meetings and dealing with difficult situations. The knowledge and skills acquired are perfected during practical workshops.
3. Omnicash - the purpose of the training is to acquire the ability to conduct customer cash service and cash handling at the cash register using the OmniCash system, in which it will be possible to handle customer cash transactions, as well as other cashiering activities.
4. Moto Project - aimed at incorporating a motor insurance product into the Bank’s offerings.
5. Recognizing the Authenticity of Money Marks - training addressed to Sales and Customer Service Specialists. During the training, employees have the opportunity to acquire, verify or deepen their knowledge of the possibility of recognizing the authenticity of Polish and foreign currency signs (PLN, EUR, GBP, USD or UAH). Employees will learn methods of securing Polish and foreign currencies and the current legal regulations on the circulation of means of payment.
6. Robotization Academy - the proprietary training program, developed by practitioners employed by the Bank in cooperation with a partner - the largest provider of automation solutions in the world - continued in 2022. A program through which employees were able to develop digital competencies and learn the basics of automation, including building robots for their own use.
7. Forge of Agility - a series of training courses to gain in-depth knowledge of Agile and Lean methodologies, confirmed by a certification process. The comprehensive program of training, exchange of practical knowledge and coaching is aimed both at people working in product teams and all employees, potential stakeholders of agile methods. As part of the Forge of Agility and its Agile Pathway, every employee has a chance to learn the necessary agile competencies, at every level of knowledge needed to change an organization toward Agility - greater transparency, performance measurement and a friendlier work environment. The Lean path includes a complete dose of knowledge, as well as the skills to bring out the potential and gain efficiency in a role related to process improvement and optimization.
8. Safe on the Web - a series of trainings aimed at increasing awareness in the area of Cyber Security, safe use of modern technologies. The program is carried out in cooperation with experienced market specialists who discuss specific real-life examples and methods to counter various cyber security incidents.
The Bank also successfully implemented the first edition of TalentsUP, an innovative development program based on practical experience, which was aimed at all Bank Pekao employees, regardless of age, position or work experience. In the end, after a 3-stage recruitment process, the TalentsUp team consisted of 50 talents working in different areas of our organization, motivated to take on new challenges, but most importantly wanting to change both the bank and themselves. The TalentsUp program is designed to develop both the competencies needed by the organization and those derived from the Talents’ individual needs. That’s why the program’s participants developed on two parallel paths: design and development.
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Bank Pekao S.A.
During the project work, participants worked together in diverse, challenging teams and were supported by leaders and experts from within and outside our organization. They experienced the design process by implementing real business challenges. The project path involved learning different competencies, versatility and diversification of techniques and tools so that the development of Talents was multifaceted and the skills were useful in their professional development. Thus, program participants learned how to conduct user research, how to build prototypes and test them with users, analyze trends, create empathy maps, prepare a service implementation using service blueprint or design a professional sales pitch, among other things.
The development path also relied on a variety of forms and experiences. The Talents had the opportunity to work with improv theater actors, participate in an improv performance or take part in retro sessions, but they also prepared videos, worked with Gallup’s Talent tool, organized consultations and gave each other feedback. The second year of the development path, on the other hand, was a whole range of development methods and tools from which Talents could choose, designing their individual development. The offerings included mastermind, Gallup CliftonStrenghts survey, job crafting, project rotation and many other development activities.
The results of participation in the program include not only the knowledge and experience gained in conducting projects using agile methods (design thinking) and developed design competencies. Talents have also built a network of new and supportive contacts (networking). The project teams delivered added value to the business - they presented the results of the qualitative research and the developed solutions before the Management and Leadership Council. Some of the solutions are further developed by the business or used in ongoing projects. One of the solutions was implemented as a pilot and is currently being tested.
Leadership development - training for managers
The Bank’s priority is to continuously develop and expand the competencies of its executives so that they can meet the challenges of the changing reality, both in business and social terms. In 2022, the Bank continued and developed training and development programs like:
• Leadership Academy and Retail Manager’s Academy - training programs designed for the Bank’s managers, who play an important role in the organization’s operations and have a direct impact on the effectiveness of business objectives, organizational culture, the Bank’s market position and customer relations. The programs make it possible to acquire knowledge in a systematic way and translate it into concrete skills on an ongoing basis. The fifth edition of the programs was held in September 2022.
• Leader of change - the program aims to introduce managers to what it means to build a position as an inspiring leader of change in a VUCA (Volatile, Uncertain, Complex and Ambiguous) environment. The training program will make it possible to understand what authentic and natural leadership and management is and develop a practical, personal leadership and management style.
Development programs and initiatives
The priority of the Bank’s development program is to identify, review, verify and develop present and future leaders. Employees can benefit from development initiatives aimed at supporting professional development, skills, knowledge and competencies, as well as take part in initiatives to strengthen commitment.
In 2022, the Bank continued development programs and initiatives for its employees to provide support in terms of interpersonal and management skill development.
• Succession Plans which are of fundamental importance to ensure the continuity of employment at strategic positions, the implementation of long-term projects and the minimization of operating risks,
• Annual evaluation system: the process of evaluating the Bank’s employees, which includes the evaluation of competencies and potential as well as the planning of individual development and business goals,
• Assessment Centre/Development Centre sessions – an evaluation of professional potential; its results are used in decision-making processes related to employment, promotion, and employee development.
• Team Atmosphere Survey - the survey makes it possible to make an in-depth diagnosis of the factors affecting the atmosphere, cooperation and organization of work. The purpose of the survey is to learn about areas that still need to be strengthened and to plan activities that are appropriate to the specific challenges of a particular team.
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Bank Pekao S.A.
1.5.4. Recruitment, internship and apprenticeship programs
Bank Pekao, as a reliable and responsible employer, treats all issues connected with both internal and external recruitment of employees in a comprehensive way and provides support in the systematic development of persons employed by the Bank.
The recruitment policy in the Pekao Group is aimed at acquiring the best external candidates, while promoting internal talents. Thanks to this, the Pekao Group employs people with various professional experiences and competences. The Bank conducts activities encouraging employees to participate in internal recruitment (throughout the Pekao Group) as part of professional development in other business areas.
The basic regulation in this regard is the Procedure for External and Internal Recruitment . The regulation guarantees optimal and uniform selection of persons to perform tasks in accordance with the HR policy and the Bank’s business plans and strategy. The procedure provides for recruitment for positions covered by the Collective Agreement and the MBO system from level N- 3, inclusive. Recruitment for positions above the N-3 level is carried out in accordance with separate procedures, including, in particular, the Policy of selection of candidates for the function of a member of the Management Board and Key Function Holders and Assessment of the suitability of the proposed and appointed members of the Management Board, Supervisory Board and Key Function Holders at Bank Polska Kasa Opieki Spółka Akcyjna .
The recruitment is always focused on the identification and verification of the best candidate that meets the job requirements and those defined in the recruitment demand, has a relevant approach and key skills from the point of view of the organization in accordance with the Bank’s Competence Model.
One of the annual goals of the Bank is to attract a specific number of graduates from the best universities in Poland and abroad and offer them professional development opportunities within the organization: in branches or units of the Bank’s Head Office. With this in mind, the Bank targeted three internship/trainee programs for university students and graduates in 2022. In 2022, another edition of the Summer Internship Program “Bison Academy” was held. In two months, 45 people participated in the program. Students had the opportunity to learn about the specifics of work in various 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 course of the cooperation and kept track of the assigned person’s progress. The trainees had clearly outlined tasks in the teams they joined and a real impact on the course of ongoing projects. Cooperation with the Bank was based on a fixed-term employment contract.
In 2022, the Bank launched the Corporate Banking Champions internship, which hired 12 people (fifth-year students and graduates) who were given a first-hand look at working in the Corporate Banking Division for four months. Each of the interns had specific tasks or projects to complete, which they performed under the supervision of a mentor. Cooperation with the Bank was based on a fixed-term employment contract. The IT Banking Champions internship, on the other hand, was aimed at students intending to develop in the IT field, in the positions of programmer, tester, analyst or administrator. Each intern was involved in a specific project, which was carried out with the support of a mentor. The interns were employed based on a fixed- term employment contract.
Bank Pekao’s already proven dimension of interaction with job candidates was recruitment as part of the Jobicon Job Festival. This 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. During the events, the following took place:
• live interactive and personal meetings with online candidates - meetings in private rooms to which participants signed up beforehand,
• group sessions,
• webinars for wider audiences.
The Bank participated twice in the event in 2022. Through Jobicon’s practice, the most desirable job candidates from all over Poland were successfully and quickly acquired, deep and long-term relationships with candidates were established and built. The internship made it possible to share knowledge and experience with young people entering the labor market.
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Report on the activities of Bank Pekao S.A. Group for the year 2022 year
Bank Pekao S.A.
1.5.5. Employer branding activities
In 2022, the Bank continued its branding efforts implemented as part of its employer brand strategy, promoting the opportunity for career development in a place where real change can be made. Key initiatives in 2022 include:
• Participation in image and recruitment events, building the Bank’s image as an employer among potential candidates. During events such as the IT Job Fair, Jobicon, Warsaw IT Days, Absolvent Talent Days, Data Science Summit, Click (2022) online, and meetings at key universities, among others, visitors had the opportunity to talk to Bank representatives about new job opportunities and what the day-to-day work of each position looks like.
• A campaign to showcase the cultural change and the Bank’s new vision.
• A change in recruitment communications, including new visuals for announcements that emphasize Bank Pekao’s opportunity to fulfill its potential so that everyone feels like a leader of change in their area. The job offers are aimed at people with different levels of seniority - from expert level to specialist to someone at the threshold of their career.
A very important group of recipients of employer branding activities are employees employed by the Bank, regardless of their position or functional area. These people not only directly benefit from the Bank’s offerings as an employer, but also contribute to the organization itself and its culture, as well as build the employer’s image in their environment.
Cooperation with universities
A focus on cooperation, exchange of information and experience between the organization and the academic world is an important area of the Bank’s activities. This is served by cooperation with the country’s leading universities, including through presence at events such as the Career Days of the Faculty of Management at the University of Warsaw and the Warsaw School of Economics (hereinafter: “SGH”) in Warsaw, Week with SGH Career Advisors, the Job Fair of the Polish-Japanese Academy of Computer Technology, the IT Job Fair at the Military University of Technology, the Engineering Job Fair and Absolvent Talent Days. Students and graduates had the opportunity to learn about internships and apprenticeships, consult their resumes and learn more about the recruitment process and the requirements for the employees being sought. For those interested in developing in a specific area, individual consultations were organized with experts from the Bank, who provided support in identifying possible development paths.
In addition, Bank Pekao was a partner for the fourth time of the SGH Master’s Degree Dean’s Award, which recognizes the most talented SGH graduates - authors of the best theses. A number of experts with extensive knowledge and experience in specific areas of the Bank were involved in evaluating the work.
1.5.6. Inclusive organization
GRI 3-3 Management of material topics
GRI 405-1 Diversity of governance bodies and employees
The Bank applies the Policy of Gender Equality and Diversity with Respect to Members of the Supervisory Board, Members of the Management Board and Key Function Holders at Bank Polska Kasa Opieki Spółka Akcyjna (Gender Equality and Diversity Policy) which defines the strategy for managing the diversity of the Bank’s employees, including diversification with regard to the selection of members of the Supervisory Board, members of the Management Board and Key Functions Holders at the Bank. The Gender Equality and Diversity Policy defines guidelines aimed at ensuring that the Bank’s employees are able to manage their careers, achieve success and assess their work on the basis of individual achievements, regardless of gender. The aim 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 their functions in the Supervisory Board, Management Board and Key Functions at the Bank, applying first and foremost objective substantive criteria and taking into account the benefits of diversity.
Gender equality ensures the Bank’s employees the opportunity to manage their careers, achieve success, and assess their work on the basis of individual achievements, regardless of gender. Guidelines on gender equality apply to all HR processes and provide for:
• assuring of representation of both genders in external recruitment processes by preparing lists of recommended candidates including at least one candidate of each gender,
• seeking to ensure representation of both genders in internal recruitment processes, by drawing up lists of recommended candidates for a given post, which contain at least one candidate of each gender,
• eliminating of discriminating criteria in relation to genders while preparing job offers and descriptions,
• informing external partners operating in the areas of recruitment and training (temporary employment agencies, employment agencies, public labor agencies/labor offices, head-hunter agencies) about the scope and content of
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Bank Pekao S.A.
the implemented Gender Equality and Diversity Policy and the Bank’s involvement in achieving the objectives of this policy,
• assuring equal professional development opportunities to all Bank employees (training, coaching, mentoring, and other development actions at work) of any gender, accounting for professional duties, effectiveness, professional potential in accordance with the Bank’s organizational needs, standards and criteria defined in separate internal regulations,
• ensuring equal treatment of the Bank’s employees in terms of remuneration and additional benefits, regardless of gender, in accordance with the Remuneration Policy of Bank Polska Kasa Opieki Spółka Akcyjna and generally applicable provisions of law in this regard,
• promoting balance in professional and private life of employees by taking advantage of possibilities provided for in relevant regulations in this field and such available facilities like:
a) offering flexible working models (part-time employment, etc.) in a manner consistent with the applicable provisions of law, in particular the provisions of labor and social security law and internal regulations, 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 remain in contact with the company during long-term absences and facilitating return after a long-term absence in accordance with applicable law, in particular: labor and social security law and internal regulations of the Bank,
c) incorporating issues related to gender equality in training programs, including, without limitation, those addressed to management staff, adaptation programs and other forms of training and communication.
The Gender Equality and Diversity Policy , in accordance with the legislative process in force at the Bank, was adopted by the Management Board of the Bank and approved by the Supervisory Board. The gender equality and diversity policy also applies to eight 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.
