Apart from strictly banking operations, the PKO Bank Polski SA Group provides financial services related to leases, factoring, investment funds, pension funds, insurance, and debt collection services, transfer agent services, IT outsourcing and business outsourcing services, and conducts development and real estate management operations.
Characteristics of selected subsidiaries of the PKO Bank Polski SA Group
PKO Towarzystwo Funduszy Inwestycyjnych SA
Value of managed IF assets (in PLN billion)
In 2017, the Company generated net profit of PLN 64.6 million (in 2016 net profit was PLN 59.8 million).
The value of the fund’s net assets under the Company’s management amounted to PLN 25.4 billion as the end of 2017 which represents a 29.1% increase compared to the end of 2016. The increase in the net asset value was mainly the effect of net profit from sales and the result on asset management.
PKO Towarzystwo Funduszy Inwestycyjnych SA ranks second in terms of net asset value and has a 9.1% share in the market of investment funds; in terms of non-dedicated funds’ asset management it ranks first with a 15.7% share*.
In the fourth quarter of 2017, the Bank Group acquired 100% of the shares in KBC TFI SA. In accordance with the plans of PKO Towarzystwo Funduszy Inwestycyjnych SA, the investment funds operating within the Bank Group will be merged in the first half of 2018.
After accounting for the acquisition of KBC TFI SA the share in the investment fund market amounted to 10.5%, and the share in the non-dedicated funds’ assets amounted to 17.2%.
As at 31 December 2017 the Company managed 47 investment funds and subfunds. In 2017 the Company’s offer was expanded by six investment funds/subfunds: PKO Obligacji Wysokodochodowych Globalny – a closed-ended investment fund, and five subfunds isolated under the PKO Portfele Inwestycyjne – specialist open-ended investment fund.
In 2017 the Company performed 27 issues of investment certificates of closed ended funds, under which it obtained assets with a total value of PLN 661.9 million.
*Source: The Chamber of Fund and Asset Managers (Izba Zarządzających Funduszami i Aktywami - IZFA).
PKO BP Bankowy PTE SA
In 2017, the Company generated net profit of PLN 8.5 million (compared with PLN 5.2 million in 2016).
Net asset value of PKO BP Bankowy OFE (in PLN billion)*
Results of the Open Pension Fund (OFE)*:
As at the end of 2017 the net asset value of PKO BP Bankowy OFE managed by PKO BP BANKOWY PTE SA amounted to PLN 8.1 billion, which is an increase of 15.1% compared with the end of 2016. The increase in the net asset value is related mainly to the rate of return earned on the Fund’s assets.
As at the end of 2017 PKO BP Bankowy OFE had approximately 923 thousand members.
PKO BP Bankowy OFE ranks 9th on the pension fund market in terms of OFE net asset value and in terms of the number of OFE members.
In 2017 the Polish Financial Supervision Authority (PFSA) announced the rates of return of OFE as at the end of March and September, for a 36 month period. In accordance with the PFSA announcement PKO BP Bankowy OFE earned a rate of return of 16.318% from 31 March 2014 to 31 March 2017 compared with the weighted average rate of return for all funds of 12.921%, ranking second among the pension funds operating on the market. In the second listing, which covered the period from 30 September 2014 to 29 September 2017, the Fund earned a rate of return of 21.660% with a weighted average for all funds at 19.128%, coming third in the ranking of open pension funds.
*Source: www.knf.gov.pl
Grupa Kapitałowa PKO Leasing SA
The PKO Leasing SA Group (i.e. PKO Leasing SA and its subsidiaries) earned net profit of PLN 77.2 million in 2017. In 2016 the net profit of the PKO Leasing Group was PLN 18.6 million, and it included the results of the new companies, i.e. the Raiffeisen-Leasing SA Group – only for December 2016, i.e. for the period when it was part of the PKO Leasing SA Group.
Lease activities:
Value of financed ffixed assets (in PLN billion)
In 2017 the leasing companies of the PKO Leasing SA Group financed fixed assets of PLN 8.1 billion in total, i.e. 5.4% more than in the corresponding period of 2016 (data for 2016 is calculated in consideration of the current structure of the PKO Leasing SA Group). The change mainly results from an increase in financing assets in the category of passenger cars, and plant and machinery.
As at the end of 2017 the carrying amounts of receivables from customers in respect of fixed asset leases (matured and not matured) and the carrying amount of fixed assets under operating leases in the PKO Leasing SA Group amounted to PLN 15 billion in total.
In terms of the value of fixed assets leased to customers in 2017 the PKO Leasing SA Group ranked first on the market of lease services with a 12.0% market share*.
*Source: Polish Leasing Association (Związek Polskiego Leasingu)
Factoring activities:
Value of factoring turnover (in PLN billion)
PKO Faktoring SA provides domestic and export factoring services with and without recourse, reverse factoring and a factoring program service for suppliers.
In 2017 the value of factoring turnover was PLN 11.6 billion (in the corresponding period of 2016 the Company’s turnover was PLN 9.8 billion); as at the end of December 2017 the company had 512 customers.
