Accounting policies and classification
Employee benefits comprise salaries and wages and social insurance (including contributions for retirement benefits, which are discussed in detail in the note “Provisions”), as well as costs of the employee pension scheme constituting a defined contribution scheme and the programme of variable remuneration components for persons occupying managerial positions, a part of which is recorded as a liability in respect of share-based payments settled in cash, in accordance with IFRS 2 Share-based payments (the programme of variable remuneration components has been discussed in detail in the note entitled ‘Benefits for the PKO Bank Polski SA key management’).
The Employee Pension Programme (EPP) has been in place at the Bank since 2013. As part of the EPP (for employees who joined the Programme), the Group accrues the basic contribution of 3% of the salary components on which social insurance contributions are accrued. Employees are entitled to declare additional contributions which are paid to the EPP by the Employer and deducted from the Employee’s salary. PPE is managed by PKO Towarzystwo Funduszy Inwestycyjnych SA.
Moreover, as part of wages and salaries the Group creates a provision for future liabilities in respect of compensation and severance bonuses paid out to employees with whom the employment relationship is terminated for reasons not related to the employees; and accruals related to costs attributable to the current period, which will be incurred in the next period, including bonuses and holiday pay, taking account of all unused holiday.
The balance includes the following items: maintenance and lease of fixed assets, IT and telecommunications services, costs of administration, promotion and advertising, property protection and training.
Lease payments under an operating lease and subsequent instalments are recognized as an expense in the income statement and are recognized on a straight-line basis over the lease term.
|Amortization and depreciation||Depreciation/amortization principles have been described in detail in the note “Intangible assets and property, plant and equipment”.|
|Contribution and payments to the Bank Guarantee Fund||According to IFRIC 21 Levies, fees paid by the Group to the Bank Guarantee Fund are recognized in profit or loss upon the occurrence of the obligating event. In 2016, the Group was obliged to make contributions comprising the annual fee and the prudential fee on a quarterly basis, therefore the respective costs were recognized in profit or loss on a quarterly basis. |
From 2017, the Group makes contributions to the banks' guarantee fund (quarterly) and the banks' forced restructuring fund (annually). The obligation to make the contribution to the banks' forced restructuring fund arises on each 1 January; therefore, such contribution was recognized in the costs of the 1st quarter of 2017. Contributions to the guarantee fund and the forced restructuring fund are not tax-deductible.
|Taxes and fees||The following items are recorded here: property tax, payments made to the State Fund for Rehabilitation of Disabled Persons, municipal and administration fees.|
|Employee benefits||(2 974)||(2 836)|
|Overheads||(1 409)||(1 422)|
|Amortization and depreciation||(844)||(801)|
|Contributions to the Bank Guarantee Fund (BGF)||(401)||(438)|
|Taxes and other charges||(156)||(69)|
|Costs of an additional contribution to BGF1||-||(24)|
|Total||(5 784)||(5 590)|
1 On 28 October 2016, the Group was informed by the BGF that the Group was obliged to make a compulsory contribution for the payment of guaranteed funds in respect of deposits maintained by the Cooperative Bank in Nadarzyn (Bank Spółdzielczy w Nadarzynie). On 28 October 2016, BGF published resolution no. 308/DGD/2016 of the BGF Management Board on the payment of guaranteed funds to holders of deposits with the Cooperative Bank in Nadarzyn and informed the Group that it was obliged to make a contribution of PLN 24 million to BGF by 2 November 2016. The Group made the payment of 2 November 2016.
The amount of the Group's contribution to the guarantee fund for the year 2017 was PLN 192 million, and the amount of the contribution to the banks’ forced restructuring fund was PLN 209 million. The mandatory contribution for 2016 amounted to PLN 298 million, and the prudential fee amounted to PLN 140 million.
|Wages and salaries, of which:||(2 497)||(2 373)|
|costs of contributions to the employee pension plan||(47)||(46)|
|Social insurance, of which:||(399)||(379)|
|contributions for disability and retirement benefits||(270)||(310)|
|Other employee benefits||(78)||(84)|
|Total||(2 974)||(2 836)|
Operating lease – the lessee
The costs of operating lease on the part of the lessee are recognized in administrative expenses under overheads.
Rental and lease contracts concluded by the Group as part of its normal operating activities also meet the definition of operating lease. All contracts are concluded on an arm’s length basis.
The lease and sub-lease payments recognized in the costs of a current period in 2017 amounted to PLN 249 million (in 2016 they amounted to PLN 263 million).
|TOTAL VALUE OF FUTURE LEASE PAYMENTS UNDER IRREVOCABLE OPERATING LEAS||31.12.2017||31.12.2016|
|For a period:|
|up to 1 year||209||243|
|from 1 to 5 years||383||449|
|over 5 years||95||140|