PEKAO GROUP
BANK
2022
WOMEN
MEN
TOTAL
WOMEN
MEN
TOTAL
Number of members of the Supervisory Board by age category and diversity
<30
1
0
1
0
0
0
30-50
16
35
51
3
1
4
>50
5
13
18
2
3
5
Total
22
48
70
5
4
9
PEKAO GROUP
BANK
2022
WOMEN
MEN
TOTAL % PERCENTAGE BY AGE
WOMEN
MEN
TOTAL % PERCENTAGE BY AGE
Percentage of members of the Supervisory Board by age category and diversity
<30
1%
0%
1%
0%
0%
0%
30-50
23%
50%
73%
33%
11%
44%
>50
7%
19%
26%
22%
33%
56%
Total % percentage by gender
31%
69%
100%
56%
44%
100%
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Report on the activities of Bank Pekao S.A. Group for the year 2022 year
Bank Pekao S.A.
PEKAO GROUP
BANK
2022
WOMEN
MEN
TOTAL
WOMEN
MEN
TOTAL
Number of members of the Management Board by age category and diversity
<30
0
0
0
0
0
0
30-50
4
22
26
1
6
7
>50
3
9
12
0
2
2
Total
7
31
38
1
8
9
PEKAO GROUP
BANK
2022
WOMEN
MEN
TOTAL % PERCENTAGE BY AGE
WOMEN
MEN
TOTAL % PERCENTAGE BY AGE
Percentage of members of the Management Board by age category and diversity
<30
0%
0%
0%
0%
0%
0%
30-50
11%
58%
68%
11%
67%
78%
>50
8%
24%
32%
0%
22%
22%
Total % percentage by gender
18%
82%
100%
11%
89%
100%
PEKAO GROUP
BANK
2022
WOMEN
MEN
TOTAL
WOMEN
MEN
TOTAL
Number of employees by age category and diversity
<30
700
515
1,215
372
299
672
30-50
5,653
2,843
8,496
4,817
2,397
7,215
>50
3,507
1,085
4,592
3,336
977
4,312
Total
9,861
4,443
14,304
8,525
3,673
12,199
PEKAO GROUP
BANK
2022
WOMEN
MEN
TOTAL % PERCENTAGE BY AGE
WOMEN
MEN
TOTAL % PERCENTAGE BY AGE
Percentage of employees by age category and diversity
<30
5%
4%
8%
3%
2%
6%
30-50
40%
20%
59%
39%
20%
59%
>50
25%
8%
32%
27%
8%
35%
Total % percentage by gender
69%
31%
100%
70%
30%
100%
PEKAO GROUP
BANK
2022
WOMEN
MEN
TOTAL
WOMEN
MEN
TOTAL
Number of employees by employment structure and diversity
Managerial positions
910
778
1,687
782
651
1,434
Other employees
8,952
3,665
12,617
7,743
3,022
10,765
Total
9,862
4,442
14,304
8,525
3,673
12,199
PEKAO GROUP
BANK
2022
WOMEN
MEN
TOTAL % PERCENTAGE BY CATEGORY
WOMEN
MEN
TOTAL % PERCENTAGE BY CATEGORY
Percentage of employees by employment structure and diversity
Managerial positions
6%
5%
12%
6%
5%
12%
Other employees
63%
26%
88%
63%
25%
88%
Total % percentage by gender
69%
31%
100%
70%
30%
100%
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Report on the activities of Bank Pekao S.A. Group for the year 2022 year
Bank Pekao S.A.
PEKAO GROUP
BANK
2022
<30
30-50
> 50
TOTAL
<30
30-50
> 50
TOTAL
Number of employees by employment structure and age
Managerial positions
10
1,242
436
1,688
5
1,042
387
1,434
Other employees
1,205
7,260
4,150
12,616
667
6,173
3,926
10,765
Total
1,215
8,502
4,586
14,304
672
7,215
4,312
12,199
PEKAO GROUP
BANK
2022
<30
30-50
> 50
TOTAL
<30
30-50
> 50
TOTAL
Number of employees by employment structure and age
Managerial positions
0%
9%
3%
12%
0%
9%
3%
12%
Other employees
8%
51%
29%
88%
5%
51%
32%
88%
Total
8%
59%
32%
100%
6%
59%
35%
100%
Activities promoting diversity
The Pekao Group and the Bank are implementing numerous initiatives offering support for diversity addressed to all employees, including reporting their initiatives and active use of existing projects. The primary goal of these activities is to:
• fully exploit the potential of all employees in the process of managing the company’s intellectual capital and building an organizational culture based on sharing knowledge and experience,
• improve employees’ commitment and satisfaction across all age groups, inter alia, through development programs, incentive targets, succession plans or compensation systems,
• improve HR management strategy by developing leadership,
• develop an employee-friendly organization.
The Bank’s employees may participate in the following initiatives:
• workshops promoting the diversity of operation and communication styles among employees, which include a discussion on the types of personality and corresponding differences in the process of communication and relations development, as well as preferred methods of operation, based on Insight Discovery methodology,
• “Insight Discovery-based Team Management” training for managers. The purpose of those workshops is to educate managers in diversity management, turn their attention to diversified needs and methods used to motivate employees depending on their age, experience, skills and competences. At the training, issues related to diversity management, challenges faced by managers of diversified teams, including generational differences, diversified experience of employees, and their individual needs and motivators, are discussed.
The Bank also has initiatives to strengthen diverse leadership and develop women in managerial positions. On the Bank’s website there is a separate section “Women Leaders at the Bank” devoted to this topic, which presents, among others, stories of women being Bank managers who succeeded in achieving their professional goals.
An important measure taken by the Bank in favor of open dialogue with women and discussion of the needs of this group of employees (women make up nearly 70% of the Bank’s workforce), was the launch of the “No Sugar” program in 2020 under the auspices of Vice President Magdalena Zmitrowicz. In 2022, it included weekly meetings and webinars on the development of personal and professional competencies on the following topics: job crafting 11 , communication, creativity training, leadership awareness, relationship psychology. A separate stream consisted of meetings on child-rearing and parenting challenges. A total of 35 webinars were held, attended by more than 4,000 people. The webinars were positively evaluated in evaluation surveys, with an NPS score as high as 87.
11 Job crafting – self-performed job modelling/transformation by employees, which is aimed at activities directed at tailoring the work to their own needs and preferences, thereby helping employees build job satisfaction and increase commitment.
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Bank Pekao S.A.
In addition, the “No Sugar” program has joined Microsoft’s “emPower Women” development project with partner Avanade. Nearly 90 applications were received during the recruitment process. In the end, five ladies were selected to be among 50 women from the top 10 organizations working with Microsoft tools. The main goal of “emPower Woman” was to strengthen the technological competence of women with a focus on cloud solutions. The program began in September, and for the next seven months the participants had the opportunity to take part in Microsoft training, soft skills development sessions, as well as project work on a selected innovation for the Bank.
The program is not indifferent to the topics of ecology, which is why it has organized an independent competition within the framework of the “Ecology at the Bank” action titled “Let’s be #EKO together. Challenge for #EKOvacation.” There were 44 entries in the competition, which attracted a lot of interest among employees. Participants in the competition demonstrated not only creativity in their submissions, but above all a willingness to promote environmentally friendly attitudes.
There were also publications in the media and press, where women working at Bank Pekao were promoted. The industry magazine “My Company Polska” published an article “Why the world needs women’s leadership” and a report “Women in IT. We do impossible things right away.”
Closing the pay gap
GRI 3-3 Management of material topics
GRI 405-2 Ratio of basic salary and remuneration of women to men
According to 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 by including ESG factors in the incentive system of the Bank’s Management Board and key managers, an annual performance evaluation based on goal achievement, an annual salary review, and a succession plan and development programs to support women’s professional development. The Bank says it will develop networking activities and mentoring programs for women, while continuing to narrow the gender pay gap. Pekao’s priority will be to maintain a balanced level of men and women in managerial positions. Providing flexible work arrangements and supporting work-life balance will remain important.
In fulfilling the obligation referred to in Article 9ca (5)(1) of the Banking Law of August 29, 1997, the Bank provides information to the PFSA for the year 2022 on the gender pay gap, using the ratio of the average pay of women to the average pay of men based on the GRI 405-2 reporting standard as of December 31, 2022, based on total compensation as of December 31, 2022, and including those classified as active and employed more than 0.1 full-time equivalent as of December 31, 2022:
a) the gender pay gap ratio for the Bank as a whole, understood as the ratio of the average pay of women to the average pay of men working at the Bank, is 35.9% for total pay;
b) the gender pay gap ratio, calculated as a weighted average for subgroups of employees taking into account job levels, business lines, and performance at the Bank’s headquarters or in the network, is 7.7% for total pay;
c) the share of women in the workforce is 69.3%.
STRATEGY EXECUTION INDICATOR
ESG 3. PILLAR – GOVERNANCE
2020
2021
2022
TARGET FOR 2024
Pay gap between men and women
37.0%
37.9%
35.9%
<35% (-5%)
Maintaining a balanced level of the number of men
and women in managerial positions
42% (men)
43% (men)
46% (men)
50%
(*) The indicated pay gap between the average salary of men and women reflects the ratio of total compensation between men and women at the Bank. The level of the pay gap is influenced by the overall structure of the workforce, where in areas including technology and data analytics (big data), where the market competitiveness of nominal salaries is at a high level, the majority of employees are men which reflects the availability of candidates and affects the average salaries of men at the Bank relative to the average salaries of women at the Bank, who dominate the workforce in other areas. The Bank is attentive to ensuring equal treatment with regard to remuneration and non-salary benefits regardless of age, race, culture, gender, disability, sexual orientation, religion, nationality, political beliefs or views, union affiliation, ethnic origin, religion, marital status, employment for a definite or indefinite period of time, full-time or part-time employment, and ensures that remuneration and any related terms and conditions of employment that affect remuneration, including those relating to the terms of award and payment of remuneration, are gender-neutral, i.e. are not differentiated on the basis of gender. In its activities, the Bank analyzes factors that may affect differences and takes measures to eliminate them.
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PEKAO GROUP
BANK PEKAO
Ratio of average (*) basic salary of women to average basic salary of men at the Bank’s headquarters or company headquarters
Members of the Management Board
0.69
1.00
Managers
0.78
0.77
Others
0.78
0.75
Ratio of average (*) total salary of women to average total salary of men at the Bank’s headquarters or company headquarters
Members of the Management Board
0.78
1.37
Managers
0.75
0.78
Others
0.75
0.75
Ratio of average (*) basic salary of women to average basic salary of men at the Bank’s establishments or company establishments*
Managers
0.88
0.88
Others
0.83
0.82
Ratio of average (**) total salary of women to average total salary of men at the Bank’s establishments or company establishments*
Managers
0.84
0.92
Others
0.79
0.81
(*) Weighted average of the number of employees of a certain gender in a given category in each company.
(**) Applies to Pekao Group companies, which have both headquarters and outlets.
1.6. Health and safety
1.6.1. OHS issues
GRI 3-3 Management of material topics
GRI 403-2 Hazard identification, risk assessment, and incident investigation
At the Bank, the basic regulations in the area of Employee safety are the Principles of Occupational Health and Safety and Fire Protection introduced on September 21, 2022 by an Order of the President of the Management Board, and the Bank Pekao S.A. Group Policy on Occupational Health and Safety.
The Pekao Group and the Bank, as institutions aware of the responsibility for the safety and health protection of employees, are primarily obliged to:
• prevent accidents at work, occupational diseases and potential accidents by the use of, among others, technical and organizational advancements,
• meet requirements set out by law and other requirements applicable to the Bank,
• aim at continuous improvement of occupational health and safety,
• take part in documenting and updating occupational risk assessment,
• improve actions relating to occupational safety and health to avoid losses arising from accidents at work,
• improve employees’ qualifications and involvement in OHS initiatives,
• provide necessary technical and financial resources and competent personnel to carry out duties connected with the protection of employees’ safety and health.
The most important duty of the occupational health and safety service is to control the conditions under which work is performed, in particular, taking into account: the organization of work processes and their impact on working conditions, and the technical condition of work premises, including the submission of proposals on occupational health and safety requirements, as well as participation in the commissioning of reconstructed facilities.
By inspecting various aspects of work, the OHS services have a substantial share in the assessment of occupational risks. The purpose of the process is to find out which threats in the working environment can cause injuries or deterioration in the employee’s health and whether such treats can be eliminated and, if not, what actions should be taken to reduce the related occupational risks.
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According to demand, the occupational safety and health service organizes and ensures an adequate level of training in occupational safety and health for newly hired employees, cooperates with relevant organizational units in periodic training, as well as with persons performing the tasks of social labor inspector.
To improve the process of performing the above tasks, in April 2001 the Bank established the OHS Committee, the rights and obligations of which are set out in a separate regulation on the establishment of the OHS Committee at Bank Polska Kasa Opieki Spółka Akcyjna. The last update of this regulation was implemented in October 2020 by an Order of the President of the Management Board.
The OHS Committee is responsible for inspecting working conditions, assessing OHS conditions on a periodical basis, prepare opinions on measures taken by the employer to prevent accidents at work and occupational diseases, draw conclusions concerning improvements in the working conditions, and cooperate with the employer in relation to the fulfilment of the employers OHS obligations.
GRI 403-9 Work-related injuries
In 2022, the number of injuries in the Pekao Group was 30, 23 of which involved Bank Pekao employees. No fatal or serious injuries were reported. In terms of the characteristics of the injuries sustained, the following should be mentioned first and foremost: sprains, contusions, and fractures of extremities, spinal injuries, and surface injuries. In each of the cases mentioned, the circumstances and causes of occupational accidents were analyzed, working conditions were inspected, and post-accident recommendations were made.
PEKAO GROUP
BANK
2022
WOMEN
MEN
TOTAL
WOMEN
MEN
TOTAL
Total number of occupational accidents, including:
21
2
23
21
2
23
Number of light accidents
21
2
23
21
2
23
Number of serious accidents
0
0
0
0
0
0
Number of fatal accidents
0
0
0
0
0
0
2022
PEKAO GROUP
BANK
Total number of people injured in accidents
23
23
Total accident frequency rate (IR, calculated as total number of people injured in accidents/employment x 1000)
1.59
1.88
Accident severity rate (calculated as number of days of disability due to accident/number of accidents)
33
33
Total number of days of work disability due to occupational accidents (LDR, calculated as the ratio of the total number of days lost to the number of planned working hours of employees in the reporting period * 200000
4
4.6
Absenteeism rate (AR, calculated as the total number of unscheduled absences from work(*)/number of days worked per year * 100)
7.6
6.8
* Absences due to ill health (not only related to accidents at work), any additional unscheduled absences (such as extra days off for childcare); excluding scheduled leaves (vacation, maternity, paternity).