As at 31 December 2017 PKO Faktoring SA ranked ninth (by turnover) among the factoring companies associated in the Polish Factors’ Association, with a market share of 6.3%.
Grupa Kapitałowa PKO Życie Towarzystwo Ubezpieczeń SA
Value of factoring turnover (in PLN billion)
The PKO Życie Towarzystwo Ubezpieczeń SA Group (i.e. PKO Życie Towarzystwo Ubezpieczeń SA and its subsidiary Ubezpieczeniowe Usługi Finansowe Sp. z o.o.) generated net profit of PLN 26.2 million in 2017 (in 2016 the net profit was PLN 7.2 million).
PKO Życie Towarzystwo Ubezpieczeń SA engages in insurance activities in sector I insurance – life insurance.
PKO Życie Towarzystwo Ubezpieczeń SA offers a wide range of insurance products: The Company focuses on insuring the lives and health of its customers, it offers independent products and products linked to the banking products offered by PKO Bank Polski SA.
Gross written premium on insurance contracts written by the Company was PLN 471 million in 2017, and the number of insured exceeded 722 thousand in 2017.
The PKO Towarzystwo Ubezpieczeń SA
Gross written premium (in PLN million)
In 2017 the Company earned net profit of PLN 9.0 million (in 2016 the Company incurred net loss of PLN 6.6 million; 2016 was the first year of the Company’s operations).
The Company mainly engages in sector II insurance activities – other personal and property (non-life) insurance.
PKO Towarzystwo Ubezpieczeń SA focuses on insuring risk of loss of income, results of accidents and sickness, and on insuring properties for borrowers taking out mortgage loans. The Company offers a wide range of insurance products addressed to the Bank’s customers and other entities belonging to the Bank’s Group.
In 2017, the Company expanded its offer with the insurance of assets constituting the subject matter of lease contracts for PKO Leasing SA customers, and individual and group GAP Insurance in the event of a financial loss related to total damage to the leased vehicle. It also launched sales of travel insurance “Moje Podróże24” in the e-banking service IPKO and mobile banking service IKO.
Gross written premium on insurance contracts written by the Company was PLN 451 million in 2017, and the number of insured was 581 thousand in 2017.
PKO Bank Hipoteczny SA
Gross loan portfoio (in PLN billion)
In 2017, PKO Bank Hipoteczny SA generated net profit of PLN 51.4 million (compared with PLN 13.2 million in 2016).
PKO Bank Hipoteczny SA engages in operating activities since April 2015. The basic purpose of PKO Bank Hipoteczny SA is the issuance of mortgage bonds which are to constitute the main source of long-term finance for mortgage loans. The Company specializes in granting mortgage housing loans to individual customers, it also purchases receivables in respect of such loans from PKO Bank Polski SA. It acquires loans for its portfolio based on strategic cooperation with PKO Bank Polski SA.
In 2017, under the Framework Receivables Sales Agreement signed with PKO Bank Polski SA in 2015, PKO Bank Hipoteczny SA acquired portfolios of housing loan receivables secured with mortgages of PLN 5.6 billion. The total gross value of the PKO Bank Hipoteczny SA loans portfolio as at 31 December 2017 amounted to PLN 16 billion, including PLN 10.8 billion of mortgage housing loans purchased under the agreement concluded with PKO Bank Polski SA.
In 2017 the Company conducted seven issues of mortgage bonds, including:
a) four foreign issues addressed to institutional investors, in the total nominal value of EUR 1 079 million;
b) three domestic issues addressed to institutional investors, in the total nominal value of PLN 1,265 million.
Foreign issues are conducted under the International Mortgage Bond Issuance Program addressed to the European market and launched pursuant to the Base Prospectus, the update of which was approved in September 2017 by Commission de Surveillance du Secteur Financier (CSSF) in Luxembourg. Domestic issues are conducted under the National Mortgage Bonds Issuance Program addressed to the domestic market launched pursuant to the Base Prospectus approved in November 2015 by the PFSA.
PKO Bank Hipoteczny SA is the leader on the Polish mortgage bank market in terms of total assets and the balance of mortgage loans. The Company is also the largest and most active Polish issuer of mortgage bonds on Polish and foreign markets. The total value of mortgage bonds issued and outstanding (at nominal value) as at the end of 2017 amounted to PLN 8.9 billion.
PKO BP Finat Sp. z o.o. Group
The PKO BP Finat Sp. z o.o. (i.e. PKO Finat Sp. z o.o. and its subsidiaries) Group earned net profit of PLN 45.8 million in 2017. This result includes the results of the KBC TFI SA Group earned in the period from 12 to 31 December 2017. In 2016 PKO Finat Sp. z o.o. earned net profit of PLN 45.7 million.
PKO BP Finat Sp. z o.o. provides comprehensive services to financial sector companies, among other things, transfer agent services, fund and company accounting services, servicing group insurance dedicated to the products offered by PKO Bank Polski SA. It also specializes in outsourcing based on the competencies of its IT specialists, outsourcing of project teams and IT processes.