1.6.2. Medical care and health-promoting activities
GRI 403-6 Promotion of worker health
Bank Pekao offers all Bank employees medical care provided since April 2020 by PZU Zdrowie. Bank employees may take advantage of the package of basic medical services with the possibility of extending them. The wide range of medical services negotiated by Bank Pekao S.A. may also be used by family members indicated by the employee, i.e. children, children over 26 years of age, spouses, partners, parents, parents-in-law, and senior citizens. The medical care offer is also addressed to retirees and pensioners of Bank Pekao S.A. as part of a specially negotiated package. As part of medical care, the insurer covers the costs or provides discounts
for medical consultations, outpatient procedures, prescription visits, laboratory diagnostics, pregnancy management, immunizations, home visits, imaging, endoscopic and functional tests, rehabilitation and dentistry. Taking into account the expectations of employees and market benchmarks, changes have been implemented as of November 1, 2022, which affect the satisfaction associated with the use of medical care services. This includes a preventive package available to all employees, as part of occupational medicine - consultations for selected specialties: ophthalmologist, orthopedist, neurologist, rheumatologist, and a package of laboratory tests.
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Moreover, the Bank, in cooperation with a medical services company, organizes additional initiatives that are part of its efforts to improve the health of its employees. Among the most important activities are flu vaccinations or additional preventive examinations. The Bank also conducts, through internal channels (Intranet), educational programs that support employees in developing health-oriented habits.
The average monthly number of packages held by Bank employees and their family members was 14,445, and the average monthly number of packages financed or co-financed by the Bank was 10,338. Pekao Group companies also provide medical care for their employees.
The Bank also continued its prevention of the COVID-19 virus threat in 2022.
For another consecutive year, the “Take Health by the Horns” program motivating employees to be physically active, eat right, undertake stress management and preventive care continued. The desire to move outdoors and act for the benefit of others was combined into one by the next edition of the “MiLOVE running with Bison” campaign - in 2022, two such events were implemented, i.e. one dedicated to running/walking carried out in the summer, while in the autumn encouragement of activities such as cycling was also included. Both events were very popular. During these campaigns, the “virtual” miles collected by employees during walks, runs, or bike rides were used for a good cause. Thanks to the involvement of nearly 700 people and the more than 86,000 miles they covered, the Bank Pekao Foundation provided financial support to six young scholarship recipients of the Run into the Future Program.
In terms of healthy eating, four programs were implemented. The first provided knowledge on the fundamentals of healthy eating and encouraged people to take up the challenge and implement specific changes in their diets. Subsequent programs addressed the most common diseases of civilization and talked about how to support the fight against conditions such as obesity, hypertension, insulin resistance and diabetes by modifying one’s diet. Each program included several webinars with a nutritionist, supplementary materials: tips, recipes and culinary trivia. In mental health issues, meanwhile, realized programs based on strengthening the pillars of psychological capital (according to Martin Seligman). Meetings with experts addressed the topic of resilience, building real optimism, and there was also a program based on mindfulness enriched with breathing and relaxation techniques, as well as prevention of depression and professional burnout.
The aforementioned activities were complemented by a wide-ranging preventive campaign conducted with PZU Zdrowie doctors, among others. Its goal was to make employees aware of the possible first signs of various medical conditions and to encourage further diagnostics if identified. Preventive activities also included meetings with an oncologist and an ophthalmologist, as well as assistance in quitting the smoking habit. Due to the outbreak of the conflict in Ukraine and the associated period of heightened feelings of insecurity about the geopolitical situation beyond our country’s borders, the Bank has made available the opportunity for anonymous, one-on-one conversations with a psychologist. There were also webinars treating how to deal with difficult emotions, as well as meetings on how to help wisely - without compromising one’s own health.
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1.7. Business ethics and corporate governance
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 goal of corporate governance is to create tools to support effective management, effective oversight, respect for shareholder rights and transparent communication of the company with the market.
GRI 2-23 Policy commitments
GRI 2-24 Embedding policy commitments
GRI 2-27 Compliance with laws and regulations
In its day-to-day operations, the Bank face ever-increasing challenges related to the rapidly changing regulatory environment. In the area of corporate governance, a key activity remains the prevention of violations and protection of the Bank from any improper conduct, in compliance with applicable laws, regulations and accepted ethical standards. The corporate governance applied at the Bank derives from the provisions of the law (in particular, the Commercial Companies Code, the Banking Law and the regulations governing the functioning of the capital market), as well as from the principles contained in the “Best Practice for WSE Listed Companies”, the “Corporate Governance Principles for Supervised Institutions” issued by the Polish Financial Supervision Authority and the “Code of Banking Ethics” of the Polish Bank Association. Pekao Group’s Code of Conduct, which is available to the public, is the primary regulatory act on ethical conduct.
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 goal of corporate governance is to create tools to support effective management, effective oversight, respect for shareholder rights and transparent communication of the company with the market. The principles of ethical conduct apply to all employees of the Bank. The Code addresses the most important issues to watch out for in the performance of official duties. The principles contained therein should be a guideline in the decision-making process.
In 2021, the Management Board of Bank Pekao S.A. adopted a resolution, also effective in 2022, for the Bank to adopt the Best Practices for WSE Listed Companies 2021 (hereinafter: “Best Practices”) issued by the Stock Exchange. The Best Practices replaced the Best Practices of WSE Listed Companies 2016 , which the Bank applied until June 30,2021. The Best Practices are a set of corporate governance principles to which issuers of shares listed on the WSE’s Main Market have been subject since 2002, based on the provisions of the Regulations of the Warsaw Stock Exchange. The Best Practices take into account the current state of the law and the latest trends in the area of 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, including issues of sustainability, diversity in the composition of company bodies and equal pay.
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 Regulations of the WSE, information on the current status of application of corporate governance principles is published, including explanations of the reasons for not applying the principles in accordance with the comply or explain principle. The benefit of implementing the Best Practices was to raise the standards and transparency of the Bank’s operations.
In terms of protecting specific groups of stakeholders, contractors and customers, the Bank has and applies the Rules for the sale of credit and payment products to consumers at Bank Polska Kasa Opieki Spółka Akcyjna and Policy for the sale of investment products.
The Bank adheres to the highest standards in handling confidential information within the meaning of the Regulation of the European Parliament and of the Council of April 16, 2014 on Market Abuse (hereinafter: MAR). A precise regulation has been implemented that clearly defines the rules for handling confidential information within the meaning of MAR and protecting it from unauthorized disclosure or use. The regulation sets out the rules related to the execution of transactions on financial instruments by the Bank’s employees, including employees with access to insider information within the meaning of MAR. For the Bank, it is very important that persons discharging managerial responsibilities and persons closely related to them observe restrictions on transactions in financial instruments related to the so-called “closed periods” preceding the publication of the Bank’s periodic reports. For this reason, in addition to the information received due to applicable laws, persons discharging managerial responsibilities regularly receive information about any upcoming closed period and related restrictions on transactions in the Bank’s financial instruments. Any information about the execution of a transaction by a person discharging managerial responsibilities or a person closely related to him/her is reported in accordance with applicable laws. The Bank constantly monitors employee activity in financial instrument transactions.
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Code of Conduct of the Pekao Group
The Pekao Group operates in accordance with applicable laws and market standards, and promotes ethical business behavior, i.e. conduct based on accepted values and principles. The current Code of Conduct of the Pekao Group (hereinafter: “Code of Conduct”) contains the most important principles to 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 and environmental protection and climate change efforts. The Code of Conduct refers to the adopted ESG Strategy, which summarizes the environmental, social and corporate governance approach and priorities.
The Code of Conduct evokes the values of #straightforward, #together, #boldly and #responsibly that shape the Bank’s organizational culture.
The Code of Conduct contains the most important rules of conduct for all persons in an employment or other legal relationship of a similar nature with Bank Pekao or another legal entity of the Bank Pekao Group, including members of the statutory bodies of the Bank or other Bank Pekao Group entities. The above principles apply to interactions with stakeholders: customers, business partners, representatives of local communities, the business environment and colleagues. They apply to all areas of Pekao Group operations so as to ensure the highest standards of service delivery.
Compliance with the provisions of the Code of Conduct is the primary obligation of each employee of the Bank and each 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 this in writing or through the information system before starting work and performing their duties. Completion of e-learning training on the Code is mandatory for all employees.
The Code of Conduct commits employees to acting ethically, adhering to the values that shape Pekao Group’s organizational culture, honesty, integrity, and professionalism. Its provisions indicate the need to:
- act in accordance with the provisions of law, internal regulations, recommendations of supervisory and control authorities and generally accepted market standards,
- strive to improve the quality of work and standards in order to achieve the intended objectives,
- build long-term relationships with customers based on mutual trust and transparent rules of cooperation, provide high quality services tailored to the specifics and needs of each customer,
- have knowledge of the risk culture, i.e. the risk limits relating to the activities carried out, as defined by the Bank Pekao or other Pekao Group entities.
Those in management positions at all levels are expected to promote ethical attitudes among employees and point out the required standards, thereby building a comprehensive Pekao Group culture based on ethical values. The Code of Conduct shapes the attitude of an employee who is aware that his or her conduct, both in the course of his or her duties and in his or her free time, can affect the way the Pekao Group is perceived. Everyone should act in a way that does not expose the Pekao Group to reputational risk - when performing official duties, representing companies or claiming employment with them.
The Code of Conduct addresses the following issues:
• compliance with the law
• ethical culture
• values
• ethical conduct
• proper principles of conduct for Pekao Group employees
• treating others with dignity and respect
• work culture
• respecting human rights
• ethical product offer
• consumer protection
• principles of handling customer complaints
• responsible marketing and promotional activities
• protecting reputation
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• communication standards
• financial reporting
• protection of information protected by law
• banking secrecy
• personal data
• company secrecy
• 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
• preventing monopoly practices and assuring fair competition
• confidential information and abuses in the market
• policy for managing conflicts of interest
• counteracting money laundering and financing of terrorism
• preventing corruption
• accepting or offering gifts and entertainment
• using the services of brokers and counterparties
• property protection
• occupational health and safety
• reporting breaches ( whistleblowing )
• activities promoting sustainable development, ESG strategy
The Code of Conduct contains examples of acceptable and unacceptable behaviors and actions (case studies), developed on the basis of the Recommendations of the Committee on Banking Ethics at the Polish Bank Association on the formation of ethical culture in banks.
Superiors who manage employees are to pay attention to compliance and reputational risks in their area of responsibility, according to the Code of Conduct, and ensure that subordinate employees act appropriately in this regard.
1.7.1. Preventing corruption
GRI 3-3 Management of material topics
GRI 205-1 Operations assessed for risks related to corruption
GRI 205-3 Confirmed incidents of corruption and actions taken
Bank Pekao decisively combats all forms of corruption and situations that may contribute to corruption. The Bank does not tolerate any actions that may constitute corruption by the Bank’s employees or other persons or units having any relationships with the Bank. Employees who refuse to take part in corruptive practices or employees who disclose such practices or attempts at such practices by other persons/entities are fully protected. Moreover, the Bank does not tolerate offering, promising, demanding, giving or accepting any payments ( facilitation payments ) aimed at accelerating any issues by the Bank employees or other persons or entities having relationships with the Bank.
No cases of corruption were reported in the Pekao Group in 2022.
Corruption Prevention Policy of the Bank Pekao S.A. Group (hereinafter: “Corruption Prevention Policy”) covers all aspects of the Bank’s operations. In accordance with its guidelines, the Bank has adopted a Corruption Prevention Program. It consists of the following elements:
1. Rules and procedures concerning:
• cooperation with intermediaries,
• gifts and entertainment,
• recruitment process,
• cooperation with counterparties,
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• donations and sponsoring (including donations to political parties),
• mergers and acquisitions,
• significant investments,
• the Bank’s participation in public procurement procedures,
2. Training and information programs for Bank employees on preventing corruption,
3. Designing and supervising the implementation of inspection mechanisms aimed at preventing corruption, applying and monitoring the compliance with such mechanisms by other business units of the Bank in accordance with the Bank’s internal regulations,
4. Estimation of compliance risk for the “Anti-Corruption Process”,
5. Establishing safe and easily accessible communication channels to be used by the Bank’s employees and other persons to report attempted corruption or actions regarded as corruption in a confidential way,
6. Reporting the progress in the implementation of the corruption prevention program to the Management Board of the Bank in the form of a quarterly report on the operations of the Compliance Department;
7. Precise and fair registration of all transactions in the books and documents of the Bank and avoiding undisclosed or unregistered accounts, funds, assets or transactions.
Corruption Prevention Officer
A Corruption Prevention Officer has been appointed at Bank Pekao’s Compliance Department who is responsible for reporting information about attempted corruption or actions regarded as corruption. The Corruption Prevention Officer has the right to examine suspected or actual actions regarded as corruption and request a person that is suspected of corruption to submit documents, as well as to review such documents and report such circumstances in accordance with the applicable procedures. Detailed duties of the Corruption Prevention Officer, including the development, implementation and supervision of the effective Corruption Prevention Program, as well as the enforcement of the Bank’s internal regulations on corruption prevention, are set out in the Corruption Prevention Policy.
The Bank’s Corruption Prevention Policy applies to every activity undertaken by the Bank, to all Bank employees, and to the prevention of corruption in the Bank Pekao S.A. Group companies. The Bank decisively combats all manifestations of corruption or situations that may promote corruption. The Bank does not tolerate any actions that may constitute corruption by the Bank’s employees or other persons or units having any relationships with the Bank. In 2022, both Bank Pekao and Bank Pekao Group companies analyzed the risk of corruption. Bank Pekao has defined the main areas of corruption risk associated with its activities, which are:
• using agent services,
• gifts and entertainment,
• recruitment policy,
• services provided by business partners,
• donations and sponsoring (including donations to political parties),
• mergers and acquisitions,
• significant investments;,
• the Bank’s participation in public procurement procedures.
The corruption risk analysis for the major corruption risk areas supplements the Bank’s due diligence applicable to other types of risk in these areas.
In the corruption prevention area, subsidiaries are guided by the Code of Conduct and the same principles as the Bank. The vast majority of companies have appropriate corruption prevention regulations tailored to the size and nature of their operations. Some companies have specialized coordinator positions or teams responsible for anti-corruption activities. The following were cited as potential areas of corruption risk: cooperation with intermediaries and contractors, conclusion and renewal of contracts with contractors, the process of giving 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 subsidiaries.
The Compliance Department, in accordance with the Bank’s internal regulations, identifies, evaluates, controls, monitors and reports on corruption risks at the Bank.
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The Corruption Prevention Policy is mandatorily communicated to the Bank’s intermediaries, contractors and counterparties. Includes due diligence on new business partners in a comprehensive form. Intermediaries are examined for corruption risks prior to the start of cooperation and periodically. The Bank provides employees, intermediaries or contractors with the opportunity to report information about attempted corruption or corrupt activities that have occurred - this should be reported to the email address: PrzeciwdzialanieKorupcji@pekao.com.pl . Information in this regard is retained for the attention of the staff analyzing the case and reported within the management information system.
The Corruption Prevention Policy is communicated to employees at each update. Each employee is also required to familiarize himself with the content of the anti-corruption training, which is mandatory for all employees and culminates in a test to verify the knowledge acquired.
1.7.2. Whistleblowing Policy
GRI 2-16 Communication of critical concerns
GRI 2-26 Mechanisms for seeking advice and raising concerns
The Whistleblowing Policy of Bank Pekao S.A. (hereinafter: “Whistleblowing Policy”) reflects the Bank’s involvement in promoting corporate culture that supports ethical conduct in accordance with legal regulations, as well as the Bank’s procedures and ethical standards. The purpose of this policy is to establish safe channels to report any practices that do not comply with law, unfair or unethical practices or a reasonable suspicion of their existence as well as to ensure that the problems reported will be received, analyzed, and properly handled and that the person who reported them in good faith will be protected against any retaliatory action.
Any early discovery of a violation and remedial actions taken in consequence of that violation contribute to the reduction or elimination of the Bank’s reputation risk. The culture of openness and honesty, contrary to the “culture of silence”, contributes to the growth of trust in the Bank’s transparent operation and constitutes a clear message that the Bank does not tolerate any illegal or unethical conduct.
The Whistleblowing Policy applies to:
• all persons cooperating with the Bank under an employment relationship or any other legal relationship of a similar nature, including members of the Bank’s statutory bodies – regardless of the issue to which the report pertains,
• entities/persons performing operations for the Bank, regardless of the type of agreement between the Bank and the entity/person – with regard to reporting actual or potential violations of regulations on counteracting money laundering and terrorism financing.
Where there are reasonable suspicions that a violation has been committed or where one is in possession of information about a possible occurrence of a violation, it is necessary to promptly contact the designated member of the Management Board and, in special cases (e.g. when the report concerns a member of the Management Board), the Supervisory Board. Reports may be filed verbally, by e-mail or in writing via dedicated communication channels, such as an anonymous infoline, a special e-mail or traditional mail. All reports are handled by the Bank with due diligence and are subject to the procedure set out in the Policy. The notice of violation can be submitted anonymously or not.
If the applicant reveals his identity, the data are protected. The information concerning the filed report of a violation is classified as “Confidential” and stored with the use of appropriate security measures in accordance with applicable laws and the Bank’s information classification and management principles. The Bank does not tolerate retaliation against reporting persons. The verification officer, while informing the person to whom the report pertains - in accordance with the Policy - about the report, at the same time reminds the person of the Bank’s rules on not tolerating retaliation and the obligation to apply them.
Bank Pekao Group’s Code of Conduct gives guidance on how to deal with the many situations a Bank Pekao employee may encounter on a daily basis, but may not provide a solution for every circumstance. Therefore, in case of doubts about how to proceed, each employee in uncertain or unclear situations has the right to ask his or her supervisor or a cell of the Compliance Department.
All Bank employees have the opportunity to ask the Compliance Department to:
• receive advice on implementing the organization’s responsible business principles and practices,
• raise concerns about events in the organization’s business relationships.
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Any employee of the Bank who has come into possession of information about the possibility of a material compliance risk is obliged to promptly communicate such information to the Compliance Department. A Bank employee who has become suspicious of the possibility of a compliance risk in the intended conduct or event should consult the Compliance Department.
NUMBER OF CASES OF REPORTED VIOLATIONS (WHISTLEBLOWING)
2020
2021
2022
Bank Pekao
9
8
24
Group’s companies
14
0
0
Remedial processes for negative impacts
With regard to negative impacts and the occurrence of compliance risks, the Bank has and applies Bank Pekao S.A.’s Compliance Policy. Responsibility for ensuring compliance is borne by the Bank’s statutory bodies, all organizational units of the Bank, as well as all Bank employees, in their areas of operation. The Management Board actively promotes a culture (hereafter referred to as compliance culture) in which every Employee of the Bank will feel responsible for the compliance of their actions with laws, internal regulations and market standards. The Management Board makes the Bank’s business units aware of the importance of this issue and supports the activities of the Compliance Department. If irregularities are found in the application of the Policy, the Management Board takes corrective or disciplinary measures.
In any case concerning the possible application of disciplinary measures referred to in separate internal regulations, the Human Resources Division is the organizational unit competent to apply such measures.
The Compliance Coordinator reports on a quarterly basis on the quality of the compliance risk management processes (self- assessment), applicable internal regulations, and actions taken to cover compliance risks in the Bank’s unit or organizational unit. Reports are sent to the Compliance Department by the tenth day of the first month of the quarter following the quarter covered by the reporting period, regardless of whether compliance risk events occurred in the quarter.
1.7.3. Conflict of Interest Management
GRI 2-15 Conflicts of interest
The Bank Pekao Group’s Conflict of Interest Management Policy in effect sets forth the principles for managing conflicts of interest and defines the circumstances that cause or may cause conflicts of interest in the Bank’s operations.
The Bank applied the methodology for managing conflicts of interest that makes it possible to identify and assess compliance risk connected with a specific conflict, choose appropriate measures to prevent or minimize negative consequences, eliminate conflicts of interest and monitor them.
The Bank defines circumstances in which conflicts of interest are most frequently identified, taking into consideration both areas potentially at risk of a conflict of interest and types of relations concerning the Bank, employees, entities from the Pekao Group and third parties, especially customers and trading partners of the Bank.
The identified types of conflicts of interest and the measures to manage them that should be applied by Employees identifying conflicts of interest are included in the Conflicts of Interest Matrix.
• Measures used by the Bank to manage potential conflicts of interest are, among others, based on:
• its organizational structure and consist in:
• establishing information barriers (Chinese walls),
• splitting duties by separating various business units of the Bank and Group entities in physical and competence terms in the case of actions that can cause a conflict of interest, including in particular the separation of the Bank’s business units,
• implementing structural independence by allocating defined competences, method description, types of actions and operations to each business unit of the Bank to let it make independent decision and supervise the Bank’s employees,
• preventing simultaneous or consecutive involvement of the Bank’s employees in service provision if such involvement can adversely affect the effective management of conflicts of interest,
• internal regulations providing for remuneration rules in relation to the Bank’s employees by defining:
• principles for remuneration that do not have a negative impact on the stakeholder’s interest and eliminate direct dependencies between a variable part of remuneration and business goals,
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• entering into proprietary transactions, putting in place procedures to prevent abuse associated with the execution of own transactions on financial instruments by establishing limitations to such transactions in relation to an employee or the Bank,
• transferring the Bank’s employees to other jobs if a reporting relationship arises between partners or relatives,
• introducing and adhering to ethics and corporate culture by employees and conducting appropriate training.
If, despite of the application of all possible measures to manage conflicts of interest, there is a risk that the interests of the stakeholder to which the conflict refers to will be violated or there is a significant reputation risk, the conflict of interest is disclosed to the stakeholder. The disclosure always includes the description of the underlying conflict of interest adjusted to the stakeholder’s knowledge and experience, which enables the stakeholder to make a well-informed decision concerning a specific service, as well as information about measures applied by the Bank to manage the conflict of interest and limit related risks. The disclosure of the conflict of interest does not release the Bank from its obligation to apply all possible measures connected with the management of conflicts of interest.
The Bank is also governed by the Regulations on Conflict of Interest Management at Bank Pekao S.A. . The Regulations (hereinafter: “Regulations”) define the principles of managing conflicts of interest and define the circumstances that cause or may cause conflicts of interest in the Bank’s activities at all levels of the organization. The Regulations establish a regime of conduct for the Bank, imposing a general obligation to disclose also in situations of sitting on multiple management bodies, capital ties with suppliers and other stakeholders, the existence of controlling shareholders, relationships and transactions with related parties. The Bank ensures public disclosure of relevant information regarding the Conflict of Interest Management Policy adopted at the Bank. These disclosures, in accordance with the Regulations, should include information on how the Bank manages material conflicts of interest and conflicts that could arise due to the Bank’s membership in a capital group or the Bank’s transactions with other entities in the capital group. Public disclosure may not include protected information: constituting personal data, bank secrecy or business secrecy. The above information, as well as information on the existence of such potential conflicts at the Bank and their extent, should also be reported to the Polish Financial Supervision Authority. In addition, with regard to potential conflicts of interest arising from the existence of controlling shareholders, the Bank has and applies the regulation Principles of Conduct with respect to disclosure obligations related to the acquisition or disposal of significant blocks of shares - Bank Pekao S.A. Group Policy.
1.7.4. Counteracting crime and countering money laundering and terrorist financing
Bank Pekao has an Ordinance - Fraud Management Process introducing the Company Instruction - Fraud Management Process at Bank Polska Kasa Opieki S.A. The Business Instruction specifies:
• what is fraud and what categories of fraud may affect the Bank in the course of its business;
• who (which organizational unit of the Bank and which employee of this unit) is obliged to implement actions in the event of a fraud incident;
• how exactly fraud should be countered (catalog of activities to be carried out).
In addition, the duties and responsibilities of the Financial Security Office in Bank Pekao’s Security Department, which performs tasks related to the central coordination of financial crime prevention in the Bank, are defined.
The Fraud Management Process and the implemented Business Instruction impose duties and powers on each Bank employee related to countering financial crime to the detriment of the organization itself and the Bank’s customers.
In accordance with the requirements of the Act of 1 March 2018 on counteracting money laundering and financing terrorism, the Bank engages in activities aimed at counteracting financial crime and terrorism. The key regulation in this regard is the Procedure for counteracting money laundering and financing of terrorism in Bank Polska Kasa Opieki Spółka Akcyjna.
1.7.5. Control and repair mechanisms
The Bank’s Management Board is responsible for designing, implementing and ensuring the operation of an independent, adequate and effective Internal Control System in all of the Bank’s business units and organizational units, which includes the Control function, the Compliance Department and the Internal Audit Department.
The Bank’s Management Board, when taking Internal Control actions, takes into account:
1) the degree of complexity of the processes in place at the Bank and its subsidiaries;
2) the resources available to the Bank;
3) the risk of irregularities in individual processes, including, in particular, significant processes;
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4) an assessment of the adequacy and effectiveness of all lines of defense to date.
The Bank’s Management Board approves the rules for categorizing irregularities and establishes the criteria for evaluating and the effectiveness of the Internal Control System, and determines the actions to be taken to rectify irregularities detected by the Internal Control System, including certain corrective and disciplinary (including punitive) measures. In addition, the Bank’s Management Board ensures the functioning of the Internal Control System in the Bank’s subsidiaries.
Control mechanisms are designed in all processes in place at the Bank.
The organizational cell responsible for a given process designs appropriate controls to mitigate the risk of failure to achieve the objectives of the Internal Control System in its process.
When designing control mechanisms, consideration is given to:
1) changes in the market and regulatory environment,
2) adequacy of a given type of control mechanism with respect to particular processes,
3) the effectiveness of a particular type of control mechanism in the past,
4) the ability to independently monitor a given control mechanism.
Control mechanisms are applied across all lines of defense and across all processes in the Bank for the purpose of:
1) prevention - by preventing irregularities,
2) detection – by detecting irregularities,
3) adjustment – by adjusting irregularities.
Significant or critical irregularities detected in the first line of defense should be immediately reported to the Compliance Department, the Bank’s Security Department and the Internal Audit Department. It is the responsibility of the head of the cell or organizational unit that identified the irregularity to promptly report the above information. The Compliance Department, in consultation with the Internal Audit Department, may change the scope or category of irregularities, in particular based on the aggregation of data from different cells or organizational units.
The Compliance Department immediately forwards information on detected irregularities to the relevant organizational unit of the second line of defense responsible for independent monitoring of the process under which the significant or critical irregularity occurred.
The Director of the Internal Audit Department decides to immediately inform the Bank’s Management Board and Supervisory Board of critical irregularities detected within the first line of defense.
Significant or critical irregularities detected in the second line of defense should be immediately reported to the Compliance Department and the Internal Audit Department. It is the responsibility of the head of the second line of defense unit that identified the irregularity to promptly report the above information. Critical irregularities should be reported by the second line of defense unit that identified the irregularity, in addition to the Bank’s Management Board and the Audit Committee of the Supervisory Board.
Critical irregularities detected as part of the third line of defense should be immediately reported for information to the Compliance Department, the Bank’s Management Board and the Audit Committee. Significant irregularities detected as part of the third line of defense should be reported to the Compliance Department for information.
The Bank’s Compliance Policy sets forth the principles for managing compliance risk. According to them, internal control system activities are implemented, which include monitoring and testing. As a result of these tasks, irregularities are identified for which an action plan is also established. Information on the number and severity of identified irregularities is conveyed to the Bank’s Management Board as part of the Compliance Department’s cyclical reporting.
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1.7.6. Compliance culture
2-26 Mechanisms for seeking advice and raising concerns
Ensuring compliance is integral to the conduct of the Bank’s business, is rooted in the values set forth in the Bank’s Charter of Principles, Code of Conduct and adopted Code of Banking Ethics, and underpins a culture of compliance.