On 12 December 2017 PKO BP Finat Sp. z o.o. acquired KBC Towarzystwo Funduszy Inwestycyjnych SA (KBC TFI SA). As a result of acquiring KBC TFI SA, the subsidiary, Net Fund Administration Sp. z o.o. (NetFA Sp. z o.o.), became part of the PKO BP Finat Sp. z o.o. Group.
The basic business of KBC TFI SA is establishing, representing vis-à-vis third parties and managing opened-ended and closed-ended investment funds and customer portfolios comprising one or more financial instruments. As at the end of 2017 the net asset value of the funds managed by KBC TFI SA was PLN 4 billion. As at 31 December 2017 the Company managed 22 investment funds and subfunds.
NetFA Sp. z o.o. provides transfer agent services and IT services.
Ultimately, in 2018, KBC TFI SA is to merge with PKO TFI SA, and NetFA Sp. z o.o. with PKO BP Finat Sp. z o.o.
*Source: The Chamber of Fund and Asset Managers (Izba Zarządzających Funduszami i Aktywami - IZFA).
The KREDOBANK SA Group (data according to IFFRS binding for the PKO Bank Polski SA Group)
Gross loan portfolio (in UAH million)
In 2017 the KREDOBANK SA Group (i.e. KREDOBANK SA and its subsidiary Finansowa Kompania “Idea Kapitał” Sp. z o.o.) generated net profit of UAH 401 million (PLN 56 million). In 2016 the net profit of the KREDOBANK SA Group amounted to UAH 224 million (PLN 34 million). These results are the effect of the development of KREDOBANK SA in all business segments, and the effective management of liquidity, margins and risks.
The credit portfolio of the KREDOBANK SA Group (gross) increased by UAH 2,300 million, i.e. 35.1% in 2017 and as at 31 December 2017 it amounted to UAH 8,852 million (the gross credit portfolio in PLN amounted to PLN 1,094 million as at the end of 2017). The increase in the credit portfolio in UAH is mainly the result of an increase in sales of new loans.
Term deposits of the customers of the KREDOBANK SA Group increased by UAH 1,113 million, i.e. 27.7% in 2017 and amounted to UAH 5,133 million as at 31 December 2017 (term deposits in PLN amounted to PLN 634 million as at the end of 2017). The increase in UAH deposits is the effect of increasing the reliability and ranking of KREDOBANK SA on the Ukrainian banking market.
As at 31 December 2017 the network of KREDOBANK SA outlets comprised the Head Office in Lviv and 102 branches in 22 of 24 provinces of Ukraine. In 2017 the locations of three branches were changed, three branches were established and 12 branches were closed.
The Qualia Development Sp. z o.o. Group
Value of apartments transfered (in PLN million)
The Qualia Development Sp. z o.o. Group (i.e. Qualia Development Sp. z o.o. and its subsidiaries) generated net profit of PLN 64.9 million in 2017 (in 2016 net profit was PLN 30.8 million).
In 2017 the Group focused its operations on:
- selling and transferring apartments from projects completed in Warsaw (Nowy Wilanów – Royal Park) and Gdańsk (4th stage of the Neptun Park project),
- conducting operations in respect of the lease of apartments based on the projects completed in Gdańsk and Międzyzdroje, under the Golden Tulip brand,
- conducting sales of selected properties and companies of the Qualia Development Sp. z o.o. Group
ZENCARD SP. Z O.O.
ZenCard Sp. z o.o. conducts IT and computer operations. It specialises in developing discount and loyalty program solutions using payment cards. The Company developed a loyalty platform which operates in e-stores and payment terminals in traditional stores.
In 2017 its technical integration with the eService terminal network was completed. The ZenCard 2.0. platform was launched based on which the first promotional campaign for the MAKRO chain customers paying with Visa cards was conducted.
Transactions with related entities
In 2017, PKO Bank Polski SA provided services on market terms to its related (subordinated) entities within the scope of maintaining bank accounts, accepting deposits, granting loans and advances, issue of debt securities, granting of guarantees and spot exchange transactions and offering units and certificates of investment funds, lease products, factoring products and insurance products of the Bank’s Group, and services offered by Dom Maklerski of PKO Bank Polski SA. PKO Bank Polski SA provided services to PKO Bank Hipoteczny SA within the scope of intermediation in sales of housing loans for individuals, performing tasks as part of the post-transaction services in respect of these loans and support tasks under the outsourcing agreement.
PKO Bank Polski SA offered its infrastructure and IT services and rented office space to selected companies of the Bank’s Group. Together with Centrum Elektronicznych Usług Płatniczych eService Sp. z o.o. (which is a joint venture) it provided payment transaction clearing services.
A summary of the significant transactions between PKO Bank Polski SA and its subordinated entities, including these companies’ indebtedness vis-à-vis the Bank as at 31 December 2017 is presented in the separate financial statements of PKO Bank Polski SA for the financial year ended 31 December 2017.