The Code of Conduct addresses the most important issues that all Bank employees pay attention to in the course of their duties. The principles contained therein should be a guideline in the decision-making process. The Code gives guidance on how to deal with the many situations that employees face on a daily basis, but does not provide a solution for every circumstance.
Therefore, when in doubt, the Code instructs employees to ask questions:
• Am I following the law?
• Am I proceeding in an ethical and honest manner?
• Can my action expose my organization or the Pekao Group to the risk of reputational loss?
• Will my action undermine customer or stakeholder confidence in my organization?
If the answer to these questions is uncertain, the Code of Conduct instructs each employee to ask his or her supervisors or the compliance unit. The request for an opinion on compliance is available on the intranet website to all Bank employees.
In addition, regardless of the implementation of the cyclical reporting obligation on the implementation of the provisions of the Whistleblowing Policy in 2022, 24 cases were referred to the highest authorities.
1.7.7. Approach to risk management
Bank Pekao has a risk management strategy described in the ICAAP Policy – Risk and Capital Management Principles (hereinafter: “ICAAP Policy”), adopted by the Management Board and approved by the Supervisory Board of the Bank. This document defines major elements of the Bank’s comprehensive approach to risks connected with its operations and arising from its business strategy, both at the level of the Bank and the whole Capital Group of the Bank. The ICAAP Policy defines the identified risks and the criteria for their recognition as material, indicating the objectives and associated risk management principles, the target risk structure associated with the activities carried out and the acceptable level and structure of risks, as defined in the adopted risk appetite.
Each identified risk is assessed in terms of its significance. If the risk is recognized as significant, it is measured (provided that it is classified as measurable) or evaluated (for risks that are difficult to measure) and monitored and controlled in accordance with methods and procedures applicable to a given type of risk. The purpose of risk assessment and measurement methods is to comply with applicable legal requirements, regulator guidelines and best practices.
The Bank uses formal risk reduction limits in accordance with its risk appetite and defines principles for handling situations when limits are exceeded. The Bank’s management information system makes it possible to monitor risk levels. The Bank’s organizational structure is adjusted to the size and profile of the Bank’s risks. While managing the risk of the Capital Group, the Bank supervises risks associated with the activities of its subsidiaries.
In the risk management systems in place at the Bank, the Management Board is responsible for developing, implementing and effective operation of risk management processes and an internal capital estimation process adjusted to the size and profile of the risk appetite, including the risk of the Bank’s 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 assess risk management system and its adequacy and effectiveness. In addition, the Supervisory Board supervises the compliance of the Bank’s risk management policy with the strategy and financial plan of the Bank.
The risk management strategy (including risk appetite) and system of the Bank are reviewed and updated on a regular basis to keep them adequate in terms of their scale and complexity of the Bank’s operations.
The Bank’s risk management system constitutes an integral element of the Bank’s management system. Risk management improves decision-making processes while ensuring that decisions are in line with best market practices and applicable regulatory requirements.
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Due to the nature of the Bank’s operations, all risks identified as significant and resulting from guidelines of regulatory bodies, including types of risks related to social, employee, environment, respect for human rights, anti-corruption, related to products and relations with external environment, including counterparties, have been appropriately defined and included in separate regulations. Selected regulations in this field have been cited in this Statement on non-financial information of the Bank Pekao S.A. Capital Group for the year 2022.
In 2022, the Bank continued the development of risk management competencies and took actions related to the optimization of credit processes in all business segments by simplifying procedures and implementing modern tools improving processes, including the implementation of automatic tools supporting credit decision making.
At the end of 2022, the Bank’s cost of risk excluding provisions related to foreign currency housing loans was 0.41%. As a risk management leader, the Bank has maintained its cost of risk at one of the lowest levels in the sector.
1.8. Observance of human and worker rights, responsibility in the supply chain
The Pekao Group companies and the Bank comply with the applicable laws and ethical standards pertaining to human rights. The key comprehensive regulation articulating these principles is the Pekao Group’s Code of Conduct. The obligation to respect the rules rests with all employees, regardless of their position, seniority, place and working time. By responsibly shaping a work environment free of practices that violate human rights, the Bank builds a system of values directed to shareholders, customers, investors, contractors, suppliers, local communities and other stakeholders
1.8.1. Regulations reflecting 10 Principles of the UN Global Compact
As a member of the United Nations Global Compact, Bank Pekao fully identifies with the 10 Principles of Global Compact, supports the efforts of that organization towards sustainable development and undertakes numerous initiatives promoting respect for human rights, improvement of working conditions, environmental protection and the fight against corruption. The individual principles of the UN Global Compact are reflected in the policies and internal regulations of the Bank and the Pekao Group referred to in this Statement.
Human Rights
• Principle 1 : Businesses should support and respect the protection of internationally proclaimed human rights; and
• Principle 2 : make sure that they are not complicit in human rights abuses.
Labour
• Principle 3 : Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining;
• Principle 4 : the elimination of all forms of forced and compulsory labour;
• Principle 5 : the effective abolition of child labour; and
• Principle 6 : the elimination of discrimination in respect of employment and occupation.
Environment
• Principle 7 : Businesses should support a precautionary approach to environmental challenges;
• Principle 8 : undertake initiatives to promote greater environmental responsibility; and
• Principle 9 : encourage the development and diffusion of environmentally friendly technologies.
Anti-Corruption
• Principle 10 : Businesses should work against corruption in all its forms, including extortion and bribery.
Among the most important regulations relating to the above principles are:
1. Code of Conduct of the Pekao Group
2. ESG Strategy 2021-2024 “Responsible Bank supporting sustainable development”
3. Collective Labor Agreement
4. Work Regulations of Bank Polska Kasa Opieki Spółka Akcyjna
5. Bank Pekao S.A. Compliance Policy
6. Ownership supervision policy over subsidiaries and with the participation of Bank Polska Kasa Opieki Spółka Akcyjna
7. Corruption Prevention Policy of the Bank Pekao S.A. Group
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8. The Whistleblowing Policy of Bank Pekao S.A.
9. Mobbing Prevention Policy of Bank Polska Kasa Opieki Spółka Akcyjna
10. Credit risk policy
11. Policy and procedure for selecting an audit firm to conduct audit of financial statements of Bank Pekao S.A. and the rules of cooperation with the audit firm, auditor and supervisory authority
12. Equality and diversity policy with regard to the Members of the Supervisory Board, Members of the Management Board and persons holding Key Functions at Bank Polska Kasa Opieki Spółka Akcyjna
13. Policy of selecting candidates for the position of a Management Board member and the Key Function and assessment of the suitability of proposed and appointed members of the management board, supervisory board and key functions at the Bank
14. Capital Management Policy of Bank Polska Kasa Opieki Spółka Akcyjna
15. Procurement Policy of Bank Polska Kasa Opieki Spółka Akcyjna;
16. Bank Pekao S.A. Group Policy on Counteracting Practices Restricting Competition and Practices Violating the Collective Interest of Consumers
17. Procedure for counteracting money laundering and financing of terrorism in Bank Polska Kasa Opieki Spółka Akcyjna,
18. Procedure of periodic evaluation of employees of Bank Polska Kasa Opieki Spółka Akcyjna
19. Principles for granting donations and sponsoring by Bank Polska Kasa Opieki Spółka Akcyjna
In addition, in its activities, the Bank adheres to:
1. The Best Practice for GPW Listed Companies 2021
2. Code of Banking Ethics (Principles of Best Banking Practices
3. Charter of Best Practices in the Financial Market
1.8.2. Prevention of mobbing and discrimination
GRI 406-1 Incidents of discrimination and corrective actions taken
The Bank does not in any way tolerate any mobbing activities or behaviors towards employees (including manifestations of sexual harassment), and appropriate consequences are promptly drawn against their perpetratorsThe Bank has a Mobbing prevention policy of Bank Polska Kasa Opieki Spółka Akcyjna (hereinafter: “Mobbing Prevention Policy”) in place. The regulation defines principles for the prevention of conduct and behavior considered as mobbing. In addition, the purpose of the Mobbing Prevention Policy is to support the implementation of the provisions of labor law to the extent of the obligation to prevent mobbing. Some of the Bank’s subsidiaries have developed internal procedures to regulate anti-mobbing issues, these include: Pekao Bank Hipoteczny S.A. , Pekao Investment Banking S.A., Pekao TFI. S.A. and Pekao Financial Services Sp. z o.o.
BANK
NON-FINANCIAL PERFORMANCE RATIOS
2022
2021
Number of cases reported and handled under the Mobbing Prevention Policy
4
4
Pekao Group
NON-FINANCIAL PERFORMANCE RATIOS
2022
2021
Number of cases reported and handled under the Mobbing Prevention Policy
1
0
In 2022, there were no cases of discrimination at Bank Pekao and the Pekao Group companies.
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Charter of Principles Advocate
The effect of caring for the formation of high quality principles of social coexistence in the workplace, as referred to in Article 94 item 10 of the Labor Code, is the function of the Charter of Principles Advocate, who acts on the basis of the Principles and the procedure of the Charter of Principles Advocates in considering reports by Bank employees of violations of the values of the Charter of Principles adopted by the Bank’s Management Board. The Charter of Principles recognizes integrity in social relations as a guarantee of sustainable development, the sustainable transformation of profit into value for all stakeholders (colleagues, customers and suppliers, investors, local communities). It identifies the values that underlie the relationship with each such group and indicates the behavioral patterns that should be followed in these relationships. Among the values identified as the foundation of fairness, the Charter includes: equal treatment, respect, freedom, transparency, reciprocity and trust. These values, which are widely shared and adhered to by employees, shape the organizational culture and enhance the Bank’s image.
Employees may report to the Advocate if they observe or personally experience behavior that is inconsistent with the rules of social conduct. The employee may forward a Report to the Advocate electronically to the email address, by letter, by telephone. The Advocate is a trusted representative of the employees and is bound by confidentiality and discretion rules. The Advocate’s duty is to help employees solve problems connected with the violation of values. Having received a notice, the Advocate takes appropriate actions to reconciliate conflicted parties and repair their relations, determine further conduct and its implications for the future.
The Advocate presents information on his interventions taken in the previous year, including recommendations of actions for the following year, once a year to the Bank’s Management Board.
1.8.3. Relations with the public
GRI 3-3 Management of material topics
GRI 407-1 Operations and suppliers in which the right to freedom of association and collective bargaining may be at risk
The Bank respects the freedom of association and holds a dialogue with trade unions operating at the Bank, based on respect for fair interests of the parties. The Bank documents the conducted social dialogue and provides trade union organizations with dedicated intranet websites for communication with employees.
In 2022, the Bank cooperated with trade unions in the form of consultations, negotiations and arrangements under terms and conditions set out by labor law and with respect for the parties’ interests and principles of social dialogue - 46 meetings were held between the Bank and trade union organizations. Meetings were held stationary, as well as there was an opportunity to participate remotely. The meetings were mainly devoted to negotiations and arrangements resulting from internal labor law and generally applicable regulations, changes in in-house labor laws, arrangements for the use of the Company Social Benefits Fund, and other topics related to collective employee rights.
In addition, in 2022, the Bank, together with four trade unions, Parties to the Company Collective Labor Agreement, agreed on and signed, in the form of Additional Protocol No. 2 to the Company Collective Labor Agreement, the “Rules of awarding bonuses to employees of the sales network of the Retail Banking Division.” All Trade Union Organizations operating at the Bank were involved in the bargaining process.
In 2022, there were three industrial disputes in the Bank, initiated in 2016, 2019 and 2021, respectively, by one of the trade union organizations operating at the Bank. On April 14, 2022, a Memorandum of Discrepancies was signed by the Bank and the union, ending the mediation phase of the collective dispute initiated in 2016.
The Bank, in its mutual relations with trade union organizations, has been guided by the principle of good faith in developing the best collective labor 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 of the Pekao Group’s establishments and locations.
Employee Council
GRI 402-1 Minimum notice periods regarding operational changes
The Employee Council is a body of employee representation, and the rules of its election, its purpose and its powers are defined by the Act of April 7, 2006 on Informing Employees and Conducting Consultations, . The Council is independent in its operations, has its own internal structure and acts independently towards the employer.
Pursuant to Article 13 of the Act of April 7, 2006 on Informing Employees and Conducting Consultations, the Employer conveys information to the Council regarding:
• the employer’s activities and economic situation, as well as anticipated changes in this regard;
• the status, structure and projected changes in employment and measures to maintain employment levels;
• activities that may cause significant changes in work organization or employment bases.
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The employer conveys information to the Council in the event of anticipated changes or intended actions and at the written request of the Employee Council within a time, form and scope that will enable the Employee Council to become familiar with the matter, analyze the information and prepare for consultation, if required.
The Employee Council has an intranet site on which it posts its messages addressed to Bank employees. In 2022, 4 meetings with the Employee Council were held.
DATA ON TRADE UNIONS AT BANK PEKAO
2020
2021
2022
Number of trade union organizations operating at Bank Pekao
8
9
9
Number of members of Bank Pekao’s Employee Council
0
7
7
Unionization at Bank Pekao
54%
53%
52.3%
Number of days lost due to strike
0
0
0
1.8.4. Responsible procurement process
GRI 3-3 Management of material topics
The Pekao Group and the Bank treat counterparties with due respect and select suppliers of goods and services in an objective and impartial manner, thus taking care of good and fair commercial relations. In selecting suppliers, the Pekao Group and the Bank apply internal procedures in accordance with best practices and mandatory provisions of Polish law. The Pekao Group builds long-term relations 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, effective from 2018: Procurement Policy of Bank Polska Kasa Opieki Spółka Akcyjna; Principles for Procurement by the Procurement Department of Bank Polska Kasa Opieki Spółka Akcyjna and Principles for Procurement Without the Participation of the Procurement Department of Bank Polska Kasa Opieki Spółka Akcyjna . The rules were reviewed again in 2019, 2020 and 2022 following a further transformation of the purchasing function at the Bank. The Procurement Policy was also updated in 2022.
Another step of improvement initiated in 2019 was full digitization of purchasing processes and communication with bidders at the stage of purchasing procedures and placed orders. The result of the work performed so far in the field of digitization of purchasing processes is the implementation of the Integrated Procurement Tool. Following the new system, the purchase procedure in force at the Bank was also updated.
During the procurement process, products or services to be ordered are defined in the same way for all business partners to guarantee fair competition. Any company may be invited to participate and, subject to meeting the Bank’s internal requirements, submit a bid. All bidders, planned for inclusion in procurement processes, are registered in the supplier database and considered when constructing the list of potential suppliers. In addition, in 2022, the so-called Bank Pekao 12 Supplier Zone was launched, where information on selected procurement processes planned for launch is published. The Supplier Zone also includes a dedicated link to register in the Integrated Procurement Tool, where contractors can indicate the assortments in which they would like to be invited to the procurement processes being launched.
Companies invited to take part in the process can ask questions concerning the specification provided. Information on the final decision is sent to all bidders. To choose suppliers of goods or services in an unbiased way, the Bank establishes procurement teams which must ensure that the supplier selection process is transparent and recommend the most advantageous bid.
In accordance with the principles applicable to the Bank’s ordering procedures, most ordering procedures are based on negotiations in an electronic form, which definitely streamlines procedures with Polish and international partners. One of the advantages of such a solution is the high effectiveness 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 PFSA. Companies that provide products or services for the Bank are informed about the abuse prevention process and material provisions of the corruption prevention policy in force at the Bank.
12 https://www.pekao.com.pl/dostawcy.html
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GRI 414-1 New suppliers that were screened using social criteria
In the Bank’s tenders (of above PLN 1 million net) suppliers must fill the Corporate Social Responsibility Form. In this way, Bank Pekao undertakes actions aimed at sustainable development, protection of the environment, and prevention of violations of human rights by the Bank’s business partners. The Form includes questions on the incorporation of environmental regulations and issues of respect for human rights in the daily operations of a supplier or contractor. The Form was updated in 2022 and the scope of its issues includes:
1. As regards the environment:
• compliance with environmental regulations, inspections and criminal cases connected with the violation of applicable regulations;
• the implementation of innovative environment-friendly new technologies;
• the organization of training and information meetings on environmental issues for employees.
2. As regards social issues and human rights:
• a ban on forced labor,
• ban on child labor,
• respect for legal regulations on working time,
• respect for legal regulations on OHS,
• compliance with regulations of labor law, including the payment of remuneration habitually applied in a given sector for all employees,
• violations of anti-corruption laws.
The percentage of procedures completed with suppliers selected to meet environmental and social criteria in 2022 was about 53%.
GRI 2-6 Activities, value chain and other business relationships
The Procurement Department cooperates with external contractors within the framework of: ongoing procurement procedures (1218 bidders were invited to participate in procurement procedures resolved in 2022), concluded contracts (272 contractors) and placed orders (879 contractors). More than 90% of suppliers are contractors doing business in Poland. The supplier base is managed through the Integrated Procurement Tool.
1.9. Mandatory disclosures under the Taxonomy Regulation 13
Taxonomic indicators - Disclosures required by Regulation (EU) 2020/852 of the European Parliament and of the Council
Pursuant to Regulation (EU) No 2020/852 of the European Parliament and of the Council of 18 June 2020 on the establishment of a framework to facilitate sustainable investment, and amending Regulation (EU) 2019/2088 (Taxonomy Regulation, hereinafter referred to as “taxonomy” or “EU taxonomy”) and its implementing acts:
- Commission Delegated Regulation (EU) 2021/2178 of 6 July 2021 supplementing Regulation (EU) 2020/852 of the European Parliament and of the Council by specifying the content and presentation of information to be disclosed by undertakings subject to Articles 19a or 29a of Directive 2013/34/EU concerning environmentally sustainable economic activities, and specifying the methodology to comply with that disclosure obligation (Delegated Regulation to Article 8 of the Taxonomy Regulation), and
- Commission Delegated Regulation (EU) 2021/2139 of 4 June 2021 supplementing Regulation (EU) 2020/852 of the European Parliament and of the Council by establishing the technical screening criteria for determining the conditions under which an economic activity qualifies as contributing substantially to climate change mitigation or climate change adaptation and for determining whether that economic activity causes no significant harm to any of the other environmental objectives,
13 Regulation (EU) 2020/852 of the European Parliament and of the Council of 18 June 2020 on the establishment of a framework to facilitate sustainable investment.
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during the transition period, the Bank is required to disclose the proportion of exposures to economic activities described according to technical eligibility criteria, i.e. Taxonomy-eligible economic activities in terms of two climate objectives - climate change adaptation or climate change mitigation.
For the purpose of determining the proportion of exposures to the activities described in the Taxonomy, the Bank and its subsidiaries analyzed their portfolios of exposures to non-financial undertakings and financial undertakings in order to identify entities subject to non-financial data publication requirements in accordance with the requirements of Directive 2014/95/EU of the European Parliament and of the Council (hereinafter: “NFRD”), and determined the gross carrying amount of the exposures separately for each of the identified entities as of 31.12.2022.
Subsequently, based on the KPIs presented in the non-financial customers’ reports published in 2022 for the reporting period ended December 31, 2021, the Group determined the amounts of exposures to each entity by:
• part related to taxonomy eligible activities, according to the percentage of turnover from products or services related to taxonomy eligible activities (KPI Turnover)
• part related to taxonomy non-eligible activities, according to the percentage of turnover from products or services related to taxonomy eligible activities (KPI Turnover)
• part related to taxonomy eligible activities, according to the percentage of capital expenditures for products or services related to activities eligible for systematics (KPI Capex)
• part related to taxonomy non-eligible activities, according to the percentage of capital expenditures for products or services related to activities eligible for systematics (KPI Capex)
The following table presents information on the proportion of exposures to taxonomy-eligible and taxonomy non-eligible economic activities and other information that the Bank is required to disclose during the period from January 1, 2022 to December 31, 2023, as required by Article 10 par. 3 of the Delegated Regulation 2021/2178:
TAXONOMIC DISCLOSURES as of 31.12.2022
CONTEXTUAL INFORMATION
Percentage of exposures to business activities qualifying for systematics in total assets according to KPI Turnover ratio
0.34%
Art. 10. par. 3 item a)
Percentage of exposures to business activities qualifying for systematics in total assets according to KPI Capex ratio
0.64%
Business activities of financial and non-financial entities subject to Directive 2014/95/EU of the European Parliament and of the Council (NFRD) as described in the Delegated Regulation on establishing 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). The exposures included loans, leases, factoring, corporate bonds and equity interests at gross carrying value
Percentage of exposures to business activities not qualifying for systematics in total assets according to KPI Turnover ratio
2.03%
Art. 10. par. 3 item a)
Percentage of exposures to business activities not qualifying for systematics in total assets according to KPI Capex ratio
1.72%
Business activities of financial and non-financial entities subject to NFRD not described in the Delegated Regulation on establishing technical eligibility criteria for determining contributions to climate change mitigation or adaptation to climate change to prudentially consolidated total assets in accordance with CRR. The exposures included loans, leases, factoring, corporate bonds and equity interests at gross carrying value
Art. 10. par. 3 item b)
Percentage of exposures to central governments, central banks and supranational issuers in total assets
28.06%
Exposures in gross carrying value to central governments, central banks and supranational issuers to prudentially consolidated total assets in accordance with CRR. The exposures included credit receivables and bonds in the non-trading portfolio, including bonds issued by the Polish Development Fund and Bank Gospodarstwa Krajowego that have State Treasury guarantees.
Art. 10. par. 3 item b)
Percentage of derivatives in total assets
5.46%
Gross carrying amount of derivatives to prudentially consolidated total assets in accordance with CRR
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Art. 10. par. 3 item c)
Percentage of exposures to businesses not subject to non-financial reporting obligations in total assets
30.62%
Business activities of financial and non-financial entities not subject to NFRD, i.e., micro-segment companies (including sole proprietorships), SMEs, corporations, public sector companies in gross balance sheet value to prudentially consolidated total assets in accordance with CRR
Art. 10. par. 3
Percentage of trading portfolio in total assets
5.70%
Gross carrying amount of trading book excluding derivatives, equity instruments and loans and advances at fair value through profit or loss to prudentially consolidated total assets in accordance with CRR
Art. 10. par. 3
Percentage of interbank demand loans in total assets
0.20%
Gross carrying amount of interbank demand loans to prudentially consolidated total assets in accordance with CRR
Prudentially consolidated total assets (PLN million)
281,207
Value of prudentially consolidated assets in accordance with CRR
As at the present moment, Bank Pekao does not have targets related to ensuring the growth of the volume of exposures consistent with the taxonomy in its business strategy and does not take these targets into consideration in cooperation with customers and trading partners (disclosure based on Appendix XI of the Delegated Regulation to Article 8 of the Taxonomy Regulation). The ratios presented above differ from ratios reported in accordance with the ESG Strategy of the Bank due to the application of a different calculation methodology.
Disclosure pursuant to Article 8 (6) to (7) of Commission Delegated Regulation (EU) 2021/2178 of July 6, 2021 supplementing Regulation (EU) 2020/852 of the European Parliament and of the Council by specifying the content and presentation of information to be disclosed by undertakings subject to Articles 19a or 29a of Directive 2013/34/EU concerning environmentally sustainable economic activities, and specifying the methodology to comply with that disclosure obligation:
As non-financial undertakings have not yet disclosed information on nuclear and natural gas activities, the Bank, as of December 31, 2022, did not have complete information to the extent required to be disclosed in accordance with Forms 1, 4 and 5 of Annex XII to Commission Delegated Regulation (EU) 2021/2178 - disclosure on financing of nuclear and natural gas fossil fuel power generation activities.
The Bank will disclose information in this regard in the Statement on Non-Financial Data for 2023 based on the information disclosed in this regard by non-financial undertakings that are customers of the Bank.
Adjustment of the disclosure required by the Taxonomy Regulation presented in the Statement of non-financial information of Bank Pekao S.A. Group for 2021
In the Statement of non-financial information of Bank Pekao S.A. Group for 2021, as a result of an clerical error, an incorrect value of the ratio presenting the share of the trading portfolio in total assets was disclosed. The value presented in the disclosure amounted to 0.20%, while the actual value of the ratio at the end of 2021 amounted to 3.40%. The table below presents the correct values of all taxonomic ratios for 2021.
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TAXONOMIC DISCLOSURES as of 31.12.2022
Ratios presented in the Statement of non- financial information of Bank Pekao S.A. Group for 2021
Correct ratios
CONTEXT INFORMATION
Art. 10. 3 a)
The proportion in total assets of exposures to Taxonomy- eligible economic activities
0.40%
0.40%
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.
Art. 10. ust. 3 pkt a)
The proportion in total assets of exposures to Taxonomy non- eligible economic activities
2.20%
2.20%
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 a)
Percentage share in total assets of exposures to central governments, central banks and supranational issuers
25.00%
25.00%
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. ust. 3 pkt b)
Percentage of the total assets of derivatives
3,20%
3,20%
Gross carrying amount of derivatives to total assets prudentially consolidated in accordance with the CRR Regulation
Art. 10. 3 b)
Percentage of total assets of exposures to business entities that are not subject to non- financial reporting
34.60%
34.60%
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 in gross balance sheet value to total assets prudentially consolidated in accordance with the CRR Regulation
Art. 10. 3 b)
Percentage share in total assets of the trading portfolio
0.20%
3.40%
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
Art. 10. 3 c)
Percentage of total assets of interbank loans on demand
0.20%
0.20%
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
250,642
The value of prudentially consolidated assets in accordance with the CRR Regulation
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1.10. Disclosure of information to the extent specified by the Principle Adverse Impacts in accordance with the SFDR for the Pekao Group as an investee 14
Table 1
Statement on principal adverse impacts of investment decisions on sustainability factors
CLIMATE AND OTHER ENVIRONMENT-RELATED INDICATORS
2022
Scope 1 GHG emissions
8,687 t CO 2 e (GHG Protocol)
Scope 2 GHG emissions
38,761 t CO 2 e (GHG Protocol)
Scope 3 GHG emissions
The calculation of emissions in the value chain (GHG Protocol, Scope 3) is planned to be carried out in 2023.
Greenhouse gas emissions
Total GHG emissions
47,449 t CO 2 e (Scope 1+2).
Exposure to companies active in the fossil fuel sector
Pekao Group companies do not operate in the fossil fuel sector and do not generate revenues from fossil fuel activities (as defined in Article 2, item 62 of Regulation (EU) 2018/1999 of the European Parliament and of the Council of 11 December 2018 on the governance of the energy union and climate action).
Share of non-renewable energy consumption and production
Non-renewable energy sources compared to renewable energy sources, expressed as a percentage of total energy sources
63%
Energy consumption intensity per high impact climate sector
Pekao Group companies do not operate in sectors with a significant impact on the climate, i.e. those listed in Sections A through H in Appendix 1 to Regulation (EC) No. 1893/2006 of the European Parliament and of the Council of 20 December 2006 establishing the statistical classification of economic activities NACE Revision 2.
Activities negatively affecting biodiversity sensitive areas
Sites/operations located in or near to biodiversity-sensitive areas where activities negatively affect those areas
Pekao Group companies do not conduct activities in or near biodiversity-sensitive areas that would adversely affect such areas (as defined by SFDR ‘biodiversity-sensitive areas: are Natura 2000 areas, UNESCO World Heritage Areas and so- called Key Biodiversity Areas, and others listed in Appendix D of Annex No. 2 to Commission Delegated Regulation (EU) 2021/2139 of 4 June 2021.
Emissions to water
Tonnes of emissions to water generated
Pekao Group companies do not generate emissions of priority substances and certain other pollutants to water, as listed in Part A of Annex I to Directive 2008/105/EC of the European Parliament and of the Council of 16 December 2008 on environmental quality standards in the field of water policy.
.
Hazardous waste and radioactive waste ratio
Tonnes of hazardous waste and radioactive waste generated
Pekao Group companies do not generate hazardous waste, i.e. waste that exhibits one or more of the hazardous properties listed in Annex III of Directive 2008/98/EC of the European Parliament and of the Council of 19 November 2008 on waste; and radioactive waste as defined in Article 3(7) of Council Directive 2011/70/Euroatom of 19 July 2011 establishing a Community framework for the responsible and safe management of spent nuclear fuel and radioactive waste.
14 Regulation (EU) No. 2019/2088 of the European Parliament and of the Council of 27 November 2019 on sustainability ‐ related disclosures in the financial services sector.
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INDICATORS FOR SOCIAL AND EMPLOYEE, RESPECT FOR HUMAN RIGHTS, ANTI-CORRUPTION AND ANTI-BRIBERY MATTERS
2022
Share of investments in investee companies that have been involved in violations of the UNGC principles or OECD) Guidelines for Multinational Enterprises
Currently, Pekao Group does not have processes and controls in place to oversee compliance with the Global Compact principles. The planned start of work in this area: 2023-2024.
Lack of processes and compliance mechanisms to monitor compliance with UN Global Compact principles and OECD Guidelines for Multinational Enterprises
Currently, Pekao Group does not have processes and controls in place to oversee compliance with the Global Compact principles. The planned start of work in this area: 2023-2024.
Unadjusted gender pay gap
Average unadjusted gender pay gap, the male-female pay gap, defined as the difference between average gross hourly earnings of male paid employees and of female paid employees expressed as a percentage of average gross hourly earnings of male paid employees
34%
Board gender diversity
Average ratio of female to male board members, expressed as a percentage of all board members
18%
Exposure to controversial weapons
Involvement in the manufacture or selling personnel mines, cluster munitions, chemical weapons and biological weapons)
Pekao Group companies are not involved in the production or sale of controversial weapons referred to in: (1) the Convention on the Prohibition of the Use, Stockpiling, Production and Transfer of Anti- Personnel Mines and on their Destruction of 18 September 1997; (2) the Convention on the Prohibition of Cluster Munitions, which entered into force on 1 August 2008; and (3) the Chemical Weapons Convention, which entered into force on 29 April 1997
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Table 2
Additional climate and other environment-related indicators
INDICATOR
2022
Emissions of inorganic pollutants
Pekao Group companies do not emit inorganic pollutants in accordance with the definitions contained in Article 3(13) of Directive 2010/75/EU of the European Parliament and of the Council of 24 November 2010 on industrial emissions (integrated pollution prevention and control)
Emissions of air pollutants
Due to the nature of their operations, Pekao Group companies do not calculate emissions of anthropogenic air pollutants such as sulfur dioxide, nitrogen oxides, non-methane volatile organic compounds, ammonia and PM 2.5 fine particulate matter.
Emissions of ozone-depleting substances
Due to the nature of their operations, Pekao Group companies do not calculate the ozone-depleting emissions listed in the Montreal Protocol. Pekao Group companies have data on the consumption of refrigerants used in air-conditioning equipment, expressed in kilograms for the purpose of calculating GHG Protocol Scope 1 and Scope 2 emissions.
Investments in companies without carbon emission reduction initiatives
Bank Pekao is implementing initiatives to reduce carbon emissions, as mentioned in the “Climate and Environment” section of this report.
Breakdown of energy consumption by type of non-renewable sources of energy
Consumption of fuel from coal and coal products: 0
Consumption of fuel derived from oil and petroleum products: 22,134 MWh
Consumption of fuel derived from natural gas: 20 MWh
Consumption of fuel from other non-renewable sources: 0
Consumption of nuclear products: 0
Water usage and recycling
Average amount of water consumed: 112,012 cubic meters.
Pekao Group companies do not calculate the ratio of recycled and reused water.
Investments in companies without water management policies
Pekao Group companies do not have water management policies.
Exposure to areas of high water stress
Pekao Group companies do not have facilities located in areas of significant water scarcity according to the Aqueduct Water Risk Atlas methodology, i.e. risk areas: “High” (3-4) and “Extremely High” (4- 5).
Investments in companies producing chemicals
The activities of Pekao Group companies are not covered by Chapter 20.2 in Appendix 1 to Regulation (EC) No. 1893/2006 of the European Parliament and of the Council of 20 December 2006 establishing the statistical classification of economic activities NACE Revision 2.
Land degradation, desertification, soil sealing
Pekao Group companies are not engaged in activities that affect land degradation, desertification or soil sealing.
Investments in companies without sustainable land/agriculture practices
Pekao Group companies do not operate in the agricultural sector and do not manage land and are not obligated to use sustainable agricultural practices or strategies/practices or strategies for sustainable land management.
Investments in companies without sustainable oceans/seas practices
Pekao Group companies do not operate in the marine and ocean sector and are not obligated to follow sustainable marine and ocean practices.
Non -recycled waste ratio
Pekao Group companies do not calculate non-recycled waste.
Natural species and protected areas
1. Pekao Group companies do not carry out activities that affect endangered species included in the Red Book of Threatened Species (IUCN).
2. Pekao Group companies do not have a biodiversity conservation policy covering operational sites owned, leased or managed in or adjacent to a protected area or an area of high biodiversity outside protected areas.
Deforestation
Pekao Group companies do not have a policy to prevent deforestation.
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Table 3
Additional indicators for social and employee, respect for human rights, anti-corruption and anti-bribery matters
INDICATOR
2022
Investments in companies without workplace accident prevention policies
Bank Pekao Group companies have a Bank Pekao S.A. Group Policy on Occupational Health and Safety.
Rate of accidents
23
Number of days lost to injuries, accidents, fatalities or illness
547
Lack of a supplier code of conduct
Pekao Group companies do not have a supplier code of conduct (in the context of hazardous working conditions, precarious employment, child labor and forced labor).
Lack of grievance/complaints handling mechanism related to employee matters
The mechanism for handling complaints regarding employee issues is included in the Mobbing Prevention Policy of Bank Polska Kasa Opieki Spółka Akcyjna and relevant separate regulations developed by subsidiaries.
Insufficient whistleblower protection
No such incidents have been identified. Whistleblower protection issues are covered in Bank Pekao S.A.’s Whistleblowing Policy.
Incidents of discrimination
Incidents of discrimination: 0
Incidents of discrimination leading to sanctions: 0
Excessive CEO pay ratio
21,4 (ratio calculated for Bank Pekao only)
Key regulation: The Remuneration Policy of Bank Polska Kasa Opieki Spółka Akcyjna
Lack of a human rights policy
Pekao Group companies do not have a comprehensive policy on respect for human rights.
Lack of due diligence
Pekao Group companies do not conduct due diligence to identify, mitigate or eliminate adverse human rights impacts.
Lack of processes and measures for preventing trafficking in human beings
Pekao Group companies do not have procedures and measures in place to prevent human trafficking.
Operations and suppliers at significant risk of incidents of child labour
In this area, Bank Pekao has internal policies, including in particular: the Bank's Compliance Policy and the Pekao Group Code of Conduct. The HR Strategy Division performs activities to ensure compliance with generally applicable laws.
Operations and suppliers at significant risk of incidents of forced or compulsory labour
In this area, Bank Pekao has internal policies, including in particular the Bank's Compliance Policy and the Pekao Group Code of Conduct. The HR Strategy Division performs activities to ensure compliance with generally applicable laws.
Number of identified cases of severe human rights issues and incidents
No cases of severe human rights issues or incidents have been identified in Pekao Group companies. .
Lack of anti-corruption and anti-bribery policies
Bank Pekao Group companies are bound by the Bank Pekao Group’s Corruption Prevention Policy.
Cases of insufficient action taken to address breaches of standards of anti-corruption and anti-bribery
No incidents of violations of anti-corruption and anti-bribery procedures and standards have been reported in Pekao Group companies.
Number of convictions and amount of fines for violation of anti- corruption and antibribery law
No convictions for violations of anti-corruption and anti-bribery laws were recorded at Pekao Group companies. The amount of fines for violations of anti-corruption and anti-bribery laws is PLN 0.
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1.11. Non-financial reporting process
1.11.1. Communication with stakeholders
GRI 2-29 Approach to stakeholder engagement
Bank Pekao conducts 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. The main groups of stakeholders include:
• Investors, market analysts and rating agencies
• Customers
• Employees
• Suppliers
• General public
• Media
• Supervisory institutions; including the Financial Supervision Committee, the Bank Guarantee Fund, the Office of Competition and Consumer Protection, the National Bank of Poland, the Financial Stability Committee, the National Securities Depository.
These stakeholder groups are particularly important due to the business model, implementation of the strategy and further development of the Bank.
The principles set out in the Bank’s information policy regarding contacts with investors, securities market analysts, media and customers are regulated by the Bank’s information policy, which is available on the website 15
STAKEHOLDER GROUP
COMMUNICATION TOOLS
COMMUNICATION FREQUENCY
REPORTED TOPICS
ACTIONS TAKEN BY THE BANK
General Meeting of Shareholders
At least once a year
Conferences
A dozen or so times a year
Meetings and teleconferences
Several hundred per year
Stock exchange and press releases
On an on-going basis
Financial statements, data compilations and presentations of results
Quarterly
Bank’s website and online information channels
On an on-going basis
Meetings with rating agencies
At least once a year
Permanent cooperation of the Investor Relations and ESG Strategy Department (institutional and individual investors, financial analysts and capital market organizations);
On an on-going basis
Online ESG Report
On an on-going basis
Investors (shareholders, bondholders, and purchasers of other securities issued by the Bank, market analysts and rating agencies)
Branches, online and mobile banking
On an on-going basis
• Implementation of strategies, building of value, organizational changes
• Macroeconomic and market forecasts
• Distribution of profits to shareholders
Transparent operation, easy and fast access to information about the Bank, enforcement of external regulations and market standards.
Bank’s website and online information channels
On an on-going basis
Online and mobile banking platform
On an on-going basis
Infoline
On an on-going basis
Complaints
On an on-going basis
Satisfaction surveys on products and services and quality of customer service
On an on-going basis
Advertising campaigns and marketing activities
On an on-going basis
Product offers, mailing
On an on-going basis
Customers
Participation in fairs
Where possible
• High quality of offered products and services,
• Fair consumer practices
• Security of entrusted funds
• Ease of communication with the Bank
• Offering competitive, high-quality products and services tailored to the needs of Customers; applying procedures that ensure fair and safe management of Customers’ funds; ensuring a number of
15 https://www.pekao.com.pl/relacje-inwestorskie/raporty-i-sprawozdania/odpowiedzialny-biznes.html
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Internal communication
On an on-going basis
access channels; creating transparent
• terms and conditions of offers and agreements; collecting information on expectations and opinions of
• customers; contributing to the development of good practices and standards for advertising financial services and complying with them.
Intranet, chats, discussion forum
On an on-going basis
Meetings with the participation of the Management Board
Several times a year
Trips to attend competitions, olympiads
At least once a year
Employee volunteer work program
On an on-going basis
Webinars
On an on-going basis
Employee evaluation
At least once a year
Internal publications
On an on-going basis
Thematic questionnaires, evaluation questionnaires, employee opinion surveys
Several times a year
Whistleblowing system
On an on-going basis
Employees
Meetings with employer representatives, negotiations, consultations
At least a dozen times or so a year
• Employment stability and opportunities for professional growth
• Attractive remuneration system
• Bank’s strategy and its key goals
• Transparent organizational structure
• Balance between professional and private life
Listening to employees’ opinions (chats, satisfaction surveys), providing employees with opportunities for growth (promotions, training), clear, measurable targets subject to monitoring, adequate wage and benefits policy, meetings with employees and on-going communication with employees, ensuring a friendly workplace: including through the implementation of remote work opportunities and pro-health and preventive measures.
Intranet site
On an on-going basis
• Provisions of CA
• Employee matters
Dialogue with trade unions operating at the Bank, based on respect for fair interests of the parties.
Trade union organizations
Meetings with suppliers, negotiations
On an on-going basis
Detailed information on the social partners can be found on the individual intranet pages.
• Trade Unions
• Employee Council
• Social Labor Inspection
Providing the social side with opportunities to communicate with employees.
Special procurement platform, telephone number, e-mail
On an on-going basis
On-going cooperation and execution of contracts
On an on-going basis
Suppliers
Charity and sponsoring activities, actions on climate
On an on-going basis
• Transparent rules for the selection of and cooperation with suppliers
Transparent supplier selection procedures; timely performance of the provisions laid down in the contract, promotion of good procurement practices.
Employee volunteer work program
On an on-going basis
Meetings with students, student internships
At least once a year
Social and natural environment
Press conferences
A dozen or so times a year
• Social and environmental projects
• Reduction of negative impact on the environment, environmental education of Customers and Employees
• Work and growth opportunities for students
• Implementing sponsorship and charity projects; supporting community development; encouraging employees to participate in social and environmental actions, reducing negative
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environmental impacts.
Press releases
On an on-going basis
Social media
On an on-going basis
Interviews, expert statements
On an on-going basis
Participation in economic conferences, etc.
Several dozen times a year
Permanent cooperation of the Communications Office (journalists, media)
On an on-going basis
Media
Reports, correspondence, inspections, non-reporting studies
On an on-going basis
• Implementation and promotion of the bank’s strategy
• Release of accurate information on measures / condition of the bank to all groups of stakeholders through media
• Building the position of a leader / expert in the financial sector
Transparent operation, easy and fast access to information about the Bank.
Regulators
• Compliance with requirements and regulations;
• Supporting the creation of new market principles, including good practices.
Compliance with requirements, regulations and good practices, ongoing cooperation with the Regulators.
1.11.2. Information about the report
GRI 2-2 Entities included in the organization’s sustainability reporting
Sustainability reporting covered the following entities: Bank Pekao, Pekao Bank Hipoteczny S.A.; Centrum Kart S.A.; Pekao Direct Sp. z o.o.; Pekao Faktoring Sp. z o.o.; Pekao Financial Services Sp. z o.o.; Pekao Investment Banking S.A.; Pekao Investment Management S.A. (including: Pekao TFI S.A.) and Pekao Leasing Sp. z o.o. (including: PEUF Sp. z o.o.).
The data were consolidated using the full method.
GRI 2-3 Reporting period, frequency and contact point
The non-financial statement has been prepared ort in accordance with the GRI Standards for the period from 1 January, 2022to 31 December, 2022. Applied standard: GRI 1: Foundation 2021.
Contact regarding the report:
• Joanna Brancewicz, manager of the ESG Team in the Department of Investor Relations and ESG Strategy
• Marta Mazek, ESG expert in the Department of Investor Relations and ESG Strategy
• Iwona Hlebko-Zwierz, ESG expert in the Department of Investor Relations and ESG Strategy
E-mail address: esg@pekao.com.pl
GRI 2-4 Restatements of information
No changes in reported information.
GRI 2-5 External assurance
The Statement was not subject to external verification or audit. The previous Statement was published on March 2, 2022.
GRI 2-14 Role of the highest governance body in sustainability reporting
The Statement on non-financial data, as part of the annual report on operations, is submitted to all members of the Bank’s Management Board for review and approval.
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1.11.3. Materiality of topics
GRI 3-1 Process to determine material topics
In determining the Bank’s impact on the natural environment, economic environment and society, the following were taken into account primarily: analysis and feedback received from stakeholders (including: shareholders, investors, financial analysts, rating agency analysts and stock market analysts). The analysis was based on the provisions of the Bank’s ESG Strategy and business strategy, and regulatory requirements, including
• Requirements of Directive 2014/95/EU of the European Parliament and of the Council of 22 October 2014 amending Directive 2013/34/EU as regards disclosure of non-financial and diversity information by certain large undertakings and groups (implemented into Polish law in the form of amendments to the Accounting Act),
• Requirements of the Regulation (EU) No. 2019/2088 of the European Parliament and of the Council of 27 November 2019 on sustainability ‐ related disclosures in the financial services sector,
• Best Practices of WSE Listed Companies 2021,
• ESG reporting guidelines issued by the WSE,
• European Securities and Markets Authority (ESMA) guidelines,
• Requirements arising from reporting rules within the PZU Group.
GRI 3-2 List of material topics
Based on an analysis, the following topics were identified as significant to report in the Statement:
• Factors affecting the Bank’s operations
• Support for energy transition
• “Green” and “sustainable” products
• Regulatory changes in the area of “sustainable finance”
• Reduction of the carbon footprint, protection of environmental resources
• Social commitment
• Responsible sales, service quality management
• Human capital, working conditions and employee development
• Business ethics and corporate governance
• Inclusive organization - development, diversity and equality
• Observance of human and worker rights, responsibility in the supply chain
• Development of innovation in business operations
The above topics have been singled out according to the principle of double significance, i.e. as topics that significantly affect Bank Pekao’s business (1) and as topics through which Bank Pekao exerts influence on its stakeholders’ environment (2). Each topic deemed significant is described from the perspective of the approach to its management, including the indicators corresponding to the process.
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1.12. Bank’s position in ESG ratings and indices
The Bank’s involvement in ESG activities is assessed by the market in international rankings and indices. The Bank’s priority is to increase its position in the environmental, social and corporate governance statements as a result of systematically undertaking and disclosing ESG activities.
RATING
2020
2021
2022
CONTEXTUAL INFORMATION
MSCI ESG Ratings
A
A
BBB
MSCI ESG measures the resilience of companies to long-term risks in terms of environmental protection, corporate social responsibility and corporate governance.
FTSE4Good Russell
3.1
3.1
3.3
FTSE Russell ESG assesses approximately 4,100 companies in 47 developed and developing countries. The purpose of the FTSE assessment is to facilitate investment in companies that meet internationally recognized corporate liability standards and is the basis for the inclusion of the company in the FTSE4Good index. FTSE4Good index companies have met strict environmental, social and corporate governance criteria and are able to exploit the benefits of responsible business practices.
WIG-ESG
Share of shares
in the index: 4.8%
Share of shares
in the index: 5.6%
Share of shares
in
the index: 5.9%
The WIG-ESG index has been published since September 2019, based on the value of the portfolio of shares of companies recognized as socially responsible. The base value of the index was determined as at 28 December 2018 and amounted to 10,000.00 points. WIG-ESG is an income index, which means that both the prices of transactions concluded therein and the income from dividends are taken into account in its calculation. The share of a single company in the index is limited to 10%, whereas the aggregate share of companies the share of which exceeds 5% is limited to 40%.
Bloomberg
Gender Equality-Index
73/100
79/100
79,9/100
The Bloomberg Gender-Equality Index may include large listed companies actively seeking gender equality in the work environment. Globally in 2022, 418 companies from 45 countries and representing 11 sectors of the economy were included in the index. Index participants were selected from stock exchange companies with a capitalization of more than USD 1 billion. In order to be entered in the index, a sufficiently high result should be obtained 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 a pro-women brand. In the Bloomberg GEI rating, issues of respect for diversity and gender equality are analyzed in terms of employment conditions, educational activities, employee benefits and perks, professional development opportunities, promotion paths and salaries, among others.
Sustainalitycs
26.9 medium risk
29.1 medium risk
26.5
medium risk
The ESG risk assessments issued by Sustainalytics focus on the financially significant risks of ESG and cover more than 20,000 companies from 172 countries. The Agency’s methodology includes an analysis of the exposure of undertakings to significant risks related to ESG issues and an assessment of how companies manage those risks. Risk factors are determined on the basis of the industry and are determined on the basis of an analysis of 20 factors specific to each industry.
Vigeo Eiris
32/100
47/100
47/100
The Vigeo Eiris score presents the extent to which companies integrate environmental, social and management factors into their strategies and operations. Entities from 40 different industries from around the world participate in the index. During the ESG assessment, 38 issues are verified.
Ranking of Responsible Businesses
Position 9. (410/500 points) out of 74 companies in the general classification
Position 11. (84/100 points) 16 out of 70 companies in the general classification
Position 13. (74/100 points) out of 62 companies in the general classification
Collection of companies operating in Poland evaluated for the quality of their corporate social responsibility management system. The ranking makes it possible to make a reliable assessment of one’s advancement in addressing the challenges of sustainable development. The basis for the compilation of the Ranking of Responsible Companies is a questionnaire that companies fill out in accordance with due diligence and professional ethics.
Carbon Disclosure Project (CDP)
-
D-
D
Carbon Disclosure Project is a non-profit organization that operates a global disclosure system for investors, companies, cities, states and regions to manage their environmental impact. Companies can disclose information through CDP’s corporate questionnaires on climate change, water management and strategies to prevent deforestation.
16 The ranking organizer has made changes to the scoring methodology.
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Reporting indicators index
GENERAL DISCLOSURES: 2021
INDICATOR NUMBER
GRI STANDARD
INDICATOR NAME
REFERENCE IN THE BODY OF THE REPORT
THE ORGANIZATION AND ITS REPORTING PRACTICES
2-1
GRI 2. General Disclosures 2021
Organizational details
About Bank Pekao
2-2
GRI 2. General Disclosures 2021
Entities included in the organization’s sustainability reporting
Non-financial reporting process
2-3
GRI 2. General Disclosures 2021
Reporting period, frequency and contact point
Non-financial reporting process
2-4
GRI 2. General Disclosures 2021
Restatements of information
Non-financial reporting process
2-5
GRI 2. General Disclosures 2021
External assurance
Non-financial reporting process
ACTIVITIES AND WORKERS
2-6
GRI 2. General Disclosures 2021
Activities, value chain and other business relationships
About Bank Pekao
2-7
GRI 2. General Disclosures 2021
Employees
Human capital
2-8
GRI 2. General Disclosures 2021
Workers who are not employees
Human capital
GOVERNANCE
2-9
GRI 2. General Disclosures 2021
Governance structure and composition
About Bank Pekao
2-10
GRI 2. General Disclosures 2021
Nomination and selection of the highest governance body
About Bank Pekao
2-11
GRI 2. General Disclosures 2021
Chair of the highest governance body
About Bank Pekao
2-12
GRI 2. General Disclosures 2021
Role of the highest governance body in overseeing the management of impacts
About Bank Pekao
2-13
GRI 2. General Disclosures 2021
Delegation of responsibility for managing impacts
About Bank Pekao
2-14
GRI 2. General Disclosures 2021
Role of the highest governance body in sustainability reporting
Non-financial reporting process
2-15
GRI 2. General Disclosures 2021
Conflicts of interest
Business ethics and corporate governance
2-16
GRI 2. General Disclosures 2021
Communication of critical concerns
Business ethics and corporate governance
2-17
GRI 2. General Disclosures 2021
Collective knowledge of the highest governance body
About Bank Pekao
2-18
GRI 2. General Disclosures 2021
Evaluation of the performance of the highest governance body
About Bank Pekao About Bank Pekao
2-19
GRI 2. General Disclosures 2021
Remuneration policies
Human capital
2-20
GRI 2. General Disclosures 2021
Process to determine remuneration
Human capital
2-21
GRI 2. General Disclosures 2021
Annual total compensation ratio
Human capital
STRATEGY, POLICIES AND PRACTICES
2-22
GRI 2. General Disclosures 2021
Statement on sustainable development strategy
About Bank Pekao
2-23
GRI 2. General Disclosures 2021
Policy commitments
Climate and environment;
Social commitment
Business ethics and corporate governance
2-24
GRI 2. General Disclosures 2021
Embedding policy commitments
Business ethics and corporate governance
2-25
GRI 2. General Disclosures 2021
Processes to remediate negative impacts
Responsible sales, quality management;
Business ethics and corporate governance
2-26
GRI 2. General Disclosures 2021
Mechanisms for seeking advice and raising concerns
Business ethics and corporate governance
2-27
GRI 2. General Disclosures 2021
Compliance with laws and regulations
Business ethics and corporate governance
2-28
GRI 2. General Disclosures 2021
Membership associations
About Bank Pekao
STAKEHOLDER ENGAGEMENT
2-29
GRI 2. General Disclosures 2021
Approach to stakeholder engagement
Non-financial reporting process
2-30
GRI 2. General Disclosures 2021
Collective bargaining agreements
Human capital
214
Report on the activities of Bank Pekao S.A. Group for the year 2022 year
Bank Pekao S.A.
II. MATERIAL TOPICS: 2021
INDICATOR NUMBER
GRI STANDARD
INDICATOR NAME
REFERENCE IN THE BODY OF THE REPORT
REFERENCE IN THE BODY OF THE REPORT
3-1
GRI 3. Material topics: 2021
Process to determine material topics
Non-financial reporting process
3-2
GRI 3. Material topics: 2021
List of material topics
Non-financial reporting process
MATERIAL TOPIC: FACTORS AFFECTING THE BANK’S OPERATIONS
3-3
GRI 3. Material topics: 2021
Management of material topics
About Bank Pekao
201-1
GRI 201: Economic Performance 2016
Direct economic value generated and distributed
About Bank Pekao
ESG Strategy: Environment
MATERIAL TOPIC: SUPPORT FOR ENERGY TRANSITION
3-3
GRI 3. Material topics: 2021
Management of material topics
Climate and environment
Own indicator
Share of high-carbon financing
Climate and environment
MATERIAL TOPIC: “GREEN” AND “SUSTAINABLE” PRODUCTS
3-3
GRI 3. Material topics: 2021
Management of material topics
Climate and environment
Own indicator
Financing sustainable projects
Climate and environment
Own indicator
Supporting the issuance of customer ESG bonds
Climate and environment
Own indicator
Share of green financing
Climate and environment
MATERIAL TOPIC: REDUCTION OF THE CARBON FOOTPRINT, PROTECTION OF ENVIRONMENTAL RESOURCES
3-3
GRI 3. Material topics: 2021
Management of material topics
Climate and environment
302-1
GRI 302: Energy: 2016
Energy consumption in the organization
Climate and environment
3-3
GRI 3. Material topics: 2021
Management of material topics
Climate and environment
3-3
GRI 3. Material topics: 2021
Management of material topics
Climate and environment
305-1
GRI 305: Emissions 2016
Direct greenhouse gas emissions (Scope 1)
Climate and environment
305-2
GRI 305: Emissions 2016
Indirect greenhouse gas emissions (Scope 2) location- based
Climate and environment
MATERIAL TOPIC: REGULATORY CHANGES IN THE AREA OF SUSTAINABLE FINANCE
3-3
GRI 3. Material topics: 2021
Management of material topics
Mandatory disclosures under the Taxonomy Regulation
Disclosures under the Taxonomy Regulation, Principle Adverse Impacts
Mandatory disclosures under the Taxonomy Regulation;
Disclosure of information to the extent specified by the Principle Adverse Impacts in accordance with the SFDR for the Pekao Group as an investee
ESG Strategy: Commitment
MATERIAL TOPIC: OBSERVANCE OF HUMAN AND WORKER RIGHTS, RESPONSIBILITY IN THE SUPPLY CHAIN
3-3
GRI 3. Material topics: 2021
Management of material topics
Observance of human and worker rights, responsibility in the supply chain
402-1
GRI 402 Labor/Management Relations 2016
Minimum notice periods regarding operational changes
Observance of human and worker rights, responsibility in the supply chain
3-3
GRI 3. Material topics: 2021
Management of material topics
Observance of human and worker rights, responsibility in the supply chain
406-1
GRI 406: Non-discrimination 2016
Incidents of discrimination and corrective actions taken
Observance of human and worker rights, responsibility in the supply chain
3-3
GRI 3. Material topics: 2021
Management of material topics
Observance of human and worker rights, responsibility in the supply chain
407-1
GRI 407: Freedom of Association and Collective Bargaining 2016
Operations and suppliers in which the right to freedom of association and collective bargaining may be at risk
Observance of human and worker rights, responsibility in the supply chain
3-3
GRI 3. Material topics: 2021
Management of material topics
Observance of human and worker rights, responsibility in the supply chain
215
Report on the activities of Bank Pekao S.A. Group for the year 2022 year
Bank Pekao S.A.
414-1
GRI 414: Supplier Social Assessment 2016.
New suppliers that were screened using social criteria
Observance of human and worker rights, responsibility in the supply chain
MATERIAL TOPIC: SOCIAL COMMITMENT
3-3
GRI 3. Material topics: 2021
Management of material topics
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